|The Ecommerce Giants|
Wanting to know how to go up against (or around) the big boys
How many of you go up against the big guys like Amazon and Ebay in your markets? If so how do you get around their strong brand identity and purchasing power?
Do you do this via niching? Product positioning? Selling local? Leveraging an exisiting bricks and mortar business? Or simply staying away from those markets?
I have been reading here for a while and was curious about how the people on this board thrive and survive in the face of competition from the big boys.
I tried to run up against Amazon for a while, and it just wasn't working. Their deep discounts and low profit margins on individual items is hard to compete with unless you are doing extremely high volume. That being said, I managed to find something that Amazon did not offer, and became somewhat of an expert in the field. I found that I got quite a lot of clients who just wanted some good old customer service from a real person, and became loyal customers to my site.
So, my point is, you may not be able to go up against them DIRECLY, but you can certainly compete with them indirectly. Offer something they don't offer, or do a better job of offering what they do offer :)
You need to move around them and be where they aren't. I remember reading about some regional airline in the west that sets their schedule so that they are always flying in the gaps between the major airlines. If Southwest is flying Denver to Phoenix every 2 hours on even hours, then they schedule for the odd hours.
That or don't sell the most popular DVD's in the world unless you can buy 100k units at a time.
I agree with all of you.
What people want from the internet is the convenience of shopping from home, combined with the reliability of their local shopping center. The internet is slowly approaching this for the consumer, and when this comes full circle the ecommerce giants will be phased out and replaced by individual SMB's that offer the same deal but with better service and reliability. SMB's can relate to a customer on a one-to-one basis, and are very accessible. The ecommerce giants are not, and their cutomers are only represented as dollar signs. As SMB's we need to follow the flow of online security, specialize our stores, and answer our phones with a voice, not a machine.
Micromanage and offer perks for your customers, and they will keep coming back for more every year for whatever occasion it is. Never let them down.
Or you can read my new favorite book "Customer-Centered Design" by Kreta Chandler and Karen Hyatt.
"This book provides readers what they need to know to greatly enhance website usability and the customer online shopping experience" óJakob Nielsen, author of best-selling title, Designing Web Usability"
[edited by: oilman at 9:36 pm (utc) on Jan. 30, 2004]
[edit reason] no affiliate urls please [/edit]
No need to include your Amazon affiliate link... the title and author will do just fine.
Thanks for the Amazon link.
Good call Shannon, that's hilarious.
Sorry about that.
eBay holds no inventory, other than their promotional mugs and t-shirts. Amazon, whether they actually hold inventory or not, is the seller of the product you buy. I think of Amazon and eBay as partners. I might list items on both sites but in the end, my goal is for that buying customer to visit my web store.
Morroco, your idea of the internet actually benefitting the small guy is very reassuring.
If true it means that we can set up individual sites specializing in a particular product and start buildng an interlinked network, much like a high street or shopping center. That vision also fits snuggly with the idea that search engines will eventually move towards grouping results by theme and putting the onus back on SMBs in the process.
Look at this recent article from E-Commerce News:
E-Commerce Growth Will Impact SMBs
By Laura Rush
January 23, 2004
As consumers' level of comfort with online functions such as e-mail and research continues to increase, so too will their level of participation in e-commerce. The next five years will see large growth in e-commerce - growth that could positively impact small businesses that have established themselves as legitimate, trustworthy merchants.
U.S. online retail sales are expected to reach $65 billion in 2004, and will continue to grow by a compound annual growth rate of 17 percent through 2008 to top $117 billion, according to a report issued last week from Jupiter Research, (a division of Jupitermedia Corp., the parent company of this site).
According to the report, "Market Forecast: U.S. Retail 2004-2008," the growth in online retail will be due in part to new online buyers, not just veterans, who have come to embrace the medium. Jupiter expects that the online buying population will grow by 14 percent in 2004, representing 30 percent of the U.S. population. By 2008, one-half of the population will make purchases online.
As more and more new online users convert to online shoppers, small e-commerce businesses ultimately will benefit, said Jupiter Research analyst Patti Freeman Evans. "SMB's benefit, as all businesses do, with greater adoption of online purchase and reduced fear. [However] Small retailers need to ensure that consumers have every reason to trust them," Evans said.
