The ecommerce business model you need, to dominate your niche

Over the past few months, we've been talking to a whole bunch of smart folks from different sides of the ecommerce industry.

We've been asking them about the future of ecommerce marketing.

There's been some juicy ideas tabled.

I'm working on bringing them together into 1 neatly packaged report to help you refocus on the big picture.

You'll see it real soon.

Some really interesting insights have come out of it, and I wanted to explore some of the ideas and assertions our ecommerce afficianados have come up with. 

Today is the first of a few in depth articles I've put together, separate to the report.

Here's 1 of the questions we posed:

What is the biggest opportunity for online retailers looking to dominate their niche?

Ecommerce Report Contributor Zac CumminsAnd here's a particularly lightbulb-moment-inducing response we got from Zac Martin, Head Digital Strategist at Cummins&Partners.

Establish a business model and brand that adds value beyond price, through service, convenience, education, etc.”

 

I know what you’re thinking…

Thanks Scoop.

Of course, differentiation beyond price is a smart way to dominate your niche.

That’s as true for online retailers as it is for any other business. Tell us something new.

This seems like one of those bland-as-skim-milk responses you see trotted out by another generic marketing firm looking to turn a fence sitting prediction into a ground breaking must-click revelation.

It’s not! I Promise!

There’s some fresh wisdom here. Delve deeper into Zac’s statement and you’ll be able to join the dots on a new trend in ecommerce that you can't afford to miss. I’ll analyse this one in detail, to help you stay ahead of that rapidly increasing pack of online retail competitors, forever chasing your tail to grasp ecommerce glory...

 

Your ecommerce business model might be your best way to differentiate

That ‘added value’ Zac mentioned - if you want to truly dominate your ecommerce niche, you need to build that added value into the business model itself.

More and more successful online retailers are using this approach to fast track their growth and futureproof their business.

This new swathe of ecommerce success stories have changed the way their industry works. The way they do business is the reason they’ve sucked up market leadership in the blink of an eye.

Let’s explore the 3 sources of differentiation (service, convenience, and education) that Zac has flagged, with some specific ecommerce marketing strategies used by the leaders of the new retail pack. This will show you how to use the innovations available to us with the advent of ecommerce to build an advantage into your business model.

Adding value through service

Adding value through ecommerce customer service
Trunk Club sell clothes to men online.

But, they aren’t exactly comparable to Ralph Lauren or The Iconic or Target.

They don’t just offer better customer service than these brands.

Their whole business is based on their service value add.

Trunk Club have revolutionised the way men buy clothes online. They’ve done it with new technology, a customer-focused strategy, and an innovative business model. As a result, they’ve created their own new niche, and although there’s some competition popping up, they are dominating.

Because their proposition is so much better, customers will pay a bunch more for the value their service adds.

If you’ve never heard of them, get yourself acquainted.

 

 

Trunk Club is a personalised shopping service. These guys assign each new customer a stylist, who uses your answers from a style questionnaire to curate a personalised box of clothes, which is delivered to your door.

Sizes, brands, styles, colours and fabrics are selected for you by your stylist based on your answers to a style questionnaire and an algorithm that pairs your preferences with data from other similar customers. Whatever you don’t like, you can send straight back in a supplied reply paid package.

Subsequent selections are refined based on your feedback, so your stylist gets to know what you like with every new trunk that lands on your doorstep.

Do you think Trunk Club dominate their niche based on their price?

Oh no, this one’s not for the online bargain hunters. Trunk Club customers pay a premium for the added value this new service offers.

Trunk Club Subscription model

Why?

Men don’t want to go to the shops. Many don’t know how to find, and select great looking clothes. They aren’t sure how to put an outfit together that works. Of course they’d pay a little extra for a pro to do all this stuff for them on a regular basis. That’s one annoying problem gone from these guys’ lives.

Trunk Club’s ecommerce business model is built on their value adding service.

Plenty of clothing retailers are trying to carve out a niche to avoid the price war. Sure, a unique range, a strong brand belief, or a striking aesthetic might set you apart from the huge online crowd. But these advantages are incremental, often fleeting, and hard to sustain.

Trunk Club have turned their market on its head with a customer-first approach.

As this article from Power Retail suggests, people will pay more, and remain loyal to those ecommerce brands that can provide best in class customer service.

Here's a snapshot from a recent Consumer Study from IBM Australia, titled, ‘Shoppers Disrupted: Retailing Through the Noise’.
Importance of ecommerce customer service

The Customer Service Ecommerce Business Model

If you want to dominate your niche and fast track your ecommerce company’s growth, take a hard look at the way you service your customer.

Can you do it better?

How can you combine new technologies with human know-how?

How can you build best in class customer service into your business model?

How can you create a customer experience that is head and shoulders above the rest?

If you can find an answer, you can futureproof your ecommerce business, seize market leadership, and dominate your niche.

