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Thursday, April 19, 2007

The Buggy Whip is Dead! Do You Try And Sell Buggy Whips?

As you know horse drawn buggys started to die out as the craze for automobiles really got motoring (sorry about that one!).A Flickr photo showing horse and buggy (buggy whip assumed!)

A natural consequence was that the buggy whip died off too. Tough on buggy whip manufacturers of course.

Now, think about the Internet...

The Times has just reported that Britain's second biggest chain of DVD rental shops has said it will "substantially" miss it's targets this year.

Firstly that should be no surprise to anyone who sees all the offers for DVDs by post, no hassle, post paid and you don't get fined for keeping them too long.

Secondly, Internet downloads - both legal (in the form of Netflix in the USA) and illegal (pirated copies) - means that people can watch any film they want, at their convenience.

Thirdly in the UK Virgin and HMV have reduced the prices for DVDs.

Finally, cable and satellite channels are providing huge back catalogues of films that you can watch whenever you like. Which is even less hassle than getting DVDs by post.

In the end the DVD rental shop (remember when it used to be video rental shop?) is getting less and less custom because their previous customers now have easier options. So they take them.

Is there anyway the DVD rental shop can survive? I think the answer is that it's most unlikely because the new distribution channels are so much faster and easier to use.

Just like cars were faster and easier to use - with no mucking out! And at the time fuel was cheap.

Are there business lessons we learn from this?

And of course there are...

The very top lesson is don't invest in DVD rental shops, if bog standard film rental is their service.

The next lesson is business continually evolves. So check you're not selling buggy whips.

For the final lesson remember what Drucker said? He said, "Business has only two functions - marketing and innovation."

Innovation is what drives a business forward and keeps them connected with their customers. And prevents them staying in the buggy whip manufacturing business.


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