Consolidations happen in every market, and the Amazon consolidation is coming. Ryan Daniel Moran has been predicting this for almost a year, and on this episode of Freedom Fast Lane he covers the consolidation, why it is good for the consumer and entrepreneurs, how to compete, and everything you need to know about the swing.
What is a Consolidation?
This is when the big players in a market capture the majority of the market share and make it more difficult for smaller players to get a larger piece of the pie. This happens at a certain saturation point in a channel or market, and as a result, those who are biggest and own the most amount of market share capture enough to where their position is solidified, and it is harder to take market share away from those individuals when you are a new company. This means that those who are already established become more established and it becomes harder to compete. Consolidation is a healthy and necessary part of market maturation.
This is when the ‘losers’ in the economic market swing over to a different channel and there is a new ‘wide open west.’ That will also consolidate and lead to another swing. The Amazon consolidation is leading to a swing back over to information products, which had their own consolidation several years ago. It seems that every three years there is a big swing to physical products, a swing back to information products, and another swing back to physical products and so on. This happens because of market trends and cycles between those that consolidated out of the market place and are moving on to the next opportunity.
Consolidation and The Consumer
Consolidation is necessary, as they are a healthy piece for the economy. They are good for the consumer because winners win as a result of price, quality, and customer service. What undoes a consolidation is when something new appears, such as a new channel opening up, and people swing over to that. There is a period where people are fighting for the opportunity on the new channel, which means opportunities open up on the old channel.
How to Compete During a Consolidation
In order to compete you have to be more strategic about how you approach your customers, how you treat them, and in the quality and pricing of your products. What this means for someone who is an Amazon entrepreneur is that you can’t just tinker around and treat this as a side project anymore. If you want to compete on a channel that has consolidated, you have to take it seriously, run it like a real business, and think like a real company, otherwise you will get consolidated out.
Why the Consolidation is Good
When consolidations happen, the purchasing value of your company goes up. If you stick with it, then the value of the asset you are building is going up in value. Ryan predicts there will be more of a marketplace for buying and selling Amazon and e-commerce businesses. The value of your asset as a sellable item is starting to go up, and that is going to continue, so if you survive a consolidation, your value goes up.
The competition for the top spots start to go down, and you have fewer players entering the marketplace. This means there are fewer competitors to deal with. It makes it easier if you are a new company and are determined to think like a big player. ‘Accidental winners’ start to disappear, and it forces people to think beyond settling for the scraps.
Consolidation shouldn’t scare you but rather force you into thinking strategically. Regardless of the industry you’re in, there are times of immense opportunity followed by a pull back and an exit of people out of your market place. This opens up new opportunities and creates more consolidation.
How Do You Compete During a Consolidation?
In order to succeed on any channel, you must have staying power and be willing to stay through the consolidation. Ryan suggests the following:
1.Think like a big company.
Ask yourself, “How would I need to think in order to grow massively during this time?”
2. Develop rabid customers.
If you can nurture your own customer base and take those who are buying from you now and turn them into raving fans, then you become immune to consolidations.
3.Look for outside and new forms of advertising.
Widen the net instead of going after the scraps. Look where most people aren’t looking, and figure out how to think bigger and go where no one else is going. Use this as fuel for your existing business and widen your customer base and develop more rabid customers.
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Links to Resources Mentioned
Thomas Smale (Previous podcast)
The Next Level (Event)
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