Adding value through convenience

Adding value through ecommerce convenience
Dollar Shave Club are another ecommerce innovator that have stumbled into a revolutionary online retail business model developed in direct response to the general male aversion to shopping.

Like Trunk Club, the Founder of Dollar Shave Club, Michael Dubin, knew that blokes hate having to go to the store to buy stuff. They’d rather be doing pretty much anything that doesn’t involve finding a carpark, trudging into a shopping centre, lining up in a queue, and having to make seemingly complex but unimportant purchasing decisions.

Here is said phenomenon expressed in song (warning: there's a couple of naughty words, but it's a right laugh).

 

 

Clothes are one thing. Regular consumables are quite another. Men only have to go shopping for a shirt every once in a while. But toothpaste, toilet paper, detergent… that stuff runs out. You can just keep it while it’s old and tattered, constantly reminding you to replace it.

Men can’t organise themselves to replenish such banal items before their supply is exhausted. Post-it lists, calendar notifications and nagging partners don’t quite solve the problem. The frustration, the irritation – it’s still there.

Enter the internet, ecommerce, and Dollar Shave Club.

Surely, buying something like a disposable razor should be simple. There had to be an easier way. There was, and DSC worked it out, to the pleasure of millions of unorganised, convenience-seeking men.

I'll let Michael and a giant bear explain...

 

 

We can buy razors online. We can get blades sent direct to our door. We have a vague idea how often we need new ones. We know computers can automate things.

Bonanza. The subscription razor business was born.

You can pick your razor, pick your blades, and pick your frequency. When you enter your credit card details, you get yourself 5 new blades automatically delivered to your door on a regular basis. No more frantic early morning emergency-razor-buying trips to the store. There’s 1 less errand you have to worry about in your life.

The Dollar Shave Club Ecommerce Business Model

Men are more than happy to pay for this convenience. Dollar Shave Club are more than happy to take your dollars once a month.

What a simple, low maintenance, and customer friendly way to develop loyal, repeat customers.

Imagine knowing exactly how many products you had to send out in any given month. Inventory management is simpler, revenue is relatively constant, and your focus is on delivering excellent service and retaining your customers after sign up. There’s next to no need for ongoing discounts and sales promotions to existing customers. You don’t need to persuade customers to keep buying. You just need to make sure they don’t want to cancel.

The subscription box ecommerce model has hit the online retail mainstream in the few years since Dollar Shave Club burst onto the scene. CEO and Founder of Carnivore Club, Tim Ray, provides some fascinating insights on this trend in his op-ed for PSFK.com.

Plenty of ecommerce innovators are trying to replicate DSC’s success. But it’s proving harder than expected. This great clip from specialist SaaS provider Zuora demonstrates the opportunities, and the challenges and dangers of making subscription commerce work.

 

 

The growth many pundits expected in this area hasn’t quite transpired. Perhaps, the magic in the subscription commerce business model is best viewed from the customers’ perspective. Instead of looking at the benefits of regular, measurable revenue and effective inventory control, think about what the person opening the box wants.

The subscription commerce brands that have achieved sustained, ongoing growth are those that have built a convenience value add into their business model. The regular doorway drop is something that customers are genuinely thankful for.

Another unorganised-dude-problem-solver, Manpacks, show you that the magic lies in the helpfulness, not the format.

 

The Convenience Ecommerce Business Model

Convenience is the secret to DSC’s success.

They made their customer’s lives easier. They built helpfulness into the model of their business, and regular subscription just happened to be the best way to do it. Dollar Shave Club added value with convenience. That’s why men are happy to keep paying DSC once a month instead of hunting for a cut-price special in the cosmetics aisle of their supermarket.

Dollar Shave Club has something that Gillette and Schick just can’t match.

Can you say that about your industry’s traditional market leaders?

Think about the possibilities that online retail and new technologies can deliver. Work out how you can revolutionise the way people buy your stuff. If you can make it easier for your customers, you can be the next ecommerce success story.

Adding value through education

Adding value through education
Goulet Pens are the little niche ecommerce company that could.

They did it by becoming the undisputed authority source in their industry, with a business model built on educational resources that add value for their customers.

If you want info about anything pen or ink related, chances are you'll end up coming across some Goulet Pens content.

Goulet Pens educational content

Any self-respecting marketer understands the importance of customer service and convenience to their target market. We get it. If we do either of these things better than our competitors, we’ll have a good chance of making more sales.

Interesting then, that Zac included education as a value-add that sits alongside customer service and convenience as a potential ecommerce game changer.

  • Can education really help you differentiate from your competition?
  • Do people really want to be educated by a retailer?
  • Would someone pay more from a company that helped them learn more than the rest?

Goulet Pens are proof of the affirmative.

If you can become the go-to educational resource for your target audience, you have yourself a competitive advantage.

Providing educational and helpful information has never been more important for a retailer. With the advent of online commerce, Google and social media, we have a virtual library of information sitting in our pocket, forever waiting to be explored.

