Nov 19 in Small e-Business Written by: Harris
While some online retailers are finding ways to tap into new national and international markets, others are finding that the Internet has opened the floodgates to so much competition that it’s near impossible to survive.
Why are some businesses thriving while others are withering away?
Successful businesses find ways to adapt to new environments. They accept the challenges they are presented, and use them as an opportunity to surge ahead of their competitors.
Failing businesses invariably fight the change and try to cling to old methods. They fail to see that change is inevitable. Sometimes they make half hearted attempts, but unsurprisingly they are too little too late.
The Threat of Change
Lets imagine we ran an old Barber shop 20 years ago. Business was great. We had regular customers, and offered regular haircuts. No one ever complained that their cuts were boring, and everyone loved the smell of talcum powder and Old Spice.
Then we started to notice trendy Unisex Hair Dressing Salons opening up everywhere. Our male customers all agreed they would never go to a Salon. So we dismissed the threat.
A couple of years later business is still decent, and most of our older customers still visit regularly, but some of our younger customers have switched to the salons.
Five years on and the Barber shop is still open, but the trend is obvious; customers are steadily switching to the Salons, and soon our only patrons will be pensioners.
What are our choices?
- Do nothing, and plot along until retirement.
- Lower our prices, and market to balding men and pensioners.
- Retrain as “hair stylists” and re-model the shop as a “salon”
- Some combination of the above?
If we remodel the shop as a Salon to attract younger clientele, we risk driving away our existing customers? And what if we spend a fortune re-modeling and retraining, and still fail to attract the younger crowd? What about the disruption to the business.
Internet Barber Shop of the Present!
Now, imagine if our Barber shop could be remodeled as a Hair Salon, refurbished as an olde Barber shop, redesigned as a Barber shop for pensioners, and decorated as a Discount Cuts shop, all at the same time!
That is exactly what many online businesses are doing right now. They are building many different models of their on-line shop to examine which produces the best results. Customers don’t see anything strange happening, they see a single shop, and are completely unaware that other customers see a slightly different shop (or even significant different shop). This process of testing different shop variants is called A/B Testing.
A/B Testing tests the performance differences of variations in the content and appearance of an on-line shop, or email marketing campaign.
Most customers are presented with the standard content, while a smaller population see the test variant. When the results of each model are calculated, the best performing variant is adopted and integrated into the standard model.
So, in the case of our imaginary Internet Barber shop, we would operate both as a Salon, and as a Barber shop. Then decide which is the better business model and adopt it.
We can do this on-line because the cost of remodeling the business on the Internet is so low, and we can run any number of experiments with no disruption to the business.