How do e-commerce companies establish their own industry barriers?What are the barriers to competition?

Market orientation = customer orientation + competition orientation.

• Industry competition isInternet marketingkey.
• Just being customer-centric is a luxury.
• You can never talk about customers without competitors.

Michael Porter, the father of competitive strategy, gave a wonderful answer:The so-called competitive strategy, the most critical issue is to keep yourself out of the competition.

• It's not about when you did it better than the competition, it's about how to do it differently.
• Therefore, the core of the competitionPositioningis differentiation.

How to achieve the highest degree of differentiation?

It is to establish their own industry competition barriers and moats.

However, many people think that a moat is product, management, etc., but this is not the case.

High-quality products, high market share, effective execution, and excellent management, while good, can lead to differentiation and competitiveness in a business.

But sorry, these things are not called moats.

Buffett believes that the moat is a competitive structure, even more important than the CEO.

So, how should the moat be designed?

What are the barriers to competition in the industry?

The current industry-accepted model includes four dimensions:

① Intangible assets

• For example, patents, brands with higher premium rights, and some franchising licenses.
• Its core is that competitors cannot imitate or enter.

② low production cost

• There is a unique resource endowment that can constitute a low cost.

③ Network advantages

• The advantages of the network scale, for example, the operator introduced a preferential system for buying iPhone, many hot became its users.
• But they are very dissatisfied with its service, but will not change it in ten years because all contacts know hiscellphone number, which is a combination of network advantages and a moat.

④ High switching cost

• Moving from the original product and service to another has long-term costs, including learning costs and loss of risk.
• Its core is to make it difficult for users to give up.

Actually, we can do a subtraction.I think the most important thing is the high switching cost.

How to build your own industry competition barriers?

There are three ways to set high conversion costs:

1. create superuser
2. Lock pin
3. resource binding

The first trick: create a super user

Recently, many people are talking about traffic pools. In fact, traffic pools are not stable, because traffic flows in and out.Only when it becomes a super customer pool will it become a barrier.

What is a super client?Users who are willing to pay for your products and services, also known as precision traffic.For a business, it is equivalent to a continuous cash flow.

For example, Amazon's Prime membership.

Let's see, what exactly does it contribute?

Here's some data:

• In the United States, 10.7% of Americans are Amazon Prime members, and 38% of American households use Amazon's Prime membership service.
• Every Prime member spends an average of $1200 a year.And an ordinary non-member, about $400 per year.There is a threefold difference between the two.
• In addition, in 2018, Amazon's stock has risen 30%, while the Standard & Poor's fell 6.7% in the same period.
• So Amazon said that the core element of why we are so stable is that we have XNUMX million members.
• Each member basically pays a fee every year, and the renewal rate reaches 90%.

How does Amazon do it?

first step, filter out the customer pool from the original behavior data, and find some customers with high transaction frequency.At the same time, find the pain points in the existing customers with high transaction frequency.

When Amazon launched this Prime membership in 2005, it found that the express delivery network in the United States is not as mature as China, because many people live in very scattered villages, so it provides a very core service: free two-day delivery. .

Since this pain point was caught, more pain points have begun to stack up.

Second step, began to design a holistic value-added package for superusers.

Only pain points can attract him, but not necessarily retain him.

It is necessary to provide value-added services for these members in large quantities.includeunlimitedA large amount of music and video, unlimited photo storage, and 100 million Kindle e-books to borrow.

There is also a 25% discount if you prepay.

third step, turning customer data into an asset to syndicate with other companies.Because I have XNUMX million customers that keep data in the network, I know their preferences.

Amazon is teaming up with Moto and Blu, another phone maker.In the past, the two companies sold mobile phones, one for $99 and the other for $199, and the contract price on Amazon was $50 to $70 lower.

Why can Amazon do this?Because it has client assets to exchange with you, stable client base transactions, and data.

So this means that once you establish a member, you can also introduce other manufacturers to cooperate with you through accurate traffic to provide more value-added services to super members.This is a use of client assets.It is possible to form this resource into a kind of equity and bind it with other companies, which becomes a kind of equity multiplication.

the fourth step, to change the super member from the value-added management of interests to the management of identity.

