Back when I was knee-high to a grasshopper, one of my favorite things to do was to go to Blockbuster and rent movies. I loved walking into the store, seeing the new releases, looking through old favorites, browsing the video games, and occasionally getting some candy. Today, there are only a handful of Blockbuster stores left open. Some people think that Blockbuster’s demise was due to a poor business model or other video rental options. Truth be told, those factors were only a small part of what lead to the video rental giant’s fall. What really did them in wasn’t their direct competitors, but rather, other available substitute options – primarily Netflix.
While there are similarities between Blockbuster and Netflix, they are completely different business models, structures, and offerings. Yes, both deal with movies, but that doesn’t make them direct competitors by any means. What happened to Blockbuster was that a newer, sleeker, faster, and more technologically advanced substitute won over their consumer base. Blockbuster attempted to adapt and offer streaming services like Netflix, but by the time they acted, it was too late: the damage was done. The mighty giant of home rental videos was doomed.
Blockbuster is just one example of a business only paying attention to their direct competitors, and not focusing on the other substitute options that could replace them. Whether it’s a big corporate business or a small family run business, it’s not just direct competitors who do the same thing as you that can bring an end to your business. A substitute option, one that doesn’t do exactly what you do but will still suffice and get the job done, such as trading ketchup for mustard, can quickly win over your customers and leave you high and dry.
So how do you prevent this from happening to your business? Look for any up and coming substitute options to what you offer. Investigate why these options are gaining popularity, and most importantly – put those advantages to work in your business.