Understanding Competitive Advantages

Compared to our e-commerce auto detailing competitors, we have a lot of competitive disadvantages:  less space, less available cash, less employees, and less control over vendors and distribution.  It can be frustrating and intimidating when entering a new industry.  The incumbents will try to use those things to crush you (or at least make your life more difficult).

From the beginning we’ve been about finding different things that turn the tables and give us the advantages.  We don’t want to play their game – we’ll lose at that.  We want to play our game.   We have lower expenses.  We don’t have any full time employees.  We aim to provide stellar customer service.  Our warehouse operations are more efficient.  Our technology ties it all together – every little thing that can save time and increase efficiency, or increase revenue has either been done or will be done soon.

By building everything in-house instead of using an off-the-shelf cart like Yahoo! offers, we’re able to do things that they can’t.  One great example is our Daily Special.  Each night at midnight an item is put on sale for 24 hours.  The system picks items that meet our criteria (in stock, haven’t been on sale recently, etc). The RSS feed is updated.  An email is kicked out to our list of subscribers.  The price is adjusted and made ineligible for use with other discounts.  George and Greg get an email with the bbcode so they can copy and paste the special on their forums.  This all happens automatically.  We do nothing.  All without any of us spending one second of our time.

So when our competition decides to try to match our prices or do their own version of the daily specials, it doesn’t really bother us.  In a way, it’s actually a very good thing.  We’ve got them now playing our game.  A game that they probably can’t even compete in (yet alone win) without throwing a ton of money and manpower towards managing the system.  Their other option would be to build an entirely new platform to compete with ours, which again would cost a lot and of course take exceptional time and effort.

Another great example is our recently upgraded coupon system.  There’s a reason that Detailed Image wasn’t on Twitter and Facebook until August 1st.  We wanted to put forward a product that couldn’t be matched by our competition.  And to do that, we needed to be able to offer more than just 10% off or free shipping.  We built a system that allows for limitless possibilities:

  • We control the number of uses allowed
  • We control the min spend
  • We control which products it applies to
  • We control the discount – either a percent off, a flat dollar amount off, or a flat price for all eligible items
  • We’re able to give away free products
  • We control the time period in which the coupon is eligible
  • We can offer free shipping or flat rate shipping

Any of those things can be used in conjunction with the other.  So I could say, for example, that for the next 12 hours the first 5 people to buy a product from brand x will receive another free product, 10% off their entire order, and free shipping.  Or pretty much any other wacky combo of those things that our brains can conceive. A Yahoo! store can’t do that.

And again, the system interacts perfectly with the rest of our back-end.  For example, a free item will still show up on the invoice, but it will have the word “Free” in front of it and show a price of $0.00.  The item will also be deducted from inventory.

These types of coupons allow us to run all sorts of micro sales on Twitter, Facebook, and our forums without making our lives more complex the next day when we go to process and pack orders.  In conjunction with our customer service, our presence on these platforms is a competitive advantage that the other companies in our industry cannot easily replicate…even though Twitter and Facebook are free.  It’s working already – the revenue from Twitter in the first 11 days has exceeded my expectations.  Considering we only have 100 followers, I think we’ve got a potential killer marketing tool on our hands.  What will happen when there are 1,000 followers?

In sum, our competitors have a lot of advantages that we don’t have.  Then again, we have a lot of advantages that they don’t have, which makes for great competition.  Maybe it’s just because I’m on our side, but at the end of the day I’ll always want to be on the younger, hungrier, and leaner company that created it’s own advantages where others saw none.

5 comments on Understanding Competitive Advantages

  1. Jay Lin says:

    Good post, Adam. It’s much easier for smaller companies to innovate and apply changes. Large companies are slower to move and more difficult to implement. I know you guys will keep innovating when you become a large company.

    • Adam McFarland says:

      You bring up an interesting point Jay. I wonder if we’ll ever become a large company. I mean, at some point to keep growing we’ll need to have a much larger warehouse, full staff, etc. I’m just not sure how that will happen or even if it will happen with us as owners. I love being the small guy in the trenches. Not sure if I’ll like managing managers ya know 🙂

  2. Dale says:

    Reminds me of our post on how small companies can beat large corporations… You guys are doing it all!

    http://corporatepreneur.blogspot.com/2009/04/bigger-they-are-harder-they-fall.html

    • Adam McFarland says:

      I remember that post Dale. I like how you listed out some of the inefficiencies and how they could be exploited. That could definitely be a whole book!

  3. […] project. And I hope I will be able to some day in some capacity. But knowing and understanding our competitive advantages and disadvantages, there are a good number of times when the advantage of sharing information with the world is […]

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