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Every business succeeds because of convenience. There are countless examples.
Before supermarkets, people would go to the market for fruits and vegetables, to the butcher for meat, and to the general store for toiletries. Today, restaurants allow people to forget about the hassle of cooking and cleaning.
Another example is Netflix. Netflix allowed customers to forget about leaving the home to rent a movie or worry about late fees. In fact, Blockbuster’s market share was takenalmost overnight when Netflix came in and figured out how they could be more convenient to the customer. It’s a good thing Blockbuster’s CEO, Jim Keyes recognized this fact when he left his post at 7-Eleven.
Instances of Inconvenience
For the most part, when a consumer encounters inconveniences, they complain, they choose to shop at different places, or they choose to create businesses that solve those inconveniences.
However, there are businesses out there that make money on inconvenience. As funny as that may sound, luxury brands have created entire experiences around inconvenience. Their whole business revolves around being as inaccessible as possible. They reduce accessibility through their extravagant prices and exclusive locations, mostly. Just recently, LVMH even cut the cord on eLuxury.com, removing e-commerce from the site in favor of a pre-1999 online catalog.
It’s comical to see brands try so hard to be so inaccessible. The ironic part is, that these brands are essentially selling an experience. They are selling the experience of inaccessibility, which for the most part, was something only movie-stars got to experience.
So are luxury brands actually making money on the convenience of the “movie star” experience?
Conclusion
Whether you’re looking to start your own business or innovate in your current industry, the real money to be made is in making products and services that aim to be more convenient. Convenience is a competitive differentiator; it’s a way to not only stay ahead of the competition, but it’s also the way to uncover new untapped business models.
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Comments
01.19.09
Adam, seems to me that based on the examples you gave, inconvenience pays handsome dividends. Coach, Mercedes, BMW - all less accessible based on the standards you've set, and all very happy with their profits.
01.19.09
Sure. Brands can compete on either differentiation or cost. The cheaper you go, the less differentiated the product or experience. That makes the product convenient based on cost, not service or experience. Those are really the only two options a business has for positioning.
Very few brands come to mind who do both well. (Think IKEA--both cheaper than competitors and differentiated)
Even then, the brands who compete on differentiation and luxury, are in essence selling an experience; the exclusivity and convenience that those luxuries provide.
There's a market for both price and differentiation, but both offer some level of convenience to the customer; price, service, or experience.
01.19.09
I would argue that businesses have as many as 6 different ways to compete: Cost, Quality, Customer Service, User Experience, Availability/Quantity of Choices, and Status.
Most companies are going to compete on some combination of these. For example, Nordstrom's main differentiator is their incredible customer service, but they also sell on quality goods. Toyota makes a high quality vehicle (Quality) at an affordable price (cost), Disneyland provides a unique experience for their customers.
I think to say its only two things - price of differentiation - is overly simplistic.
01.19.09
That's fair, though I think we're straying from the point of the post. Whether a customer chooses to purchase because of quality, customer service, user experience, etc, convenience is still the underlying decision factor.
01.19.09
Well, yea, but you're saying the big bucks is in being convenient, and I don't think that's always the case. In fact, as you've demonstrated above, numerous businesses have been very profitable by being inconvenient to the point that their good or service becomes a status symbol or rate, unique experience.
- Chris
01.19.09
I'm saying that all the dollars are in convenience. Convenience just takes different forms. Aren't selling status and experiences people otherwise don't have access to a convenience?
01.19.09
Adam, I would say no. In fact, I think you even agreed with me on that point in your article, when you wrote:
"However, there are businesses out there that make money on inconvenience. As funny as that may sound, luxury brands have created entire experiences around inconvenience. Their whole business revolves around being as inaccessible as possible. They reduce accessibility through their extravagant prices and exclusive locations, mostly. Just recently, LVMH even cut the cord on eLuxury.com, removing e-commerce from the site in favor of a pre-1999 online catalog."
01.19.09
Correct, but a lot of it is artificial inconvenience which I later argue is in fact selling the convenience of the exclusivity or "movie star" experience.
01.19.09
Netflix convenience might be impacting their bottom line in the near future. The US Postal service might start charging them more for postage, I hope it works out!
Another convenience that Netflix offers is the ability to have more than 1 queue so that you can have 2 different people with different tastes getting movies they like. They tried to take this ability away about 6 months ago and got such backlash from customers that they kept it.
They have been very customer responsive at other times also, I had a complaint once about the delay in putting a hold on the account until the end of the billing cycle. The next time I went to put a hold on the account they had already changed the policy!
If you ask me they have both convenience and differentiation down!
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