Here’s a usual question when it comes to deciding to start a business online. How do we as individuals compete with Internet Giants with thousands of employees that could offer lower prices and probably more professional service than any individual ever could. The theme of this article is going to be based on the 3 generic strategic approaches that can lead a business to outperform it’s competitor according to many experts. The three strategic approaches are Cost Leadership, Differentiation, and Focus/Niche. Most if not all company has their strategic approaches along the lines of one or more of these. But there is always one approach that is emphasizes on one than the rest, which becomes the company’s main strategic approach. I will go through each of them individually and quickly describe what they are how they play into our E-Commerce world today.

The first is “Cost Leadership”, which is when a company tries to offer low prices which their competitors can not. In other words they want to be the price leader of the market, offering prices so low that their competitors can’t make a decent profit if they try to undercut them. An example of a company that employees this strategy is WalMart. Sadly, most of us will not be able to employ this type of strategy and be successful when it comes to dropshipping. Simply because a key to being successful in being a price leader is to have strong purchasing power. The concept can be as simple as, if you buy a lot, you get a good deal. And Walmart, can buy a lot!

The second is “Differentiation”, which is when a company tries to give the impression that they are unique and different. In which they can charge a higher price and customers will still to pay for it. This in many cases is also difficult to do for individuals, because it usually requires a significant amount of resources to employee. So unless you are dropshipping custom products from places like Cafepress, Custom Dropshipper or selling a unique product that you make yourself chances is that you will not be employing this as your main strategy. An example of a company that employs this strategy is Apple Computers, which are not exactly the cheapest computers, but are unique.

The last is “Focus/Niche”, which is when a company tries to target a very small a specific niche. They focus a lot of their energy on providing customers of that the niche is looking for. They outperform their broader competitors through paying attention to detail that their target market cares about which their broader competitor misses out on. This is an ideal strategy to employ for small businesses and the primary strategy that most successful dropshippers use. The most important thing when it comes to integrating this strategy into your dropship business is that you understand the niche and your target customers well. This usually means that you need to have exceptional knowledge in the field, and in most cases the dropshipper is also a fan of the niche himself. For example a successful dropshipper that sells car parts, is probably a car fanatic himself.

To conclude, I want to emphasize that all businesses should have a focus to have one strategy as their primary focus. But all three factors should still come into play when it comes to managing a successful business. For example when employing Focus/Niche as your primary strategic approach, you can also provide great customer service(Differentiation). Such as responding to concerns on a timely manner and adding some friendliness to it, so it doesn’t seem like they are talking to a robot. This is one strategy that Ebid.net uses to differ themselves from Ebay. Having a primary strategy, doesn’t mean you can’t utilize the others at the same time! Although this is still rather basic and you can go much more in depth with this if you wanted to. Knowing just the basics of it can still help you decide what can potentially work and what probably would not, in terms of competition on the internet. I hope this has shed some light or made the picture more clear for you, when it comes to being a successful dropshipper today.