As retailers cut back their outlets and reduce their floor space, and as e-tailers re-evaluate their true market position after yet another tough quarter, a range of conclusions have become clear. Among them is the fact that being a narrow-line retailer is more successful than being a broad-line retailer. And this assumption is interesting because it points to what will and won’t work in the future. Let me explain…
Until now, only a few true portals have established a clear presence in our consumer minds. You already know them (so I won’t mention them), but if I asked you to name more than five portals, you would probably be struggling.
Running one of those top portals is appealing. Imagine being at the consumer mind’s epicenter. You couldn’t wish for more, right? But the fact is that the price for entering and staying in that inner circle is too high for the returns the position generates.
To achieve the status of a well-known portal, even if it’s only in the USA, you’d have to outlay at least $300 million a year for marketing alone. So what happened to the other portals, the not-so-famous ones? Some died. Others became narrow-lined: They specialized.
Exactly the same trend has developed offline in the retail environment over the past few years. Only a very few new retail brands have established strong market positions. Almost every new retailer that has stayed afloat has been specialized in a niche.
So, the lesson learned is that when e-tailers try to be everything-for-everyone, most of them became nothing-for-nobody. Lack of focus is the problem. Not many broad-line e-tailers have survived, and the ones that have are in that top three category. Quick! Tell me the fourth largest book portal on the Internet. Thought so… You can’t, eh? The future for e-tailers will be all about narrow-line e-tailing: focusing on one group of products and becoming the best within that category. Successful examples of narrow-line e-tailing are numerous.
Basically, the trick is to gain first-mover advantage (FMA) in your choice of product category, or to ensure your brand is one of the three. If you’re number four, you’re dead. So, if you can’t make your way up the ladder, create a new category and conquer it.
Today’s trend is clear. The narrow focus has become a part of our lives almost without even realizing it. And the Internet supports this trend more than any other medium. Creating the smallest, most narrow-lined e-tail store in the city, in the country, or even in the world won’t stop you from becoming successful. It means that your market no longer remains local. It becomes global. Retailers realized this, not because their markets became global, but because they capitalized on catalog ordering on one hand, and the consumer’s apparent willingness to drive miles for the best selection on the other.
E-tailers still haven’t figured this out yet. Are they too narrow-minded to go narrow-line?
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