Bleak Future for Me-Too eCommerce and Catalog Companies

The internet is a hotbed of commerce. We’re talking about billions of dollars a year being spent at retail stores online. The future would seem bright for small-to-midsized e-commerce and catalog companies (after all, low overhead and increased customer access are huge advantages) if it weren’t for one problem: mega-retailers. The online marketplace is ruled by a few enormous businesses like Amazon and eBay. They sell in all of the main markets and they sell at ridiculously low prices.

How do Mega-Retailers Impact Small and Midsized Internet Businesses?

The primary way that these superstores affect the smaller guys is by encouraging hyper competition. Because so many web stores sell the same items, all of the outlets are constantly nickel and diming each other to have the lowest ticket price. The result is that prices fall through the floor and little-to-no profit is made on anything.

Compensating for such small profit margins can only be done by moving tons of product and the only players who can do that are the big guys.

Eventually, all the small and midsized internet-based businesses get their legs cut out. It becomes impossible to match the prices of the mega-retailers and when a better price is only 10 seconds and two clicks away, making sales gets very difficult. It’s only a matter of time before the smaller stores get forced out.

Is there anything the smaller business can do?

If they insist on competing directly with the mega-retailers, there is nothing that the smaller stores can do. They will lose. What has to happen is that these companies need to separate themselves from the competition!

The most successful small and midsized e-commerce and catalog stores find a small, profitable niche and exploit it. A web store with a dozen employees will not beat Amazon when it comes to books and televisions and baby toys. Do you know where they will beat Amazon? Saddles and bridles for horses. Single malt scotch. Automobile paint. When you’re battling a store that sells almost everything, your profit comes from everything else–the stuff that nearly nobody else has.

What’s even better would be to sell something that nobody else has! By creating a one-of-a-kind product that has value in a particular niche, a small or midsized web store can establish itself in the internet marketplace.

The future for e-commerce and catalog web stores

As the mega-retailers’ death grip tightens on the internet marketplace, those smaller stores that cannot or will not innovate must become a web titan themselves. But they won’t. The margins are too small and the reach of their competitors is just too big. That market is tapped–there’s no more room. After the dust settles, the only small-to-midsized e-commerce and catalog web stores left will be those with highly innovative and truly remarkable products