How to Compete With the Big Guns
For those who still don’t think the Internet is a winner takes all ecosystem, David Solomon suggests you look at Amazon, Or Zappos. Or Newegg.
As he noted at last week’s New England Mail Order Association conference in Boston, Internet Retailer reports that the top 500 sites account for a whopping 69.1% of all online sales. And the top 100 dominate 55.3% of retail.
Now, that doesn’t mean everyone else should roll up their virtual sidewalks and weep quietly, said Solomon, head of the specialty retail and direct marketing group at Lazard Asset Management. But you do need to be a smart marketer.
For one thing, you can’t compete with the big guns on all levels. “Try to compete with Amazon on price and you will fail,” said Solomon.
Solomon suggested marketers need to stop looking at target gross margins and markups as the only way to set price. Pricing, he said, should reflect market value, not cost. Price sensitive items are tied to competitor prices, and hard to find or exclusive products should be priced more competitively.
The value package—essentially the “wrapping” around your brand—is a key way to keep ahead of the competition. This, he noted, includes
• Keeping your merchandising point of view distinctive
• Offering service and convenience
• Product election
• Encouraging customer interaction and feedback
• A wealth of content customers can research on your site
• Creating a community
Regarding the latter, Solomon encouraged participation in social media. Approximately 40% of buying decisions are made after Internet research, regardless of the ultimate channel the purchase is made in, he noted. Marketers need to make their presence felt.
“Everybody is talking, so give them something to talk about,” he said, urging marketers to focus more on the message and less on the medium. Being on Facebook is not as important as driving the conversation.
There are many e-commerce sites that are doing a great job of this, he said, pointing to TwoPeasInABucket.com as an example.
Solomon encouraged catalogers at NEMOA to embrace change. “Ten years from now, you will be circulating less. Accept it.”
