How to Launch an Online Business in a Highly Competitive Industry

Anand Srinivasan

Anand Srinivasan

There are a number of reasons why first time entrepreneurs are wary of competitors in their space. Competition typically tend to engage in price wars. While this is good for consumers, it affects your cash flow and profitability. If your competitors have deep pockets, they could afford to provide higher quality products for a lower price and this can threaten your very survival.

While these are risks that are part and parcel of any business, competition, in general, is good. For one, it validates the demand for your product. Also, it provides you with a benchmark of where you currently stand what you should do to acquire more customers.

But what do you do when you are in an industry with thousands of competitors? This is true for online businesses like web hosting providers, marketing agencies and loan comparison sites. How do you stand out from competition and acquire customers? Here is a short guide.

Find the right market positioning

While you may have hundreds of competitors in your industry, customers typically choose a provider from a handful of players. They may arrive at this short list based on factors that are important to them.

For example, in the web hosting segment, there are tons of factors that determine what is the right hosting for any particular customer. There are some hosts that offer the cheapest plans while there are others that focus on premium clients. In addition to this, hosts also focus on specific hosting categories like shared hosting, VPS or dedicated hosting. For many customers, the geographical location of the server is a huge determining factor.

As a business entity, it is important for you to chart out an exhaustive persona of your buyer. Your typical buyer persona, for instance, could be a 35 year old male with a small shop serving customers in the London area. Knowing this, you could position your business as a small business hosting service with a server in London. This way, you instantly stand out uniquely in your niche and stand out from competition that cater to a global customer base.


Word of mouth is one of the most effective ways to acquire customers. On the internet, this is taken over by online reviews and recommendations. A prospective buyer looks up reviews from third party portals before making their purchase. Partnering with such influencers can go a long way in acquiring customers.

The most popular way to do this is through affiliate marketing partnerships. With this strategy, the influencer or publisher earns a commission from the business entity each time a customer they refer to your business makes a purchase.

Success with affiliate marketing comes with the right execution. Partnering with publishers who promote any and every business can bring down the reputation of your site in the eyes of customers. It is a good idea to partner with a select few influencers who are trusted by customers. Such influencers offer their honest reviews and criticisms despite benefitting from a successful customer conversion. Partnering with such affiliates can do your branding a world of good.

Affiliate marketing is not the only way to partner. One of the more common ways to partner is through service partnerships. Users of your product or service typically work with other businesses and service providers too. Partnering with such businesses can help you acquire new customers.

Let us go back to the example of the web hosting industry. A typical customer here also works with web development agencies for building their website. In such cases, you may partner with popular web development agencies in your geography and offer discounted price for their customers. This gives them a competitive edge over their competitors and also helps you bring their customers to your fold in the process.

Find unique marketing channels

Most digital advertising platforms use an auction model to determine the top placements on their platforms. This often shoots up advertising costs in hyper-competitive industries as there are a large number of advertisers vying for a finite number of ad spots. Such channels are not viable for new entrants who do not have adequate marketing budgets.

This also means traditional SEO can be quite expensive since it might be incredibly difficult to beat competitors to the top spot. In such cases, you will need to be creative in your marketing strategy.

Content marketing is often regarded as one of the more effective methods in this regard. This does not only include blog marketing, but also many other forms of content, including visuals (that includes memes, infographics, stock photos, original graphs, etc.), videos, and the like. As a matter of fact, one study shows that over 56% of marketers had visuals in their content over 90% of the time.

The reason this strategy works is that original visuals are relatively harder to come by. Add to this, the fact that visuals engage audiences much better than text, many publishes prefer to link out to visuals produced by other sources in their content. Consequently, producing original visual content can help serve to broaden visibility and bring new customers to your website.

You may also consider investing in other forms of marketing like publishing market reports, launching a YouTube channel on a topic relevant to your audience, publishing books, offering interviews, and so on. Successful marketing is simply a measure of how creative you can get in order to expand reach while keeping marketing costs low.

In conclusion, it is worth pointing out that a hyper-competitive industry is a tough place to be in. But that does not mean that a new entrant cannot survive. With the right strategy and a solid product or service to offer, startups can beat established competitors in a space and may also take the lead over the long term.

Do you know a company that has managed to beat established competitors in a highly competitive space? Share their story in the comments.

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