Retail competition is fierce these days. With big players like Amazon dominating e-commerce, many companies are struggling to solidify their position in the market. Head marketers at the world’s top e-commerce companies aren’t sitting on the sidelines just hoping their products gain traction. They’re using Art of War military strategies and tactics to push their products ahead of the enemy. Let’s discuss how this strategy is being used to seize markets…
While dominant brands tend to invest vast amounts of time and resources into large sources of traffic like Google, Facebook and other massive affiliate websites, new entrants to the retail space can feel limited in options when attempting to expand their market share. These channels are highly competitive, and thus expensive to even engage with in any meaningful way.
However, if they approach the market with a flank military strategy, they can invest resources in specialty blogs and targeted niche websites, all while utilizing target influencers. The strategy allows what was once a small company to effectively scale brand awareness and grow revenue. The development in growth and brand awareness will lend itself to the market entrant, slowly developing the ability to take on dominant brands on top marketing and advertising platforms.
It is critical now, more than ever, to focus on competitors. Competition is both fierce and constantly evolving, in large part because the barriers to entry for online retail are so small. But this may also be viewed as an opportunity. Many big box chain companies don’t realize until it’s to late that a scrappy, new-to-market underdog just took over a key category online. These underdogs could be the main source of competition to the titans of the industry within a few short years.
How did this start?
Target versus Walmart is a prime example of the impact that flank military strategy can have. In the ‘90s, Walmart had no fear that Target had the capabilities to take customers away from them. Walmart’s footprint at the time wouldn’t allow Target to compete. However, Target was strategic. Target knew the only way to get ahead in the big box retailer market was to focus in on select categories in which they wanted to dominate. In time, Target stole away consumers from Walmart by focusing on the financial services and fashion sectors.
The flank military strategy became highly effective for several other organizations, like leading department stores losing to new online entrants in the ‘80s and ‘90s. The department stores originally sold a large selection of both furniture and electronics, but the cost of keeping the goods in the store were high, and the profit they made was not. Therefore, stores began taking electronics and furniture off the shelves, but they found this led to a decline in customers, which ultimately led to a decline in sales. More and more people were realizing the power of online shopping, which allowed for new entrants in the market to win sales and take away from what was once a leading e-commerce company.
This applies to digital marketing in much the same way.
Now anything you could ever need can be found online. While retailers like Walmart and Target still hold a large share of the marketplace, companies are finding it harder than ever to compete with online sales of smaller retailers.
Who are some of the category killers?
Looking at men’s shirts is a great way to understand how savvy retailers are leveraging highly targeted media companies to sell more than top leading department stores. It’s easy to assume that stores like Macy’s, Nordstrom and JCPenney sell the majority of men’s shirts. But, modern menswear companies like Bonobos, Club Monaco and UnTUCKit are quickly are pushing their way into the market.
The aforementioned menswear companies are gaining traction in the market, specifically through specialized blogs, in order to reach new audiences, all while creating media partnerships with out of the box, but high volume media companies. For example, UnTUCKit is currently the only men’s shirts company that leverages Barstool Sports, a media company that has brought more than 6 million people to the brand’s website in the past 12 months alone.
Men’s shirts aren’t the only category in which this tactic holds true. When looking at women’s lingerie, you can see similar trends are found as new companies enter the market and compete against Nordstrom and Macy’s, the top sellers of women’s lingerie. Thirdlove, Yandy, and WarLively diverted more than 50 million people away from the leading brands to their sites by simply performing well on Facebook. Nordstrom found their traffic has declined after ThirdLove started leveraging Cupofjo as a powerful traffic source.
The main point here is new entrants are not only competing, they’re winning by using a variation in sources of traffic, and focusing on precision targeting techniques in areas where more traditional players simply don’t care to go, or are too slow to mobilize resources.
Will big box stores last?
Now that the problem has been identified, department stores must protect their business by defending three main areas: margin, traffic and brand/relationship.
- Margin- Do not just assume that big box retailers are your only source of competition. Understand which categories your store controls and maintain those.
- Traffic- Know where the traffic to your site is coming from and how this traffic is converting into a customer. To do this, use tools that will help you prescribe quantifiable action to drive quality traffic to maximize top performing sources of referral traffic.
- Brand/Awareness- Customer service is evolving and you have to evolve with it. It is extremely important to keep a positive reputation with customers. Companies often find most innovation occurs when you understand consumer expectations and how your industry meets that expectation. Keeping up with your customer service is key to maintaining status in the market.
Having a holistic understanding of who your competitors are has increasingly become more difficult. It’s vital to maintain diligent competitive research in order to be hyper-aware of emerging brands in your market space. In order to win in 2018, brands are going to have to keep their focus specific on who their customers are and how to target them, all using a flank military strategy.
DemandJump enables companies to improve their online marketing investments with unprecedented purpose and precision. The company’s award-winning Traffic Cloud™ platform uses complex math theories (artificial intelligence) to analyze a customer’s competitive digital ecosystem. The platform then delivers prioritized action plans of where, how and when to invest marketing dollars in order to drive qualified traffic across channels, resulting in new customers from direct competitors.