If you’re in eCommerce, it’s likely you see your product or brand as having a competitive advantage. It’s what sets you apart from the competition – the reason why people should choose your business. Without one, what you actually sell can be often be irrelevant.
But the more eCommerce brands there are in the digital landscape, the higher the stakes for competitive advantages. Which leads us to our next question – in today’s busy market, is your product’s competitive advantage working for you? Is it actually that competitive at all?
As we noted in one of our last blogs, the eCommerce landscape is set to only get more competitive as demand continues post-lockdown. That’s why it’s imperative that brands take stock of their competitive advantages now, and make sure that what they’re offering actually does the best job possible to appeal to their customers’ interests.
Too often, we’re seeing brands devoting precious marketing space to attributes that might once have been perceived as competitive, but are now so commonplace that they don’t actually stand out at all.
This is because today’s consumers are so overwhelmed with choice, competitive advantages are no longer as straightforward as simply claiming your product is better quality full-stop, or that it comes with “good” customer service.
Devising real competitive advantages takes in-depth customer research and strategies that constantly evolve. In this blog, we’ll show you how.
What are competitive advantages and why are they important?
Competitive advantages are simple – they’re an attribute or factor that businesses can use to show customers their product is better, cheaper or more effective than the competition. In essence, they’re what compels customers to buy from you and not someone else.
Since the explosion of online businesses as a result of COVID-19, having a compelling competitive advantage is more critical than ever. This is because customers are becoming more and more desensitised to competitive advantages that once might have been convincing enough for them to buy from you, but that are now seen as more or less standard.
What do we mean by a compelling competitive advantage? Let’s start with some examples that aren’t that competitive anymore:
- Free shipping over X
- Saying you have “low prices”
- Claiming your products are “quality”
- Free returns
- Saying you have “great customer service”
- Good UX
Then, there are those that might still be this side of advantageous, but are working their way toward becoming a standard:
- Offering instalment payment options
Yes, good UX, product quality and great customer service are still desirable, but they’re also more or less a given. When someone buys from you, they expect these things. To say you do this tells your customers nothing about why you’re better.
Free returns and free shipping above a certain purchase point – these are nice too, but they’re so common nowadays, they’re not exactly the stand-out point digital retailers need to cut through the competition.
Because that’s the ultimate goal of a competitive advantage – they’re important because they work to differentiate your product and services from your competitors. If you’re selling a product that’s more or less equal to your competitors and with an equal offer, what will make a customer buy from you and not them?
How can you develop a sustainable and effective competitive advantage?
For decades, Harvard Business School’s Michael Porter wrote the seminal theory on sustainable competitive advantages, breaking it down into four easy sections in which businesses can seek competitive advantages:
- Cost leadership
- Cost focus
- Differentiation leadership
- Differentiation focus
His idea was that if brands can focus on one of these and make it sustainable for their business, they can continue profiting in this way for the long-term.
And while this theory is valid, we’d argue it’s now outdated.
Competitive advantages by their very nature should be transient. Sustainability is ideal, of course, but it’s not always feasible, especially in a world as ever-changing as eCommerce. With this in mind, a strategy that’s flexible and can account for fluctuations in the market and adapt to changing customer needs is far more “sustainable” in the long run.
This brings us to our next point – whether or not the competitive advantage you devise is actually competitive will come down to your customers. Some people might put high value on shipping, but are these the people that are actually buying from you? What do they want?
And more importantly, how do you find this out?
- Customer profiling – Doing in-depth research into who your target customers are can go miles in the way of dictating what competitive advantages you should offer. Create detailed customer profiles that map out who exactly your customers are and what they want – is quality more important to them than price? Or are they specifically looking for the cheapest option? We’ll write a blog on this in the near future, so keep an eye out.
- Customer pain point analysis – What problems are your customers facing and how can your product solve them? Is their main issue accessibility? In this case, a big competitive advantage would be free, fast shipping. Once you know what your customers need most, you can adapt your advantage accordingly. Expect another blog from us on pain point analysis and how to factor it into your marketing and positioning soon.
- Competitor analysis – What are your competitors doing? What’s working from them, and more importantly, what isn’t? What competitive advantages can you offer that’ll differentiate you from what’s on the market?
Above all, it’s important to remember that customers are human beings, and human beings are fickle. We’re constantly re-prioritising, trends change, markets change – and it all affects what we want and how we shop. Your strategy surrounding your competitive advantage will need to adapt accordingly.
How can you create a real competitive advantage?
We’ve outlined what doesn’t constitute as a competitive advantage, but what does?
Let’s go back to the competitive advantages we listed above that are most frequently overdone, and see how a slight adjustment can make them actually advantageous.
“Free shipping over X” becomes “Free shipping on everything”
Mattressman is a great example of a company that goes above and beyond with their shipping offerings. Mattresses aren’t products people will be willing to wait a long time for, especially if something has gone wrong with their existing mattress. They want it quickly, which is likely why Mattressman offers free next-day delivery across mainland UK.
Free shipping isn’t necessarily feasible for all businesses, but depending on your customers’ pain points (i.e. accessibility, like we mentioned above), this could be a huge advantage.
“Good customer service” becomes “24/7 customer service”
Amazon is renowned for their customer service – their goal is to even become the “world’s most customer-centric company,” and it shows. Last year saw the introduction of their automated customer service bots that can fix simple issues, and redirect customers to real service agents when they can’t. For a company that’s this vast, and with so many products, being able to offer quick and easy help to customers is huge.
Not everybody has Amazon’s seemingly limitless customer service capacity, but offering anything above the basic margin of “we’ll help you” in an eCommerce sphere that demands it, puts you in a competitive spot.
Good UX becomes in-person experiences online
With COVID-19 shutting down so many businesses, many brands have had to shift online to stay afloat. This has prompted a number of retailers to start incorporating what would be traditionally in-person experiences into their online space to help customers through their buying journey, as well as stand out in the overcrowded eCommerce landscape.
Sportswear brand lululemon offers free online consultations with their staff, which allows customers to essentially browse through their stock with a personal shopper on-hand. What’s more is, lululemon typically do this through FaceTime, which gives the overall experience a much more personal and easygoing feel.
“Free returns” becomes “Free returns 365 days a year”
IKEA offers what they call their “no-nonsense return policy.” With the exception of mattresses (which have a 90-day exchange policy), customers aren’t restricted on when they need to return their items.
This is particularly crucial for a brand like IKEA, whose customers are theoretically buying what’s perceived as cheaper furniture online. The knowledge that they can return just about any product at any point in the future can offer the peace of mind needed to convince people to buy.
“Good quality” becomes highlighting actual quality differentiation
Made’s trendy branding and marketing already do an exemplary job of communicating that their furniture is high quality, but they go the extra mile to outline exactly why. They detail their relationships with independent designers as well as their commitment to using high-quality materials and outsourcing to experts around the world.
The key here is not just saying that your product is of better quality – it’s giving actual, tangible examples of why this is so. Studies show that most customers buying online start the process with extensive research, so the more you can clearly convey why your product is the best, the better.
Above all, in today’s eCommerce landscape, it’s most important to continue adapting your competitive advantages as the market and your customers’ needs change. What might be seen as competitive today could change tomorrow, so keep your strategy flexible, aware and forward-thinking.
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