In the Land of Giants: How to Beat Big Corporations in the E-commerce Market. As e-commerce becomes more popular, it becomes more and more difficult for small companies to compete with market giants such as Amazon and Alibaba. What are the non-obvious advantages that startups have and how they help them win over large ecom-corporations?
The expansion of e-commerce has brought with it conflicting conclusions for startups. On the one hand, the growth of consumer interest in online commerce increases market capacity and opens new niches for projects. On the other hand, monopolization by large players makes newcomers doubtful.
Unlike traditional businesses, e-commerce (like any IT-fields) scales not so much in quantity as in quality - in other words, the success of a company is not determined by the size of its staff. A simple example: a baker can be an experienced specialist with all the intricacies of making good bread, but he cannot speed up the baking process in terms of physics. And if a company wants to produce more bread, it needs more bakers.
In the IT industry there is no such a clear correlation: sometimes one professional programmer can replace a whole team of average programmers. Thus, in my practice there were cases when one employee could not cope with a task for a week, and another one solved it literally in half an hour. In the technology industry, the winner is not the one who has more staff, but the one who was able to assemble a talented team. And in e-commerce, the bet is on people - people who are capable of generating breakthrough ideas and implementing them.
Yes, as a business grows, it often faces the need to expand its staff to perform operational tasks. But today, many routine things can be automated, outsourced or solved with the help of partners. For example, an online store does not need to build its own logistics network: just find a reliable service provider and integrate his service into your processes, or better yet, connect multiple providers for fault tolerance.
The question may arise here as to how a small project can attract talent who will be passionate about what they do. But in fact, it is the startups that are in a better position - due to their flexibility, self-organization, and lack of bureaucracy, they can become more attractive employers than large corporations.
Among young professionals now there is a very high demand for freedom: people want to work from anywhere in the world on a convenient schedule, to be able to offer their solutions and influence the development of the business. And unlike large companies, which require rigid hierarchy, startups can afford a flexible approach and a flat organizational structure - the turquoise way.
In a turquoise organization, every member of the team is able to influence the success of the business and provide ideas for its development. In a hierarchical company, where staff play the role of cogs, this is virtually impossible: all proposals "from below" require endless meetings and approvals.
This is the reason why many talented employees prefer startups to large corporations, with their freedom of action, creative atmosphere and opportunities to realize their potential.
So a well-built HR-brand is one of the most important factors affecting competitiveness in the battle with the giants.
Another strong point of small projects is a high degree of flexibility, the ability to quickly change approaches and adapt to the demands of the time. Let us remember the infamous Kodak, which was never able to adapt to the changes in the industry. An opposite example - Airbnb, which once offered the market a new model and very accurately guessed its demand.
Of course, Airbnb is a resounding example, but the point is that one day the traditional business models, which now seem immutable, can be knocked off their pedestal by new innovative ideas. That's why you can't be stagnant in your strategy today, and that's especially true in the e-commerce market. Companies need flexibility, the ability to adapt to customer needs, and ideally, to anticipate those needs - in other words, not to follow trends, but to set them themselves.
Of course, this does not mean that every business needs a revolutionary idea that will turn the whole industry upside down - your own concept, which will make you stand out from the crowd, will suffice. In its essence, innovativeness is not complex technology, but the ability to give the consumer a new experience that no one has ever offered before, even in something small.
Instead of a technology race, young ecom startups are better off betting on customer attitudes toward their product and the customer experience. And it is important not just to form an image, far from reality, but to really make consumers loyal brand advocates.
Many people are familiar with the term customer-centricity, which implies that a business turns its face to the customer, but now we need to go further - to listen, to lend a hand and to offer a shoulder, and this can be an important advantage in competition with the giants. Large marketplaces are undoubtedly popular because of their assortment and prices, but now people increasingly demand personal attention and a "live" human approach.
Marketplaces cannot provide this: they work with the masses, and their personalized approach will always remain within the framework of targeted campaigns.
It is much easier for startups to tailor models to the needs of customers and build trusted communications with them. These factors can be decisive for the customer. For example, last year Wunderman Thompson Commerce, as part of its research, asked consumers what would make them choose another company over Amazon. First among the criteria, of course, was low price (68%), but respondents also named convenient shipping (27%), a loyalty program (23%), better product ratings (22%), environmental practices, brand ethics and personalization. So a focus on these components may give startups an edge over large e-commerce.
Overall, the era of marketplace dominance is coming to an end. The first calls are already there: while a few years ago every third project sought to add "marketplace" to its name, today the focus has shifted to creating a unique business. It's a challenge for small and medium-sized organizations to offer consumers a new format that meets their needs, but at the same time is not inferior to the previous one.
One way to meet this challenge is to cooperate with other companies based on a common vision and shared principles. In particular, this method can work when ecom-projects enter Russian regions, where online commerce is still underdeveloped, and therefore market capacity is very high.
Realizing the potential opportunities, large marketplaces have already begun to enter this territory, and they can be counterbalanced by a partner regional network of small and medium-sized companies. Both models can successfully balance each other out, allowing them to avoid distortions in the market structure and eliminate the dictate of the rules of the game by corporations.