Ebb and Flow: The Cycle of Supply and Demand
Supply and demand is perhaps one of the most basic theories of economics and it is the driving force of the market economy. The principles of supply and demand apply in eCommerce just like they do for any type of business.
For eCommerce, supply is not necessarily about the number of online competitors, but the strength of the competition. Unlike brick and mortar stores, eCommerce relies heavily on website traffic to gain revenue.
Website rank on search engines is extremely important to consider for measuring up to competition! Ranking on the first page in Google when somebody searches for a product is like having your building on the most popular street in town. Secondary page ranking is like owning a building that nobody knows about. Not a whole lot of business traffic.
Why is it important to know the strength of competition? Your goal as a competitor is to find their weaknesses and become strong in them. The weaker the business, the easier it will be for your eStore to outrank them, both in quality and search engine rank.
When it comes to demand, there are two factors to consider. There are quantitative and qualitative factors to measure the success of a certain product or service in your eStore. The quantitative factor is simple: how often is your product searched per day on your webstore? In addition to looking at the raw search number, you also need to consider the quality, or the specificity of the item or service searched. How specific or targeted is the search? Did the consumer purchase or intend to purchase the item searched?
A targeted search is when a consumer looks at an item or service with the intention of purchasing the item. Generally, targeted phrases are more wordy because it narrows the search for them. Targeted phrases generally include specific product descriptions and brand names. Knowing when your customer is in “buying mode” is key for online commerce, and can help you get ahead of the competition.