4 factors that give online brands an edge

(Published August 9, 2011)

When I was a young Marine learning my trade at The Basic School in Quantico, Virginia, I had the great fortune to be lectured on battle tactics by Medal of Honor winner Colonel Wesley L. Fox.

Concerning the attack, Col. Fox advised, “Lieutenant, pick the ground on which you want to have your fight…On some ground you almost cannot lose; on some ground you cannot win.”

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When online retailers take on their offline competitors, they should keep the Colonel’s caution in mind. From an aggregate perspective, it may seem that e-commerce is a losing battle. After all, while nearly 80 percent of Americans use the Internet, less than 5 percent of retail sales are conducted online today. Apparently, U.S. consumers still prefer to shop in stores.

But success isn’t just about choosing your battles. To win, you must choose the right battlefield. E-tailing victories aren’t evenly spread across the landscape. When online retailers choose good ground on which to fight, they can dominate offline rivals.

Four arenas in particular give the advantage to online brands:

1. Hard-to-find products and services

Hard-to-find products and services are a natural for the Internet because, except in the largest cities, there is no retail competition. Not only do you avoid pricing pressure, but your marketing message doesn’t have to compete; you may even be able to exert buying power on your suppliers.

What does a campaign in this arena look like? Check out Etsy.com, a fantastic place to buy handmade art and jewelry from craftspeople around the globes. Good luck locating any of the items on Etsy at Tiffany, Nordstrom, or Target. Offline retailers can’t compete on hard-to-find products like handmade goods.

2. Low prices

Amazon used to call itself “Earth’s Largest Bookstore,” but long before it could claim to be the largest, Amazon was the cheapest. When the company launched, its value proposition was “30% less” than your book store. Today, bestselling books on Amazon are typically 45-50% below the retail price. The company is going gangbusters, while Borders is in bankruptcy.

Low price is a natural for online brands because customers expect that online sellers should be cheaper than traditional retailers. Online retailers that meet that expectation have flourished with a wide range of offerings—from 29 cent logo pens at my company, Branders, to $5,000 diamond rings from BlueNile.

3. Complete selection

Say you’re looking for an office headset. You’ll be glad to find Headsets.com, an online retailer that sells headsets of all kinds, maybe every kind. Sure, you can find headsets at your neighborhood Staples or Office Depot—but their selection can’t compare with a single-minded seller like Headsets.com.

“Complete selection” brands like Headsets.com get a second boost from consumers, because shoppers equate the brand’s focus and fuller selection with product expertise. Whose sales reps do you think know more about headsets – Staples’ or Headsets.com’s?

4. Perishable information

Successful online stock brokers like Schwab depend in large part on the rapidly changing nature of the information used to make a purchase or sell decision. When up-to-the-minute information is essential, online providers have the upper hand.

The most successful online brands throw down the gauntlet in more than one of these arenas. Companies like Expedia, Orbitz, and Travelocity, for example, are attacking offline competitors in all four: They offer a hard-to-find service—airline comparison shopping; they enable customers to find the lowest price; they bring together a seemingly complete selection of all available flights that meet the traveler’s criteria; and they leverage the need to get the most current information for this kind of purchase decision.

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Their impact? Traditional travel agents are being driven to extinction. Today, more than 80 percent of all U.S. ticket sales are transacted online.

Internet retailers can do very well when they pick their battlefields carefully. Good ground will allow good ideas to take root, and good online brands to triumph.

Source: Business Insider

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