Why read this? : We explore 4 actions which help you find your e-Commerce competitive advantage. Learn how customer knowledge, brand building, experience creation and a learning approach help you get ahead. Read this to stand out with an outstanding e-Commerce competitive advantage.
Much of what you read online about e-Commerce seems to suggest you don’t really need an online strategy. No need for marketing plans either. Or working through the customer experience process. No, many so-called experts say all you need is to sign up for Etsy or Shopify. Bang out a couple of product pages. And boom, you’re an online retailer. The path to untold riches.
Savvier readers will recognise this as total hot air. We’ve ranted before about the sharks who loiter around marketplace and dropshipping forums. Their only value is in learning what NOT to do. But we have a positive mindset here at Three-Brains. And we like to focus more on what you should do to win in e-Commerce.
Your e-Commerce competitive advantage
The concept of competitive advantage came to the fore from business strategy academic literature in the 1980s and 1990s, mainly thanks to the work of Michael Porter.
Most business people have heard of it, but it’s rarely top of mind. Especially in e-Commerce. Many e-Commerce stores aren’t clear on their competitive position. So don’t worry if you’ve only just started to think about it. Knowing you need it is the first step in building your e-Commerce competitive advantage.
Our how to start selling online guide shares the 3 key questions you have to answer to start e-Commerce :-
But, to answer that first question, you also have to answer who’s going to buy what you’re selling? And why would they buy it from you?
As per our marketing guides, you always start with the customer. You start with what customers want and need. So, your first source of e-Commerce competitive advantage comes from understanding the needs of customers better than anyone else.
E-Commerce competitive advantage #1 - Know your customers
One of the easiest ways to start learning about e-Commerce AND about your potential competitors (other than checking out their online stores directly), is to join relevant Facebook groups and online forums like this one on Reddit.
Most are targeted at e-Commerce newcomers. You can learn from the questions they ask, and the store websites they ask for feedback on.
Because the biggest thing most newcomers get wrong is not thinking about the customer.
You see many people set up an online store in a popular category like fashion or homewares. But then, they post on these forums saying they’re getting no sales. And when you look, it’s clear they’ve just copied other sites in the category. Nothing stands out about them. Which is why there’s no sales.
Or they’ve come up with an idea for a product or service. And set up a store to sell it. Again, they post saying no sales. And it’s obvious, they haven’t thought about their customer, and what they actually need.
Research your customers
E-Commerce newcomers may not have the budget to do formal qualitative or quantitative research. But secondary research is (mostly) free and easy to do. You should start there to try to work out who your customers might be, and what they might need.
Build a profile of your ideal customer segment. Where do they hang out online? Are there specific websites, forums and social media groups that pull in your target audience? Spend time in the same online spaces your customers do.
Try to find out what these customers need and want. Figure out what they think, what they feel, how they talk, and what they expect of you. The better you can do this, the closer you’ll be to finding your e-Commerce competitive advantage.
And talking of you.
E-Commerce competitive advantage #2 - Build your brand
Standardised templates. Easy to use software. Click and drag site building. You no longer need a computer science degree to set up a website.
And yet, while that easy access technology makes your life easier from a technical point of view, it makes your life harder from a competitive point of view.
Why? Well, easy access technology breaks down barriers to entry. That means more people setting up online stores. More people competing against you and what you have to offer. The online shopping marketplace is very crowded. So, you need to position yourself in a way that stands out from that crowd.
Your e-Commerce brand needs a clear positioning
That position comes from the segmentation, targeting and positioning process. You start by identifying customer segments which share needs. Then, you decide which of those to target. And finally, your positioning defines how you’ll go after that target.
The positioning statement defines your target customer, the benefit you’ll offer and why customers should believe your offer.
It also defines your Frame of Reference, the category you’ll play in. That category definition gives you the competitive set you need to find your e-Commerce competitive advantage against.
Porter’s competitive strategies
Cost leadership is when the business keeps costs and prices low. There’s lots of price discounting. You aim for higher volume sales, so you can save via economies of scale. Or if a service-led business, you automate and scale the processes you need, so the cost per customer interaction stays low. The goal is to be the best value brand on the market.
Next is focus differentiation. Instead of price, you highlight another part of the marketing mix like product, promotion or place. You focus on 1 or 2 specific benefits rather than a wider range of benefits. This can feel like an audacious choice. But there’s a lot of support for the idea that it’s better to “own” one specific benefit than to spread your efforts too thin.
With this approach, your brand goes after customers who really value the specific benefit you offer. So, your “universe” of customers will be smaller than the mass approach of cost leaders. But, those customers will feel more strongly about your brand’s offer. They’re willing to pay a premium and stay loyal.
Finally, there’s finding a strong niche position.
