You’ve poured your blood, sweat and tears into your online business and then suddenly, a website pops up copying your innovative idea. What do you do? We ask the experts.
The online retail market is saturated with similar businesses, but while there are hundreds of companies that sell women’s clothing and dozens of online homewares companies, it can really grate on the nerves of businesses when someone swoops in and outright copies their business model.
When you notice a new brand replicating your unique point of difference or outright ripping off your content and marketing activities, what should you do? We speak to Nathan Huppatz, the co-founder of costumes.com.au, Lauren Lee, the founder of STYLE STORY and Dean Salakas, the chief party dude at The Party People, to find out.
The Emergence of Copycat Competitors
Since starting out as a lingerie business almost a decade ago and branching into the costume’s space, Huppatz says that multiple brands have popped up with similar models to costumes.com.au.
“Competition is inevitable, so this isn’t a surprise. We don’t think negatively about it, although there is definitely an impact,” he says.
“One of the keys to successful retail is constant evolution and innovation. So we have always worked hard on our offering, in order to stay ahead of competitors.
“We have also seen some competitors disappear over the past few years, so this is an indication of the competitiveness in the space. I think this competitiveness has also increased a lot over the past three years or so, since the big box retailers have really got on-board with Halloween and other events in a bigger way.
“In light of that, the last two years have been two of our best,” Huppatz explains.
Lee has experienced a similar “explosion” in competitors, with some businesses going as far as replicating STYLE STORY’s blog content, product copy and images.
“At first, it concerned us, but over the years we’ve noticed there’s a definite cycle to them – they pop up with impossibly thin margins, and unsustainably low free shipping rates,” she says. “Eventually they do themselves in, as that kind of a model is only sustainable if you’re filling e-commerce orders in your spare time and have another main source of income. Their whole business model falls apart the minute they need to outsource anything or hire a second person.
Lee also says that a number of her brand’s competitors take short-cuts when it comes to importing their Korean beauty supplies, which she says is easy to get away with if you’re a small retailer, but more difficult to cover-up as you grow.
“We’ve realised that many of them are in for a bit of a shock down the track as they are not following the proper importing channels or any of the key legal and regulatory requirements. We’ve seen competitors illegally selling everything from sunscreens to pharmaceutical products. These kinds of practices might work when you’re small but they are unsustainable for bigger businesses.”
Lee isn’t the only business owner having her intellectual property stolen, with Salakas saying he can cite two specific occasions when a competitor has “directly copied” The Party People.
“As an industry pioneer, our competitors do seem to quickly catch onto changes we make and implement them in their own stores,” Salakas explains.
“On one occasion a major competitor copied our whole home page. We sent them a polite email asking them to change it or we would pursue legal action. They promptly changed it and blamed their developer for copying our page.
“On another occasion, a competitor directly copied our shipping page, only changing the phone number and address in the copy. By the time we noticed, we were about to launch a completely updated shipping page. At the time we had a page detailing costs per location and lead times. For example, it was $$0 to Perth and $15 to Sydney. We implemented $9.95 shipping so we chose to not threaten legal action to the competitor as we feared it might prompt them to review their shipping strategy to be more competitive.”
Steps to Take When Copycat Competitors Emerge
So what happens when a competitor copies your business model? While in some instances legal action might be the most appropriate reaction to direct infringement, Huppatz says that continued brand evolution is the best way to fend off copycats, as customers will quickly realise who the market leader is and which company will provide consumers with the best possible service.
“We focus on a number of areas, including product range, shipping options, payment options, and of course marketing,” Huppatz says.
“So there are lots of ways in which you can differentiate. Customer service is very important though. Having a dedicated local team to answer calls, emails and live chat to support our customers is very important, and really influences long-term growth.”
According to Huppatz, the real key is putting the needs of your customer first.
“This involves really understanding who your customers are and building a business to solve their problems and help them. Sounds simple, but in businesses like ours, we have lots of different types of customers!
“People can be buying items for their kids, for birthday presents, Halloween events, for their pets, parties and more. So a lot of thought needs to go into your site design and navigation and how you can make your offering better for customers. You also need to buy well. Being able to scale, and build strong supply lines is very important too. Scale also helps with freight costs and other business costs,” he says.
Lee says that the best way to ensure her beauty brand remains unique is to avoid stocking mass-produced Korean products.
“To differentiate ourselves from the competition, we’ve stopped curating a lot of the so-called “road shop” brands from Korea (mass-produced, mass-marketed offerings) and started focusing on more unique, indie brands that we can really partner with.
“We’ve also stepped up our content creation across all our social media channels, refined our digital marketing strategies and have hired an in-house videographer to shoot our own YouTube content,” she explains.
At the end of the day, Lee believes it comes down to being true to who you are as a brand, “just do you,” she says.
“Don’t be reactive to what other people are doing. As tempting as it is, you really need to stick to your guns, particularly when it comes to important things like margins, product selection and the like. The copycats are always a step behind and often, in their rush to imitate you; they’ll be cutting corners. Habits like that have a way of catching up with people.”
For Salakas, however, it’s more of a confidence thing, both in yourself and in your brand.
“So many people introduce themselves by saying “Oh I am just a…”.These people need to change and start introducing themselves as “I am the…” If you’re not unique, why would anyone want to do business with you?
“You have to keep reinventing yourself. An easy way to do this is to ask yourself the question ‘If someone paid me millions of dollars to disrupt this business, how would I do it?’ Most people know what needs to be done to stand out but lack the courage to take the risk of being wrong. Find ways to test your theories without spending lots of money and test them. You might learn or discover something that will make you stand out. In today’s market, if you’re ‘just another XYZ’, you will not survive,” Salakas concludes.