Beijing time on February 14th, according to foreign media reports, Alex Rampell, CEO of payment and promotion platform TrialPay, published a signed article titled "Goodbye, Long Tail" on the well-known technology blog TechCrunch. Some methods used by Internet sellers to compete with "Online Wal-Mart" are cited. The following is a summary of the full text:
The 1980s and 1990s saw the decline of small retail stores, with supermarkets like Walmart selling everything from butter to guns. No matter where you stand on this trend, the economics of it make sense: By buying in bulk, Walmart gets better prices from suppliers, which it then offers to consumers at a lower price. (Walmart has even been accused of engaging in "predatory" pricing, driving small retail stores out of the market and then raising prices after they disappeared). By bringing together a wide variety of items, Walmart entices consumers to buy "staples" (sometimes even selling them below cost) and then profits from selling "side dishes."
One of the main reasons why Walmart hasn't completely taken over the planet is geography. Compared with Walmart's physical retail stores, Walmart.com's business is nothing to mention. Some communities, like New York City, have locked out Walmart, while some people live too far from a Walmart store.
But no one can keep out the FedEx trucks, and Walmart-style influence will become even more extreme online. We can say that Amazon is the Walmart of e-commerce.
5 factors that influence your shopping decision
Generally speaking, consumers shop at retailer A instead of retailer B mainly based on the following 5 factors:
1 Price (actual price offered to consumers + “trouble” in the ordering process)
2 Geographical location (close to consumers)
3 Choices (Do they have the size I want? Do they sell a certain item that isn’t found elsewhere?)
4 Service/Brand (Do I trust/like them?)
5 Experience (Is the shopping process easy?)
The price transparency of e-commerce is extremely high. For most goods that can be delivered by express delivery, the Wal-Mart effect can work regardless of geographical location. This explains why there are 41,000 physical shoe stores in the United States, but the largest There are only 5 online shoe stores. Take away the factors of price and location, and what’s left is selection, service and experience. The "choice" factor explains why SquashGear.com, a small website offering racquetball gear, thrives, and the "service" factor explains why online shoe store Zappos can reach $1 billion in sales.
But the problem is that when a market segment gets bigger, Amazon has the potential to invade that market. I'm sure if squash became the number one sport in the US, Amazon would be able to "squeeze" better prices from suppliers and offer lower prices to consumers, coupled with its top notch logistics, squashgear .com is likely to be squeezed out of the market.
Several approaches that e-commerce entrepreneurs can adopt
If you're an entrepreneur aspiring to enter the e-commerce space, remember that you can't compete on location (except in special circumstances), and you can't compete purely on price, but you can:
Better shopping experience
Provide a better shopping experience, such as BlueNile is a better place to buy engagement rings and Zappos is a better place to buy shoes. In some cases, Amazon.com's greatest strength—the same shopping experience every time—is also its greatest weakness. Some things are meant to be purchased differently.
"Decommodification"
If you're a reseller of a generic commodity, you'd better have a clear advantage other than price...but that's sometimes hard to come by. If you can add something unique (for example, specialized software that can be used with a common commodity), you can more easily provide a differentiated service. For example, a vitamin distributor could develop a smartphone app that reminds consumers to take pills, and include them in packages to be couriered to customers.
Not a dealer
Not a reseller, but a marketplace for buyers and sellers to trade, just like Etsy, eBay, IronPlanet, Copart, Elance and other companies. This field is far from fully developed, and there are many types of transaction markets that have not yet emerged (such as the child nanny market). The best marketplaces tend to deal in things that people buy frequently, and have a variety of sellers with few repeat interactions. For example, you will go to different restaurants to eat, but usually study with the same piano teacher for a long time. The food ordering site OpenTable is clearly bigger than the piano lessons market.
decentralized e-commerce
Who can beat Amazon on price? Companies selling products on Amazon! Except for Kindle e-books, Amazon is just a reseller. It sells other people's products, so in theory, those "others" can beat Amazon by selling products directly to consumers. However, most manufacturing companies are not good at selling products directly to consumers. And consumers also prefer shopping in supermarkets rather than single-product warehouses. Imagine a decentralized commerce world where all you need is a shopping cart to buy items from many manufacturers. This may be a pipe dream, but if it does well on the "experience" and "service" aspects, it could also be a huge opportunity to beat Amazon on "price" and "selection."