This is where you find a unique offer no one else can match or copy. It might only appeal to a small number of customers, but it highly appeals to them, because of its uniqueness. You sell fewer units. But each unit sells at a much higher price.
What do Porter’s strategies mean for e-Commerce?
Anyone with a business or marketing degree has probably had to write a long essay on the work of Michael Porter at some point. There’s a lot more in his work than we’ve covered here, but this one’s important. We’ve given you the gist of his most important work on competitive strategy.
And the reason we did that, is you can use these strategies to help you find your own e-Commerce competitive advantage.
For e-Commerce, the cost leadership approach is best suited to “generalist” stores with a wide range of products and the ability to keep costs and prices low. It usually requires a higher level of initial investment to attract a wide range of customers.
Focus differentiation in e-Commerce means you need to work out exactly what it is you can offer as a specific benefit, ahead of your competitors.
And niche positioning takes that to another level as you aim to find something unique to offer. Something which can’t be copied by competitors.
Your choice of e-Commerce channel
For marketplaces, particularly options like Etsy, niche positions may be your choice of e-Commerce competitive advantage. You can create specific and individual products which are hard to copy.
For print on demand (POD) though, you only really have control over the design that goes on the products, not the actual products and delivery itself. When you sell via POD, your design and brand identity drive focused differentiation.
With online retailers, you have the option of any of these competitive strategies. But your actual e-Commerce competitive advantage is mostly in the hands of the retailer.
Where you actually have the most opportunity is when you set up your own online store. As per our online store benefits article, with your own online store, you have the most control over what you do. You can choose any of these 3 strategies. Which you choose then shapes your online store business model.
Stand out from the crowd
Your brand positioning is a key part of your e-Commerce competitive advantage. To make the biggest impact, it needs to consistently reinforce your brand identity.
Your brand identity is a collection of tangible and intangible brand assets, that define who your brand is, and what it stands for.
For e-Commerce, your brand is how people find you, how they remember you, and what persuades them to buy. That makes it important to help you achieve your e-Commerce objectives.
As we cover the process of creating brand identity elsewhere, we won’t repeat it here. But for this article, we wanted to call out one specific element of brand identity that’s super important for e-Commerce. And that’s the need to be distinctive.
Von Restorff made this point almost 90 years ago. Smart marketing and e-Commerce people understand the value of distinctiveness.
If you want to grab attention online, you can’t be a “Me 2”. That just doesn’t work. You have to make all your customer interactions distinctive.
This means your advertising needs to stand out. Your store website might start from a standardised template, but you should look for ways to make it seem more distinctive and stand out. That can be both “front-end” in terms of the design style and tone of voice you use. But it can also be “back-end” e.g. how you manage the order to delivery process.
Your online store brand is what your customers notice and remember. To build your e-Commerce competitive advantage, you need to build a distinct and relevant identity for your brand.
E-Commerce competitive advantage #3 - Create relevant and inspiring experiences
So, knowing your audience and building your brand are where you start to build your e-Commerce competitive advantage. But where you drive growth is in what you do with that knowledge and those assets.
One of the big benefits of online selling is you can sell 24-7, 365 days a year. Online stores never close. And that means you need a lot of brand activation. This is what drives people to your store. It’s what engages and influences them when they visit. And it’s what keeps them coming back for more.
As per our online store strategy guide, a good place to start is to think through all the actions which need to happen to drive an online sale.
For each of those actions, think about what you can do to make your brand stand out from competitors.
When customers visit your online store, think about how to make the shopping experience better.
Once an order’s placed, think about what you can do with your order to delivery process to make the “service” feel better than competitors.
And that’s just the thinking to drive “one” online sale. With e-Commerce, and particularly with your own store, you have great access to online data about your customers. You can combine this insight with marketing technology to set up a CRM system that keeps your shoppers loyal and coming back for more.
E-Commerce competitive advantage 4 - Keep learning
This brings us to our last source of e-Commerce competitive advantage. Which is, that you can never have enough knowledge about your customers and what they want. There’s always more to learn. You’ll always have new e-Commerce issues to deal with. And you have to learn from your mistakes.
The basic processes and techniques we’ve covered in this article give you a good start. If you use them, you’ll sell more online than if you don’t.
But every market, every business, every shopper is different.
Conclusion - E-Commerce competitive advantage
In most competitions, the “winner” is the one who’s left standing at the end. But, in e-Commerce, the “game” doesn’t have a clear end. It just keeps going.
And though you might see off some competitors, the ease of entry to online selling means there are always more competitors waiting in the wings.
But, if you’ve built your audience knowledge, have a strong brand, and create great experiences, then you’re well on the way to playing the e-Commerce game for a long time.