7 ways to compete against larger competitors

7 ways to compete against larger competitors

Competing against larger online stores? Keeping your promises and being clever are way to establish a strong online presence.

If you have a small online store or are opening a new one, one of the challenges you will probably face is the presence of large and established competitors. How do you compete against them? There are many things you will need to do well if you want to succeed, but two of the most important will be to exploit the weaknesses of the established competitors and protect yourself against them plugging those weaknesses and driving you out of the market. Here are some ways you can start to do that.

Planning is essential

Knowing your customers as specifically as possible is key to delivering an online service that stands out from the rest. Any one can get a website set up, but knowing why your customers will buy will give you greater insight into how to beat your competition. Too many businesses answer the question “who are your customers” with generic answers like “consumers”. Not all buyers are equal and if you want to attract the right customers to your website and get the right ones to buy, you need to really step inside the purchase decision and the factors that are important to customers in making that decision. Some of the factors include:
Price Sensitivity
Different products have different responses to price drops. An everyday product like safety pins or matches or example will not see a massive change in purchasing behaviour by customers if the price is dropped, but something more of a luxury like an expensive ladies handbag will be more sensitive to price drops – but only to a certain extent as the demand for this type of product is specific to a certain type of buyer.
Shipping times
If a product is frequently purchased at the last minute, then faster postage might be an important trigger for a purchase. If a product is purchased with no specific time in min, then customers might be prepared to look overseas for that product – which means you would need to consider international competitors as well as local ones.
Purpose of purchase
Is the item purchased by the buyer, or as a gift? If it’s a gift, customers might look for product quality and service first. Gift wrapping, product packaging or gift messages might be more of an important factor in the buying decision than something that is purchased as a one-off for themselves.
Current availability
What is available now in Australia will be a big factor in determining what expectations that your customers have of this product. If it’s a new product to the Australian market then you have the opportunity to shape those expectations, but if you are selling products where there is already an established market, you will need to take into account the current availability and pricing of that product and current sales. How established is this market for example? Will another person selling this product mean that your sales come out of the pocket of another seller or is there enough room in the market that your presence will grow the market for everyone.
Sources of supply
The availability and costs of the product will largely determine how many competitors offer that product as well as where the product comes from. If it has to be imported for example, there will usually be fewer sellers, as many smaller online store operators do not want the hassle of putting together international orders, managing the shipping, doing any customs documentation and factoring all of this into their cost structure.

Working out your source of advantage

Once you know the customer and what makes them buy your product, you can look at the weaknesses of your competitors. For example, their size might make them slower to turn around orders as they shift stock between warehouses. It’s not uncommon for large competitors to have long processing times (even when they promise less) and poor follow up service if you contact them to chase an order. For nationwide chains, there’s little room for them to overhaul their processes as so many people are involved so this can open up opportunities for smaller online stores to establish a reputation for reliable and fast online service. As long as you keep your promise!

Strategies for dealing with larger competitors

Don’t compete solely on price

Large online stores frequently hold large amounts of stock in warehouses which means they can frequently offer very low per-unit costs. Their inward freight might come in a container ship or on palettes.

Compete on Shipping Costs

Large stores might sell the same products as you with very low per unit prices, but frequently have a larger flat rate charge for shipping, which is usually set to an average cost at a tracked parcel rate. Offering lower shipping costs than larger stores or more flexible shipping rates (e.g. lower charge for small packages or an untracked parcel) could give you an advantage in the eyes of

Compete on Information

Customers appreciate honesty. Many large stores may not have the time to write detailed descriptions of products, and often just put the product title (using the manufacturer’s title) and a very short description or no description at all, with little else. They might also hide their shipping costs with statements like “shipping costs are shown on checkout – log in to check” or “shipping starts from $8” but when customers log in they find that the shipping cost is considerably more. Give your customers full and complete information, and making your shipping costs up-front and clear can give you an advantage over larger stores that don’t.

Make Bundles

Large online stores that keep products in warehouses do so to make it easy to pick and pack orders. They might not frequently create bundles of products, unless they are trying to clear out a group of products. You might want to consider pairing up hot selling with slower selling products in packages, or grouping together products that would otherwise be too costly to post individually and create packs.

Have a versatile product range

Large stores, particularly ones with an offline presence, must hold enough stock for all of their chain stores so tend to focus on products they can purchase in large quantities. Large online-only stores might only have one store to service but specialise in a particular range of products and may not experiment.
Keep introducing new products and try to dig down into the buying behaviour of your target customers (this is where knowing your customers in detail can help), as you may be able to fill a product gap that isn’t being solved by the bigger stores. Is there a product combination that might be unusual or uneconomic for the bigger stores to carry? Is there an alternative size or colour or style that the bigger store doesn’t carry? Perhaps you might want to consider purchasing a discontinued line of stock that the larger store is clearing out or has already sold out of? Think laterally and creatively.

Add Value

Don’t just sell your products – sell your service. Look at what your competitors do and don’t do and what they might be prepared to do in response to competition. Do you have a brand that you can establish? Could you establish a club to get repeat buyers? Think about what you can do over and above just selling the products. Maybe you could team up with an associated business in a similar industry – a shop selling skin care might team up with a shop selling beauty therapy sessions.

Solve Problems – keep your promises and don’t let customers down.

If there’s a problem, fix it. If there’s a problem, many customers will give you the benefit of the doubt but expect that the problem is resolved to their satisfaction. Go the extra mile where your competitors might not. Don’t let your customers down or your name will start appearing in product and service review sites, or general forums. These types of negative reviews can severely tarnish your reputation so you should always do as you say and say as you do.

Follow up

When your orders go out, include something with it. A coupon for a second order, a promotion, a welcome card, a brochure – anything to establish rapport with your customer and encourage them to come back to you again.
Ultimately, your objective should be to build a strong online presence and ongoing relationship with customers that encourages people to come back to your store or recommend someone else – after all, it’s easier to get an existing customer who has bought from you before to come back a second time to your shopping cart website, than it is to get someone new through the checkout for the first time.
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