Posts Tagged ‘first mover advantage’

I’m clicking to Westfield

June 17, 2010

Aussie shopping centre powerhouse Westfield (the world’s biggest shopping centre operator) announced a curious brand extension last week. The firm is reportedly planning to use its website as a virtual shopping mall, hosting e-commerce interfaces for a variety of retailers (with fashion being the rumoured kick-off).

So, is this a good move for Westfield?

As I’ve argued elsewhere, Westfield has five particularly powerful competencies: (i) property selection; (ii) redevelopment; (iii) financing; (iv) retailer relations; and (v) branding and marketing . The first three have no relevance to this venture, so the firm is only left with retailer relations and branding/marketing.

Source: Daniel Austin (d)Not

The retailer relations is partially about Westfield’s capacity to offer a more extensive suite of locations relative to rivals and the resultant bargaining power they wield as a landlord. It is also about Westfield’s extensive monitoring of tenant sales and sophisticated contracting processes.

Westfield already carries some information about tenants on their website, and because of their prominent landlord status can certainly attract the attention of these firms. I would be stunned if any of the retailers would grant Westfield exclusive rights to host/direct traffic to their e-commerce portal. Indeed, e-commerce is a substitute to the physical interface, and a mechanism these retailers can use to more effectively negotiate with Westfield as a landlord. Westfield will need to tread much more carefully in these e-relationships.

The counterbalancing angle may spring from the final competency – branding/marketing. Westfield was a global pioneer of using a common brand for their malls (indeed, my post title reflects the reported source of this brainwave – a founder heard a shopper saying they were “heading to Westfields”, and saw the scope for differentiation).

It may well be the case that online shoppers welcome the ‘browsing’ capacity of a virtual Westfield mall. New/small retailers with limited capital to expand their bricks and mortar footprint across Westfield’s 119 malls, may relish being next door to Zara, The Gap and Gucci on the Westfield website. It may also be a mechanism for virtual internationalisation. This could be a chance for Aussie retailers to test the waters in the US, UK and NZ without crossing an ocean. Presumably solely e-commerce retailers could also tap into this spillover effect. Getting this right could also extend consumer awareness of Westfield beyond their current whitebread Anglo markets.

The big challenge is making the site sticky enough. Westfield will need to fill the competency gap in build a user interface that is engaging, exciting and innovative. If they don’t get it right quickly someone could easily build a rival (Google perhaps?).

The uspide for Westfield is that there isn’t much downside here. I wouldn’t think there is an enormous investment required here. It is just a mechanism to augment an already profitable business (and perhaps distract some investors from the firm’s exposure to property price and finance risk).

Verdict? Interesting experiment that could conceivably secure some first mover/network effect advantage.

Entrepreneurship from the beachside

June 9, 2010

This interview with Travelfish founder offers some nice insights for those of you/us thinking that building a career around lying on a South-Eastern Asian beach would sure beat winter in Melbourne (feel free to substitute your wet and windy hometown here).

Stuart McDonald certainly seems to have built a nice life of running an informative travel website for several prominent countries north of Australia.

I presume many of his site visitors (the folks who are providing the click through revenue) come from down under and other Western nations. But as the interaction is web-based the visitors don’t really care where he is.

His suppliers (i.e. the content providers) and advertisers/clients (the hotels, travel companies etc) are in the six countries his site covers. He has made the very judicious decision to base himself closer to these folk. This reduces his overheads dramatically (as cost of living is so much lower) and makes his revenue requirements much lower. He presumably can also deal with any dramas much more quickly (espcially if they require a physical presence) then if he was sitting in an office in Sydney or Melbourne.

There are other aspects of strategic importance here (such as the decision to focus on a regional niche, the possibility of considerable early mover advantages from network effects, and the scope to extend the model to other locales users identify).

It sounds like a pretty cosy life. Now, can someone think of a version for the rest of us to pursue? 🙂