Four key lessons to find your e-Commerce competitive advantage

Competitive advantage - chess board - set of white chess pieces at start of game with one black pawn replacing the white pawn in front of the king

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Snapshot : To find your e-Commerce competitive advantage, you need to follow a marketing-led approach. In this article, we cover how knowing your audience, building your brand and creating relevant and inspiring experiences drive e-Commerce success. And of course, to stay at the top of your game in e-Commerce it’s important to keep learning.

If you believe most of what you read online about e-Commerce, you don’t need to worry about creating a strategy for your online business. You can forget all those marketing strategies and plans. Don’t worry about working through the customer experience process

All you need to do is 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. 

Yeah, right. 

But more savvy readers recognise this for the BS that it is. We’ve ranted before about the sharks who loiter around marketplaces and dropshipping forums. But calling out the sharks, only helps give you a warning of what NOT to do. But, positive mindset and all that, we like to focus more on what you can do

So, this week’s article focusses more on what you SHOULD do to succeed in e-Commerce. We’ll look at what you can take from marketing strategy and planning. And at what you can take from customer experience development. 

Between these two areas, we believe there’s four key lessons, that’ll help you find your e-Commerce competitive advantage.

Your e-Commerce competitive advantage

Competitive advantage as a concept came out of business strategy academic literature in the 1980s and 1990s, mainly thanks to the work of Michael Porter

It’s one of those business concepts, that people are aware of, but it’s rarely at the front of the strategic thinking of most businesses. That’s especially true in e-Commerce. Most e-Commerce businesses don’t have a clear competitive position. 

So, if you run an e-Commerce business, even just starting the process of thinking what your competitive advantage is, gives you a head start on most of your competitors. 

For us, it’s part of the basics of getting e-Commerce right. 

The basics of e-Commerce

In our guide to how to start selling online, we outline the three basic questions you need to answer. What are you going to sell? Where are you going to sell it? And how will you manage payments and deliveries? 

But, within that first question, there’s an implied extra question, that’s super important. If you’ve read any of our marketing guides, you’ll know what you always need to start with the consumer. You always need to start with what consumers want and need. 

So, in fact, it’s not just what are you going to sell, but who’s going to buy it? Because, your first source of e-Commerce competitive advantage is really how well you understand and can meet the needs of your potential customers. 

E-Commerce competitive advantage #1 – Know your customers

One of the easiest ways to start to learn about e-Commerce AND about your potential competitors (other than checking out their online stores directly), is to join relevant Facebook groups and relevant online forums like this one on Reddit. 

Most of these are targeted at newcomers to e-Commerce. You can learn a lot from looking at the questions they ask, and the store websites they ask for feedback on. 

Because, the number one thing that newcomers to e-Commerce seem to get wrong is not thinking about the customer

You see many people set up an online stores in a popular category like fashion or homewares. But then, they post on these forums saying they are getting no sales. And when you look, it’s clear they’ve just copied other sites in the category. There’s nothing that stands out about them for their audience. Which is why they are getting no sales. 

Or the other common story is when someone has come up with an idea for a product or service. So, they’ve set up a store to sell it. And again, they post saying no sales. And it’s obvious, they haven’t given any though to who their potential customer is, and what they might need. 

Do some market research on your customers

If you’re new to e-Commerce, you may not have the budget to do formal qualitative or quantitative research with customers. But secondary research is (mostly) free and easy to do. Start there to try and work out who your customers might be, and what they might need. 

Think about who your ideal target customer is. Think about where they hang out online. Are there specific websites, forums, social media groups that pull in your target audience?  

Go check those online spaces out.

Try to understand what your target audience needs and wants. Figure out what they think, what they feel, how they talk, what they might expect of you. Because that’ll put you in a stronger place to find your e-Commerce competitive advantage. 

And talking of you.

E-Commerce competitive advantage #2 – Build your brand

In the early days of the Internet, if you wanted to build a brand website or an online store, you needed to know how to write HTML code, or be able to use complex and complicated site builder tools. 

But companies like WordPress and Shopify now make it much easier for anyone to now build a website or online store. Standardised templates. Easy to use software, with click and drag different elements. No coding required. You no longer need a degree in computer science to set up a website. 

Brilliant. 

And yet, while that accessibility makes your life easier from a technical point of view, it makes your life harder from a competitive advantage point of view. 

How so?

Because that easy and accessible technology breaks down the barriers to entry. And that means more people setting up online stores. The online shopping marketplace is crowded. And that means, there’s a lot of competition out there to fight against. 

3 steps of the process - Segmentation - divide the total marketing, targeting - pick the most attractive, positioning - build your brand

Your e-Commerce brand needs a clear positioning

The marketing process of segmentation, targeting and positioning helps you identify different segments of the market who share common needs. It helps you decide which of those segments to focus on. And then, it forms the start of building your brand identity, as you define your market position through your positioning strategy. 

The positioning process defines who your customer is, their needs and the unique benefit your product or service will offer. But, it also defines who your competitors are through the setting of the Frame of Reference

And by association when you do this, you are forced to also consider your competitive strategy.

Porter’s generic strategies

While it may seem like there are hundreds, if not thousands of potential competitive strategies to choose from, the work of Michael Porter suggests that if you look at them from a high level, most fall into one of three approaches. 

