In this article I’m going to highlight the topic of competition from two points of view: as a client and as a marketer who works to deliver instruments for e-commerce merchants.
Competition issue in terms of limited resources
E-commerce market is growing rapidly. As I am seriously going to write this post without a single number, I’m just saying: it was growing in 2014, and projections are that it will be still growing till 2018.
What does it mean for you as an e-commerce business owner?
- More customer demand
- Bigger market
- Quantity and quality growth opportunities
- Rising competition
What’s the problem with competition in small e-commerce?
I will refer to small e-commerce as to businesses started by individuals with no great capital or external funding, with small-sizes staff and limited turnover. Normally, such people start their businesses with resources they got from working as a salaried employee or from other types of small businesses.
Say, there’s an organic tea e-shop based somewhere near London shipping only across the UK. Here’s a rough list of competitors for the shop:
- Resembling UK shops selling organic tea online of the same size, product range, price segment
- UK online shops selling organic tea, but from slightly different sectors; big companies, or luxury, or very cheap stores
- Online shops selling organic tea but shipping worldwide
- Offline shops
Now, the first point of the list is actually the main segment we should think about; these shops are more likely to steal clients from us.
What direct competitors in small business are
This is not only about e-commerce competition, though.
Our direct competitors are very likely to
- Have the same audience
- Have the same channels of marketing, distribution, PR and ads
- Have the same or resembling products with resembling prices, often from the same suppliers
- Have resources that relatively similar to yours
- Largely depend on sales (relying only on themselves, no support from funding or external owners)
Limited resources as a stumbling block on the road to success
Okay, let’s put our problem into words one more time: you want to sell more and stand out, but you have limited resources, as well as your competitors.
You can’t invest more money into SEO, marketing, social, or ads, as you don’t have enough sales for that. You can’t hire more people for the same reason.
Sounds scary, I do agree. You know this feeling of going round in circles. And it’s okay, I’ve heard many merchants complaining that only big brands have real opportunities to win the market.
In fact, all these how-to-beat-competitors articles are too general and don’t provide any exact steps.
There is a better one. Before taking it, I would like to share two cases I experienced as a customer.
I needed to buy Xbox One with Kinect. A quick research showed that there is actually only one store that sold them without pre order, at a reasonable price, had a discount program and specialized on consoles.
However, there was no exact details about how to participate in a discount program. They gave me a card after the purchase but there’s no option of adding a card or a discount in the account.
Their website was offering two kinds of warranties, but it never explained why I need a warranty apart from what Xbox offers.
When I ordered the items, the shop manager called me and said they didn’t have the Russian version of the console, only the UK one, I agreed.
After they called and said they have the UK variant only in white color. I refused. They called back in 15 mins and said they do have the black UK version, scheduling delivery for 7-10 PM the same day
(yay, they made their minds up!). The manager was losing his temper.
6.10 PM – the delivery guy called me. He wanted to drop in right now (not asking – informing, actually). I said that I’m not at home yet.
The guy came at 9 PM with my Xbox. The price was different from what was on the website, and they promised to bring an adapter from UK socket but never did.
The delivery guy asked if he could charge his dying phone for 15 mins at my place. I didn’t mind, but, man, power banks are not that expensive!
Summing up: I got what I wanted and nothing really bad happened, but I experienced a lot of confusion on all the steps: choosing, ordering, dealing with a discount program, delivery and communicating with the shop stuff (very unprofessional).
I needed to buy a new Fitbit band, and I had a 10% discount lifetime card for one of the shops. I bought from them offline before, and when I registered online I didn’t know how to apply my card, so I mentioned that in the order comment. In 5 minutes I’ve got a call from a shop manager, she added my lifetime discount to my account. I paid, she called back and we scheduled delivery for 1-4 PM the same day.
What is more, their website clearly stated that the bands are original (it’s important, because non-original bands are of very low quality material).
1 PM – a call from a delivery guy, he asked if it would be okay for him to drop in 15 mins. 1.15 PM sharp – I’ve got my band in 3 hours after ordering. And the delivery was free (it wasn’t in the case with Xbox).
