Being aggressive and taking calculated risk is undoubtedly the safest way to ensure above average performance in the growing online retail industry.
The urgency of this post is geared towards retailers that compete largely on price. These retailers can't afford to sit still while players like Amazon and IT-driven marketplace sellers squeeze profits out of a growing universe of product categories. You need to have the most efficient operation or you're a sitting duck. How do small retailers achieve the level of operational efficiency necessary to compete successfully and take market share from weaker marketplace sellers? The answer to this question is presented below.
- Automate ruthlessly: take an honest look at how your online retail business operates. How are employees spending their time? How are new products selected and listed? How are orders imported, picked, packed, shipped, and updated on the sales channel?
- Move first, move fast, leverage powerful players: what channels are you selling on? What payment options are you accepting? How do you embrace innovation? How aware of and responsive to the actions and implicit strategies of giants including Amazon, eBay and Google are you?
- Control your destiny: don't get caught in a race to the bottom. Carve out your niche, establish competitive advantages (exclusive relations with suppliers, volume-based incentives, supply chain efficiencies), launch your own brand.
- Optimize endlessly: collect accurate and actionable data, be honest with yourself, measure key performance metrics (average order value, average margin per order, sales trends per SKU, brand, category), provide your providers (suppliers, IT, logistics) with feedback and ideas and expect them to take action.
- Focus on your strengths: look in the mirror, resources are limited, are you allocating your resources in a manner that makes you most likely to succeed? Partner with service providers that are world class to address your weaknesses.
Retailing in the 21st century is not for the faint of heart. Our industry is remarkably competitive and in order to succeed, you need to be remarkable. At the very least, you need to be remarkably efficient. The purpose of this article is not to scare you, it's to focus you for success.
This post was inspired by the book Purple Cow by Seth Godin.