The challenge is to become a destination.
Something weird happens when people go online. Instead of going to multiple stores, like they might go to multiple shops in the bricks-and-mortar world, they go to their one favourite destination. It’s almost as though it doesn’t occur to them to go elsewhere.
To illustrate this, just think of some of the big online brands and then ask yourself. Who is going to seriously challenge Amazon for leadership in general book sales? The answer is no-one, although more recently Book Depository is giving Amazon a decent run.
If I’m going online to buy a book, I go to Amazon first. My friends are exactly the same.
The fact is, most people behave like us – and the proof is that Amazon is and remains the biggest bookstore online. Barnes and Noble might be a big book store in the bricks-and-mortar world – and it has an online store too, but Amazon dominates the Internet.
So the challenge to marketers everywhere – those that want to be big online – is that they have to find a way of their websites being destination websites too – the place the buyer goes first because their brand is front of mind – and this is especially true as the Internet becomes more and more crowded.
And while optimising your website today so that it’s found in search engines is important, I predict its importance will diminish in the future as people get more overloaded with information and start culling.
You can’t copy an online leader and expect to win.
Then there’s eBay which has had a profound effect in online retailing.
In Australia, there was a second-hand trading site called the Trading Post where you could list your stuff for sale. Then eBay came along, with a bigger marketing budget, a better brand position, and it simply outclassed the local effort.
To compete, the Trading Post changed itself to copy eBay. It too began to offer auction formats. The moment it did that it was doomed. Instead of copying a bigger brand, it should have differentiated against it so the consumer was offered a real alternative.
It could have taken a leaf from history, to the classic marketing case study, the battle between Hertz (leader) and Avis (challenger) where Avis used Hertz’s position as leader as a weakness.
Avis told the public, come to us, our queues are shorter.
Trading Post could have told the public, if you want junk, go to eBay, for the good stuff, come to us.
But it didn’t. Ciao baby.
First mover advantage is really important.
There are people that argue about the importance of first mover advantage, that is, the marketing theory that says if you’re first in the market, you’re in a better position to dominate the Internet than if you’re a follower brand. So I want to qualify this by saying that by first mover advantage, I mean the first to get locked into consumers minds. There is no point being first to market if no-one knows you’re first to market.
The overwhelming evidence says that first mover advantage IS important. The website that gets locked in as THE destination is hard to dislodge.
Look at Amazon, it was the first to get locked into online book-buyers minds. There are many online book shops trying to compete – but not coming close.
Look at YouTube, it was the first video hosting to get locked into mainstream consumers minds. Yet there is metacafe, vimeo, blip TV and many others that hardly rate a mention.
Look at eBay, it was the first auction site to get locked into online auction shoppers for general goods. In fact, in New Zealand, they have an auction website called TradeMe. It was the first auction website in New Zealand – and it’s locked into New Zealand consumers minds.
Most buyers on Trademe have heard of eBay – and Australia is close to New Zealand so it’s not as though shipping something is a nightmare – and yet most New Zealand Trademe shoppers don’t bother going there unless perhaps they cannot get what they want from their first destination, the place they always go first, and that’s Trademe. The fact is, it doesn’t occur to them.
Once you’re locked in as a destination, it’s hard to dislodge you.
Losing Your Leadership.
When Yahoo lost search leadership to Google, largely because Google had a much better product, it never got it back.
It is very hard to unsettle a leader once they are entrenched online and locked into people’s minds. So Google is there for the long run unless it makes some big strategic mistakes.
But the same rule applies to Google as it applied to Yahoo! So, when Google entered China, it wasn’t the first search engine. Despite all its money, it was up against another big entrenched leader, one that was locked into people’s minds, and that left it with no hope of claiming market leadership.
The Chinese Government made it difficult for Google, requiring the search engine to censor results. Google didn’t like it. It pulled out of China in 2010 and, now that’s 2016, it wants back in. It’s re-entered the market through its Hong Kong subsidiary, running third behind Baidu and Siso. It will never catch Baidu, the leader, now.
So the moral of this story is that people head to one place for one thing. It gets locked into their minds as the place to go. They don’t tend to buy across multiple online stores. People are reaching the point where they have so many sites to visit already that there needs to be a really compelling reason to visit yours – and this applies even if you’re not selling online, perhaps your providing information or wanting to build a community or get customer feedback.