The next day I’ve got a call from the shop – they were asking if everything went well and if I was satisfied with the result.
Summing up: professional communication, fast delivery, I didn’t experience any hesitation on all the steps of making a purchase. Both the shop manager and the delivery guy were very pleasant and positive.
Will I buy anything from the first shop even if I need it badly? No. They lost me as a customer. I’ll spend my who-knows-how-much-money on a console for my brother somewhere else.
Will I buy from the second shop? Sure, I am a big fan now. Moreover, their CEO writes hilarious marketing emails, and, to be honest, they’re so good there are times I want to buy anything from them just to be a happy customer.
Simple as that.
Apply this to 50% of customers incoming daily during a year – and the result will be clear. If the first shop even survives.
Negative experience is worse than you think
I bet you’ve experienced frustrating situations yourself. But most merchants don’t associate these feelings with their own clients. When I said ‘Did you realize that your clients experienced the same as you did – anger and annoyance?’, they usually answered ‘Not really’.
Negative experience has the power of taking your money. Or giving them to you, should you overthink your strategy.
A universal small e-commerce competition advantage
Now, here’s the formula:
All other factors being equal, giving great customer experience is a perfect e-commerce competitive advantage.
In other words, if you can’t invest more money, or hire Magento developers or more people, or create a better website, invest your time and brains instead, and it will pay you off.
Again, if you google ‘how to beat competition’, you’ll see lots of tips on doing this. The problem is: the number of stores worldwide following these tips is smaller than you think. Why?
- Not-a-big-deal. They think if they delivered the product you wanted, it’s okay if the shop manager sounds unprofessional, it’s not a big deal.
- I-am-too-busy-for-this. Oh really? Customer experience MUST be a priority. I don’t care about your next blog post or Facebook update or whatever is inside your newsletter, if you didn’t manage to show relevant stock information on your website.
If you understand customer experience as a priority, you’ll always have time for it.
- People-will-buy-all-the-same. I’ve heard that a million times, and that’s not true even if you sell something very exclusive.
- Everybody-is-working-like-we-are. Right! That’s why if you want more than everybody, you have to do this.
I know you want more.
What to do next?
- Review your website.
Is it working fine? Are the product descriptions clear? Do you have decent explanations of delivery and return rules, loyalty programs? Is it really easy to contact you?
- Analyze customer calls and emails. What are the most popular questions? Can you answer the questions on your website?
- Ask someone close to choose and buy a product on your website. Do they experience hesitation on any step?
- Make a couple of test calls/email queries. Is your shop manager helpful? Is he/she able to answer all the questions, including the tricky ones? How does he/she react when something goes wrong?
- Carefully analyze customer reviews, and if you don’t have enough of them, send follow up emails to your former customers.
- Do the products come to customers in proper packaging? How often are wrong products delivered?
- Is your delivery man/delivery company working fine? Do they ship products in time, are they polite?
- Is your ticket/support system in order?
Collect answers to all these questions into one document. Figure out the points that your customers were the angriest about, and start thinking how you can invest your own time and effort to fix this. Remember: it shouldn’t be expensive, you have limited resources, so it’s wise to do free things in the first place.
For example, spend a couple of hours with your shop manager and see how you can improve experience with phone calls/emails.
Will your customers care?
- Overall, 95% of respondents who have had a bad experience said they told someone about it, compared to 87% who shared a good experience.
- Respondents who suffered a bad interaction were 50% more likely to share it on social media than those who had good experiences (45% vs. 30%).
- 54% of respondents who had shared a bad experience said they shared it more than 5 times, compared to 33% of those who had shared a good interaction.
Okay, I broke and gave you lots of numbers.
Being average and ignoring small drawbacks is no better than failing it. Start making things better for your customers and treat this not like spendings.
Here’s the harsh truth about customers. We do know most merchants are polite, and helpful, and caring mostly because they want more money. And we are perfectly good with it. In fact, we love it.