Target Niche Markets on eBay—Avoid Commodity Products
Posted by Tom Craig in eBay
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As a new eBay business, you can learn only so much from existing businesses. It might be tempting to look at the list of top sellers and say that you want to duplicate everything they’re doing. The problem with that strategy is that if you duplicate everything they do, you’ll be in direct competition with them. And when it comes to competing with an established competitor, the established business almost always wins.
For example, a surprisingly high percentage of Sellathon 10,000 sell CDs and DVDs. All fine and good, but CDs and DVDs are pretty much commodity products. That is, one Madonna CD is the same as the next Madonna CD; there’s very little unique value that a retailer can add to the product. So, if you decide to sell that Madonna CD, you’ll be competing with every other eBay retailer who’s also selling that Madonna CD. Why should a customer buy from you instead from one of your competitors? What unique competitive advantage do you bring to the table?
The answer, of course, is that you don’t bring anything unique to the table. One Madonna CD is the same as the next, so the customer is probably going to buy from the retailer that offers the lowest price. Unless you can offer the lowest price, you’ll lose sales. (And you probably can’t offer the lowest price because your larger competitors are no doubt buying at a lower cost; size has its purchasing advantages.)
Any new eBay business selling a commodity product has two strikes against it. First, it’s offering a product sold strictly on price, and doing so at a purchasing disadvantage. Second, it’s selling against established businesses that have built large customer bases and established efficient backend operations. Your ability to succeed in this situation is limited.
A better approach is to carve out a position in a less competitive category. Don’t go head-to-head with the big boys; instead, oiler a product that has fewer competitors and is thus relatively underserved to the consumer.
Go in a Different Direction—Change Your Plan
You might acknowledge that you can neither beat them nor join them, and instead choose to abandon that category and pursue something altogether different. Maybe there’s no room for you at all in the DVD market, selling either niche DVDs or accessories. You might want to change your game plan and pursue a totally different category—tennis rackets, or leather gloves, or maybe pet supplies. It might simply not be worth your time to compete in your original category of choice.
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