30 Aug Understanding competition for an online advantage
Starting a new business? Here is how to cash in when others aren’t.
What will you need?
No matter what you plan to sell online, if you want to be successful you will need:
- a well chosen market and niche
- a solid marketing plan
- an affordable platform for selling and growing your business
Method – Your Online Selling Plan
Specialise for success
Strategy Understand your competitors and your competitive advantage
- Faster delivery – if your competitors all import items directly from overseas and you hold stock, then you can deliver the same products faster
- Time to market – if you develop new products, you might be able to innovate and produce new things faster than your competitors
- Personalisation – this is a great way to build loyalty if your competitors produce a generic product and compete on price. Instead of selling just plain T shirts
- Product range – you may specialise in hard to find products or hard to find sizes that other competitors don’t wish to carry as they don’t move as quickly
- Bundling – you may have a unique way of grouping products together or work in conjunction with an exclusive partner to be able to offer something that adds value to the customer experience in a way that other competitors can’t match.
Keeping costs low does not mean spending nothing
What online cost factors do you need to consider for your online shop?
- Costs of advertising.
- Postage and delivery costs.
- Inventory costs.
- Product photography.
- Costs of writing product descriptions (or your time to do it yourself).
- Monthly costs to your shopping cart provider.
- Design fee or the costs of the software to design it yourself (and the time it will take you to learn).
- Payment gateway and merchant bank fees (or PayPal fees).
- Costs of sale to your cart provider (you don’t want your provider to take a cut of your sales as your bank is already doing that!).
- Business overhead – electricity, utilities, stationery, computers, printer paper, transport, etc.
- Cost of your time! (often forgotten).
- understand your customers
- stay informed
- monitor your competitors – but not so closely you have no time to complete your other tasks.
Everything stems from really understanding your customers and why they buy the products that you are selling. If you don’t know exactly who you are selling to, it’s hard to come up with marketing promotions, identify new products to sell or get your sales pitch right. Many people start up online businesses with an idea of the product to sell but only look at what is happening in the market at the time they start selling it. They don’t understand the reasons why people buy those products so they are not prepare to be able to shift with the market if things change.
Whether you’re selling children’s stationery, pet supplies or software products, ask yourself the following things:
- How much information do customers need to buy this product? Is it something that they will shop around a lot to purchase or something that will be purchased on impulse?
- What problem or need does the product fill?
- How urgently is the product required – how long is there between when someone decides to buy this product and when they make the purchase?
- How many other sellers are there of this product? How do they market those products?
- What can you see as the weaknesses of the current sellers?
- What do you know about the specifics of the people that buy this product? Is it something that is purchased by any retail consumer, or is it something that is part of a particular decision or even process? Is there a particular kind of person that makes the decision to buy this product?
These things will give you an idea of the strengths and weaknesses of your current competition, but also what things drive the buying process and how much a customer would be prepared to pay for it.
Once you understand who you are selling to, you can start researching them. Find the online forums where these types of people discuss what they like and dislike or discuss the products that you sell. Find reviews written by these people of your competitors. Note the weaknesses and positives that they describe. Read the magazines that they read. Read any industry magazines or newsletters from suppliers. Understand as much as you can about your industry.
Keep an eye on your competitors, but don’t obsess with them or else you won’t have time to focus on beating them. Visit their website on a periodic basis, watch to see what they say in social media, read their newsletters, read their blog posts.
Put all of this together with an understanding of your own strategy and provided you understand your costs you will be well placed to grow and succeed with your online store.