How to compete against another e-commerce store in the same niche?

8 years ago

Originally Posted by windrider07

So you want to create a brand new website that sells products. You talk to a supplier who happily agrees to work with you and support you once you open your website. They then tell you about other places they will supply their products to and you find out that there are other websites that exist with the same goals as you.

So.....what do you do? How do you compete with other websites existing in your niche and still succeed? How do you find out what will make you different from them? What steps do you take?

Classic commerce problem.

But the classic problem is not the question you pose, but in the way you are thinking about it.

In short where you have a market with numerous vendors of the same product this virtually always leads to difficulties. Whenever you can buy exactly the same thing from a number of sources you buy the cheapest. This however begats a price war for the vendors.

As Seth once said, the problem with a price war is that you might win!.

Higher volume but at a much lower margin that leads to a 'hand-to-mouth' existence where you are barely surviving due to cash flow problems. Many, many ventures go out of business not because they produce no profit but because their margins are so low it creates a cash flow death march.

The answer is not to do this in the first place (and is also the reason why so many dropshipping businesses have real problems that are not solvable, because of the way the industry is margin structured to advantage the wholesaler at the expense of the dropshipper).

So what do you do? Private labelling and building your own brand portfolio of products where you differentiate and add value (and charge greater prices) is the main approach. This, in turn, then lifts the celing on selling price and allows you to create a whole pricing strategy that can greatly increase your margins.

How to do this is a different issue, of course (i've built a very large ecommerce business this way).

Good luck with your venture.

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dave_hermansen

8 years ago

Originally Posted by ZanyZebra

Classic commerce problem.

The answer is not to do this in the first place (and is also the reason why so many dropshipping businesses have real problems that are not solvable, because of the way the industry is margin structured to advantage the wholesaler at the expense of the dropshipper).

To an extent, but that's what MAP is for with dropshipping.

Many of you have already touched on branding and creating a great user experience. I think that's super important when competing against other eCommerce stores in the same niche.

One of the biggest edges I still find, however, is that I understand and stay on top of SEO where many of the competitor sites clearly don't. I don't mean to sound flip, but in many cases, it's like going to a book club to discuss what you read, and you're the only literate person there. Just a little good SEO goes a long ways these days. You always have two audiences to please: your potential buyers and Google. If you don't get square with the latter, then the former will never find your store anyway.

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ZanyZebra 8 years ago

Originally Posted by dave_hermansen

To an extent, but that's what MAP is for with dropshipping.

???

MAP makes my dropshipping point, precisely.

Any business model, in this case dropshipping, that is so flawed it subsequently has to invent it's own artificial market mechanism in a sorry attempt to keep margins even reasonable is clearly structurally unsound. This is why the majority cannot make a decent business out of dropshipping (a small minority do).

MAP, invented by manufacturers in the first place (which should ring alarm bells in any dropshipper's mind), is a tawdry attempt to interfere with the natural workings of the market and protect manufacturers' margins whilst literally forcing the poor dropshipper to go along with it. If it had been invented by dropshippers it would not be structured the way it is and would at least attempt to seriously address the paltry margins of many dropshippers.

Why so? Well here's just one glaring issue, when MAP applies it restricts dropshippers to a floor price at which they are told not to sell below. This is good isn't it? No. It doesn't necessarily apply to all those big ecommerce businesses who are powerful enough to tell the manufacturer to go shove MAP up their backside. These bigger players are allowed to sell below MAP price and in doing so disadvantaging dropshippers even further.

Just as bad for the dropshipper, manufacturers need to keep adding more and more and yet more dropshippers to their list of sellers in order to try and grow their business. This means that the dropshipper is often battling against yet more and more sellers of exactly the same products as their own livelihood depends upon.

I repeat, dropshipping is a fundamentally flawed business model that is deliberately structured to advantage the manufacturer over the dropshipper. There's not too much debate about it. The evidence is everywhere in the sheer numbers of dropshippers who struggle badly.

Anecdotally, over the years, I've had a number of dropshippers message me (I have a sizeable ecommerce business not based on dropshipping) asking for advice and help because they can't make it work properly. For some i've been able to advise changes that helped but for most they were actually battling the industry structure without knowing it. Far too many (probably the vast majority) find their way into dropshipping without having first understood the basic business economic structure of it, to their eventual cost.

Good luck with your venture.
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ZanyZebra

8 years ago

Originally Posted by dave_hermansen

... You always have two audiences to please: your potential buyers and Google. If you don't get square with the latter, then the former will never find your store anyway.

Sorry, I couldn't disagree more.

(I swear, I'm not having a go at you today, Dave, I just can't let this go by without comment)

My own ecommerce experience (6 figure monthly income, average 54% margins), and that of the hundreds of ecommerce and amazon sellers I have coached (mostly newcomers to the ASM programme), and that of the large number of ecommerce business owners I know, says different.

For the most part, for the large majority of us, SEO and google are a complete waste of time.

