Why e commerce competition is extremely intense

Do they have a way of getting merchandise to customers who live in hard-to-access places , like urban apartment or condominium buildings? This latter point is becoming an important issue to consider, as cities struggle to balance traffic and limited parking against increased e-commerce delivery truck traffic in residential zones. Some businesses are pursuing the concept of centrally located pick-up centers to get their goods as close to their hard-to-deliver-to customers as possible.

Returns are an increasingly important aspect of e-commerce business. How do your competitors handle returns? Just as it is with initial sales, a growing number of customers expect free shipping for returns. And in those hard-to-deliver urban areas, how is your competitor handling returns? Do they have a simple and convenient system in place? Likewise, do they offer a way for customers to pay in cash? As the Wall Street Journal reported recently , there's a surprisingly large number of people who prefer to pay in cash.

Cash sales can be tricky — they require a brick-and-mortar presence. The big retailers, like Home Depot, have been experiencing an interesting phenomenon in their e-commerce sales. Can your competitors offer same-day pick-up?

Such a system requires a brick-and-mortar solution where customers can get their goods, which can be an expensive proposition for businesses that don't want to invest heavily in a network of retail stores. This isn't an easy process. It'll take time, and it may even take a few rounds of trial-and-error. Run test batches of your product to ensure that the quality and price are what you want. Trade magazines may give you a head start if you're just starting your search for the perfect supply chain partners.

The best supply chain isn't necessarily the cheapest source. If you choose the cheapest wholesaler or distributor, you may end up compromising on quality or reliability. If you're trying to create a budget product, you may be looking for a cheap option, but ensure that the product actually functions as you intend. Low costs could attract customers, but poor quality products will ensure they don't come back. Many e-commerce professionals make the mistake of thinking too narrowly while striving to crush the competition with better sales.

Having better sales isn't only about selling more product for better prices, it's also about better meeting the customer's needs and desires. When you fulfill the customer's needs, you have the possibility of driving more sales through return customers. This crucial aspect of e-commerce is too often overlooked. Keep the big picture in mind as you work on this goal. With better sales, you have more money to drive the operations, but sales alone won't fix underlying issues with the business.

For example, if your operations have inefficiencies in purchasing, then more money from more sales—which leads to more purchasing—will only increase the size of your inefficiencies. Shoring up any cash leaks is equally as important, if not more so, than pursuing better sales.

Some e-commerce businesses excel in customer service as a way of separating themselves from the competition. You cannot crush the competition by solely focusing on customer service, but you can give yourself a significant advantage by bolstering this aspect of your business. Better customer service means happier customers, and happy customers give businesses two major advantages: stronger word-of-mouth advertising and customer loyalty.

Word-of-mouth is extremely effective, especially since it's free. The fact that customers aren't getting paid for it also helps the promotion come across as more genuine than an ad would. The customer genuinely wanted to share their experience, and the people they share it with have a good chance of checking out your site.

Loyal customers will also be key to establishing yourself. Repeat customers, and their steady cash flow into your business, will help you grow.

Incentive programs help shape the customer's behavior and drive them to your desired action. You give them a positive reward for their action, so they feel like they have gained some value in return for giving you their business.

It is a form of a value-exchange game. If volume is large enough, prices can be reduced by 40 percent or more. Customer service. Such service can be an extremely important competitive factor. Barriers to entry are reduced. Setting up a website is relatively easy, fast, and inexpensive, and doing so reduces the need for a sales force and brick-and-mortar stores. Therefore, it is easy to start an online business. However, companies must view this as both a threat e.

Virtual partnerships multiply. With easy access to the Web and the ability to share production and sales information easily, the ability of a firm to create a virtual partnership to exploit an EC opportunity increases dramatically. Market niches abound. The market-niche strategy is as old as the study of competitive advantage. What has changed is that without the limits imposed by physical storefronts, the number of business opportunities is as large as the Web.

The challenge strategists face is to discover and reap the benefits from profitable niches before the competition does so. Differentiation involves providing a product or service that is not available elsewhere. For example, Amazon.