Business StrategyCustomer AcquistionE-TailEntrepreneurshipInnovationMarketingNext Generation Business

“Location” is the only thing that matters in the digital age

“There are three things that matter in property: location, location, location.” -Lord Samuel

For restaurants and retail, location is considered the most important element of success.  Location is so important that companies like Starbucks employ internal data science teams and spend $12,000 minimum on site surveys to see it is perfect

However, as important as location is for physical businesses it pales in comparison to the importance to a digital one. In the physical world locations can draw in customers independent of the business’s quality and can be used as a differentiator. If a business with a poor experience has a great location they can succeed because they are the convenient choice . While a great experience in a bad location can become a “destination” and a desirable place to travel.  

In the digital world companies can’t use location as a differentiator since there competitors are just a click away. There is no “convenience” from choosing Walmart.com over Amazon.com or “destination” feeling from using MySpace over Facebook. This results in the best experiences and prices dominating markets. Where these companies dominate customer’s hearts and minds so they are chosen before their competition.  

So what?

Since companies are dominating “hearts and minds” instead of physical real estate, it allows companies to sustain a dominant market presence easier than their “physical” competitors while also being cheaper to achieve national market penetration. This is can be clearly seen from looking at the FANG stocks (Facebook, Amazon, Netflix, Google) market positions:

  • Facebook  – 60% of all social logins and 2.07 BILLION active users
  • Google – 75% of all searches and 18% of Global marketing spending
  • Amazon – 44% of all e-commerce sales and 35% of cloud computing
  • Netflix – 75% of all video streaming

And comparing it to traditionally “dominant” companies:

  • Walmart – 14% market share of US groceries
  • Coke/Pepsi – Coke has 22% and Pepsi had 19% of US non-alcoholic beverage sales
  • McDonalds – 17% of US Fast Food Market
  • Starbucks – 39% of US Coffee Chain restaurants
How can you beat these Giants if customers never find you?

These companies dominance didn’t happen by accident. It happened by delivering significantly better experiences than competitors and creating customer loyalty. Additionally they worked hard to retain the premium locations they legitimately earned by creating tie-ins and integrations across the internet to keep themselves front of mind.

To beat these companies new players will have to take unconventional approaches to have a chance against these dominant players:

  • Create a company that is so radically different your user experience stands out immediately. i.e. Snapchat vs Facebook. 
  • Focus on a narrow niche so ruthlessly it will be hard for existing players to replicate. i.e. Etsy vs Amazon
  • Innovate in new technologies. Facebook achieved dominance through Mobile, Amazon and Google through the web. i.e. Artificial Intelligence, AR/VR, and Autonomous Vehicles.

Fighting these companies in unconventional ways gives a chance for smaller companies and the space to win their customer’s hearts and minds.

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