How to Create Predictable Success (The 3 Ways Ecommerce Businesses Compete and Succeed)
In our experience working with ecommerce brands, we’ve found that many successful businesses don’t truly understand what has made them successful. Even more concerning, many unsuccessful businesses tend to be perplexed at why their companies are failing. This is just as much the case for large brands as it is for small ones.
Whether you feel like a million bucks or are struggling to make it to next month, there’s an important concept you will need to understand if you want predictable long term, healthy, sustainable growth.
If you boil all of the various business models and strategies down, there are really only three basic strategies. If you want to run a successful ecommerce business, it’s essential to know where your brand falls so that you can capitalize on this strength and use it to your advantage. You must identify what business type you have, be committed to it, and then invest the necessary resources to make that model work.
In this post, we will explain what the three strategies are, how to determine which one you are, and what you need to do to drive success inside that model.
The 3 Basic Business Strategies for Success:
There are three possible models for your business to build on and see success. Your brand is either 1) the best in your space, 2) the only one in your space, or 3) the cheapest in your space.
Let’s translate each of these to ecommerce to make them useful for you.
1. The Best: You Have the Best Product in your Space.
Definition: If you’re the best brand in your space, your product has a unique advantage over your competition. Whatever your product does, it does it the best. Inherently, this means that you manufacture and create your own products.
Where you invest: With a unique product, the goal is to maintain what makes your product the best and always stay ahead of the curve. Therefore, you will need to invest in R&D, manufacturing, product design, your brand, market education, and customer research the most.
Your competitive edge: Your product’s unique features or design, which make it better than any other brand.
Why people buy: Your brand is trusted to solve a problem better than anyone else.
Examples: Apple technology, Tesla vehicles, Yeti drinkware, GrooveLife silicone rings
2. The Only One: You Have a Unique Brand in a Niche.
Definition: The “only one” refers more to the brand experience than the product. In reality it’s almost impossible to have a unique product for more than a little while. However, no one can copy a unique story. You may sell products that people could buy anywhere as well as your own products. Either way, you offer a curated collection and a unique experience unlike anything else. In the ecommerce world these businesses often come in the form of marketplaces and curated collections.
Where you invest: In this situation, you are investing in a brand people trust, as opposed to your product line. Vendor relationships, customer service, and content curation should be key areas of focus..
Your competitive edge: Your brand is trusted as a more reliable source or provider than anyone else.
Why people buy: Customers value the trustworthiness of your brand, the curated selection you offer, your expertise, and overall customer experience.
Examples: Amazon, Nordstrom (offering a unique retail experience), Groupon, or Etsy (offering unique services)
3. The Cheapest: You Sell at the Lowest Price
Definition: If your strategy is to compete on price. Your goal is to be the cheapest option. You likely sell generic products, commodity products at the lowest price possible with the goal being high-volume. You make your profit on volume and your ability to create margin through supplier relationships.
Where you invest: If this is you, you’ll likely invest in supplier relationships that get you the best quantity and efficiency for the lowest price as well as extremely high visibility, low-cost marketing.
Your competitive edge: Your company offers the best possible prices for the products sold.
Why people buy: Customers still need to trust your brand, but ultimately they come to you because you are the cheapest option.
Examples: Big Lots, Walmart, eBay
Which business strategy applies to your brand?
There isn’t a right or wrong strategy, and there isn’t a “best” strategy. The issue comes when a business is not intentional about the strategy that they are pursuing.
Is your brand the best, the only, or the cheapest?
If you have a completely unique product, or if you know for a fact that your version of a product is better than anyone else’s, push hard to be the best in your space. It won’t take long for other companies to riff off of your concepts, so we can’t stress the importance of consistent research, development, and innovation enough. Also, don’t forget that success is proportionate to the quality of your product and the resources you commit to telling others about it. Keep your products high quality and invest in the proper marketing to get your brand in front of the right people.
In contrast, if your brand or your prices are what make you stand out, capitalize on that in any way possible. Become a brand that people trust more than anyone else (Amazon, anyone?) or continually remind customers of your low prices (Walmart’s slogan says it all).
Steps to Compete and Succeed
Once you understand the three basic models, the path to success can be broken down as follows:
1. Know your model
We just walked through each of these above. Pick one as your primary.
2. Be the best at that model
Commit to chasing what makes you stand out over anything else.
3. Invest your resources
All resources should be aligned around that one goal. Your brand and product messaging should both reflect your business model. Your team (internal employees and external partners) should be constructed to capitalize on your model. All marketing efforts must be aligned as well.
4. Create an irresistible offer
A great brand, product, or price is not quite enough to make a sale. Customers are inundated with messages to buy, buy, buy everywhere they look, so they need something extra to purchase from you. It’s your job to make an offer they can’t refuse using a combination of competitive pricing, risk reversal, and urgency.
This is an important concept for brands of all sizes— for those just getting started and for large, established brands. Even global brands can lose their vision for who they are and what makes them different from their competition. This will inevitably lead to floundering. Take the time to redefine your business strategy and recommit to owning it now!