3 Ways to be Competitive in Online Retail

by Vangie Beal

Predictions for 2013 ecommerce revenues look promising, but you still need an edge to stay competitive and bring in new customers. Here are three expert tips to help your ecommerce business compete.

It's an exciting time for ecommerce: the year is still relatively new, and it's time for business owners to look at what needs to doing to stay ahead of the game for the rest of the year.  

While industry firms like NRF and eMarketer forecast a positive outlook for the year ahead, online retailers do face challenges. Experts say you should expect to see some slow down prior to the holiday selling season, and you should be prepared for a new wave of online shoppers.

One of the big things to understand is that while more people will be shopping online this year, they will be budget-conscious. Many of these new customers will start shopping online because they are looking for low everyday prices, but they will also spend less money per transaction. Small business retailers will also need to compete for another type of consumer: the mobile shopper. Make no mistake; it's extremely important to offer mobile-optimized versions of your website.

Small Business Computing spoke with ecommerce experts to find out what you need to do this year to stay relevant to consumers and one step ahead of your retail competition online. Here's what they had to say.

Be Competitive with Your Mobile Presence

Despite earlier predications mobile didn't mature in 2012 as many had expected, but we're seeing increased mobile traffic today, mainly from smartphones and tablets going to websites.

According to Matthew Winn, marketing communications manager for Volusion, the problem is that small business owners simply don't see conversions happening in mobile, and they don’t view a mobile Web presence as a big priority. "What these small business owners aren't looking at, however, is the increase in mobile device traffic to the website," he said.

The big thing to know about mobile optimization is that it results in a good user experience for customers. Winn said that, typically, consumers may conduct the product research using a mobile device (perhaps on the bus or subway on the commute to and from work), but they complete the transaction using a desktop computer either at home or at work. 

"More and more traffic comes from mobile sources, and it will continue to grow," said Winn. "I recommend that small businesses leverage mobile optimization from within their ecommerce software if it's available, or hire in a third-party so they can give consumers a generally optimized mobile experience."

What's difficult for small online retailers, according to Winn, is that they compete with the Amazons and Best Buys for customers, and this is where having a good mobile presence is critical.

"If you have two shopping options – a small mom-and-pop shop that has the same price as the larger retailer – but you have to fumble around with your thumbs or make three extra clicks on the small business site, it's easier for the customer to abandon the site and shop elsewhere," said Winn.

Winn said a mobile presence is a must-have to be competitive in online retail, but you don't need the most amazing mobile presence in all of Web development. "Small businesses with the mobile basics in place are moving in the right direction," he said.

You Need a Competitive Pricing Strategy

When it comes to your online retail competition, there are a few things you need to know, according to a recent blog post by Upstream Commerce's Chief Marketing Officer, Gilon Miller. Some of those things include knowing what your competitors are doing, meeting consumer demand for bargain prices, stocking the right inventory and using analytics to adjust your pricing and merchandising strategy to stay on top throughout the year.

In retail intelligence (which includes things like pricing intelligence and product assortment intelligence), automated systems collect data from online retailers and compare it to your own pricing and assortments.

"The fundamental comparison is price, because price is a major factor to compete effectively in retail," says Miller. "But what products you carry compared to your competitors also plays an important role in competing effectively."

While the intelligence systems handle large, in-depth analytics and comparisons, small businesses can learn a lot from retail intelligence. All the trends -- such as consumers becoming smarter about pricing, and mobile price-comparison shopping -- affect pricing.

That's especially true for industries such as consumer electronics, where prices can change every 30 minutes. "If you don't have visibility into what your competitors are doing, you're out of the game," says Miller.

The value isn't in just collecting your competitor's data, it's in analyzing that data to help you make better business decisions regarding pricing, sales and merchandise.  Automated systems can help you adjust prices and order levels on the fly, but many companies still use a manual process to set a competitive pricing strategy.

Online retail business owners who compete with larger retail outfits can benefit from competing on price in Web search and price-comparison shopping engines on specific merchandise. Doing so brings in those budget-minded consumers, and then you can upsell on your higher-profit items and services.

"Retail intelligence is important for online retail businesses," says Miller.  While many retail intelligence suites are designed and priced for larger corporations, it's still a worthwhile investment for the lower to mid-market sized businesses (e.g. those that fall under the $5 to $10 million yearly revenues).  For small mom-and-pop shops, however,  Miller says this type of automated retail intelligence solution might be too costly.

While noting that there are a couple lower-end competitive pricing solutions available for the very small retail businesses, Miller says, "if it's not in your price range today, it's still something that small business retailer should start thinking about."

Offer Competitive Shipping Services and Prices

While branding and packaging are small business marketing trends to know for 2013, Volusion's Winn says that small businesses also need to stay competitive when it comes to setting shipping prices and service levels.

"Amazon is already dabbling in same-day service in major metropolitan areas, but what's really interesting is that some bigger players are trying to follow suit and looking to provide better shipping options for customers," says Winn. "This is putting more pressure on small businesses to compete with better shipping offers."

Winn's advice to small business owners is to "not freak out." He says that right now same-day shipping is still in beta mode and "for right here and now (or at least until the end of the year), consumers will not demand or expect same-day delivery."

One thing that small businesses can do to keep up with the competition is to offer some type of premium shipping.  "Everyone should offer 2-3 day shipping," Winn says.  "A small business can simply make this shipping option more prominent on their website and continue to charge for it."

If, however, you do feel the pressure is on in your specific industry to offer same-day shipping, Winn says small businesses should simply do the best they can. "Offer it in your own major metropolitan area where possible, and offer it at a premium because it's going to cost you a premium to do," he says.

Based in Nova Scotia, Canada, Vangie Beal has been covering small business, electronic commerce and Internet technology for more than a decade. You can tweet with her online @AuroraGG.

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This article was originally published on Monday Mar 4th 2013
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