How e-commerce Davids can battle Goliaths

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With online retail giants like Amazon continuing to disrupt the e-commerce ecosystem and squeezing smaller sellers everywhere, how can those smaller retailers remain competitive? The sheer massive reach and scale of the Amazons of the world and their focus on growth over profits give them an advantage that small businesses just can’t compete with. Or can they?

With the right focus and strategy, they can battle the Goliaths. By selling with a deeper purpose, creating or offering unique products, personalizing the customer experience and making purchasing as easy as possible, SMBs can survive — and even thrive — in the face of intense competition from online behemoths.

A Deeper Purpose

Brands that resonate with customers’ core values find it much easier to carve out a market niche and loyal following that bigger sellers can only envy. Rosie Hippo, which sells high quality eco-friendly wooden toys manufactured under fair working conditions, gives back to the community by donating a portion of its profits to various charities, organizations and causes. TOMS Marketplace has built a loyal global following, both for its stylish footwear and for an innovative program in which the company donates a pair of shoes to a needy child for every pair sold.

Standing Out in the Crowd

Plenty of small online retailers have carved out niches for themselves by specializing in unique products not offered by the giants like Amazon. Brian Deer, owner of the online sports memorabilia store Collecting Concepts, explained that specialization has effectively neutralized Amazon’s advantage.

“What we sell is so unique that big sites like Amazon actually can’t compete with us.” said Deer. “We don’t sell commodity-type goods, we sell unique collectible items.”

Sonics Online, which sells ultrasonic cleaning equipment and accessories, focuses exclusively on marketing its products to customers in the jewelry and industrial sectors. Although many of its products are more expensive than they are on Amazon, the company’s website is brimming with valuable product information, including detailed specifications. Niche customers value this highly specialized approach.

“By becoming a true niche expert – and successfully conveying that through your e-commerce store – you’ll be much better equipped to compete against Amazon without having to rely on razor-thin pricing,” writes eCommerceFuel’s Andrew Youderian.

Personalize for Success

Smaller brands must strive to reach customers on a personal level in order to stand out from the impersonal giants. This requires a human touch that goes beyond data collection and analytics.

“[Personalization] means not only trying to reach visitors during holidays, sales or promotions, but building a bridge with them throughout the year,” asserts Alex Becker, global vice president and general manager of branded manufacturers for e-commerce and marketing firm Digital River.

“Businesses might send you birthday cards, updates or notifications,” Becker said in an interview. “Any way to try to bridge that connection so that there’s more brand affinity and constant connection between consumer and retailer or brand.

“If you use personalized messages in your communications it actually has a much higher adoption rate, allowing people to take action,” added Becker. “So each time you personalize your communications it’s certainly going to have a better effect.”

Each customer is different and needs to be catered to in a specific fashion, writes Jack Lowinger, founder and CEO of the collaborative shopping platform Cartonomy. “The first step to a successful transaction is paying close attention to the shopper, and then figuring out what products he or she needs. Many e-commerce sites do the opposite, where they focus on the product line over the customer and, as a result, are unable to build a loyal customer base.”

Easy Does It

Online retailers should also aim to make purchasing products from their websites as simple and seamless as possible, keeping in mind that many site visitors seeking information and conducting research often end up making purchases.

“We’ve seen that as high as 80 percent of consumers who will ultimately buy a product in a given category will visit a manufacturer’s site before they make their purchase,” said Becker. “Based on a lot of that traffic, some of them might be there to do research or to learn more about the product category, but some of them are definitely there with the intent to purchase.”

“I think one of the questions that manufacturers and retailers want to look at is how to make it as easy as possible for visitors to their site to transact that order,” he added.

How to do that? Streamline the checkout process by minimizing the number of clicks between shopping cart and checkout. Also, leave proprietary account registration details until after purchases are completed.

Smaller online retailers who follow these four steps have more than a fighting chance at success in the age of the dominance of giants like Amazon. The underdog can triumph by offering deeper purpose, carving out a unique market niche, employing a personal approach and making the customer experience as seamless as possible.

Flickr photo via Creative Commons

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