for small businesses
Differentiation still is the key
to creating competitive advantage
I have received several emails recently pointing my attention to some extremely important points to consider before a
small business embarks on an ecommerce
adventure. The number one item that almost everyone has pointed out as absolutely critical in any business process, and even more so in e-business, is differentiation. The reason I
also consider it to be important is that small businesses often take pride in personalized attention to their customers' needs. This should not be lost when you also offer an e-business option to your existing or new customers. It is not just important to operate at a certain level of technology; it is equally important that you do not compromise on the values that made you what you
are today. (Related link: Customer service and care)
As we all know, many small businesses cannot
yet claim that they have fully exploited information
technology (IT). They have changed only when they had to
and embraced IT only when it became a 'must-have'. This impacts them in two ways. By not having strong, internal IT resources, they have been slow to embrace technological change. Secondly, they are forced to rely on outside agencies to help them with some of the IT-related projects. While I am a strong advocate of
outsourcing (Related link: Impact of offshoring on American economy), effectively managing your IT provider is still your responsibility. A provider can only know so much about your business and, while this company may have only good intentions for your business, it may still end up providing you with a solution that is no different than what they sold to half-a-dozen of your competitors.
The solutions providers have another interest in selling you a standard product. If you do not know enough
about a new ecommerce or software or any IT solution and also do not want to select a customized product, the only way that you can be served is by using an off-the-shelf software solution that requires minimum tweaking. The outcome is that, while your offering may be significantly superior to your competitors, your e-commerce
venture is unable to convey that message to your
Why is differentiation crucial even in e-business?
First the pressure on you was to develop an online presence (or website) and now it is imperative that you develop an online platform to conduct business. However, very soon everyone will be there, and the issue will no longer be
that you have an online channel, but how effective it is in highlighting the differences and advantages that you have over everyone else. If that is not clearly apparent, the dot com mantra that ‘your competitor is only
a few clicks away’ will actually become true in your
case and literally drive you out of business.
have indicated in other
articles, with the elimination of business inefficiencies through better information management, commercial friction will largely
disappear very soon (as is evident from rising
productivity numbers in the US), further squeezing our margins. As a result, retaining customers will be predicated on how much value you can create for
them and what differentiates you from your competitors. Thus, the basic rules related to differentiation from competitors still apply.
Suggested road map
While e-business may be a new
channel for small businesses, the principle of competitive advantage remains essentially the same. You still have to differentiate yourself from your competitors, no matter what. If not, your customers will simply select
a supplier with the lowest price every time they have to make a selection.
While developing an online strategy, make sure that you have your strategy managers
and senior people from the company on the team. If you do not have good internal IT people who understand your business inside and out, get some help from industry experts who understand your business as well as IT.
It is worthwhile to use a consultant that you can trust
to help you learn more about the technology and
facilitate the negotiations with the IT provider
(Remember that when you hire a consultant, she or he
will work for you. You can use her or him to
educate you about what you don't know and to fill the
gaps in knowledge that your company has.). Putting together a team with such diverse backgrounds will enable you to work more effectively with your e-business provider so that you will be able to develop an online presence that duplicates your offline strengths. (Related
link: Key account management strategies)
to improve online customer service?
Questions, comments or