Who is breathing down your neck?
We already know about the struggle in the high street; about retail stores being forced to re-think how they do business – check out how Burberry is reacting to that with their blending of the digital and physical retail experience.
We know about HMV and the music industry being usurped by Spotify and music sharing sites ; about Kodak going to the wall after decades of successful trading and Instagram being sold for $1 billion dollars only two years after it launched.
We know about AirBnB, the home-sharing service that is already approaching the worth of some of the biggest hotel chains in the world, with virtually no overheads.
We know about Uber giving taxi and car hire firms a big shake up and bicycle sharing schemes slashing revenues on bicycle production.
Are there any businesses that you think will never be affected by this trend?
How about the law?
Clive Rich started LawBite, an online documents and advice service to offer “a low-cost and easy-to-understand legal service” to the UK’s 5m small businesses. Its prospectus predicts total sales of £9.7m and gross profit of £4.3m by the end of 2016.
How about brewing?
A tiny craft brewery run by two fishermen and a dog in Glasgow took on the world of big brewing. Brewdog turned to Twitter and Facebook to connect with their fans and got the crowd to create new products, voting on key ingredients and a name. Its average annual growth since 2007 has been 167 per cent. BrewDog has raised nearly £6million from 12,500 small investors, many of whom have never owned a share.
The blur Group, a global expert service exchange has only 50 employees but connects businesses with more than 32,000 expert service providers in more than 140 countries. The platform makes a margin of 20% on every deal.
How much does it cost you to acquire a new customer?
It took Amazon eight years to make a profit but, once the fixed costs are in place, most of these disruptive businesses have almost zero marginal costs, allowing fast and easy growth. This has left many traditional companies reeling.
How much does it cost you to acquire a new customer or produce more stock?
Hundreds of millions of people are transferring parts of their economic lives to these new businesses. They are making and sharing their own information, entertainment, green energy and 3D-printed products.
Brands and Crowds
Some companies have seen the trend and are taking the view that they’ll join the movement rather than try to fight it.
Instead of hiring a car from Avis, you can test drive a new BMW for free with a code sent to your smart phone, picking it up and leaving it at pre-arranged spots.
The clothing store Patagonia has a re-seller site on eBay where they encourage their customers to re-sell their goods instead of buying new – proving how hard wearing and long lasting they are and re-enforcing their “green” profile.
New (and not so new) business models
There are business models that are set up for all stakeholders: owners, employees, shareholders, suppliers and customers to be partners. Some of these are new, some have been working quietly for over 100 years but it does seem that technology is enabling more people to experiment with different ways of doing business.
There are flat structures, no job descriptions, no set hours, results driven, “bring your own device” and remote working organisations that make a profit.
The challenge for all of us is to figure out how this is going to affect our own little corners of the business world and to make sure we’re not the next Kodak or HMV.
What are your favourite disruptors? Is your business immune to disruption?
If you’d like to explore how your business could take advantage of acquiring customers at zero marginal cost, contact me and lets talk about it!