Strategies for entering a crowded e-commerce market - differentiate or die.
15th June 2012

Illustration by Ms.Bhakti Chande

"There are over 40 good quality e-commerce websites in the your industry space, and that is only in India." The client was quite surprised at this. He had not considered how much the e-com space has evolved in his industry, especially in India. But the good news for him was that there is were very few differentiating factors among 40 plus odd competitor websites. I continued, "The opportunity exists if we can come up with a radically different concept & strategy, leveraging your core competencies."

Create Real differentiation, not the superficial kind that most websites claim to be their differentiating factor or USP.

When I talk about differentiation I am talking about very real, very unique, extra ordinary differentiation. Easier said than done. Most new e-commerce entrants don't put in the thought process required to produce a truly different business model. Rather they go for what I would call 'tactical differerences'.

Tactical differences are much smaller and do not provide a unique inflection point that a business entering a crowded space requires. Tactical differentiators include pricing, delivery methods, payment methods, packaging, or even product feature differentiation. However all these do not have the depth required to truly make a difference in the market place and stand out.

Strategic differentiation in the go-to-market plan requires that you throw out 'how its done now'.

Most would be e-commerce ventures get stuck when they try to extend or modify the 'how its done now' models. What you get is a piss poor copy of the original model which succumbs to competition and copycats. Throw out the old model and start with a blank slate and a fresh outlook. Think game changing, think wow factor and think a new way to interact with the customers.

The new model has to have a social or community based factor - sell and forget days are long gone.

If your model does not involve some sort of customer social or community factor than you are missing a very important piece of the puzzle. Here I am not talking about some Facebook or Twitter interaction. I am talking about a genuine loyalty building, socially interesting concept that has your customers hooked.

Some cool models that have emerged recently for higher customer engagements include:

  • Group Buying: Collaborating with other buyers to affect the price or terms of the deal. This creates a community of buyers who will together go after good deals. That is, if done right. There are many many variations out there for this concept but not all industries have websites that utilize this. That's where your opportunity lies.
  • Mystery Box Concept: Buyers subscribe to a monthly mystery box of products chosen by the e-commerce vendor. This creates the surprise and expectancy element. Its also a good idea to tie this with some social aspect of the customers life. E.g. claims to turn the customer into a gentleman one box at a time.
  • Celebrity Quotient: Would you buy clothes that Sharukh Khan (an Indian actor) or Priyanka Chopra (another Indian actress) have chosen for you? Would you buy a cricket bat personally selected for weight and balance by Sachin Tendulkar (a cricketing icon)? Adding a celebrity quotient to the products selling points along with personalized attention from the celebrity gives customers a cool factor and bragging rights as well. This is not to be confused with endorsements which are limited and usually do not personally involve the celebrity. Film stars, sports persons, TV personalities, well know business gurus, cooking show hosts etc. are all excellent for this concept provided they have the time to curate the offerings.
  • Concierge Buying: Take the guessing, negotiating and worrying out of the equation with a well informed, well connected concierge who helps with the buying process. This ideal for repeat customers who might need to buy for different occasions or needs. Price comparison, feature evaluation, quality checks et.c are all done by the concierge along with making sure the final product is delivered safely. This is not to be confused with good customer service. This is a whole new level of service.
  • Library Buying: This is a spin on the second hand deals concept where the customer buys, uses it and then exchanges it for another piece of same of higher value. The original product is then 'bought' by another customer thus ensuring a rotating product inventory. The e-commerce venture makes a profit in margins when a buyer up scales and also in subscription fees. Delivery and pickup can be an issue but can be solved if the customer base is small and exclusive. Works best with products that are not easily soiled or worn out.

None of the above models might be attractive to you personally but they all have it in common that they are out of the box. Some way out of the box than others.

The model has to be Fun otherwise don't bother.

A small last word of caution. Whatever model you decide, it should be fun. It should sound like fun for the customers, for your employees and for your investors as well. The fun component enhances saleability of the concept.

I love the term - 'Differentiate of die', it brings into sharp focus the job ahead of us all in business and in life.


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