It's Not Just About Price

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

It's Not Just About Price

This article in the NYT article about Amazon is about the book publishing industry. Amazon is waging a battle against book publishers over price. As a book buyer, I often wonder how an e-book can cost almost the same as the printed version. In this article, the publishes yell about the way Amazon undercuts their other sellers and demands lower prices - like Home Depot and WalMart.

Reading the comments, I think most people miss two points: books can still be published without publishers (although they may be inferior products) and Amazon is more about ease of business - easy to order, easy to get delivered.  Most websites do NOT have that. Yesterday, during a pitch at Startup Weekend Tampa, one company mentioned the online shopping cart abandonment problem - 65% on average - it is about ease of use and transparency. On Amazon, you know what shipping and taxes (zero) will cost before you get through the cart. Not so on most other sites. You get shipping sticker shock (maybe because we are used to almost free shipping and no taxes from online retailers). There is also the matter of filling in all the forms. So folks just say Good bye. Wasn't OpenID supposed to help with this problem?

easy.jpgEveryone blames it on the pricing model. Doesn't matter the Industry - books or telecom.  It isn't just price.  It's Value, Trust and Ease.

Value is something that needs to be communicated. If you can't deliver a product - book or telecom service - as cheaply as the giant, you have to accept a smaller market share. You have to deliver Value first and last. You have to build Trust. And you better be easy to deal with from the sale to the end of time. Or you lose. The difference between cost and price is Value. Not everyone sees Value.

There's a number out there - 1000, 2000, 10K, 100K, 1M - the number of customers that you need to have a healthy business selling at your price and delivering your value. It's called a Tribe. Go build it!

When the authors talk about publishers, not all publishers give value. And they do take some control. To self publish (or use Amazon), you have to market your books yourself. In other words, you have to build your Tribe. Some authors do this well, some don't.

In the article, they talk about Amazon being all that is left. That's unlikely, with Apple, Barnes & Noble, Independents and the Big Book Houses. And as much as I rail against WalMart, there are alternatives.

This makes me say look at how Target competes against WalMart. One way is talking about design and the exclusive stuff they offer. It's still clothes, just Bundled better. It's a nicer, cleaner store (User Experience).

So when you are competing against the Giant, think about  these factors: What is your Value? Are you building a Tribe? How are you Bundling your product? How Easy are you to buy from and deal with? Do they Trust you? These are the hallmarks of success.

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