I recently read a wonderful book – The Everything Store by Brad Stone – that narrated the story of Amazon.com through in-depth interviews with Jeff Bezos and several others who knew the story from close quarters. In the book, Bezos gave us a peek into the finer nuances of his thinking process, something that enabled him to build the world’s largest e-commerce venture. One aspect that stood out for me was his view on competition and competitors. Bezos deeply believes that mimicking ones competitors is one of the drawbacks of several founders; He believes, instead, in focusing deeply on one’s customers often ignoring what the competition is doing. The idea of being customer-centric might sound simple on paper but as many founders often say, it is extremely tough to implement.
A classic example of a company that doesn’t worry too much about its competition is Apple. It took its own path to becoming the world’s most valued company (its current market capitalisation is a whopping US $700 million). Considering that Apple and Microsoft competed in the operating systems category (in the early days), it would have been easy for senior Apple executives to try and compete with Microsoft in several other areas including Gaming (Xbox), Office Products (Microsoft Office) and so on. Instead, Apple took its own path and built market-disrupting products in the music player, smart phone and, eventually, tablet categories.
On the other hand, Microsoft fell into the trap of mimicking competition. It built Bing to compete with Google Search (a lost battle) and bought over Nokia to compete with Google’s smart phone business and the iPhone (yet another lost battle). The point is: it is futile to mimic competition, especially when you don’t do it from a customer viewpoint.
In an interview with Wired magazine, Larry Page of Google touched upon this subject a little bit. He simply said: “If you look at the media coverage of technology companies, often it’s about tackling competition, and it is not the way we look at it internally.” For Page, like it was for Steve Jobs, it is rarely about what the competition is up to. Instead, it was about building products that improved 100x over what existed in the market. Sometimes, it was about launching a whole new category.
Of course, the other side of the argument is that if you take your eye off the competition, they’ll run you over. They’ll raise more money, hire better people, run larger marketing campaigns and destroy your offering. The point is not to ignore competition, but to keep it as one of the elements while continuously building yourself up, to serve more and more customers.
In India, atleast if one goes by what the media reports, there is very little differentiation among the top few e-commerce companies. Flipkart and Amazon India are battling right at the top. Snapdeal, the company on the cover of this edition, is right behind in the race. The Snapdeal founders believe it’ll become the Alibaba of India, not the Amazon of India, maybe indicating that it’ll foray into B2B commerce as well. Flipkart on the other hand hasn’t voiced its role model in as many words. Jabong, another competitor in India’s e-commerce battle, is hoping to be acquired by Amazon, according to recent media reports.
However, ironically, the winner of this fierce e-commerce battle will not be the company that beats its competition, but it’ll be the one that delivers the maximum value to its buyers and sellers. If you’re Snapdeal, you’ll have to deliver to your merchants who’ll recommend the offering to their other merchant friends. The experience of the sellers will have to be magical; they need to make more money than they’d make with an Amazon or a Flipkart.
In short, business is not a sport. And, it is certainly not just about beating your competition.
Happy Playing.
