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 customer base. 

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. 

As we 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.