Question about ecommerce "theory".

Stealing a portion of the market

[lschmidt]

This is all hypothetical, but can obviously relate to the real world. Let's say there is a certain industry/niche which does a large portion of it's sales online. There are ~2-3 sites which do most of the online sales, most likely 1 that is the clear leader.

Now a "little guy" wants to get involved. He can set up an ecommerce site with the same product availability, site functionality, shipping speed/cost, and prices that are also close to those more successful older sites that do more sales.

Over time, will the little guy be able to just "steal" a portion of the market - not offer anything innovative or new, but simply offer an equivalent alternative and over time steal part of the market?

Or, in markets like these where there are already a few established leaders - is there no hope for newcomers?

I realize this is very general and would depend upon many variables, but please just share your views on the topic.

Thanks

[HRoth]

I have seen other merchants come in and try to steal customers by deliberately undercutting the price, by engaging the competition through their content ("better than Brand X"), or by copying. I don't know if it works or not. I decided that what I wanted to do was not compete with them (so no stealing is even involved) but to create something different and thus hopefully tap into a group of customers that previously could not buy what they wanted and so were not buying period. This is following Marx's dictum that capitalism creates a need and then fills it.

It does seem to me that there is enough business for pretty much everyone but that survival is dependent upon each business being different from the next. So I think that is key for a newcomer--what s/he can do that is different.

[LifeinAsia]

In relation to existing customers, all other things being equal, most people will probably stick with what they know and continue using the company they'd been using before. So the new company should have some sort of incentive to entice people to change: lower price, better/faster service, or some other benefit to existing customers if it wants to steal market share.

In relation to new customers, the new company may or may not be on a more equal footing, depending on the branding of the existing companies. If the existing companies are very offline and the newcomer is very Internet savy, then he has a chance to "steal" new customers who would be more likely to find him through online methods.

[vincevincevince]

It also makes a difference if these are branded items. If you sell Wellknown Brand Widgets then you will find your customers to be fickle and go price comparison shopping as they perceive Wellknown Brand Widgets to be all the same and backed by the manufacturer's guarantee. If you are selling products without such a brand (i.e. beige box widgets) you will probably find a lot more loyalty and so the new entrant will have a much harder time of things.

[pbradish]

"Over time, will the little guy be able to just "steal" a portion of the market - not offer anything innovative or new, but simply offer an equivalent alternative and over time steal part of the market?"

You're right in the sense that this depends on numerous variables *but* speaking from personal experience you CAN and WILL "steal" customers from the top merchants if you are efficient, knowledgable, and have good customer service.

Most customers will continue to use an ecommerce site that they're A) familiar with and B) have had positive experiences using in the past, but if you involve yourself enough in the niche market (i.e. forums, shows, seo, ppc, etc.) many will eventually warm up to you and make that initial purchase. Pull it off correctly and they will become a customer for life.

With hard work and know-how you can become a force to be reckoned with, just like the top dogs in your particular niche. Nothing is impossible and with a relatively uncompetitive market (2-3 main ecommerce sites) it should actually be pretty easy to accomplish assuming you have all of your ducks in a row and have done your research.

Again, just my .02 from someone who has been there, done that, sold it, and moved on to larger ecommerce projects :)

[King_Fisher]

All markets are dynamic! While you might not be able to "steal" any business from the existing sites you should be on equal footing with new customers entering into the market. With good products, site, pricing and customer service you will start to build your own customer base.

Look around you in the B&M world. How many competitors are there in any niche?
More than a few!

Build your business on the better mouse trap theory and you will succeed!...KF

[p5gal5]

I think there is absolutely room for newcomers in any/every niche. Perhaps an enduser prefers Yahoo! stores and searches there. Maybe they trust Froogle, Amazon, eBay, or Shopzilla. There are dozens of ways to get immediate traction in a niche.

Sure, people and online shoppers are creatures of habit; however, (to me) the most exciting aspect of ecommerce is the "newness" of the market. There are lots of people who are still apprehensive to buy online, who are not very computer-savvy, or who are older consumers that never used computers (and now don't want to). These individuals will eventually phase out of the market.

We are coming into a time where the decision-makers at companies and online shoppers grew up shopping online and surfing the 'net.

<nostalgic flashback> When I was young(er), my interaction with computers entailed Oregon Trail on an Apple, rudimentary DOS commands, and dialing into a BBS on a 2400kb connection.</nostalgic flashback>

Some people will always prefer the local b&m; however, individuals who grew up using the Internet will see it as a viable medium for doing business. This pool of consumers will only continue to grow.