As an operator of an e-commerce store, you must often ask yourself the question 'Would I prefer to be huge or expert?'.
I'm sure that Jeff Bezos has problems but it must be quite good being in charge of a business like Amazon. But for most of us, we can't ever expect to reach that size. So, what can we do instead? Should we go for size (and all that entails in terms of marketing and assiciated costs) or expertise? When you have some dominant players, there is a threat that they can just cut and cut prices to undermine everyone else and effectively kill off any more competition.
How can you survive and thrive in a market where the race to the bottom is always a threat?
The optimum online retail strategy for the vast majority is focus
We believe that there are really only two viable business strategies to adopt now (but only one is really achievable):
- Size: the larger you get the bigger the bigger the benefits of scale are. It is possible to survive on increasingly small margins because of size and market power. There is also operationally efficiency and the ability to cross sell and up-sell to your base 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 customers recognise they are dealing with the best in their field
Online retailing options
Given most of us don't have either the capital or the capacity (or the expertise) to replicate Amazon or Wal-Mart, then the obvious strategy will be focus. This will not be an easy option but it will be much more achievable than trying to compete with multi-national corporations and their hard pricing strategies.
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? This is essentially a mixture of between ecommerce website design and content marketing. What you have to do is become the accredited expert in your own field.
This would be supported by doing the following too:
- Online commerce 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 future of operating an online shop
The running of an online store in the future will become both easier becasue the technology required to do so is more affordable and quicker to deploy. But to make this work quickly, effectively and consistently, you will have to probably employ an ecommerce consultancy to achieve this.
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