Management & Strategy

How To Compete With Bigger Online Businesses

How can a small online business possibly compete with larger rivals? By taking advantage of your agility, cultivating customer loyalty, and prioritising personality. Business Editor Guy Matthews explains.

The internet has the potential to level the playing field for small businesses, providing a shop front that allows competition on something approaching even terms with larger rivals. Managed appropriately, your online presence can either disguise the smaller size of your operation, or can make a virtue of it by letting you reach out to the customer on a more personal level than is possible for a larger, more established enterprise. In either case, your web presence requires a degree of sophistication if it is to engage your intended customer-base.

The web 2.0 era has raised the bar for everyone. “In the old days, having any sort of site was considered fine, but now it’s about offering a good experience, no matter who you are,” says Simon Norris, CEO of specialist digital agency Nomensa, which offers advice on site design to a range of businesses, large and small. “It’s about matching a good human experience to the design of your site,” he says. “Social networks play on the basic need of humans to form groups, so you need to establish your design with similar human principles and behaviour in mind.”

Be clear on your offering

Simon believes businesses often neglect to make absolutely clear up front what the site is offering. Another is the mistaken belief that an unusual site design will win over customers. “Don’t be quirky,” he says. “If you want to design a door by putting the handle next to the floor, then that’s fine for one-off novelty value, but it’s not going to encourage people to use the door twice.”

Large, well-known web brands have many elements in common because those elements have been proven to work. “Don’t be afraid to copy the way large businesses do things,” says Simon. “Successful e-commerce is based on established processes. Look at what successful sites do, but do it better, using your agility.” He cites the example of incorporating customer reviews into a site. “That’s how buyers make judgements these days,” he says. “It’s a proven fact that sites which don’t have customer reviews don’t sell as much as those that do. There’s a lot of information out there now that lets people see what best value is.”

By their very nature, large internet businesses are efficient production lines with little in the way of a personal touch. This is a disadvantage that a small business can exploit, but how exactly do you achieve that intimate ‘boutique’ appeal?

Compete on your own terms

Nikki Walls, Managing Director of successful online jewellery retailer Bling Rocks believes attempting to compete on the same terms as a bigger business is a waste of time. “When we set up in business, we decided that there was no point in trying to compete directly with larger businesses,” she says. “Our primary focus is to provide exceptional customer service, and sell bespoke, high-quality costume jewellery products that are not available on the high street. We source products from niche suppliers, normally overseas ones, who will not be supplying to larger businesses.”

Nikki believes it is near impossible for larger businesses to provide the same quality of service, with every order treated as a priority. “Whilst some larger businesses endeavour to provide good customer service they are reliant on individuals who are not committed in the same way as employees in a smaller business,” she says.

A little personality makes a big difference

The personal touch is always a key differentiator, agrees Glenn Behan, owner of online home furnishings company Bruno and Bean. “I think the best way to compete, particularly with large businesses, is to offer a reasonably broad range of products on your site, and put lots of thought into that range,” he says. “My site is highly interactive, allowing customers to coordinate things like colours easily. This reflects what my business is all about. It’s also good to match competitors on things like free delivery.”

However, Glenn says that online price comparison will tend to favour the larger competitor. “I’ve learned that rather than try to match them on price, it’s better to encourage loyalty instead,” he says. “Your marketing budget will be a lot smaller than theirs, so it’s about grabbing customers who can see what you do well, and then holding on to them. Big businesses don’t do that. Lots of small businesses get bought by larger business because they are trying to buy into that personal touch.”

The benefits of social media

Social media can provide a useful tool in reaching out with a personal message. “Lots of customers come to my site driven from Pinterest,” says Glenn. “I’m trying to build that side of the business up all the time. It attracts people who genuinely like our products, and who buy-in to the Bruno and Bean lifestyle.”

So, if you’re an SME looking to hold your own online, there’s several boxes that require ticking. Does your site look as appealing as a niche, high-quality bricks and mortar business? Have you made it easy for visitors to use the site? Does it speak on a personal level to your community of customers? Have you eschewed competing on price in favour of quality and uniqueness of product, and level of customer service? If the answer is ‘yes’ to all these then you could be on the way to becoming one of the tens of thousands of successful online enterprises out there on the market. 

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John Carroll - Helping businesses achieve International success. Head of Product Management & International Business, Santander UK