Every year Twinkle magazine publishes a ranking with the top 100 webshops in the Netherlands. Bol.com was again at the top of the list with an estimated revenue of 730 million over 2015. The number 100 had already a much lower turnover of barely 3 million. (Emerce, 2016)
Since there are 30.000+ online stores in The Netherlands, these figures raised me some questions. What will be the revenue of webshop number 30.000? Can these thousands webshops survive in a market wherein consumers became picky and more demanding? (CBS, 2016)
In the early days of ecommerce it was possible to run a profitable and “lazy” webshop when weekly delivery was still accepted. But today consumers are aiming for more speed, at least they expect next day delivery. The big players are able to do so by enclosing high volume contracts with companies like PostNL. Others even have a whole own logistics infrastructure with large distribution centers to fullfill the consumers’ expectations.
Companies like Coolblue (and Amazon outside the Netherlands) set the standard, and are ever raising the bar with services such as same day delivery. That makes it harder for small webshops to compete. Furthermore, the shop should work on any device. And users should be able to pay in countless different ways. (Ting, 2016)
Because it is costly to meet all these requirements, small webshops should consider other strategies to survive.
Become the expert in your niche
It is too hard and costly to compete on price and assortment. As a small shop you do not have the economies of scale that the big players have. Therefore it is better to offer unique products where you have less need to compete on price.
Focus on SEO
Spending money (the small webshops probably do not have) on Google Adwords can be really expensive.
In addition, there are plenty of opportunities in the field of SEO. With unique product descriptions and quality content it is possible to establish high ranking in the search engines. This will result in structural free visitor streams. Besides that, quality content and product descriptions will also prove your expertise and trustworthiness. (Kissmetrics, 2013)
Do not fight the giants, use the platforms they offer.
Besides their dominance, major players like Bol.com and Zalando offer also opportunities with their open platforms. By selling your products on their platform you can easily reach a lot of potential buyers and create awareness for your webshop. (Sprout, 2013)
Despite the differences in financial possibilities there are still ways to stand out from all other webshops. Still, I wonder if the mentioned strategies are sufficient for small webshops to survive.
What do you think? Are small webshops able to survive or will the big players dominate the entire online market?
Sources:
CBS. (2016, January 20). Stormachtige ontwikkeling webverkopen. Retrieved from https://www.cbs.nl/nl-nl/nieuws/2016/03/stormachtige-ontwikkeling-webverkopen
Emerce. (2016, september 22). Twinkle 100 is uit, bol.com bovenaan. Retrieved from http://www.emerce.nl/nieuws/twinkle-100-verschenen-bolcom-bovenaan
Kissmetrics. (2013). Seo errors ecommece websites. Retrieved from https://blog.kissmetrics.com/seo-errors-ecommerce-websites/
Sprout. (2013, february 26). Extra Sales via Zalando of Bol.com. Retrieved from http://www.sprout.nl/artikel/bedrijfsvoering/extra-sales-zalando-bolcom
Ting, L. (2016, September). Session 2: Industry Disruption.
Dear Sander, Thank you for your interesting post! I am currently doing a parttime internship at a fashion start-up, and they have a webshop as well. I might be able to answer the question you raised: they do not make a lot of profit. Oftentimes, small companies offer a webshop as an extension, and sell their products through offline retailers. Hence, this makes it possible for the Netherlands to have 30000+ webshops.
Given my personal experience, I think small webshops are only able to survive if they solely focus on their webshop, and put in all efforts they have to marketing and making sure people can find their webshop. However, for small companies to survive, solely having a webshop might not be enough. Maybe a lot of these small webshop owners also have a parttime or fulltime job next to it, as it quite easy nowadays to start a webshop.
I couldn’t find any numbers on this, but it would be interesting to know how many webshops fail in a given year.
Hi Ananda, thanks for your comment! I think online shopping will develop in such a way we already have seen in offline shopping. There will be a few big players with a large assortment and huge turnover (Coolblue, Bol.com, Zalando etc.) Small webshops with a similar assortment are not able to compete with the big players and will soon disappear. Specialistic (small) webshops with their own unique products and identity are able to survive because they do not have to compete on price and delivery speed.
Besides that, I agree that most webshops function as an extra sales channel. I also think that among those 30.000 webshops there are a lot created as a hobby. Which should not be counted as a serious small webshop.
It think it’s the same as in traditional retail, if you don’t have economies of scale it is very difficult to compete. Typically there is only room for one good player to excel in a certain market, e.g. bol.com for books and coolblue for electronics. This is the reason that Amazon takes ages to come to the Netherlands with the full webshop: it’s very difficult to compete with such efficiency operating organizations.
Thank you for you blog! It is very interesting and it got me thinking about the topic. Whenever I want to order something, I immediately go to Bol.com to order it. They have good service, a huge assortment and a next day delivery. It is easy, quick and reliable. You don’t know if a smaller company will deliver the product under the same conditions. But I think smaller firms can survive if they make good use of their digital opportunities. By using online tools to get closer to their customers, they can create more customer engagements what could lead to more brand loyalty. According to a research done by a Customer Engagement Agency (and many other researches), creating and nurturing loyal customers essential for ecommerce businesses, since engaged customers deliver three times the value over the course of a year. So I think that is the key for small companies to survive in the online market.