Creating Blue Ocean Strategies in E-commerce

by | Mar 24, 2018 | Blog, Shopify | 0 comments

Creating Blue Ocean Strategies in E-commerce

Would your business be different if you had no competitors? Have you ever been stuck trying to think “outside the box” to attract new customers? Do you find it difficult to stand out from the crowd? These are struggles every business owner can relate to. Whether you’re selling products on an E-commerce website or providing services like website design and social media marketing, it’s very challenging to market your business, especially when you are starting from scratch.

The theory:

One of the most powerful ideas I have come across in the last year while analysing business strategies is one of the simplest: create a blue ocean where your company can exist outside of direct competition. This idea is detailed in Blue Ocean Strategies by W. Chan Kim and Renée Mauborgne, published by Harvard Business Review over a decade ago. Chan Kim and Mauborgne argued that the business world is a lot like the ocean: there is a vicious system of competition for space and resources. Business owners get trapped trying to find ways to compete with each other directly, creating a sort of bloodbath, also known as a “red ocean”. In a red ocean there are winners and losers, and most importantly it is very easy to waste your time trying to survive rather than thrive.

Are there a lot of ‘sharks’ in your in your corner of the ocean?

Instead, Chan Kim and Mauborgne suggest business owners take a different approach. Rather than fighting and competing with other businesses for customers and market share, use your resources to find new, uncharted waters untapped by your competitors. These are called “blue oceans” where you create a new crowd rather than standing out from the crowd.

Putting theory into practice:

It’s easy to discuss the blue ocean theory, but applying it can be difficult. Luckily, there are a few resources and methods to get you started. My favourite is using “radar” charts (also called spidograms). With a radar chart, you can list off the qualities of your competitors and instantly see where they have exploitable gaps. You will begin to find competitors often overlap in many areas; this is the red ocean. Rather than emulating your competitors, try to see what they aren’t doing. To help with this we have created an interactive tool on Google Sheets where you can begin creating your own “radar” chart. Click here to view it, and if you have a Google account you can make a copy to customise it yourself.
Once you have filled the Google Sheet out you will quickly begin to see where there are “gaps” (i.e. blue oceans) where your business can differentiate itself. You can also see where companies overlap and create red oceans. In the fictional example above all of the existing competitors are focusing on providing relatively inexpensive products as fast as possible, with nothing special when it comes to service quality or reliability. Because of this, the other businesses can’t offer many choices to customers when it comes to shipping or quality. If you were a business owner in this situation how would you react? One possible course of action would be to provide a more expensive product, while at the same time focusing on higher quality and reliability.

Above: Notice the area of the graph completely untapped by the three companies. This is your blue ocean!

Practical steps for E-commerce:

Now that you know what a blue ocean is and how you can find one, what do you actually do to exploit it? If we were to take Shopify merchants as an example there are some steps you can immediately take to work towards a blue ocean strategy (these steps are also relevant if you don’t use Shopify).  
  1. After completing the radar chart of your competitors what is standing out? If none of your competitors offers flexible shipping options to customers consider checking out the shipping section of the app store. Maybe you can offer your products to more areas, at a lower cost, or even at different speeds.
  2. Consider diversifying your product range or specialising more heavily in a profitable niche.
  3. Use technology to improve your business without taking more time out of your day! You could consider a live chat feature for customer service, automating your order fulfilment, or using a service like Kit to speed up your marketing.
  4. Think outside the box. Rather than changing your products and how you sell them, maybe you can have a quirky style, a strong sense of shared values, or offer value to your customers in other ways.
  5. Get creative! A fun way to start is to “force-fit” words together to come up with brand new ideas. Check out this website to get a list of random words to begin. How many connections can you find? It’s harder than you think!

Conclusion:

Blue ocean strategies can be incredibly effective and allow you to become more creative with how you position, market, run, and manage your business. However, it is worth noting this theory doesn’t exist in a vacuum, and if you’ve tried any other business strategy frameworks before (e.g. SWOT or Porter’s generic strategies) you will realise how easy it is to get stuck into the framework and lose sight of what you are trying to do: run a successful E-commerce business. My advice is to use theories like blue oceans as a launchpad for your ideas, not as an instruction manual. Get creative and have fun.

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