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9 Tips for Starting a Business in a Crowded Digital Marketplace Just because you weren't there first, doesn't mean you can't do it best.

By Patrick Carone

Boll & Branch

Many successful entrepreneurs were inspired to start their businesses after noticing a hole in the marketplace that needed to be filled, whether it was Bill Gates creating an operating system for home computers, Pierre Omidyar starting an online auction site, or Elon Musk building a reliable electric car.

But what happens when you want to jump feet first into a marketplace that's already crowded? We spoke to the entrepreneurs behind a wide-ranging group of successful companies in some of the most competitive digital spaces -- from butchers to home brands to eco-friendly cleaning products -- to get their insights into what makes a business that lasts.

Related: 63 Businesses to Start for Under $10,000

The common theme? Product quality is the most important way to make a splash. As Scott Tannen, CEO of e-commerce luxury home brand Boll & Branch, says about their signature direct-to-consumer mattresses, "While we take tremendous pride in the people and processes behind them, it is our finished products themselves that truly set us apart."

What else do these success stories focus on? Here's what the entrepreneurs behind them told us.

1. Offer the highest quality product

Other direct-to-consumer mattress brands may offer lower prices, but they're also largely following the cheap-to-produce blueprint of compressible, boxable foam beds made popular by O.G. market disruptor Casper. (The number of online mattress-in-a-box companies is currently upwards of 150 and climbing.)

Boll & Branch's mattress is more expensive than most -- $2,500 for a queen size, compared to $995 for Casper's popular mid-level offering. But the company isn't so much trying to compete in the current space, as they are trying to re-disrupt it altogether.

"The Boll & Branch mattress is a hand-crafted, luxury mattress that doesn't use a speck of foam or any of the other toxic materials that are commonplace in the mattress marketplace," says Tannen. "We think that anyone bringing high quality, ethically-sourced products to market is good for us, and everyone, and we're happy to play that role in the mattress space."

They've not only traded cheap foam and toxic materials for latex and organic cotton grown to the highest possible standards; but also place a real emphasis on transparency -- which means, no more inquiring about that strong chemical smell, and receiving a vague answer from customer service. (And which also means, no more strong chemical smell to begin with.)

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James Peisker, co-founder of online butcher shop Porter Road, has a similar take. And while delivering meat to people's homes is definietly not a new idea -- Omaha Steaks was founded in 1917 -- an ever-expanding number of upstarts is starting to eat into the $55 billion U.S. meat industry, per Bloomberg.

"Start with your product and make it exceptional," says Peisker. "Often, entrepreneurs bring a specific set of experiences and skills to the table and tend to lean on them as they embark on their dream of creating a business. While savvy marketing, PR, customer acquisition skills, etc. can help you to quickly scale and generate interest and trial, ultimately your product is your calling-card, and the quality of that product will have a greater impact on the longevity and success of your business than softer business skills. Once you have nailed your product, those other skills become incredibly useful, but great brands and companies have a moat around them and a unique, differentiated product is much harder to replicate than advertising and media."

This tack has proved successful for Porter Road, which has experienced an incredible 500% year-to-year growth and has sold a hefty 150,000 lbs of meat to date.

2. Educate customers on what makes your product different as soon as you start your business

"At our heart of hearts, we are a mission-driven educational company," says Kelly Love, co-founder of eco-friendly, female-founded Branch Basics cleaning products. "We have always wanted to share information with others on how to create a healthy, non-toxic home. In the B2B space, that message is diluted and oftentimes, lost. We love that we have a direct line of communication to our customers so that we're able to share information and products that will enhance their lives. We chose cleaning products as our "trojan horse' for non-toxic advocacy, because they're used by everyone, every day, and are an easy alternative to something consumers are used to doing (versus introducing a totally new product into their routine)."

Allison Evans, Branch Basics co-founder, says this is particualrly important in the exploding-but-difficult-to-define natural cleaning category. (Federal regulations don't require proof for environmentally friendly claims, unlike FDA certifications for food.) "There is so much misinformation," she says, "from ingredient safety labeling to greenwashed marketing, it's critical that our products are never on the same "shelves' (both physical and conceptual) as conventional cleaning products that don't share our non-toxic mission."

This holds true in any online market, whether you're selling dish soap or beef ribs.

"We differentiate ourselves through transparency, quality, and being the only relevant entrant into this space that touches our own product every step of the way," says Porter Road's Peisker.

3. Personalize your product

Entrepreneur and author Anand Srinivasan says product personalization is an ideal strategy for startups that compete in a space led by big brands. "Huge brands typically operate at industrial scale, making it difficult for them to adapt and personalize their products to individual customer tastes. Startups can use their agility to offer a product or service that is more appealing customers."

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He points out two brands as examples: Alala, which competes against the likes of Adidas in the female workout clothing space, lets their customers customize their apparel. Boca Java, a brand in the highly competitive coffee space, specializes in creating customized orders according to consumer preference.

4. Improve the experience

"This is by far the most common and popular strategy to penetrate a market," says Srinivasan. "To do this, you understand the average customer experience in the industry and make it demonstrably better for your customers. Some of the biggest companies today have successfully deployed this strategy."

