1. Their competitors have had a hard time competing with OpenTable because OpenTable aggressively marketed its product with a door-to-door sales force to the restaurant base and has amassed huge numbers of customers. Their market presence is far superior. Also, customers find the software very easy to use and like it very much.
2. The characteristics of the restaurant market that makes it difficult for a reservation system to work are that the industry is highly fragmented and local. Many restaurants didn’t even have computers when OpenTable started.
3. OpenTable changed its marketing strategy to succeed by first narrowing its broad market nationwide to just a handful of cities; upon successfully building these markets, it then when back to attacking the broader national market. Also, they changed their revenue model to shift a focus away from advertising and towards subscription and transactional fees.
4. Restaurants find the SaaS model very attractive because they don’t have to buy and install software, instead functionality is provided through online subscription. Also, the software is periodically automatically updated for them.
2. Omni-channel merchant: Bass Pro Shops.
Bass Pro is an outdoor recreation retailer specializing in hunting, fishing, and camping. They are a good example of this because they have a good number of highly successful high-end retail stores throughout the country. They also have a seamless website interchangeable for internet and mobile platforms that can even show a physical inventory level for a desired online item of order at a store designated by postal code should a customer want to pick-up an item instead of receive the item by delivery to home. They also distribute extensive periodic catalogues throughout the calendar year and have a highly capable and user-friendly phone ordering system; it is also available and seamless with their website.
Virtual merchant: OpticsPlanet.
OpticsPlanet is an online retailer specializing in optics; binoculars, rifle and spotting and telescopes, cameras, and video cameras and related accessories. They are a good example of this because they are highly successful, have been doing it for many years, and nearly any search online for an optical retail item will reveal an Optics Planet result that’s price can almost never be beaten item-for-item from another supplier.
Catalog merchant: Fingerhut.
Fingerhut is a catalog merchant specializing in retail catalogue ordering of everything under the sun. They used to be only catalogue by mail, but now also have a corresponding website. Fingerhut was the all-time master of catalogue retailers. Once they send you a catalogue, then they will be sending them to you forever no matter where you go to. They are masters of managing mailing lists. They suffered a near-death experience and bounced back several years ago. Fingerhut is the go to catalogue company for many millions of people.
MyPillow, of course, sells a uniquely manufactured pillow directly from their manufacturing facility in Minnesota. The pillows are special, in that they are custom sized to a person’s physique and have a no-squash fill, and with a fill that is uniquely different than down, memory foam, and poly-fill. Most people have seen their ubiquitous television commercials; the company is highly successful and can apparently afford a huge television marketing budget to match. They do sell a small minority of product through Walmart’s as-seen-on-tv display in-store shelving market, but the overwhelming super-majority of their sales is online.
3. There are several social and legal issues facing online retailers. Socially, I believe the most relevant are privacy and related big data, and the customer experience. I think that legally, the ‘fine print’ (of releases and authorizations), and the protection of intellectual property, are the main issues.
The fine print of authorizations and releases plagues us continually. The classic hard copy example is the back side of a credit card application. Who actually reads this? Not many. Who can actually decipher this? Not many. The same is true for any piece of electronic or online software or information system that we access. We sign onto the legalities by clicking through the fine print and don’t really know much about it, or generally pay much attention. When you installed your last ‘app’ did you breeze through the fine print too? How companies handle this affects their public relations and ultimately their bottom line.
Intellectual property is another thorny legal issue. The most dominant example is downloaded digital music. With the advances in computing technology countless exact digital copies of entertainment media can be reproduced and distributed. This is not such a hot button issue in the U.S. as it used to be in the Napster days, but it remains a sticky issue in much of the world where the view on profit from proprietary information is viewed much as a ‘public good’ like electricity or water. Until the world gets a handle on this, countries like the U.S. will continue to pay a premium for such property.