Competition’s good for business

WHEN entrepreneur Paul Slee started online grocery delivery service Ezyshop in 2005, there were no direct competitors in the market.

"I saw the potential niche in the grocery market in Perth for a quality and affordable online service," Mr Slee told WA Business News.

But that situation wasn't to last, with a number of new entrants joining the sector after also recognising the opportunities.

And while Mr Slee acknowledged that his competitors helped develop the evolving sector, he said he soon recognised the need to change his business model or face losing market share.

"I would describe it as getting increasingly competitive," Mr Slee said.

"This is great for the consumer as they are not only getting a better deal, but they are also benefiting from better service, value and improvements.

"Increasingly, new technology, like better websites and more options, is making online shopping easier.

"The increasing competition is also good for Ezyshop as it's generating more awareness of online shopping in Perth, and encourages consumers to seek out better service and value."

However, Ezyshop quickly lost its place as the largest online grocery business in Perth when supermarket giant Coles launched its online service in May.

"But the big marketing spend by Coles when it launched had a positive impact on our sales and it put the spotlight on online grocery shopping and the fact that services such as ours exist," Mr Slee said.

"Initially, we feared this would mean a big drop in customers for us due to Coles' large marketing budget, which we could never compete with.

"However, we looked at the positives and focused on areas we knew we could surpass our competition, which is value and service.

"We also sought our customers' feedback and surveyed them for areas they enjoyed and areas they wanted to see improved."

From this research Ezyshop realised that, regardless of the advertising budget, online consumers in Perth wanted quality service.

"As we offered a very high level of service already this was a very cost effective way of beating our new competitor," Mr Slee said.

He said Ezyshop had the capacity to resolve any customer issues quickly, without directing them to eastern states call centres like some competitors, meaning the issues were dealt with directly.

"We found that, of those customers who left to try Coles, most returned after a week or two," Mr Slee said.

"We also received a large number of new customers as the Coles advertising helped grow the online market significantly.

"We are heavily focussed on service, whether it's as simple as the customer asking us to phone them 10 minutes before delivery or to stock a particular product they want - we can respond quickly.

"We have not only maintained our current level of service but have also looked at ways of making our service even more user friendly and an enjoyable experience."

Since May, Mr Slee said, the small business, which now employs 30 staff, had achieved steady growth of more than 10 per cent per month, which was expected to continue to the end of the year.

"As Coles helped to grow the market we saw a greater awareness of online grocery shopping which ultimately helped our business grow in sales and [led to] new customers signing up," he said.

"We have had great growth over the last three months and are still on target for our end of year target in terms of sale revenues, which was set in January before we knew about our new competition.

"Ironically I believe that their presence in the market has grown the market in Perth."