E-Commerce Competition Is Intense but You Can Win
Crush the competition in e-commerce before it crushes you
All of us want to come out on top. In e-commerce, your goal should be to dominate. If you do not harbor this desire, either secretly or overtly, you probably won't last long in e-commerce. The competition between online retailers is cutthroat. You must be equally cutthroat to survive.
Attitude is only half the battle. You've got to match a must-win attitude with the strategies to actualize your goals of domination. If you're unsure of where to start, there are a few key ideas you can focus on as you build your business plan.
Learn From Your Competition
The place to start your quest to conquer is your competition's website. Study it carefully. If you see some good ideas, note them, and implement them on your site. While doing this, you should, of course, ensure that you are not plagiarizing or violating someone's intellectual property. Note the bad ideas too, and you can give your website an advantage by avoiding those mistakes. By building on proven success and avoiding past downfalls, you can create a site that beats out the competition.
Find out how your competitors are pitching their products and services and what they believe to be their differentiators. You should dilute their differentiators by replicating them (again, make sure to avoid plagiarizing), while simultaneously striving to create your own differentiators that can't be as easily copied.
If you want to beat your competition, you are going to have to establish the best supply chain and maintain the best wholesaler relationships. This isn't an easy process. It'll take time, and it may even take a few rounds of trial-and-error. Run test batches of your product to ensure that the quality and price are what you want. Trade magazines may give you a head start if you're just starting your search for the perfect supply chain partners.
The best supply chain isn't necessarily the cheapest source. If you choose the cheapest wholesaler or distributor, you may end up compromising on quality or reliability. If you're trying to create a budget product, you may be looking for a cheap option, but ensure that the product actually functions as you intend. Low costs could attract customers, but poor quality products will ensure they don't come back.
Many e-commerce professionals make the mistake of thinking too narrowly while striving to crush the competition with better sales. Having better sales isn't only about selling more product for better prices, it's also about better meeting the customer's needs and desires. When you fulfill the customer's needs, you have the possibility of driving more sales through return customers. This crucial aspect of e-commerce is too often overlooked.
Keep the big picture in mind as you work on this goal. With better sales, you have more money to drive the operations, but sales alone won't fix underlying issues with the business. For example, if your operations have inefficiencies in purchasing, then more money from more sales—which leads to more purchasing—will only increase the size of your inefficiencies. Shoring up any cash leaks is equally as important, if not more so, than pursuing better sales.
Better Customer Service
Some e-commerce businesses excel in customer service as a way of separating themselves from the competition. You cannot crush the competition by solely focusing on customer service, but you can give yourself a significant advantage by bolstering this aspect of your business.
Better customer service means happier customers, and happy customers give businesses two major advantages: stronger word-of-mouth advertising and customer loyalty. Word-of-mouth is extremely effective, especially since it's free. The fact that customers aren't getting paid for it also helps the promotion come across as more genuine than an ad would. The customer genuinely wanted to share their experience, and the people they share it with have a good chance of checking out your site. Loyal customers will also be key to establishing yourself. Repeat customers, and their steady cash flow into your business, will help you grow.
Incentive programs help shape the customer's behavior and drive them to your desired action. You give them a positive reward for their action, so they feel like they have gained some value in return for giving you their business. It is a form of a value-exchange game. You should pay careful attention to your competition's customer incentives. Check back regularly, and every time they introduce an incentive program, strive to introduce an even better one. Your reputation will spread, and you will gain more customers.
You can create a program based on any concept. Your incentives can come in the form of discounts, rebates, points earned toward a discount, points earned toward prizes, and so on. As you design your incentive plans, avoid ambiguity in the rules. Otherwise, customers could feel duped when the terms aren't as beneficial as they thought they were, or you could end up losing more profit than anticipated. You also want to avoid the reputation of a bargain basement store.
Better Products and Services
E-commerce businesses should strive to provide better products and better services. "And" is the operative word here. Many e-commerce businesses are hesitant to strive for better products, though they are willing to upgrade or alter their services. There is a widespread belief that better products automatically require higher costs, whereas better service can be achieved through extra effort alone. This kind of thinking is fundamentally flawed on both points.
Better services will cost your business because your time is worth money. Time spent retraining or putting extra effort into projects could instead go toward promotion or sales. You may even make more money by focusing on sales or promotions (depending on a variety of factors, of course). Also, the assumption that better products mean higher costs is not necessarily true. It can be offset by locating the right wholesaler for that product, or by tapping cheaper distribution channels. Even if costs do rise, investment in better products could pay off through customer loyalty, word-of-mouth promotion, and a reputation for quality.