You need to understand this principle when you build your business plan because it helps you refine how to compete and then you can satisfy investors or your boss that you know how it works so you have more chance of success than failure.
Product Development is King.
Product managers – or those trained in product management – are in a great position to understand the Internet and websites.
If you look at Apple’s iPod for one moment, that was the first MP3 player to facilitate the easy transfer of music from a computer to portable music device via a USB port. They stitched up 80% of the market for MP3 players in the first two years.
To hold their share and stop cheap Asian copies, they deployed a really aggressive product roadmap, and every six months the iPod model would be superseded by another, newer, faster, higher functionality model. What this means is that while a factory in Asia is trying to copy an iPod, by the time that’s done, the iPod they are copying is redundant, superseded by something newer. It keeps imitators always on the back foot.
Look at Google. They do what Apple does – take the same thinking and translate it to the Internet. Google is constantly developing its product roadmap. It doesn’t stand still. From starting with a search engine, we were then given mapping, access to images, it bought YouTube so we got video, it gave us Google earth and access to those amazing NASA pictures. By pushing out its roadmap, Google is defining what consumers expect from search engines, so Yahoo always played catch-up and Bing will have a great challenge on its hands to catch Google.
Everyone online is vying for someone that someone else is also competing for.
So there might be some people that don’t agree with me. They might say that people are increasingly going online and using search engines to find products and services. That’s absolutely right, people are doing that. Today. But once they know where to go, they don’t need a search engine anymore.
Think about this. How many websites have you got saved to your favourites? There might be a few news sites, your bank, maybe your email if you’re using a webmail service.
eBay, Youtube, Facebook and Amazon might all be saved to your favorites. You might have a few communities as well.
Make no mistake, the online world is very competitive because your customers have limited time to get around to all these sites they favourite already. Everyone online is vying for someone that someone else is competing for.
Now here’s the other thing. When someone goes straight to a destination, most usually bypass a search engine to get there. They just click on their link. In the process, they also bypass all or any competitors.
It is no coincidence that Google launched a browser so that it can follow a person’s online behaviour outside of its search engine. Whether you like it or not, Google has a lot of information about its users.
You are wasting your time duplicating a competitor that has been locked into a consumer’s minds. Find a different drum to bang, a different story to tell, innovate or target a niche that your big entrenched destination cannot cover as well as you can.
Without credibility, you have no brand.
Even more than in the bricks-and-mortar world, you have to have credibility. It is easy for consumers to post negative feedback about their experience with your brand. It is easy for competitors to do the same. (Given it is easy for someone to make you look like a bad supplier and it is hard to undo the damage caused, you should care about Reputation Management.)
In the online world, you have to develop your product and never rest on your laurels so you can keep copycats on the back foot. But aside from product development, public relations is perhaps THE most important marketing discipline you can apply to your brand strategy, much more than advertising.
Creating credibility online – getting endorsement from others that you’re a great online brand to deal with – removing any risk associated with dealing with you or purchasing from you – is fundamental to your online success. There are way too many consumer review forums that ensure that if you’re not credible, then your online brand life will be strictly limited.
The Myth of Cheap Online Pricing.
It’s hard to imagine, but I have a surprise in store! You do not have to be the cheapest online to be the leader in your category.
It is a complete myth, a fabrication, that you have to be the equivalent of the offline world lowest cost provider and if you need proof, we’ll go straight back to Amazon who is NOT the cheapest book store online but it is the biggest. Amazon has a great range of product and fantastic customer service but it does NOT have the cheapest prices.
So the thing about pricing for the Internet is this: most often, people go to the Internet to compare online prices to the bricks-and-mortar worlds.
The thinking goes – Okay, if I want to buy this TV and it’s $500 in a local bricks-and-mortar store, how much will it cost me online?
If the products are commodity products, high value and easily price compared, the buyer may compare online prices, but overwhelmingly, buyers will buy first on other factors. Let’s use the TV example. Tom’s online with the TV for $350 – and he has 20 negative reviews. Fred’s online with the same TV for $400 and he has 50 positive reviews. Will people pay the premium to know that they are not dealing with shysters? You bet they will. An extra $50 is nothing compared to the peace of mind it offers.
Picture credit: Freepik