According to the report, during this time of new user growth, businesses should continue to target first-time online buyers as part of their new customer-acquisition efforts, as well as focus on retention marketing efforts in order to gain increased wallet share after a consumer's initial purchase. For small businesses, attracting these new buyers means getting the message across loud and clear that you are legitimate.
How do you convince potential customers that you are legitimate and trustworthy? "Be clear about security on all fronts, be sure to execute immaculately," said Evans. "Because [businesses] are small, their brand name may not be known to the breadth of consumers they may reach through online. So, they need to be sure they manage their messaging well."
Average Spending to Rise
Online retail growth will be fueled by another factor: increased average spending per buyer. In 2004, online buyers are expected to spend an average of $585 person, up from $540 per buyer in 2003. That trend in higher spending is expected to increase over the next five years: Through 2008, average spending per buyer will be close to $780 per buyer.
According to Jupiter Research, the increase in average spending is a reflection of the maturation of the online shopping market. Contributing factors that add to the likelihood that consumers will spend more online include more offline merchants adding online components to their businesses, which gives consumers more reasons to shop online, and improved product comparison features.
In this realm, small businesses will face different challenges from their big business counterparts.
"What is unique to small businesses is that though consumers do look for items not readily available in their local market, they also want to trust the retailer from whom they purchase. So, small businesses need to be sure that they have legitimate and very strong vendor ratings in every place consumers may find their products, like comparison-shopping sites," said Evans. "Also, adding consumer feedback sections to their own site could help the credibility factor."
Evans said she also feels that acquisition marketing and awareness-building tactics are critical for small businesses. "Search engine marketing, along with comparison-shopping site listings and well-managed affiliate programs are ideal tactics and generate real ROI," Evans said. "It is important that small businesses allocate staff to manage these programs as that will pay off immediately."
Growth by Category
In the next five years, small business merchants should realize that not all retail categories will grow at the same rate. Jupiter Research's forecast groups retail categories in three growth modes: Plateau, Steep and Steady:
Categories in the Plateau group will experience compound annual growth rates of below 10 percent and include areas such as PCs, books and software.
Areas of steep growth (above 30 percent) are found primarily in the home and personal care categories such as home improvement, grocery and over the counter drugs.
According to the report, the remaining categories comprise half of total online retail sales and include heavy volume players such as apparel and consumer electronics.
Ultimately, small businesses should understand that there is still double-digit growth coming from online sales, and that more and more people are choosing the Internet to make purchases. As such, online buyers will be adding more and more product categories to their online purchases. And by ensuring a solid position as a trusted merchant, small businesses will be able to reap the benefits of the coming growth in e-commerce.
I can provide you with some suggestions on how to appeal to new customers in ways that the giants can't, if anyone is interested.
PS Sorry about the large paste, the link wasn't working.
Things I have used or worked with that have been successful on some scale-
niche site-earns loyalty and trust, tends to a higher conversion rate- volume is lower
niche terms -earn on high volume of terms-they often aren't targeting the lesser searched for items, mispellings etc-these can be valuable- but take more time and research and a higher volume of terms to return
make it better- If you can make a more user friendly site, better navagation, a better search form, better product display than them- you will have an edge once you get people in- again this will influence conversion and loyalty. What dont you like about the big guys? Fix it on your site.
To me ecommerce is the soul of the free market.
Because it is up to our individual efforts to prove that we have value to internet surfers.
Now all we have to prove that we are different/better than our competitors, and to add value, and to reach their expectations.
BTW what is everyone's favorite ecommerce/retailing news source?
A few of them are Internet Retailer, Business 2.0, A-Clue, Marketing Sherpa, Retail Forward. Although I wish i had the money to subscribe to Forrest's Research.
Did you steal my list?
Those are all excetional resources, take note everyone to those resources.
I originally began as a very small SMB but I am finding that because the internet is the wave of the future I can't keep my merhcandise on the shelves. I have almost doubled my employment since last November.
We should all exchange one simple idea that we have recently used that has made our business better, no matter how large or small that developement is.
