Competitive advantage and Sustainability

Micheal Forter once said to create a sustainability a company should either be a differentiator (produce goods that are heavily different from that of the competitor) or the cost leader. (low cost provider) But with the new online business there created a way for companies to be both differentiator and the low cost provider in different markets which they are not expert in. Which is the niche market.

Online retailing create a huge global consumer base. But not to forget this huge world wide consumer base also create now a global competition from other businesses around the world in the same industry. In this bigger competition it comes to the point how much a company can differentiate themselves or cut costs to create a average or a sustainable competitive advantage.

In my venture at FAARO jewelry we planned to create a competitive advantage over thousand other online jewelry retailers. We get access to gem mines in Sri Lanka, where we cut several middle persons and be able to purchase high quality gem stones from gem mines, specially Blue sapphire gems which FAARO is specialized in. There is no doubt should you have about the quality of the gem stones at FAARO. They are natural and genuine.

This create a great opportunity for FAARO to cut down costs of the gems. (Almost 95% of FAARO jewelry are gemstone jewelry) Low cost of jewelry at FAARO does not imply they are bad in quality, we were able to price them low because of the low cost of precious and genuine gemstones that we have the access to.

This can be classified as a sustainable advantage over the market we operate. But will this last for a long time? We dont know, if it doesnt we will look into other strategies.

Another strategy at FAARO is their unique Crystal Sapphire collection, which I mentioned in my previous post. This is not a propounding advantage at the moment but as we sharpen our customer targeting we can extract some revenue out of this product line.

In a nutshell it is very important to plan out your strategies and then build the business plan around and also the business.