The e-commerce retailer Monoprice has one primary goal: source and sell electronic accessories and equipment at the lowest cost possible. It seeks to shrink every margin it can find so that the online prices for its private-label HDMI cords, for example, are less than half the prices that big box electronics stores charge for branded versions of the same cords.

Although Monoprice has a physical store in California, its $145 million in gross sales come predominantly from its online channel. Despite the inevitable comparisons to Amazon, Monoprice makes a point of specializing in only particular product categories. It seeks out production lines on which it can price its offerings at least 30 percent lower than comparable products sold by competitors. Because all its offerings involve electronic components, Monoprice finds its own manufacturers and has the expertise to test the products it sells. By outsourcing production, mainly to Asia, it lowers prices. By testing all the equipment, it simultaneously guarantees an acceptable level of quality.

Its pricing also relies on its efficient supply chain. In response to each order, an automated system first determines the proper box size. That box moves along the line to a staffed station, where the line worker adds the requested items to the box, which then heads out the assembly line to the shipping trucks.

With these strategies, Monoprice sells HDMI cords for $3.61, compared with average prices of around $20 for a similar cable sold at RadioShack. Monoprice’s iPhone cases sell for $4; from other producers, they range from $10–$50.

Discussion Question:

What is Monoprice’s retail strategy? That is, what are its target market(s), retail mix, and bases for sustainable competitive advantage?

 

Source: Ian Hamilton, Orange County Register, April 12, 2014