Buying products is easier than it’s ever been. As eCommerce has taken over the retail industry, what was once revolutionary is now the norm. You only have to go back to 2007, less than a decade and a half ago, to see people still heading to the mall on weekends to shop at big box stores for electronics, beauty products, clothes, and just about everything else.
But only a year later, the financial crisis set in motion the complete transformation of retail. And since the retail apocalypse of 2010, things have never been the same. In the place of a diminishing brick-and-mortar retail sector, we saw the inevitable rise of eCommerce. In 2019 alone, we witnessed an astounding 9,300 store closings.
Big box retailers like Sears, HHGregg, and Borders fell, and in their place rose Amazon, eBay, and other eCommerce giants. The rise of digital shopping offered convenience to consumers and presented an opportunity for brands to shift online.
Given the accessibility that the internet brought to product development (and sourcing), the playing field was leveled in a way it had never been. This enabled small and medium-size businesses to compete in the giant and ever-growing eCommerce market. Anyone could open an online store and begin selling products. All you needed was a product, a budget to launch it, and the tenacity to ensure its success.
That growth in competition has led to another major trend: democratized product development. What does this mean for you? And what can you do to maintain your competitive edge?
The Rise of ECommerce in the 21st Century
Even before the turn of the century, the idea of selling and buying things online went from a pipe dream to a reality. Major retailers opened up virtual stores, and so did mom-and-pop shops, local merchants, online-only operators, and moonlighters looking for a side source of income.
Technology has disrupted almost every area of our lives, allowing drastic market changes and opportunities to shift the status quo. What we're witnessing now is similar to what we witnessed with media. Players like YouTube, and to a degree streaming services like Netflix, have made it so anyone can be a creator, not just large-scale production houses.
We're seeing the same thing in eCommerce. Growth and competition is expanding exponentially. The global eCommerce industry has proven especially resilient, even during a pandemic. According to an eMarketer report, while retailers struggled in 2020, eCommerce sales grew 27.6%, totaling an astounding $4.28 trillion.
We can thank the democratization of product development for this rapid growth. The barrier to entry is lower, making it easier to create products that compete in a now-global market. And the pandemic only accelerated this shift. In the first quarter of 2020, we witnessed an astounding 10 years of growth in eCommerce sales, reaching an all-time high of 14.5% of retail sales.
How Product Development Became Democratized
Operating a brick-and-mortar retail store came with many limitations we no longer see in eCommerce. Notably, brands were limited in their ability to get customer feedback and preference beyond their purchasing decisions. This limited the ability to make adjustments and posed a challenge to competing with other brands in the market. Plus, the large budget needed to properly launch a brand or open a retail store made it more difficult to even enter the market, not to mention the specific expertise required for a business’s many moving parts.
But eCommerce changed all of this.
These barriers to entry are much lower, which has created even more competition. In response, brands democratized product development to stay relevant (or even ahead of competitors).
Let’s look at several factors that made product democratization possible.
Consumer Feedback Became Instant and Accessible
A significant benefit to launching a product on platforms like Amazon and Etsy is the subsequent access to all sorts of valuable customer data. Once your product begins to sell, you'll know quickly whether or not people like it. Online reviews and ratings can certify your product as a great idea or one that still needs more work. These previously inaccessible customer and competitor insights now open up new possibilities for anyone to bring their product to market.
That immediate feedback allows you to identify trends and make decisions to improve your products. For instance, if you see multiple complaints about size, color, or quality, then you can quickly change course and begin sourcing products with current and new manufacturers to meet those demands. With this data readily available, brands can use it to make better products and improve their bottom line.
Competitor Analysis Got Easier
The eCommerce marketplace also presents the opportunity to "spy" on your competition. Their listings, ratings, and reviews are available for anyone to see. Additionally, there are a variety of tools available for monitoring competitors to empower better-informed product development. This gives you insights into all sorts of intel you wouldn't typically see with brick-and-mortar competitors.
You can take this data and determine why customers like or dislike your competition’s products so you can make adjustments to your own line of goods. For instance, you can find new product ideas based on the items that are highly rated. Or, if you're already considering adding a product a competitor sells, you can learn how to improve it based on the feedback in their customer reviews.
Technology Simplified Creating Online Stores
The internet made it easier to access the platforms and tools needed to jumpstart an online store.
For example, platforms like Wix and Shopify make it easy for anyone to build a website and digital storefront. No technical knowledge is needed, and the process is quick. What used to take months and large budgets to build can now be done in a few hours and for a few bucks.
Furthermore, marketplaces like eBay and Amazon made it so anyone can become an online seller. You don't need a website to set up a product listing or even start your own Amazon FBA business. You can get up in running with less time and effort.
Order Fulfillment Became Commercialized
Since the birth of eCommerce, the rise of order fulfillment services, like Amazon FBA, has eliminated a major retail hurdle. Order fulfillment took away the need for sellers to house their own products, which means that with the right budget, sellers can go full-scale with their online store without worry of space issues.
Other solutions, like drop-shipping, have also facilitated order fulfillment. Taking this aspect of logistics out of sellers' hands made it possible for more small businesses to get off the ground.
Transactional Capabilities Are No Longer Complex
There was a time when handling transactions was complicated and expensive. You needed pricey services to process card payments, which made it inconvenient for smaller businesses. Today, you have online payment portals (e.g. PayPal and Google Pay) that eliminate the complexity and decrease expenses dramatically.
Consumer Habits and Demands Changed
Consumers have driven this transformation of commerce. The new generation of customers is accustomed to having choices and now expects to have a larger pool of options. The brand that offers the most variety will likely be the go-to shop. Because of this, more online retailers are looking for products to "piggyback."
Let's say an online FBA retailer is selling a popular item, but only has it in blue and white. Another merchant will see this as an opportunity to sell the same product, but in five other colors as well. This provides a competitive edge and the opportunity to get a share of the market. And this is all possible because...
Product Sourcing and Development Is Cheaper
Finding products to source and manufacturers to develop products can be as simple as going to Alibaba.com. Access to inexpensive products is fast and reliable, making it possible for anyone with capital, drive, and know-how to become a competitor in the eCommerce marketplace.
In the past, developing product lines was expensive. There were higher minimum order quantity requirements, and designing products was only possible through expensive manufacturers. This squeezed out smaller businesses from entering different markets. But not anymore -- you can now affordably develop and source products across all eCommerce industries, from cosmetics to clothing to furniture.
Ways to Compete in a Democratized Product Market
Now that eCommerce is saturated with online businesses and products, how do you protect what you have while still maintaining growth? Here are several ways today's eCommerce businesses are adapting:
- Offer sustainable options. Consumers are growing a conscience, and fast.
- Encourage customer reviews. Today's customers rely on recommendations from peers.
- Price competitively. Watch the market to ensure you're the best priced (and use automatic repricers).
- Track and target competitor keywords. This will help drive more traffic to your store/product.
- Continue enhancing your products. Use ratings and reviews (yours and competitors') to improve your goods.
- Optimize shipping and inventory. Find ways to reduce costs and prevent stockouts.
- Use inventory management tools. This allows you to stay on top of product levels and whereabouts.
At the end of the day, it's about monitoring the market and consumer habits to find ways to meet their demands. By making this the focal point of your product development, you will help your online business remain relevant and successful for years to come.
The Democratization of the Sale
The democratization of product development has made serial entrepreneurship easier than ever. And in the same way that starting an eCommerce business is more accessible, so is selling that business. At Boosted Commerce, we reward Amazon FBA businesses for their hard work and growth. If you’re thinking about selling your business -- or are ready to get the process started -- feel free to contact us and learn more.