Last week I wrote about Amazon.
And whether it is a company that we should love or hate.
My ultimate conclusion was that while it is an interesting debate, for almost all small companies it is an irrelevant one, too.
Because the “customer is all powerful” world that the Internet economy has spawned and of which Amazon is the most prominent example is 1,000% here to stay.
And for businesses – especially small businesses – the only real choice is to either adapt to it…
Luckily, adapting a modern business is far easier than any of us might think.
It begins with coming to grips with the modern customer’s expectation and demand of the highest possible quality at the lowest possible price delivered in the fastest possible time.
Amazon, more so than any company ever, has delivered this to customers through a combination of operational excellence and by being allowed by the financial markets to operate their business on the tiniest of margins for literally decades on end.
And the “Amazon Way” has spread around the world, to thousands of millions of micro-businesses and freelancers – both domestically and overseas – who because of their super low overhead and minimal profit expectations sell and serve customers at extremely low prices.
All so very wonderful for customers, but often impossibly challenging to more traditional businesses across almost every industry.
While this new reality can’t be sugar coated or wished away, as business owners and executives we can take solace that we are customers too.
And as customers, we too can access these low cost sellers and service providers to outsource / reduce our cost structure and to somewhat offset the ever-present margin squeeze.
But in the end if all we do is cut costs it will be no way near enough.
No, we need business protection.
Against the challenge of the Amazons from above, and the swarming competitors from below.
And to be clear, this protection will not, can not, and should not come from the government.
No, the only true form of modern business protection is better strategy.
Better strategy as to how best to adapt and pivot to those “adjacencies” in our industry and to our business model that are more in line with modern marketplace realities.
For many businesses, this might look like serving a more premium and less price sensitive customer demographic, and in turn forsaking the plentiful but more structurally unprofitable mass market.
Or in rethinking our delivery model in a such a way that our customers serve to themselves their purchased products and services, and thereby structurally increasing our efficiency, throughput, and margin.
Uber and AirBNB are prominent examples of this self serve approach, and through a combination of innovative thinking and creative application of new technologies “sharing economy” process models like this can be applied to almost any business.
Or perhaps mixing in a bit of both of the above, on the one hand seeking to serve a mass market via a more self-serve delivery model, and on the other hand raising prices, perhaps under an entirely new brand, and then “walking that talk” with vastly improved product / service quality and customer care.
But as every business is a little different, so for every business the proper adaptation and pivot will be different too.
The only thing that will always be the same is the need to do it.
Because adaptation is way better than death.
Need to Adapt and Innovate Your Business?
Feeling pricing pressure coming at you from all sides and not sure what to do about it?
Like to tap into some Uber / AirBnB “sharing economy” business model magic?
Feel you have to do something new to get your business moving in the right direction?
If so, we should talk.
And we’ll reach out with our thoughts to help you.