Shrinking Pie or Growing Pie?

I got the inspiration for this post from a small restaurant I visit from time to time. The owner is an older Thai man who makes sure his food tastes great. Since I’m a fan of Thai food I come to the restaurant every few weeks and although I’m a regular customer who has referred 10 people to the restaurant the owner still always charges me extra for something. The extra charges are not very much, but just enough to make you regret visiting the place.

So I began thinking why does he insists on upsetting his customers? I believe that the answer lies in the shrinking pie syndrome. What I mean is he thinks that there will only be so many customers and so much revenues coming to his business. So he has to make sure he gets enough to pay the rent. So if he gives a customer an extra plastic cup or another bowl of rice he has to charge for it or there will not be enough to pay the rent.

On the other hand, a business person can look at the situation and consider will this customer come more often if we treat him as a welcome guest? Would this customer bring more people? Is there anything to be gained by making this customer feel special?

Most people reading this by now think the answer is obvious, however, many of us get stuck in the shrinking pie syndrome. The reason for this is that the growing pie requires faith. The growing pie requires us to put forth a plan and execute it. If you pay an employee a greater amount would he produce more? If you spend additional time with a customer will he buy more? If you investment in website improvements will close ratio improve? If you invest additional funds in any area of your business would sales increase or would profit grow?

The answers are not always obvious. In many times the decisions are hard. However, the growing pie is always better then the shrinking pie since it provides you with an opportunity to grow.

So who will create the next Revolution?

Every once in a while a company who transforms an industry appears in front of our eyes. Barnes and Nobles who pioneered the concept of a book superstore with a massive selection of books, comfortable ambiance, and (who can forget) a nice coffee shop in every store revolutionized the book retailing industry. Then there was Zappos with their customer focus approach that revolutionized the online market for shoes.

When we first started our business this was the question we asked our selves: what will be next? What will be the next hum dram market that can be transformed by an up and coming company?

In our quest we first explored the industry or market who is ready for this transformation. We found the online wall art market. A non-traditional eCommerce market. In many cases shoppers are not even considering to go online in order to find the next work of art to beautify their home or office.

We then conducted a vast analysis of numerous retailers that sell art and wall decor solutions. At the end we decided to build our company as an online art gallery many know as – overstockArt.com.

While currently a small pure play e-commerce retailer, overstockArt.com was built to take a page out of Tony Hsieh’s (CEO of Zappos) book. However, we are telling a different story.

First and foremost, our company focuses intensely at delivering value to our customers. overstockArt.com is focusing on selling the highest quality hand painted art at very reasonable prices. Moreover, we are the only company online who certifies that there art is truly hand painted.

Second, like Zappos who awakened and effectively created a 30 billion dollar market for shoes online, overstockArt.com is focusing on the customer. Both companies have a customer intimacy business strategy. The customer focus is apparent in everything that they do from gallery design to framing features which allows the customer to comfortably brows and select ready to hang art.

Finally and specifically, overstockArt is a customer oriented company, and the first (currently the only) wall décor company incorporating free shipping both ways. We make it easy for the customers not only to buy their hand painted art, but also to return at no charge if they are not entirely pleased. This is an indicator of a company who focuses and respects the needs of its customers. We want each and every customer to be happy with the art that hangs on their wall.

So in this day and age, you have to think disruptive strategy as you embark on building your business. find the market that offers substitutes to yours and with relatively low cost, build a solution that will form into a quaint blue ocean.

No one has 20/20 vision into the future, but it will be interesting to see what will happen in the next few years with the wall décor industry. We hope that by that time, overstockArt.com will become a household name.

The Future of Facebook – a Retailer’s Perspective

the future of facebookIt’s the elephant in the room. Facebook is becoming the Google of the Social Network realm. There is hardly anyone I know who doesn’t have a profile and it is becoming more and more a part of our daily lives.

The question on a lot of people’s minds is how will Facebook make money? How did Microsoft value Facebook at 15 Billion Dollars as they took a 1.6% stake in the company all for a grand total of $240 Million?
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