You sell bananas. A guy down the road sells bananas. In the next town over another guy sells bananas. You’ve heard that a girl a few streets over has decided to sell bananas as well. You already had competitors long before any of them appeared.
Competition is a complex concept. You may assume that your main competitor is the woman who sells what you sell from her home is the same way as you do. But competitors are always popping up. And there’s probably a whole set of them that were already in place long before you came along.
So, what kind of competitors are there?
- Direct product competitors
- Direct vertical competitors
- Online competitors
- Expanded competitors
- Disposable income competitors
Who are your direct product competitors?
These are the people and businesses that sell the exact same product as you do. If you’re selling Thermomix, then every other person in your world who sells Thermomix is your competitor. You sell it. They sell it. They’re likely to bump into the same people as you, so if someone you know is going to buy a Thermomix, it’s either going to go in your pocket or theirs.
Who are your direct vertical competitors ?
These are the people and businesses that are selling similar kinds of things to Thermomix machines. While you are selling the Thermomix, they might be selling blenders, food processors, soup makers and air fryers. None of them does everything that a Thermomix does, but they each do a bit of what a Thermomix does. This means that someone who is considering buying a Thermomix, who then decides to buy a blender and an air fryer, they have bought those things from one of your vertical competitors.
Let’s give the kitchen appliances a rest for now and look at someone who sells life coaching services in their town. You have grown a small clientele of other women in your town who have been seeking services like the ones you provide. It’s been nice. Then one day you lose one of those clients. When you ask why they’re leaving, they reply that they have decided to work with a coach online. While you were aware of several in-person coaches in your town, you have never heard of this online coach before.
The online commerce world is highly disruptive to local services. That’s because the internet offers limitless choices, price points, personalities, and variations. You can only offer as much as you can offer.
The impact of Expanded Competitors
An expanded competitor is the competition that comes from an existing business that didn’t happen to sell what you sell but suddenly does now. When I was part of a business networking group some years back, I was the person who sold social media services and training. There was already someone in that network who sold websites. We were able to comfortably refer work to each other when someone was seeking to do what the other person had expertise in.
Then one day the website business started selling social media campaigns and training as well. Which now meant that any referrals I was getting from them came to an abrupt halt. As I was getting no referrals from them, I responded by more openly letting it be known that I happened to build websites.
The other business expanded into my market to become a competitor. So, I expanded into their market to also become a competitor to them. Of course, that had a big impact on our working relationship which went from friendly referral source to hostile competitor.
The vast number of competitors for your income
Returning to the Thermomix, there are a lot of air fryers, blenders and benchtop appliances vying for your attention. But at over $2000 for a Thermomix, there are a lot of other things that are vying for that $2000 that have nothing to do with cooking dinner.
At $2000, you have travel and airlines hunting for that money. Harvey Norman would love to sell you a $2000 TV. Apple would prefer that you gave them that two grant for a new iPad. Even the local private school would love you to give them that 2K in exchange for educating your kids.
The point is that every product, service and business is hunting for the disposable income in every household to flow to them. So when you appeal to someone to buy from you, you’re asking them to spend that money on you. Not just instead of other businesses that do what you do. But also instead of every single other business that wants that money coming to them.
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Dante St James is the founder of Clickstarter, a Facebook Blueprint Certified Lead Trainer, a Community Trainer with Facebook Australia, a digital advisor with Treeti Business Consulting, an accredited ASBAS Digital Solutions advisor and presenter, and the editor at The Small Marketer. You can watch free 1-hour webinars and grow your digital skills at Dante’s YouTube Channel.