Is E-Commerce a Monopolistic Competition?

E-commerce firms that operate in competitive markets should conduct regular competitive analyses. No longer is there a compelling reason not to implement internet pricing monitoring. The eCommerce industry is unquestionably one of the fastest-growing in the world. According to recent data, over a billion people shop online daily. Those numbers are only likely to rise as new mobile technology is developed! Like any other start-up, launching an eCommerce firm has its share of challenges: marketing and sales efforts rather than product quality. Because of the fierce competition on the internet, it is difficult for newcomers to make a name for themselves.

What is monopolistic competition?

  • The company has a lot of buyers and sellers.
  • Non-price competition.
  • The company maximizes profits.
  • High profits in the long run.
  • There are low barriers to entry and exit.
  • Potential abnormal profits in the short term.


Is E-Commerce a Monopolistic Competition?

No, e-commerce is not monopolistic competition. E-commerce is similar to any business, and many companies do not succeed in it. Amazon’s monopolistic competition is the only current situation that will change. 

The biggest problem is a vast supply and weak demand for many products.

Many people think that e-commerce is monopolistic competition because of Amazon. However, based on current estimates, there are around 24 million e-commerce sites globally. Start-ups have difficulty getting their voices heard due to increasing e-commerce and rising online competition. On the other hand, a crowded market demonstrates the existence of demand, making e-commerce an intriguing prospect. You don’t have to defeat already-established giants like Amazon to succeed.

Acknowledge the following tips to stay competitive in e-commerce-

  • Do competitor analysis.

Your e-commerce competitors may teach you about new trends and how to prepare for shifting markets. In addition, it helps you identify possible roadblocks in your area and make better-educated judgments about your business strategy. As a business, you must have a plan to keep tabs on your competition regularly. It will guarantee that you are always aware of the developments in your industry. Where do you begin? When conducting a competition analysis, what should you include? You may use Google and Amazon to determine your industry’s top rivals. Look for a broad product concept, a company name, or specific goods.

Direct competition comes from your top competitors. Both of you offer a similar audience, product, or service. However, your secondary rivals may be selling the same items or services to a different customer base than you are. For example, they may provide your product’s preliminary or deluxe version. Finally, tertiary competition comprises firms competing with one another for the same customer base.

On the other hand, their products are distinctively different but linked. For example, third-party competitors may include a jeweler store if you’re selling gemstones. The following are some of the things you should mention in your competition evaluation after you have done so.

  • Make A Good Marketing Strategy

In the minds of many e-commerce businesses, marketing is typically not the first thing that comes to mind. Making a profit on your first sale is critical to your business’s success. Many e-commerce firms lose money on the first transaction and consider it a “loss leader,” a misconception. Their approach relies on recurring sales to finally become lucrative. In contrast, as a start-up, you aren’t interested in it. You want to make money on every single sale.

Starting with the end in mind is the best way to achieve your goals. Analyze your clients’ sources, the cost of acquiring them, and whether or not the initial transaction is profitable. Search Engine Optimization, Pay-per-Click, Affiliate Programs, Banner Ads, Comparison Shopping, Public Relations, and Social Media are the most prominent e-commerce marketing tactics.

  • Focus on Product Quality 

Customers are drawn to e-commerce firms that provide fresh and innovative items. That’s why staying on top of the newest trends and technologies is essential. However, not every product can be better than your rivals’ or better than the competition’s product. However, this does not rule out the possibility of devising a strategy to surpass them. Competitive advantage comes from being able to stand out from the crowd.

Marketing your product as an improvement over your e-commerce competitors’ is one of the most acceptable methods of differentiating yourself. This might include using newer technology and apps or remaining on top of the latest industry trends. Keep in mind that these enhancements should all focus on meeting the consumers’ needs better than the competition.

Customers aren’t hesitant to stick with a brand they have confidence in. In the same way, when you’re producing a variety of items, quality control becomes a concern. Customer loyalty and revenues might be at risk if your items aren’t up to par. It’s best to focus on a single product when you’re just getting started. As a result, you’re more likely to pay attention to the product’s reputation and general quality. Expanding your product line once you have mastered and grown a single product is possible. Adding product videos to your product photos is just as vital. A slideshow is a great way to achieve this. You may talk about the product’s advantages. After watching the video, 64 to 85 percent of visitors are likelier to buy a product from you.