He points out Apple as a prime example: "They've done this several times in the past with products like iPod and the iPhone. The iPod was not really the first portable music player in the market, just like how the iPhone was not really the first smartphone. Yet both these devices dramatically improved user experience. With the iPod, users could hold up to a thousand CD-quality songs in a single device, something revolutionary at the time."

Another recent example he points out is Uber: "With millions of taxis, Uber entered a highly competitive and fragmented market. Yet, by providing a better experience through door-step pickup and GPS navigation, Uber revolutionized the transport industry."

5. Be fully transparent with your customers

No matter the industry, customers appreciate transparency. When you're trying to break into a business that's traditionally shrouded in secrecy and misinformation, being upfront is even more vital.

"We are pioneering radical transparency in the cleaning industry -- full ingredient disclosure plus end-product testing," says Marilee Nelson, Branch Basics' third co-founder. "There are essentially no regulations required for ingredient labeling of household cleaning products; a cleaning product can have a completely "proprietary' formula. This opens up an enormous window for dangerous ingredients that are cheap to produce, but costly for our health and ecosystem. Not to mention the opportunity for marketing "greenwash.' We've taken extreme measures to ensure our product's safety because our customers' health depends on it."

Related: The Complete, 12-Step Guide to Starting a Business

Boll & Branch's Scott Tannen is in full agreement: "We're the first luxury home brand with a completely transparent and traceable supply chain. By working directly with farmers, we know the exact origin of each product, from the parcel of the land the cotton grew on to the name of the farmer who grew it. We partner with family-owned factories that exclusively make our products and ensure that each product is made with respect for the human and environmental resources that make it possible. Our people-first, ethical and sustainable approach maintains our standards of luxe, quality, long-lasting products, without which, we'd never be in a position to make the impact we have."

6. Embrace the digital marketplace

Sometimes, the more things change, the more they stay the same. Take Tannen's views on Boll & Branch being a direct-to-consumer business: "In many ways, it's an old-fashioned way of doing business. The internet enables us to actually have a one-to-one relationship with every customer that walks through the door. Yes, we sell luxury bedding, but we are truly in the customer service business. Technology enables us to deliver our customers are more unique and customized experience. And, in turn, when they're satisfied with our service, products and brand, geography and distance does not disrupt their ability to recommend us to their friends."

For Porter Road, moving online was, as Peisker puts it, "really just the digital manifestation of the face-to-face interactions we've had with customers over the butcher counter since 2010. Some customers want to go down the rabbit hole on our process, so we created article content to get into those details on our website. Some customers just want a mean ribeye, so we launched the business as a la carte first and foremost. We used to write cooking tips and recipes on the butcher paper wrapping we handed to customers, so every product page on the website has preferred cooking methods and gear."

7. Delegate responsibilities and focus on strengths

Entrepreneur and consultant Peter Gasca emphasizes how important it is for entrepreneurs not to shoulder all the work themselves, looking at U.K.-based denim sunglass company Mosevic as a case in point: "Founders Jack Spencer and Alexander Boswell bootstrapped their company from the start, often doing everything from marketing to office management to accounting. Because they were both product designers with no previous business experience, this meant that most of their time was spent learning new skills needed to keep the business going instead of focusing on the skill they did best -- innovating and designing."

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"Eventually, the founders decided to outsource the tasks that were better completed by more experienced individuals, such as finance and marketing. For other startups, this means identifying and focusing on your strengths and prioritizing the search for great partners and employees that fill your weaknesses."

8. Be local, wherever you are

Don't let the fact that you're a digital company, accessible from anywhere in the world, create a distance between you and your customers. "Our entrance into this space was organic, and going online was the natural progression of Porter Road," says Chris Carter. "Back in 2010, we saw a need in our local community of Nashville for quality, sustainably-raised meat, which lead us to opening our brick-and-mortar shop in east Nashville. The consumers' desire for transparency in where their food comes from lead us to purchase our first processing facility. As friends, family, and customers moved away from the Nashville area, they let us know how much they missed having Porter Road in their lives. Seven years after the first butcher shop opened, we can now be your local, trusted butcher no matter where you are in the country."

9. Learn from your mistakes

This well-worn maxim holds true in every business situation, and is especially relevant in the fast-moving, ever-changing digital retail space. "Stay true to your values and know that business, just like life, is not a straight path. It is what you do with the detours that make you a failure or a success," says Porter Road's Chris Carter.

Marilee Nelson of Branch Basics agrees, and offers some additional insight: "Make sure you're not just there to sell! Your passion, personal story, the "why' behind the brand all matter so much, especially in today's overcrowded marketplace. We've had a few business blunders along the way that, quite honestly, would have closed most companies down. We only survived because we never tried to sell soap -- we are passionate about our mission and determined to share it with others, the products simply follow."

Related: 100 Businesses You Can Start With Less Than $100

Patrick Carone

Entrepreneur Staff

Special Projects Director

Patrick Carone covers all aspects of entrepreneurship, specializing in the automotive, entertainment, hospitality, spirits and cannabis industries.

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