It's not about google rank. Even when many of us are found via a google search, the searcher is not in buying mode but in information gathering mode (at best). This leads to very low conversion rates. This is harmful if you are spending time, effort and money a the expense of much more effective and efficient methods. Not just me, the majority of ecommerce business owners I know say the same.

The answer is not to try and get traffic by google rank (which, as I say, converts poorly). The answer is to buy highly targeted traffic who are already looking to buy your type of product and are therefore in purchase mode. This traffic converts at a hugely higher rate than anything google can send.

I get virtually no traffic from google SEO. I get some traffic from google ads (converts reasonably). I get the vast majority of traffic from social site advertising: facebook, instagram, pinterest, twitter and more (converts beautifully).

In addition to SEO and google, also a waste of time, at least in the early stages of ecommerce, is social media posting (different from social site advertising, ie paid traffic). This has been studied by ecommerce research groups and found to be so. Where social media posting is of value is on brand development over the medium to long term (I can personally vouch for this).

In short, in ecommerce, buy your own traffic (via paid advertising) and own your own traffic (via email capture).

Good luck with your venture.

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Tad 100

8 years ago

Originally Posted by ZanyZebra

In addition to SEO and google, also a waste of time, at least in the early stages of ecommerce, is social media posting (different from social site advertising, ie paid traffic). This has been studied by ecommerce research groups and found to be so. Where social media posting is of value is on brand development over the medium to long term (I can personally vouch for this).

This is the first time I hear that Google converts purely which I find so untrue. I get most of my sales from Google and YouTube and it converts really well for me. For example I did some high profile backlinks about 18 months ago and the site is ranking No1 on Google till this day. I am not saying that this keyword is competitive or something, but I don’t do anything else and still get steady traffic.

I have to agree that focusing on SEO is a waste of time and resources most of the time, but paying for high quality articles and publishing them on authority sites will work even 5 years from now.

I know your training and that you are guru, but backing up your statements with your authority without giving any specific numbers sounds odd to me. Let’s have conversation and talk specifics.

What is the profit margin and price of the products you are selling? I am really skeptical about paid traffic because I know for a fact that you can’t cover the costs with 20-30% profit margin.

Originally Posted by ZanyZebra

Even when many of us are found via a google search, the searcher is not in buying mode but in information gathering mode (at best).

I would say that this is the case with social media in a way that people are there to socialize, not Google. Maybe you have problems of picking the keywords which leads to buying.

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ZanyZebra

8 years ago

Originally Posted by Tad 100

This is the first time I hear that Google converts purely which I find so untrue. I get most of my sales from Google and YouTube and it converts really well for me.... I am really skeptical about paid traffic because I know for a fact that you can't cover the costs with 20-30% profit margin...

If it converts well for you don't stop.

You need to re-read what I wrote. I didn't say that SEO with google search doesn't convert for everybody and I didn't say it doesn't convert really well for those sellers either, just that my personal experience and the experience of the majority of those i've coached inside ASM and my other ecommerce contacts find it doesn't.

You may be skeptical about paid traffic but, again, i'm not and neither are the vast majority of ecommerce business owners I know. It is for me, and for very many, THE source of targeted traffic.

There are now a large number of paid traffic platforms with different cost structures. The problem you may have is that your margins are too small. I, and others, don't have that problem. I don't have 20% margins, my margins average 54%.

Good luck with your venture.

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Tad 100

8 years ago

Originally Posted by ZanyZebra

There are now a large number of paid traffic platforms with different cost structures. The problem you may have is that your margins are too small. I, and others, don't have that problem. I don't have 20% margins, my margins average 54%.

I have to agree that it is doable with something over 50%. I personally don't have problems with low margins and I still use blogs and youtube as my main source. It works and doesn’t require active monitoring or tracking and can be considered as asset. I believe it is more about your area of expertise rather than the talk of what is worth doing or not.

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dave_hermansen

8 years ago

Originally Posted by ZanyZebra

Sorry, I couldn't disagree more.

(I swear, I'm not having a go at you today, Dave, I just can't let this go by without comment)

My own ecommerce experience (6 figure monthly income, average 54% margins), and that of the hundreds of ecommerce and amazon sellers I have coached (mostly newcomers to the ASM programme), and that of the large number of ecommerce business owners I know, says different.

No offense taken Zany - I see what you're doing. Good luck on your ventures.

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Oziboomer

8 years ago

Originally Posted by windrider07

So you want to create a brand new website that sells products. You talk to a supplier who happily agrees to work with you and support you once you open your website. They then tell you about other places they will supply their products to and you find out that there are other websites that exist with the same goals as you.

So.....what do you do? How do you compete with other websites existing in your niche and still succeed? How do you find out what will make you different from them? What steps do you take?

One thing about brand leaders is the percentage of market share that they generally have.

If the brand leader has for example 50% of the total business out there then the number two has about half that say 25%.

