Competitive Advantage
A competitive advantage is necessary to succeed in the e-commerce world. No doubt you need something unique or different to shine. So, having an outstanding value is the best way to outperform your competitors, obtain larger monetization, and increase the value of the business. In addition, competitive advantage gives you singularity, which is hard to imitate and almost impossible to copy.
That competitive advantage also opens the door to many benefits, including banking and investments. Having an advantage that cannot be easily duplicated is what investors always look for in a business.
In e-commerce, you can have several advantages, such as unique products, unique technologies, experts in specific skills or areas, prices, or a strong business with an established brand. But how can those with a new business achieve a competitive advantage? Here is valuable information that will help you in your quest.
What Is Competitive Advantage?
A competitive advantage is a characteristic that makes a business unique. It can include services, products, technologies, delivery, or any other element that makes your business extraordinarily competitive and unique. Thus, no matter what you choose as an advantage, the importance is to make it so special that it is hard for others to duplicate.
Remember, it is not what you think about your business but the people’s perspective. So, for example, you can consider that your company offers outstanding customer service, but you need to rethink your competitive advantage if the customers think otherwise.
A competitive advantage makes you stand out compared to thousands of similar businesses. It also answers the question; Why should buyers buy from you instead of other businesses?
How does a new small business develop a competitive advantage?
There are many types of competitive advantage: customer service, innovation, trustworthiness, quality, convenience, etc. But to identify yours, you must verify the three main elements you can use to determine your completive advantage.
The first one is benefits. It would help if you were very specific about your product or service’s benefits to the consumer. Find something that includes these two angles:
- Value: is the product or service good enough for the price?
- Satisfaction: does the product or service satisfy the customer’s needs?
So, your first step is knowing your product or service features. Then, be specific and match them with possible needs—for example, a hand vegetable chopper. Features: doesn’t need electricity to work. Need that satisfy; people who love the outdoors can use it without any problem.
The second element of equal importance; is the customer. Who is your customer? Do you know the percentage of the population that is an excellent match for your product? Define your target market (buyer persona). Don’t go doing business without knowing whom you should sell to. Large companies know exactly who their customer is. They focus on them and “pamper” all their needs.
Once you know your customer, it will be more accessible to:
- match features with needs
- do special marketing
- develop special services
- provide unique discounts
You see, the better you know who your buyer is, the faster you can define your competitive advantage.
The third element is your competitors. Competitors are those with businesses like yours and the same target market.
So, to create a competitive advantage, you need to know your target to detail the benefits that are better than your competitors.
How to Make Competitive Advantage Strategies?
First and most important, you need to know the three types of competitive strategy according to Michael Porter’s book Competitive Strategy, 1985: cost leadership, differentiation, and focus.
- Cost leadership: This strategy’s main objective is to grow into the lowest-cost producer. A business can achieve this through many ways like, for example, automation, foreign countries’ production labor hiring, or even large-scale production in foreign countries. The competitive advantage is producing products at the lowest price its competitors have. This strategy is used by places like Walmart, offering lower prices that are hard to duplicate.
- Differentiation Strategy: the main objective is to differentiate your products or services from competitors. It can do it through innovation, high-quality products, services, or any other that makes the product or service different and hard to duplicate. Unique products or services set the bases for premium prices.
- Focus: the main objective of this strategy is to focus on a narrower target market or niche. You can apply this strategy to the differentiation and the cost by marketing or serving a specific niche within those schemes.
What can you do to have your competitive advantage?
- Hire the best talent you can afford or develop a business environment to attract the best professionals (skills) and use it in your marketing strategies.
- Select a target market niche you know best suits your products or services.
- Define your competitive advantage based on the needs of your ideal customer.
- Define your strengths and become an expert.
- Define your Value Proposition and use it as your competitive advantage.
- Integrate new technology to offer better services.
- Offer impeccable delivery timing.
- Offer great prices.
Here are a set of questions that will help you define your competitive advantage:
Why do you start your business?
What are the major problem or problems your business can solve?
What are you knowledgeable about?
What are the best skills of your employees?
What are the best features of your product?
What makes your product or service unique when compared with others similar?
What makes your business unique when compared with other companies?
What does your business have that is very hard for others to duplicate?
How can you improve a process and make it unique for your business?
How is your business unique based on expenses?
How are your offers unique from others?
How relevant is your advantage to your customers?
How can you maintain your competitive advantage through time and technology changes?
Is your competitive advantage patentable or trademarkable?
Which are the technological (or any other) advantages your product, service, or business has over others?
