Using the Internet to Jump the Competition
Welcome to the new Sideroad series, The Passing Lane; Passing the Competition Online. The goal
here is to help business professionals learn to use the
Internet and the Web to become more successful. I'll be
talking about Internet marketing and ways to gain the
competitive edge for your business by using the Net to its
full potential. I'd like to start off with a look at a
recent news story that caught my attention. It's a perfect
example of why some businesses are successful on-line while
others are not.
Reuters carried a story about Barnes & Noble
(www.barnesandnoble.com) and how they are selling off 20%
of their on-line business. Both barnesandnoble.com and
Amazon.com, its main competitor, are posting losses of $23
million and $21.2 million respectively in the second
quarter of this year. But Amazon.com's stock is soaring
at $129.375 a share, while Barnes & Noble's stock was
trading at $39 3/4 on the same day. One industry analyst,
Ehrenkrantz King Nussbaum stated, "This is really part of a
war. Barnes & Noble is considered No. 1 in the industry,
but it looks like a No 2 in the stock market."
How can this be? Why would a big powerhouse like Barnes &
Noble have a stock price so far below Amazon's? There are
two reasons for this apparently unfair phenomenon.
First, although Barnes & Noble is #1 in the bookstore
market, they aren't #1 in the "on-line bookstore" market.
The first rule of marketing tells us that to be a leader,
you have to be first in the mind of the prospect. Whoever
gets into the prospect's mind first, wins. Think about it.
Xerox was first in copiers, Jell-O was first in gelatin,
and Amazon was first in on-line bookstores. Barnes & Noble
may have gotten established first in the physical bookstore
market, but Amazon beat them to the punch on-line.
The second reason for the disparity in stock prices is that
the Internet is what's hot on the stock market these days.
People see potential there. There's that speculative
uncertainty and possibility about it. But, the bookstore
market is a well-known one. It's a tried and proven market.
There's no room for speculation there. As the Web becomes a
more stable environment, the run-away stock prices of
net-based corporations will stabilize as well. I'm no
stockbroker, but I'd say a stock price of $129.375 a share
is a little over inflated and probably won't last for long.
What can we learn from this? It pays to be on the fringe -
the frontier - the first - even if you have to make up a
new category to do it. Amazon would have failed miserably
if they'd tried to open a physical storefront. Instead,
they created a whole new category as an on-line bookstore
and became the first in that new category.
Look at your competition and how they are going (or have
gone) on-line. What aspect of their business are they
promoting? Don't just jump on the same bandwagon. Find
something you do differently, something that sets you apart
and become "first" to be known for it on-line. Put all your
marketing efforts into promoting your category on-line, and
you'll be positioning yourself for success.