As an operator of an online store you are under constant commercial pressure to keep the visitor numbers sufficiently high. That is the way to keep sales on track. However, online retailing can be extremely difficult when there are the likes of Amazon operating in your sector: their traffic is so large and their operations so cost effective that they can undercut your prices whenever they want. Therefore, the question is: how can you survive and thrive in a market where the race to the bottom is always a threat?
The best online retail strategy is...
We believe that there are really only two viable business strategies to adopt now:
- Size: the larger you get the bigger the benefits of scale are and you can survive on smaller margins due to your size and market power. You also become very operationally efficient and are able to cross sell and up-sell to your base of customers more effectively
- Focus: you have to become extremely expert in your field. This means offering more advice, a greater range of products and be more expert than everyone else in the sector. This will then allow you to generate business at a higher margin becuase customer satisfaction is so high
Viable online commerce options
Given most of us don't have either the capital or the capacity to replicate Amazon, then the obvious strategy will be focus. This will not be an easy option but it will be much more easy than trying to compete with multinationals and the pricing they are able to adopt and maintain.
Many very large sites are now undertaking dynamic pricing linked to demand. This means that they are able to adjust prices up and down depending on how much activity is being exerted at any time. We have all seen how th price of holidays shoots up during school holidays. This is a much more dynamic example of this where prices can move to minute by minutes to take advantage of customers' price sensitivity.
For the smaller operator, it would be difficult and administratively difficult to undertake this kind of activity continuously. It can be challenging enough to operate sales over limited ranges. This would be a continuous price change strategy and it would be hard to plan target margins and turnover in such a marketplace.
Greater expertise justifies higher margins
What can you do to demonstrate greater expertise? What do customers expect?
There are a number of activities which you can do which will keep you front of mind. What you have to do is become the de facto expert in this field - and the
- Ecommerce website design. A couple of things you will have to concentrate on here: making sure you site loads quickly and that you are reasonably functionally rich. Whilst you cannot match every piece of functionality a very expensive site will have, you must be reasonably close to it.
- SEO. Pay per click advertising will get you over the throughs in demand, but an essential strategy must to be optimise your SEO so you appear on p1 in relevant searches. This will take time and will require you to understand the personas you are targeting and the keywords they will be searching for
- Blogging. This is a way of demonstrating expertise in a very useful way. It will allow prospects to gain information that they are looking for and will inform their purchase decisions. But it will also help with your SEO and it will also help to distribute your messages further. Blogging isn't something you can dip in and out of, it is something that requires to be a regular activity
- Chat / customer service. Customer service for a site that wants to be expert needs to have lots of information at its fingertips. It needs to be able to know and compare products within its ranges so the best solution can be offered to a client. You can do this over the phone, by email and - increasingly popular - is online chat
- Customer satisfaction. All the above leads to a higher level of customer satisfaction. You should be able to tell whether customers are loyal by the repurchasing rate, the loyalty and by the increasing value of their baskets. Customers that you get to know and understand can be cross-sold and up-sold
The real future of operating an online shop
At the risk of sending mixed messages, running an online store in the future will become both harder and easier. It will be easier becasue the technology required to do so is more affordable and quicker to deploy. But it will also become harder because it will also become more competitive and it will be increasingly difficult to find a commercial niche where you can carve out a successful, long-term position.
If you liked this blog then you might also like this previous blog: http://inbound.itqsolutions.net/blog/good-article-on-internet-shopping-prepare-for-winter-sales