Starting a new business in any industry sector before the internet was hard. Really hard. It required not only a good product/service, a compelling price point with supporting promotion but also investment to get the product or service in front of customers.
Setting up the distribution channel whether it was establishing supplier relationships, opening retail outlets, branches or recruiting brokers required time and money. Consequently in the pre-internet era many organisations derived competitive advantage from powerful distribution networks. They acted as barriers to new entrants and protected profit margins.
The arrival of the internet then effectively made distribution free. Well, certainly the distribution of digital goods became free and it levelled the playing field in most other sectors. The first wave of digital disruption hit sectors such as music, publishing, travel, gambling and parts of retail. New digitally native start-ups used the distribution power of the internet to disrupt the business models of the incumbents in these sectors. Disruption was slower to hit other sectors where the purchase process was more complex or physical interactions were required. However sectors like banking, fast food retail, transport, hotels, supermarkets, dry cleaning and other home services are now finding that the powerful distribution network they developed over many years is not the sustainable competitive advantage it once was.
The new battleground for many of these companies is Customer Experience.
Empowered customers, with a super computer in their pocket, can research and compare products, place orders and request home delivery. Aggregators are also attacking different sectors offering customers increased choice, flexibility and greater price transparency. To acquire new customers and prevent churn, forward thinking organisations are investing in new enterprise architectures that leverage public cloud, APIs and target mobile. They are updating processes to support greater automation, changing organisational structures to orientate around digital services and harnessing data to offering customers a personalised experience.
Find out how Storm ID can help you move from competing on distribution to customer experience.