July 7 is called Prime Day, and at this time, Amazon's prices for members are at their lowest.Generally speaking, every time this day, sales will increase by 15% or even 90%.

It's a disciplined movement, but it's essentially a value-added management of identity.

in conclusion.Many Chinese companies that are super-members, including JD.com and Ele.me, have strategies that look good and are easy to use, but they have not achieved the same success as Amazon when imitating them.One of the core elements is the understanding behind customer needs.

To find his pain points, a user pool will only be formed after a number of pain points are solved.After that, an equity increase package was formed, and cross-border cooperation with other companies was carried out, so that this equity could be expanded.

Another very important element is the identification of identity, not just a simple benefit element.So I think there are a lot of things that a super user can do in China.

The second trick: lock the pin

What is a lock pin?Let's first see what a company that can lock up looks like, this company is called Starbucks.

星巴克每年一开张，就可以实现1/4的营收。什么意思呢？星巴克发展了很多星享卡的会员，仅2015年就销售了50亿美元，占到它当年销售额的1/4。

In other words, the money stored in Starbucks by these Starbucks Rewards members is used to support 1/4 of its annual sales. In fact, through this privilege card, 1/4 of the opportunity has been blocked in advance.

In 2017, Starbucks released a data saying that the cash stored in the Starbucks Rewards card and in mobile payment has exceeded 12 billion US dollars.This amount of cash on hand exceeds that of most banks in the United States.

Therefore, the lock pin is based on the insight into the customer's consumption cycle, to lock the customer's transaction or the possibility of the transaction in advance.

If you want to do the conversion ratio, the lock pin is the highest level that can help you set the conversion ratio.

Because it has several functions:

1. First, reduce the risk and collect the money in advance;
2. Second, by reducing marketing costs, you can accurately provide customers with more value-added services. You don’t need to spend this money for dissemination. You rarely see Starbucks advertisements;
3. Third, blocking competitors, we used to think that the core of competition lies in the terminal, but through locking, I received the money in advance, and he has fewer opportunities to buy things from competitors.

Therefore, the highest level of lock-up is the financial attribute. I will take the money back first.

Then you can use this money to expand more business, or to better serve the rights and interests of customers, forming a closed loop.Good companies can form a closed loop and flywheel of performance.

There is also a very typical case, that is, in a small town, there is a company called Love Fan, which does catering.Its model is that every time a customer eats here, assuming that they spend 3000 yuan, it tells the customer that they can order free today - as long as you save 6000 yuan, the order will be free this time.

This is equivalent to a 6000% discount, just another way of saying it.But many consumers saved XNUMX yuan because of this attraction.This is also a typical locking behavior.Therefore, after the restaurant in this small town used this method for two months, very few people went to eat in other restaurants, and all were locked up by it.This is also a very effective model to beat competitors.

The third trick: resource binding

This trick is very suitable for B2B enterprises.

What is resource binding?It is to turn this service into a resource with high conversion cost through in-depth service on the basis of original customer transactions.

Many B2B companies are at risk if they switch suppliers.

Therefore, if I want to emphasize this risk, it is necessary to increase the stickiness of customers and eliminate these risks for customers.It is to turn this traditional transactional relationship into a strategically complementary relationship.

For example, someone went to Baosteel one year and saw that Baosteel has a group of salespeople for major customers. They work more hours at the customers than at Baosteel, so they have a deeply bound relationship with the customers.

doingWeb PromotionWhen consulting practice, I encountered a most interesting phenomenon.

That is, one year, Tetra Pak found a company and said that I would give you a consulting fee and you would consult Mengniu, which made people feel very strange.Because Tetra Pak sells equipment to Mengniu, Tetra Pak can help to consult Mengniu. In fact, this is a deep resource binding model, which deepens the relationship.

E-commerceHow can companies build their own industry barriers?

The core positioning of competition is differentiation, you can continue to browse the following articles on differentiation▼

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