How to Compete With the Big Guns
For those who still don’t think the Internet is a winner takes all ecosystem, David Solomon suggests you look at Amazon, Or Zappos. Or Newegg.
As he noted at last week’s New England Mail Order Association conference in Boston, Internet Retailer reports that the top 500 sites account for a whopping 69.1% of all online sales. And the top 100 dominate 55.3% of retail.
Now, that doesn’t mean everyone else should roll up their virtual sidewalks and weep quietly, said Solomon, head of the specialty retail and direct marketing group at Lazard Asset Management. But you do need to be a smart marketer.
For one thing, you can’t compete with the big guns on all levels. “Try to compete with Amazon on price and you will fail,” said Solomon.
Solomon suggested marketers need to stop looking at target gross margins and markups as the only way to set price. Pricing, he said, should reflect market value, not cost. Price sensitive items are tied to competitor prices, and hard to find or exclusive products should be priced more competitively.
The value package