My first submission: Control every aspect of your CC transaction from your gateway until your acquiring bank, and only involve another third-party unless they give you complete control of what they have to offer in terms of security.
But here's the rub, I am a humble Web Developer who wants to develop applications that are customer-centric/retail-centric.
Working in Ecommerce is much more challenging and educating than any other kind of web application development.
I only wish i knew other web developers who specialized in ecommerce so i could exchange, meet trade knowledge and experience.
Almost every day i check the news, and i got a couple free subscriptions, as Ecommerce People you can get a free sub to InternetRetailer, and a few others.
The hardest part of Ecommerce is that the fact that we don't have direct face-to-face contact.
Face-to-Face contact is already here...
I mean with our customers.
So it's a bit harder to get clear where we do good and where we go bad.
I think the phone is an acceptable alternative to face-to-face interaction. If I receive a phone call because the user is having difficulty navigating the site, what he/she complains about says a lot about what is working and not working.
I come to B2C ecommerse from a background in providing B2B services. So I'm not sure if I'm on the right track, but here's some of my thinking.
Provide niche online experiences for people. A percentage of the market will buy just on price, and so it's hard to compete with Amazon for that segment. But a large percentage, I believe, buys because of the experience of using the site. It's here that we might have an opportunity.
The user experience can engender trust and loyalty. And that experience can continualy be broken down into smaller and smaller targeted groups. I guess ultimately there could be unique sites for every individual customer, with a single backend efficiently handling fulfillment.
The trick is getting the cost of developing the front end, and finding that traffic, low enough to realize a profit. Haven't figured that one out yet.
I agree, traffic is the key. What do some of you recommend as the best ways to initiate traffic
pay per click
search engine optimization
(plus telling all my friends to check out my new site, that usually generates at least two hits ;-)
User experience is the key, because our goal is not simply 1-2 sales, we want to build and improve the customer lifecycle.
I remember one old training story from when I managemed my own restaurant, about a story told to clerks at a grocery store.
The clerk did not care about or for the customer, so to help identify the cost of not providing excellent service at all times to the customers.
He identified how many times a week that customer x came to the store, the average dollar value per week, then multiplied that for how many years he/she has been coming to the store. So then having X $$$$ amount that we would lose every year, just because the clerk had a bad attitude, or bad training or whatever.
Also to remember customers who have bad experiences may tell up 9 other people, so bad experiences cause a ripple effect magnifying the cost of giving bad experiences to customers.
Where as if they had a good experience they may tell up to 2 people.
GoodExperience.com is another great user experience site, as well as a great newsletter.
Some very interesting and exciting notes have prompted me to add my two cents.
I have been having some first hand experience in running my b2b venture,BidOptima.com, in the area of PPC Campaign management services.
There was a lot of concern when we launched our business as the concept was new and we were setup against giants.
However, internet is a great leveller..every one worth his salt gets a chance.
If one is able position one's site(that place in the perceptual-ladder is so important) - provide a differentiated offer(customization is something giants are able to replicate)- enrich the user experience(even though it might be b2b,just handling the queries with lot of understanding helps)- and most importantly deliver to meet or better the expectations built up.
Also, of greatest value is to understand the competition thoroughly...surprisingly,what seems to be their strongest link is actually their weakest link!
With the internet buyer still in the infancy stage,there is a huge chance to differentiate and garner one's "place in the sun" thru some "intelligent" efforts.
My compliments to people like "Morocco" who have been able to do the above.
you're right, user experience is the key to going up against the big boys. thats the main reason I went into business myself is because I knew the 2 things I could do better than the big guys was build a better website and provide better customer service. I came from a customer service background before this whole ecommerce thing, so I know the mentality that the big companies have, which is customer service is an afterthought. The big guys will always be around because they have economies of scale which no small retailer can match. The thing the small guy has is he can offer a superior experience and since most of us are owners of websites, we actually "care" about our customers.
If you're looking for other web developers, try posting in the Microsoft.Net and ASP forum. I usually check and post to that forum also.
Yeah but i am a ColdFusion Web Developer, but i want to learn more about customer service, user experience and ecomemrce sites...