So if the top two brands own about 75-80% of the market you have to look at how you can compete in that space.

In the books written by Eli Goldratt https://en.wikipedia.org/wiki/Eliyahu_M._Goldratt about the theory of constraints there are several tactics and methods discussed in relation to working your way into a market in a way that may give you an edge.

In one one of his books "It's Not Luck" there is a suggestion relating to a printing operation and a major supplier say like Mars (M&M)

Everytime they want to run a special on (M&M) for example there would be a print run of a number of promotional packets.

Usually printers will vary their prices based on volume.

The thoughtful printer who is going to target the (M&M) type buyer will offer a slightly higher printing cost per item but supply much closer to demand than the volume operator who tends to oversupply.

The whole "Theory of Constraints" is worth studying a little to help you work out the constraints in your system.

Originally probably aimed at manufacturers but the ideas are easily translated into e-commerce.

Look at how newcomers enter the market and become winner and model their methods.

Think "shoes of prey" https://www.shoesofprey.com

"the iconic" Clothes Online | Shoes Online | THE ICONIC

Study those guys for clues.

Best regards,

ozi

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windrider07

8 years ago

Great points.

What I notice is that it comes down to supply and price. I will search for the best price and then compare. The challenge is when you see other websites that you know you can beat but you need to outrank them to be noticed.

When it comes to "branding", I think it really comes down to the "atmosphere". How easy is it to navigate and browser the website, how easy is it to buy a product and have it shipped, how fast does customer service reply to your concerns, how great is the website designed? and then the products.....the pricing and availability and the frequency of discounts and promotions and other perks.

I wonder....does anyone here have a success story when competing against an already established ecommerce site in the same niche?

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ttados

8 years ago

Don't sell a product. Sell a lifestyle.

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windrider07 8 years ago

Originally Posted by ttados

Don't sell a product. Sell a lifestyle.

Good quote. Though some would say "Sell an Experience".
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Pick Panda 8 years ago

Originally Posted by ttados

Don't sell a product. Sell a lifestyle.

Simple and deep

See what all products are getting more benefits. What all channels are bringing more traffic. What all advertisements are working good for you.

Based on above research go ahead with more with beneficial strategies. Lower your margins and promote more.
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jmferret

8 years ago

Nothing changed during the last couple thousands of years.

Competitive prices, better service (in many senses).

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Tad 100

8 years ago

This is exactly what I do and yeh it is called marketing.

I usually sell products from China without brand names at all. So, I can come up with new ones and sell at much higher price. The problem is that Chinese are smart enough to sell worldwide but they are not doing much of the marketing.

Most of the products I sell are presented as solutions for specific problem. I start with niche specific site and invest a lot of time on copy and design.

Check out myweddingfavords.com

Look at the gallery pictures they have. I know that they importing cheap products from China but they look like luxury line on pictures.

Same goes for branded products, you can outsmart others by using latest SEO and video marketing strategies and the site they can trust.

I used to sell acupuncture massagers with a brand name about 3-4 years ago at much higher price than my competitors. I talked about the problems they solve and used a lot of various UX strategies to connect with the customers.

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HCFGrizzly

8 years ago

Originally Posted by windrider07

So you want to create a brand new website that sells products. You talk to a supplier who happily agrees to work with you and support you once you open your website. They then tell you about other places they will supply their products to and you find out that there are other websites that exist with the same goals as you.

So.....what do you do? How do you compete with other websites existing in your niche and still succeed? How do you find out what will make you different from them? What steps do you take?

Only one thing will differentiate you from the crowd and that is : Marketing.
Whether you invest your budget in SEO or in commercials, it is important to have a big marketing budget, especially when you start your website.

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Alperr

8 years ago

Ask yourself as a customer:
-What would I like to see in this website?
-Why should I prefer this website?
-What would I like to see from the website owner?
-What would make me happy?

If you can compare yourself with the other website and answer these questions, then you can create some solutions to be one step ahead.

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MW Ghostwriting 8 years ago

You asked a very specific question. You spoke with your supplier and they exposed you to other companies who were selling the same products you were selling, and competing within the same niche.

First, make sure that it's actually 'niche'. There are large categories, such as 'Electronics', 'Home & Garden', 'Toys & Games', etc. You can break these down into what's called sub-categories. This is where you have things such as 'Computers', 'Kitchen Appliances', 'Board Games', etc.

Until it's broken down much further than that, it's not really a niche. I just say this, because it's essential you are selling a niche product in order to survive online. That's how each store you have can thrive.

Back to the basic issue at hand... The fact of the matter, is that the suppliers who are willing to work with online retailers (especially when they're new), are not selling products with massive brand awareness.

People don't turn on the TV and see those brands on a daily basis. Therefore, your 'competition' can really be your best friends, because you are working together to develop that brand awareness.

When it comes to reaching #1 in the search engines, your own research should tell you whether or not it's a product worth exploring.

I hope this helps answer your question!
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