The internet is fantastic for many things, but what it's doing at a pace faster than the speed of light is turning all purchasing decisions into a commodity. The price wars are fierce and the competition ruthless. Whenever I buy something online (which nowadays happens far more frequently than me actually walking into a brick and mortar store), I always do a search to see if I can get it cheaper anywhere else. And then I do a second search looking for promo codes and discount coupons. Not only is the competition fierce for online e-tailers, but now brick and mortar retailers have been pulled into the game too. It's all thanks to the smart phone.
Need a new tv? Walk into Best Buy and do your market research - fiddle with the remote, check out the quality of the high def screen. But before you reach for your wallet and make the sales person's day, you probably do a quick search on your phone to see if there's anywhere else you can get your tv cheaper. Turns out it's available at Costco for $150 less, and at Amazon.com for $125 less. So you turn on your heel - sale lost for Best Buy, and now your biggest deicision is whether you can be bothered actually going through the hassle of driving to Costco and loading and unloading your new tv, or whether you'll just press the buy now button on Amazon and have it shipped straight to your door in 24 hours.
Yes retailers are in for a giant shake up - we've barely even scratched the surface.
So this is all very interesting but what does it mean for your business?
The lesson is this - unless you give a customer a real reason for product or service differentiation, then they will always base their purchase decision on price. Don't ever be the business that offers the cheapest services - your competitive advantage will be extinguished in the blink of the eye because you can always be beaten on price. Instead build your competitive advantage by offering extraordinary service and value added services - things that will enable you to command a higher price (and also attract a far better quality of customer also). This is where your thinking should be at...