So you want to be number 1 in your market? Look at the disruptors, not the market leaders


by gigCMO MD Mark F. Magnacca

When you’re number two or three in the market place, whichever industry that may be, it’s easy to keep your eyes on the person/company in front of you in your quest to become the market leader.

However, it’s not the person at the top you should be looking out for, it’s the disruptors you might not have even heard of yet. Avis has been trying harder for longer than most of us can remember but it is Turo, the auto manufacturers themselves and even Uber, who are dramatically changing the marketplace.

Businesses can rise and fall at a much faster pace than ever before, but one of the merits of the innovative and more transparent age in which we live and work is that it’s much harder for one individual to dominate the market unless they’re really delivering what the customer wants.

Office Depot didn’t see it coming

This summer delivered a real case in point when Office Depot, one of the leading stationary organisations in the U.S, reported a 25% drop in share value in its quarterly report. The company conceded that the rising clout of new competitors such as Amazon Business was one of the key reasons. CFO Steve Hare said: “People like Amazon Business are pulling away some business from our core customer base,” on a conference call with investors and Wall Street analysts.

Perhaps realising there was a problem, the company had been looking to merge with another stationary giant, Staples, earlier this year, a that that the U.S. Federal Trade Commission felt created too much industry concentration after Office Depot bought OfficeMax a couple of years ago. Either way, the drop has resulted in a poisonous lack of confidence from investors.

The value of consumer loyalty

As a consumer of office supplies, we can see first hand that the problem Office Depot faces is one that many of us, as business owners, could fall into. But it’s also a deep rooted issue linked to a chronically complacent approach that has been allowed to develop thanks to the company’s long standing market dominance, and they are not alone.

For years, we, amongst others, have been cornered into buying office supplies from leaders such as Rymans and WH Smiths in the UK, or Office Depot and Staples in the US. Their stores have overcharged and the service was uninspiring, but they were the most convenient option around, so we bought from them out of necessity. What they lacked however, was brand loyalty, which we know courtesy of businesses like Apple, is a powerful currency that money just can’t buy.

No one’s big enough to be complacent

These big businesses have spent so much time looking at their obvious competitors, that they didn’t (or wouldn’t) think to look where someone new might come in and change the game. Of course, it’s not a new phenomenon – we have seen similar things happen before, famously with Kodak in 2012, when the photography oligarch wilfully ignored the rise in digital photography and ended up filing for bankruptcy while their rivals at Fuji invested in new technology and diversification into new businesses. It has since taken nearly five years for Kodak to reinvent itself in printing and packaging solutions.

Equally, as we speak the big movie studios in Hollywood are bowing to Netflix – once a laughable industry outsider that’s now caused such disruption that the world’s biggest movie market recorded the second lowest level of attendance in a quarter of a century this September – a matter so severe, they’re bringing in Disney’s Avengers to try to save the day.

So now that the ultimate industry disruptor, Amazon, has come along with Amazon Business, a carefully considered offering that meets client requirements, the likes of Office Depot have been totally taken by surprise. Amazon Business has already proven itself to be a game changer, designed for business, giving them a way to control a key cost, and proving especially valuable in the UK, EU, U.S, Canada and most countries that have a value added tax system.

In the meantime, Office Depot has been left with no loyal customer base, no outstanding features and a business model that went out of date almost overnight. By the time they realised there was a leak, they had already begun to start to sink.

Of course, the human being in us hopes that for the sake of the hard working individuals within the company, Office Depot manages to find a way to compete in the market and to keep the industry developing in a healthy and competitive way. However, there is a lesson in this to all of us – whether you’re number 1, 2 or 102 in your market, your biggest competitor is probably someone you haven’t heard or thought about yet, and if you always keep your industry blinkers on you might not see them coming until it’s too late.

Oh, and if you want to find out what Amazon Business is all about click here.