We first covered these three generic strategies back in our article on price discounting. But, in actual fact, price is only part of the outcome of this approach to strategy. These strategies affect much more, including your product, price and place choices in the marketing plan.

Cost leadership

The first of these is cost leadership, where the business decides to “go large”. It aims for scale, so that it can keep costs down by buying the materials it needs to produce in bulk. Or if a service led business, it automates and scales the processes it needs, so that the cost per interaction with the customer is kept low. 

Brands who follow this strategy aim for mass appeal, with a broad range of benefits.

Focus differentiation

The next generic strategy is focus differentiation. This is where brands choose to focus on a narrow range of specific benefits. They choose not to offer a wide range of benefits like the cost leaders. A big part of strategy is often what you choose not to do. The rationale goes that it is a better position to “own” one particular benefit, than to spread your efforts (and therefore message) across multiple benefits.

With this approach, your brand only attracts consumers who really value the specific benefit you offer. So, your “universe” of potential customers will be smaller than the mass appeal approach of cost leaders. 

But, those consumers who value the benefit, will feel more strongly about the brand that offers the benefit. They will be willing to pay a premium for it. And, they’ll be much more loyal. 

Niche

The final competitive strategy is to really find a strong niche position. This is where you find a unique offer that no-one else can match or copy. It might only appeal to a small number of consumers, but it has very high appeal to those consumers, because of its uniqueness. Your volume of sales will be the lowest, but you potentially can charge the highest price per individual sale. 

What do Porter’s strategies mean for e-Commerce?

There’s a good chance anyone reading this with a business or marketing degree has probably had to write a long essay on the work of Michael Porter. There’s a lot more in his work, than we’ve covered here, but this one is very important. We’ve given you the gist of his most important work on competitive strategy. 

And the reason we did that, is that you can look at those three 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 higher level of initial investment to attract a wide range of customers. 

Focus differentiation in e-Commerce means you need you to work out what exactly it is that you can offer as a specific benefit, ahead of any of your competitors. 

And niche positioning, takes that to another level where you need to find something unique to offer, that cannot be copied by your competitors. 

e-commerce 5 key channel options - on a x-y graph against level of complexity and control

Your choice of e-Commerce channel

All of which means you need to connect your positioning and competitive strategy with what your e-Commerce channel options are. 

For market-places, particularly options like Etsy, niche positions may be your choice of e-Commerce competitive advantage. You can create specific and individual products that are hard to copy. 

For print on demand though, you only really have control over the design that goes on the products, not the actual products and delivery itself. So, in this case, your design and brand identity (which we’ll come on to in a second) is what drives focussed differentiation. 

With online retailers, you have the option of any of these competitive strategies. But your actual e-Commerce competitive advantage is pretty much in the hands of the retailer

Where you actually have the most opportunity is when you set up your own online store. As we cover in our article on online store benefits, with your own online store, you have the most control over what you do. You can choose any of these three strategies. And that choice then flows though into your online store business model.

Brand identity asset classification examples

Your brand needs to stand out from the crowd

Your brand positioning is a key part of your e-Commerce competitive advantage. But to make the biggest impact, it needs to connect and drive 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. And for e-Commerce, your brand is how people find you, how they remember you, and what persuades them to buy. 

As we cover the process to create brand identity elsewhere, we won’t repeat the process 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

Red flower standing out in a field of yellow flowers to show the Von Restorff effect

With so many competitors in online selling out there, it’s important that your brand stands out. As we covered in a previous article it’s long been known in psychology that people’s brains tend to focus on the “odd one out” from any group. Von Restorff made this point almost 90 years ago. And smart marketing and e-Commerce folks understand the value of distinctiveness.

Which means for your brand to capture online shoppers attention, and to persuade them to buy, you can’t be a “Me 2” offer. That approach just doesn’t work. You need to look at key touchpoints where you interact with consumers and make them distinctive. 

This means your advertising needs to stand out. Your online 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”, in terms of how you manage the order to delivery process.

Your online store brand is what your target audience will notice and remember. So, to build your e-Commerce competitive advantage, make sure you take the time to build that 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 really close the deal, and drive the sales is in what you do with that knowledge and those assets. 

One of the big benefits on online selling is that 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. 

e-commerce planning process - 5 key steps in e-commerce experience

As we cover in our guide to online store strategy, a good place to start is to think through all the actions that need to happen to drive an online sale. Then, for each of those actions, think about what you can do to make your brand stand out from competitors. 

For your advertising, think about how to make your message sound more relevant and compelling to your target audience. When consumers visit your online store, think about how you can make the shopping experience better for them. And once an order is 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

Which brings us really 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. 

The basic processes and techniques we’ve covered in this article, and in other guides 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. 

You need to be able to use the data you gather to continually review and re-assess your audience understanding, your brand identity, and the impact of your activities

In most competitions, the “winner” is the one who is left standing at the end. But, in e-Commerce, the “game” doesn’t have a clear end. It’s endless and infinite. 

And though, you might see off some competitors, the ease of entry to online selling means there’s 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. 

Check out our range of e-Commerce guides for more on how to grow your business online. Or contact us, if there’s a specific e-Commerce challenge we can help you resolve. 

Photo credits :

Chess board : Photo by Randy Fath on Unsplash

Flowers : Photo by Photo by Rupert Britton on Unsplash

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