Alex Rampell wrote a story yesterday on TechCrunch that said exactly what I’ve always thought in the article “Say Goodbye to the Long Tail Of Product Sellers: At Least on the Internet” If you want to be a reseller you’re in for a tough ride. The only way you have a chance to compete against the Amazons is if your product doesn’t become “hot”. Once your niche becomes valuable enough for them to get into ,they will out price you right out of business. In order to compete you have to do the following.
1. Cultivate a better shopping experience. You know what a better shopping experience is. It’s exactly the opposite of a mini site. Zappos is considered the best shopping experience for shoes. Blue Nile for diamonds. Become the best experience in your industry. A wonderful flow and display of your product that caters to your type of clientele can trump pricing if done properly.
2. Distribute your own products. Want to know how to beat Amazon on price?. Only one way. Make your own product. Product manufacturers are usually not very well versed in Internet commerce but they have a competitive advantage over every single one of their competitors and need to take advantage. This has always been my plan. Nobody in the nation can compete with me when it comes to selling plants. No middle man and it’s a business model that is very scalable. I just keep building greenhouses.
3. Have something proprietary over the other people reselling the same products to make it more than just buy and move on. You better have something to add to the buyer’s purchase besides just the commodity item. A reason for them to come back. A calculator, a text reminder about important dates, something that makes buying the product more of an ongoing experience. Rampell used Diapers.com as a good example of someone taking a commodity item and “out Amazoning” Amazon. Of course Amazon knew it and just bought them.
4. Don’t be a reseller, be a marketplace. Bringing niche buyers and sellers together has been a strong business model. Sites like Etsy, Ebay, Elance organize the transaction rather than sell products. I look at it like owning the mall and it’s buildings rather than the store within the mall.
I think Alex did a fantastic job pointing out the increasing transparency of pricing and the difficulties of our products becoming commodities. In today’s business climate you have to combat that in a variety of ways, but each year it becomes more difficult as the big boys now are providing both service AND the best prices. Fortunately for me I am both the manufacturer AND seller and will always be able to compete in price. Another advantage I have is my product is perishable. It takes experience and direct delivery from the grower to get the product to the end user alive. There’s no bulk storage in a giant warehouse. Advantages for which I am thankful as margins and prices drop to all time lows.