This online marketplace thing is just a small part of the internet. There’s a whole other section that allows your customers to research and learn for hours, days, months before they make a purchase. There’s an expectation that you will provide as much helpful information as possible for your potential customers. This helps to establish your authority and develop trust in your brand. If your competitor is doing it better, watch out.

Goulet have a niche market. Fountain pens and inks aren’t sitting next to the Snickers bars and Women’s Day magazine on the impulse buy checkout shelf. But the people that are interested in old school pens have obsessive passion levels, with an insatiable knowledge for information about their writing instruments. They want to know everything there is to know.

Just take one look at this product review vid from Founder and CEO, Brian Goulet. You'll get a feel for how serious these folks are about their writing sticks...

 

 

Goulet understood this audience. Fountain pens and inks are not simple commodity products. The purchase decision is not a simple one.

Anyone setting out to buy wants to know why one brand or model is different or better to another.

  • Why use a Faber Castell Loom over a Noodlers Acrylic Flex?
  • What’s the best all round ink?
  • How will a brush pen work compared to a rollerball?

If you can be there to answer all of those questions with helpful and detailed information, the potential customers begins to see you as an authority source on the subject.

By providing interesting, entertaining and helpful content for your target audience, you are delivering genuine value. Your readers notice. They’ll thank you for it. When they decide to buy, they’ll buy from you.

Goulet’s content marketing program is the primary asset of the business. They clearly outline this within their Content Mission to

“provide product education with a bit of entertainment to bring together pen enthusiasts from around the world to share in a common passion”

 

4 posts a week for 4 years of consistently amazing content makes sure Google sends its love, and new potential customers keep flooding through streams of archived articles. Simple, cheap and hyper-targeted videos keep their pen-nutter fans highly engaged (1 clip showing how a fountain pen works has a over 80,000 views alone).

Goulet’s weekly Q&A videos are also a thing of content marketing legend. Pens and inks don’t lend themselves to social media virality, but Goulet knew their passionate audience would be keen to get involved and contribute to their community. These 1 hour clips are sooo detailed that Goulet have even started a miniature version they have dubbed 'Q&A Slices'.

 

 

We penned (pun intended) an entire article dedicated to this ecommerce user generated content success story. You should read it.

There's a huge benefit to the education-first ecommerce business model.

Instead of being drawn into a bottom of the funnel fight for your potential customer’s click, Goulet Pens have already established themselves as the trusted choice. No need to focus on CRO, PPC, or spammy promotional emails. Goulet just work on providing the best possible educational experience for their industry, to build loyalty with potential customers before they buy.

It's a comparatively cheap way to dominate your niche and fast track your growth in a sustainable way.

The Education Ecommerce Business Model

Education is a genuine value-add for your customers.

If you can build this into your ecommerce business model, you can build a strong core of loyal customers.

To develop a legitimate best in class resource, you'll need structure your business differently. Regular creation and promotion of quality content is difficult. You'll need to develop a replicable content marketing process and infuse it as a function within your business.

That's why it's such a strong advantage if you can pull it off. Your competitors can't just overtake you overnight. Trying to oustrip the number 1 ecommerce educator requires lots of time, money and structured business process.

Become the go-to educational resource for your target audience, and you establish a loyal-customer-generating business asset that your competitors just can’t match.

So get started on building customer education into your business model now, and you'll have a sizable head start on the content marketing stampede that's about to hit your ecommerce niche.

Education is an ecommerce marketing asset

Developing a winning ecommerce business model is not as easy as it sounds

This ecommerce domination stuff doesn't come easy.

If you want to burst out on your own into uncharted waters, you can't just dip your toe in. You need to take the plunge to make it happen.

If you're serious about it, you're all-in.

 

 

Customer service, convenience, education - these propositions aren't something you can half commit to.

Your business needs to be synonymous with one of these 3 areas if you're to use this approach to succeed. The value-add needs to be at the very core of your business.

There's no textbook that's been written here, no formulaic gameplan or cookie-cutter method.

You just need to look at your niche market from the customer's perspective and work out how you can redefine their experience for the better.

Use a value-add of service, convenience, or education to fundamentally improve the way people can buy your product. Incremental improvements won't change the game. Technology isn't the answer. A superior user interface is just a step change.

You need to use everything at your disposal to find a way to craft an ecommerce business model that helps your customers more than anyone else.

Think big. Go hard. Commit long.

It's an exciting time to be an online retailer.

Go and change your customer's world.


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Author

James Dillon

James tells stories for a living. Sometimes they are true. Always they are crafted to help brands delight, educate and funny-bone-tickle their audiences into coming back for more. He’s super passionate (read: obsessive) about ecommerce content marketing. James is dedicated to teaching ecommerce brands how to create their own repeat-customer-generating media empire. Keep an eye out for his online ramblings - you can expect a generous helping of lightbulb moments and cheeky guffaws.
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