  • Prioritize customer service.

If you don’t build your product line, there is a good chance that your rivals will sell identical items and use similar marketing strategies. On the other hand, you may name yourself in customer service. Customer service is a badge of honor, so take it seriously. Your consumers become enthusiastic fans of your firm because of your excellent customer service. Zappos is the gold standard for outstanding customer service.

Your purchase price includes a 365-day return policy and 24-hour customer assistance. Zappos employees have a reputation for going above and beyond for their clients. They’ve given flowers to customers, sent complimentary shoes to the best man at a wedding, etc. However, excellent customer service may be the difference between a business’s success and failure.

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  • Establish a Brand

E-commerce sites are continuously competing for the attention of your potential clients. With this, it’s difficult to break through their sensory overload when they’re just like everyone else. Your company’s brand is the foundation of its identity. Putting things into context means determining what you do and why. These ideals define your mission—customers’ perceptions of a company’s brand influence sales. When customers think about your e-commerce firm, their thoughts and feelings are included in customer perception.

As you can see from the examples above, customer perceptions of your brand are shaped by interactions and initial impressions. Therefore, you’ll need a USP (unique selling proposition) to win them over—a liberal return or refund policy and varied delivery options help. Even more so, you’ll find that your brand is your keyword. For organic traffic, you’ll need search engine optimization (SEO).

If you want to avoid getting penalized by search engines, follow the recommended SEO procedures. Transparency is also essential for your company’s public image. Make sure that your website’s contact information is readily available. It’s good to have your phone number and email address prominently displayed on every web page. Don’t hide any additional fees or charges; be upfront about your prices. Your shipping and handling fees should be communicated to potential clients. Also, don’t forget to include detailed information on the products you’re selling.

  • Build Engagement

You must create genuine relationships with your current and future clients to grow your business. It’s a terrific way to connect with your consumers via social media. Don’t stretch yourself too thin by advertising on every platform that comes your way. While evaluating your possibilities, look at your target demographic to see which social media networks best serve them. To assist your target audience in seeing the value in what you’re giving, start a blog where you can provide product updates and exciting material.

Your site should have a forum or community area where people can meet and organize activities. Nothing beats a good time and a big turnout when promoting a brand. Promoting the event early can help develop interest and ensure the subject is relevant to your products or service offerings. Hire a public place, create a social media hashtag for your event, and invite your followers. Encourage attendees to utilize the hashtag when posting images on social media throughout the event. Offer rewards, such as door prizes or trophies, to be won during the event’s contests as a kind of encouragement.

  • Fix a Reasonable Price

You didn’t misread the sub-headline; we don’t provide the best value. Customers buy from you for various reasons, including price, but you don’t have to compete just on price. By providing excellent customer service and high-quality products, you can overcome the fact that your prices aren’t the cheapest in your market. We aim to sprint to the top, not the bottom, if a corporation competes solely on price.

Remembering that it costs money to attract a consumer, raising your rates will allow you to spend more on marketing. It costs money to provide excellent customer service and top-notch products. You would choose superior marketing, customer service, and product quality over the lowest price. Avoid having the lowest price unless your company will be an outlier that goes public, loses money, and has a $240 billion market valuation.


It’s never been easier to sell your goods or services online. Unfortunately, there is a lot of rivalry in e-commerce. New brands can enter the market and take control in seconds, and customers have no reservations about switching allegiances to a rival company. Use Sun Tzu’s “The Art of War” to learn your opponent’s strengths and weaknesses.

Identifying your competitive edge and using it in your branding plan can help. Strive to generate an emotional connection with your consumers via social media, a fantastic website layout, fantastic customer service, and establishing a forum where people can have one-on-one interactions with each other and your business. We hope you have acknowledged everything regarding how much e-commerce we need to keep competitive.

Daniel Smith

Daniel Smith

Daniel Smith is an experienced economist and financial analyst from Utah. He has been in finance for nearly two decades, having worked as a senior analyst for Wells Fargo Bank for 19 years. After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management. At, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification. Read more on Daniel Smith's biography page. Contact Daniel:

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