How does a cost leadership strategy work for e-commerce?

To start implementing the cost leadership strategy is to analyze existing operations by determining the costs of each material, labor, and administration. Next is to research competitors their business processes and costs. Finally is to identify which strategies will reduce costs and how you'll price.

Cost leadership strategy is effective for large organizations but least practical for smaller ones. This strategy works on the concept that you can sell more by keeping your costs low. However, it is essential to note that not all customers buy lower-priced goods.

So, before deciding on your pricing, you must consider the price elasticity. You can easily find out your price elasticity by using the statistical approach of econometric modeling. It includes in-depth data over the years, which you can use to analyze your price elasticity.