In this article we will discuss:
- Not keeping their eye on the ball drove these companies to become obsolete
- How web data could have helped these companies to thrive
- Leveraging the next black swan window of opportunity
Not keeping their eye on the ball drove these companies to become obsolete
Here are two examples of companies that were disrupted:
Kodak is the classic example of a company that had a massive market share in the camera industry and pulled in the lion’s share of its revenue from film sales. But the digital camera completely changed the market, making their revenue model obsolete.
Blockbuster is another example of a company that was caught completely off guard by current consumer demand and competitor activity. Blockbuster was huge in the US in the 90s and early 2000s – families would go to stores and rent a stack of DVDs for the weekend. But then Netflix entered the market, offering to mail movies to customers and ultimately cornering the entertainment-on-demand segment. By 2010, Blockbuster could no longer compete, being forced into full-blown bankruptcy proceedings.
Here is one example of a company that acted as a major disruptor:
Amazon has totally remade retail in its own image. It began by selling books that were better priced, easier to find, and shipped directly to consumers. It has since branched out to almost every product category imaginable, not only selling items but also serving as a platform for third-party vendors.
Amazon’s share of eCommerce Gross Merchandise Volume in the United States from 2016 to 2021
It is hard to quantify ‘retail’ as a whole, and using a 50% blanket statistic would not be correct in proper financial analysis terms. But many industries, including books, homeware, and phone accessories (among others), would concede to losing close to half of their sales volume to the digital retail powerhouse.
How web data could have helped these companies to thrive
When looking at companies like Kodak and Blockbuster, as well as retail department stores thrown off balance by Amazon, they all have one thing in common:
Consumer and competitor web data collection in real-time in order to make strategic decisions would have enabled them to adapt, pivot, and thrive in a dynamic market environment.
- Had Kodak identified that consumer sentiment was shifting away from cameras with disposable film, while interest was simultaneously peaking in digital cameras, they could have rolled out a new product line in time.
- Had Blockbuster been taking its industry’ pulse regularly, identifying new business models with high subscription rates, coupled with strong consumer interest/engagement, they could have digitized their video selection and potentially have become one of the biggest on-demand streaming services currently in operation.
- Had big retail chains taken notice of the Amazon model, noting a thirst for quick delivery, transparency, easy vendor comparison, as well as a peer-review-based shopping experience, they could have opened their own online marketplaces.
They may have realized that their bricks & mortar locations actually gave them an advantage to create an online-offline model that would enable consumers to shop how and where they wanted. Amazon in recent years is just getting around to opening physical locations after cornering the internet space. In 2020 J.C. Penney, Neiman Marcus, Tuesday Morning, Brooks Brothers, Aldo, GNC, and True Religion along with tens of other retail outlets filed for bankruptcy both in the US, and globally over the course of 2020. The ‘COVID-19 pandemic’ was cited as the ‘cause of death’ but really their inability to understand what consumers wanted (digital access), and what competitors were doing (quick delivery, free returns, dynamic pricing) was what really caused them to go under. Proof of this is that big eCom marketplaces only expanded as the waves of pandemic came, and went like the tides of the ocean.
Leveraging the next black swan window of opportunity
I speak to many business people. The successful ones are stuck in the past, lamenting over missed opportunities. The successful ones look at those same missed opportunities as a learning experience for the next unforeseen event. These are what we call black swans, COVID was one, Amazon was another, the subprime “crisis” in 2008, 9/11, the Afghanistan war, etc.
When a company utilizes web data, they are never “taken by surprise.” They have a real-time snapshot of what is going on:
- Where are consumers spending money?
- How are competitors addressing new challenges?
- Which new services and goods have become the new necessity (think PCR tests, and face masks)?
Better to disrupt than be disrupted.