Month: December 2014

The ecommerce innovation dilemma – one step further

I closely followed the interesting conversation between my colleagues Roman Zenner, Alexander Ringsdorff and Björn Schotte about innovations in the ecommerce sphere. I like to add my thoughts here.

First of all: the ecommerce system manufacturers are companies with a product themselves – not only suppliers. So it just doesn’t make any sense that the system manufacturers all say: “The innovation needs to come from the customers’ side.” To go back to the car industry comparison (that was already used in the discussion) it would be like every manufacturer building the same car and expecting the customers to customize it. While I’m writing this – it actually feels a bit like this in the ecommerce industry at the moment. From my last consulting projects, where I screened the existing solutions, it is pretty clear that the distinction between the system is really small by now. Why would you choose one system over the other? If you as a shop system manufacturer are in this state, you are in danger, since your product is pretty replaceable. The only thing that holds the merchants back to switch frequently is the investment in one platform that has been done. Imagine for a second that the switching costs and investment in a new platform would be nearly zero: would the merchants stay with the systems they have right now? And why would they? If you lose the competitive edge on innovating your product it is likely that someone else will come around the corner and eat your lunch. If you do not innovate, you lose the differentiation. All products consolidate over time and the distinction shrinks to a minimum – and so the competitive advantage. If you want to read more about innovation theory, go take a look at the works of Gary Hamel.