Tuesday 12 December 2006

Common sense more accurate than research data?

With the holidays come all sorts of predictions for the future; sales will be dominated by X next year and Y will die a quick death, etc., etc. Yet how many times are they so off base? Seems more often than not. Yet even though this has been the case year after year large companies still drive their businesses based on the research firms who put out the predictions. A quick example; as far back as 7+ years ago it was predicted that the Palm OS would die at the hands of Windows Mobile/Pocket PC's. While the Palm OS has certainly seen better days, saved in great part by the Treo line of SmartPhones, the predictions were still totally off base. The underlying principles and design that made the first Palm PDA's leaders are the same ones that have propelled the Treo's to dominance in the SmartPhone market. Even Consumer Reports in it's December 2006 issue recommends the Treo 650, specifically mentioning how much easier the Palm OS is to use than it's competitors! What has changed is it is now a converged device: Phone and PDA.

What does all this have to do with anything? From my point of view a number of things:

  1. The research companies making the predictions (Gartner, etc.) are basing their predictions off of (from what I can tell though it seems reasonably accurate at least as far as the predictions they are making) A. what the companies who make devices are telling them which they are basing off of current sales trends, B. info from so called industry "visionaries" and C. bad data, trending is easy, where the bad data comes in is the data they are using. For example, what one carrier defines as a SmartPhone and includes in it's sales data within that definition is totally different than another carrier. Garbage-in = Garbage-out.

  2. Convergence is here, in fact it has been for a long, long time. Albeit not successfully until the first Treo was launched by Handspring (now part of Palm, Inc.)

  3. Content, schmontent... The aggregators, from the D2C ones like Handango, PalmGear, Mobihand, etc. all the way up to the big boys such as Verisign, Motricity, etc. are doing what they have been for years; REACTING to the market instead of DRIVING IT, i.e. being PROACTIVE.

  4. Long tail? At what cost? Much has been said about this and worse there are even college courses dedicated to this "phenomenon". They would have you to beleive that by carrying everything under the sun your bussiness will be a success, "hey, everybody wants something different, right? So sell it all!". The flaws in this are in the management of thousands of titles and that subscribing to the Long Tail as a have-all-be-all is a contradiction to capitalism and survival of the fittest. My suggestion to the aggregators?

    a. CULL THE HERD! If you have a product that has not sold a single product in say the prior 6 months DISABLE IT! Why continue to muddy the waters. Does not matter if it was a best seller a year ago, all it is doing now is keeping your customers from finding what they WILL PAY FOR! At the very least these has been and in many cases never beens should be relegated to a section of your sites/catalogs called maybe "old stuff", blah, blah, blah. Fix this and your abandoned shopping cart rates will improve greatly.

    b. Limit your product mixes to no more than 5 of the same thing, seriously, DO YOU REALLY NEED ELEVENTY-BILLION versions of Sodoku? Carrier decks should have been a clue: Customers will buy what they are presented........

    c. It is self depricating. Think about it, Ecommerce company XYZ has 100,000 products of which 25,000 sell at least one unit a month. XZY company is happy! BUT.. what about the vendors? ERK.. They must continually come up with new products to make a living, now that 100,000 product number is 125,000 then 150,000, etc., etc. And the customer? They have to sift through more and more to find what they want and with the quantity exists a greater chance that the quality is not there. SOLUTION: CULL THE HERD!

    While the Long Tail theory is more than just a theory, what about the other side of the coin? Sure, if you are Amazon the Long Tail represents a ton of revenue, but what about the products and companies who create that revenue? Sadly very few, if any, of them are making much more than the equivalent of dinner at McDonald's. Great, a couple thousand vendors getting their monthly heart attack fat quota met.

    Should you ignore the Long Tail? Of course not, but there is I am confident more revenue and customer satisfaction AND vendor as well to be found in the middle area. One of the advantages of ecommerce is unlimited shelf space, but think about it; that is what makes traditional brick and mortar successful. Shelf space is very valuable. Take the middle ground and treat your "virtual shelf space" as if it was a valuable commodity, just like they are at WalMart but with the added twist that you can sell products that a brick-and-mortar retailer cannot. If it does not sell do you think that WalMart keeps it on the shelf? NOPE! And neither should the content aggregators, or at least they should relegate it to another area of the site, in the process making it easier to find what they will buy. Seriously, when is the last time you went shopping on the net and considered it an "EXPERIENCE" like you do in the real world? Uh, never? That is why it is even more important to make sure that finding products quickly, with as little fuss as possible, is PARAMOUNT!
What is the moral to this story? MARKETING IS KING at LAUNCH. Be proactive from the get go. It is much easier to create a winner from day one as part of the plan than it is to resucitate a failing product.

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