What do you do when your partner becomes your direct competitor?
You could stick your head in the sand, but I promise that won’t work. You could sue them, but unless you’re an attorney and in that business it isn’t a long-term solution. Or you could employ coopetition tactics.
Guess which one I recommend?
Proctor and Gamble has decided to start selling products directly to US consumers. Count on international expansion soon (hint, hint).
P&G is one of the world’s largest consumer products companies, and this announcement will create business change that many small retailers just won’t know how to deal with. Imagine you sell Tide detergent in your brick-and-mortar store and the company from which you buy the stuff for resale makes it so the people you sell to can get their soap direct, without visiting you.
What if they sell the product at a price lower than you do . . . or even lower than you can? You’re done.
You won’t be done immediately, of course. P&G doesn’t want you out of business tomorrow, but let’s face facts: over the long term if they can keep a greater piece of the retail price of everything they sell instead of letting you grab a share, then they will. And with companies like Amazon.com doing their distribution at an extremely low cost, P&G can get goods to consumers for a few cents less than they now pay at retail and realize a tremendous profit growth.
As I said above, you might try suing P&G to prevent this, but I’m guessing you’ll lose unless you have some contractual “we won’t do that” clause. And let’s face it; you probably don’t. And if you do, P&G will simply out-wait you as the legal process runs its course. You lose.
So what to do?
We preach two things here more than anything else: Business Change, and Coopetition. Business Change is something you’d rather create than wait around for, and coopetition is something you embrace as a whole new form of doing business; for many, it is the ultimate business change. So:
Maybe it’s time to start reaching out to your suppliers and offering them distribution solutions. And do it quick, because you aren’t the only one reading this!
That may not be easy, and you may not have thought of yourself as being in that business. But unless you want to subsist on the people who just can’t wait for shipping (there will always be some of those), or do business only with people who won’t buy on the Internet (a dwindling group), this is one business change you’ll undertake.
You can even ask us for help. Business Change ‘R’ Us, you know . . .