Tony Sarno20 February 2007, 8:35 PM
Our first major decision was what our online store would sell and how would it generate profits
We addressed this most fundamental of decisions when I visited NetMerchant’s offices in Western Sydney late in 2006 for an initial discussion with the managing director Luke Amery. We agreed that we’d need to add value to whatever we sold on our store, and the best way of doing this was to take advantage of our main skills as wordsmiths and journalists. We would not want the APC editorial team moonlighting on an assembly line building gadgets.
T-shirts with witty APC geek slogans fitted the bill. They would test our creativity while being easy to source and customise and – importantly – not break on the way to customers, thus avoiding the vexed area of warranty claims. In addition to the T-shirts, stocking some technology gadgets would give us the opportunity to select products our readers liked.
Talk to any e-commerce store owner trying to succeed online they’ll tell you the same thing: to succeed in e-commerce, a business needs to provide online shoppers with unique value, since online puts you in a brutally flat playing field where your competitors don't face many of the barriers to entry they might face if you were a bricks and mortar business (such as geographic location).
An online store is competing with hundreds of similar businesses around the world, so its success all comes down to the value of the offer and subsequent marketing behind it .
Amery says value is offered by online businesses in two main ways: via pricing, or provision of niche or unique products.
We decided to stay away from the cut-throat pricing approach. This is actually the business model followed by many online businesses and Amery advises against it, arguing instead for the niche product approach. “It’s easier to sell on niche than on no margin or next to no margin."
Amery says many small operators enter a market segment with the idea of using extremely low prices to put competitors out of business. “But what they don’t take into account is that there will always be lots of others trying to do the same thing.” Even if we wanted to sell our T-shirts and gadgets purely on the basis of cut-throat prices, we simply did not have the market power or connections with suppliers in Asia to get the gear cheap enough.
So we decided that Geek Gear would compete with added value rather than pricing – via T-shirts with funny slogans and some unique gadgets. The model already existed elsewhere, and it proved to us that a market did exist for it. Like any business eyeing off its competitors, we did a quick tour of the Web and decided there was nothing we couldn’t do better given enough time.
Next: Geek Gear's unique selling point