So, you’d like to launch an e-commerce business. Wise choice! Despite the rapid growth of online retail, consumer demand remains high. Online shopping is the new normal, and with a potentially global customer base, there is plenty of potential to grow.
However, high competition is always a problem, and stores that take a copycat approach often fall behind. If you’ve ever seen an online store that seems like a knock-off brand, you probably passed it over. It can be difficult to be unique. Avoid falling into that same trap by creating an online store that ties into your ideal customers’ desires. Here’s how.
Step 1. Choose Your Business Model
Any retail business falls into one of three categories:
- Business-to-Business (B2B) retailers sell products to other businesses, including wholesalers and other retailers.
- Business-to-Consumer (B2C) stores sell directly to customers.
- Direct-to-Consumer (D2C) is similar to B2C but generally represents a single brand that is marketed directly to customers.
In the world of online commerce, there’s also the option to create a dropshipping business. In this model, you essentially curate your products and allow a third party to fulfill orders.
Step 2. Know Your Niche
Your biggest mistake is to aim to be the next Amazon. “Kitchen-sink” retailers struggle to compete with better-known brands. The key is to target a well-defined niche that gives you a competitive edge. (Remember, even Amazon started as a niche retailer!)
For example, online beauty stores are among the most popular types of e-commerce retailers. You can start gaining your competitive edge by tailoring your inventory to a particular consumer preference, such as eco-friendly brands, or to an industry subset, e.g. beauty tech or textured hair care. Some industry segments, such as stage makeup, may be niche by nature.
Your niche also reflects your target market and selling style. Are you appealing to budget-conscious buyers or offering high-end products in an online boutique? Is your store geared toward impulse buys or do you offer a monthly subscription or customized product package?
To answer these questions, do some market research. You can find valuable insights using tools such as Google Trends or simply by browsing social media on your industry’s relevant topics.
Tip: Look for pain points, such as “I wish I could find more cruelty-free eye makeup” or “none of the big makeup brands have the right foundation shade for me.”
Step 3. Analyze Your Competitors
Even the most niche retailer has competitors. Your task is to find your key differentiators, i.e. the characteristics that will make you more appealing to your ideal customers.
Niching down your brand will narrow the pool. Next, look at similar businesses. There are two types of competitors:
Direct competitors are the businesses that are also marketing to your target customers with similar offerings. For example, Birchbox and Ipsy are direct competitors. They are both beauty e-commerce stores using a B2C subscription model.
Indirect competitors are businesses that (a) market similar yet distinct products or services to your target audience and/or (b) use a different model to solve that audience’s core problems. For example, Sephora is an indirect competitor to Ipsy, because while both offer high-end cosmetics, Sephora uses a B2C model that emphasizes exclusive products.
Evaluate which niches your competitors are dominating, then look for the industry gaps. Could you solve one of your audience’s problems more efficiently? Is there a buying experience or product selection that would be more enticing?
Once you know how your store can stand out, it’s much easier to develop your overall branding approach.
Step 4. Develop Your Value Proposition
Next, develop your value proposition, which is a concise, compelling statement of what you provide your audience and why it’s important to them.
We won’t focus on all the various branding and marketing tasks in this blog. It suffices to say that your store’s value proposition should drive everything else. You will immediately become more memorable — and competitive — by doing what 90 percent of online retailers don’t: focusing on the value you deliver rather than the sales you want to make.
Consumers can tell when a brand is just out for their money or doesn’t care about the customers’ experience. Common red flags include insincere advertising copy, a poorly designed website, gimmicky ads, keyword-stuffed product descriptions, and so on.
It’s no longer enough to get your products in front of your audience. You must (a) demonstrate that you can solve their problem and (b) gain their trust. The most successful online retailers have a streamlined UX (User Experience), personalized marketing campaigns, and — most of all — a great reputation. That’s what your brand is, in the end: your reputation.
Spend time refining your value proposition. If done well, it will guide everything else, from the products you sell to how your website is designed to what types of promos you’ll run. Most importantly, it gives you clarity as you authentically communicate with your customers. They will notice that — and be more likely to stick around.
As new e-commerce sites come online every day, it’s ever more important to focus on the value you provide to customers. Part of that value happens when you choose a niche that’s primed for new business. Part of it happens when you determine how you’ll uniquely solve your target audience’s problems. Most of all, you’ll create value by focusing on your customers’ needs and making them feel like special members of your brand’s community. That’s something that mega-retailers such as Amazon struggle to achieve — but you can!