These are challenging times for small online businesses. With the advent of price-comparison agents and competition between big players like Wal-Mart and Amazon, prices are coming down. Customers want to get their stuff faster, and they'd like free delivery, as well. The growth of big-time e-commerce over the last 12 months has changed the landscape for small business online. Nick tells you what questions to ask, and promises to figure out the answers next week.
If you’re a small business selling stuff online, these are challenging times.
Take a seat, grab a tall drink and let’s think this through. (BTW – there are no answers this week, just questions. We’ll try for some answers next week.)
If you started your online business a year or two back, you’ll have had time, hopefully, to establish a decent base of customers.
Regardless of what you’re selling – garden seeds, homemade jams, rugs, spare parts for pre-1958 John Deere tractors, chocolate recipe books, how-to “success guides” – the last two years should have provided you with a lot of opportunities.
Hopefully, your site has been listed at a half-decent spot on some search engines. Maybe you introduced an affiliate program. Perhaps you purchased some ads in well-targeted newsletters and did the chat-and-give thing in all the right newsgroups and discussion lists.
One way or another, you built your business.
But I don’t think it’s going to be so easy for you over the next year or so.
Take a sip of that drink and let’s look at some of the odds that are building up against you.
With the advent of price-comparison agents and competition between big players like Wal-Mart and Amazon, prices are coming down. And just as in the offline world, consumers love to get a great deal.
However great your relationship with your customers, there’s a limit to how much more they’ll pay just to be loyal.
So if Wal-Mart.com and Amazon.com are offering products similar to your own, some alarm bells should be sounding right about now.
“Ships within 14 days” used to be OK. Not anymore. Customers want to get their stuff faster. Twenty-four hours is good. But if I live in a big city, same day or within an hour sounds even better.
Can you do that?
Oh, and I’d like that delivery free, as well. Take a look at the big sites now offering free delivery – particularly at peak buying, time-sensitive periods like the run-up to Christmas.
What would free delivery do to your bottom line?
The big guys are just raising the bar, wherever you look. Right now, there are over 450 vendors of Customer Relationship Management solutions hawking their wares to every big and medium-sized site that will listen.
That means, hopefully, better service and more relevant offers for their customers.
How does a typical, low-end solution cost of around $40,000 sound to you?
The entire customer/vendor relationship is shifting. Customers are taking control of exactly what they buy, for how much, and from whom.
You think you’re safe from the big boys because your product is different?
Grab some more of that drink because I’m just going to wander over and do a search at eBay.com. I’ll probably find something pretty close to what you’re offering.
And I’ll be able to do some price comparisons as well. I’ll see what folks are bidding and paying and compare that to what you’re charging.
It can’t have escaped your attention that the larger dot-coms are paying huge sums of money to get noticed. There are hundreds of millions of dollars in VC money being spent to win the “attention war.”
In the face of all that noise, how are your own advertising efforts going to capture new customers?
The growth of big-time e-commerce over the last 12 months has changed the landscape for small business online. Whether you like it or not.
Is there an answer?
Sure, there are answers. We can’t let those cash-swilling, Porsche-driving, VC-schmoozing SOBs steal the show.
We’ll figure out some answers next week.
