A number of coopetition models have developed in recent years
involving Internet companies.
One of the best-known is the case of Amazon.com, which offers online
services and fulfillment to a number of traditional retailers.
http://216.239.53.104/search?q=cache:PjhKLpvzJr8J:www.dsnretailingtoday.com/in_this_issue/index.cfm%3FID%3D2951+Amazon.com+fulfillment+target+Circuit+City+Toys+%22R%22+Us&hl=en&ie=UTF-8
"Amazon sees retail service reshaping company future" by Laura Heller,
DSN Retailing Today, June 23, 2003
Amazon.com began providing the services four years ago to Toys "R" Us,
and has subsequently added Borders, Circuit City, Marshall Field's,
Office Depot, and Target as customers. "Target, for example, is
integrated into Amazon's own Web site and the company not only
provides the systems but fulfillment as well while visitors to
Amazon.com may never know that Circuit City is a partner that benefits
largely from the company's technology."
"Amazon can help with customer acquisition through exposure to the
site's 30 million visitors each month, front end Web site technology,
provide fulfillment and logistics, and customer service with e-mail
and telephone support."
Having realized that online sales "...will likely never be more than
10% of total retail sales..." according to Jeff Bezos, founder of
Amazon.com, it has become apparent that coopetition is the only way to
generate significant additional growth for Amazon.com. By engaging in
coopetition, Amazon.com can amortize its software development costs
and fixed expenses from fulfillment facilities over a much larger
number of items, thereby increasing its profitability. When it
provides fulfillment, Amazon even gains a percentage of the sale in
addition to a fee per item sold. Amazon also enjoys the benefit of
having other well-known brand names under which it can sell
merchandise, in fact, by participating in a portion of the sales
price.
Assuming that Mr. Bezos is correct, there is very little downside in
offering these services. While the companies could conceivably learn
from Amazon.com and then set up their own distribution network and web
site, the huge costs of doing so, which nearly sank Amazon.com, do not
make this option very attractive. Meanwhile, traditional retailers
have much less to fear from Amazon.com than they once thought if
online sales are really unlikely to capture more than 10% of retail
sales.
A second model of coopetition is one where competitors band together
to create a purchasing marketplace to gain economies of scale while
continuing to compete on the sales of end products. An example of
this is Covisint, which sought to combine the purchasing power of
Ford, GM, and DaimlerChrysler. Internet companies supplying
technology to the venture gained, but there is substantial skepticism
regarding the likely success of this venture. Instead, private
marketplaces run by large individual companies like Wal-Mart, Dell,
and GE appear more likely to be successful.
http://news.com.com/2100-1017-253009.html?tag=nl "Public Net exchanges
may be losing their luster" by Erich Luening, CNet News.com, February
22, 2001
The "business model has largely failed to take off, because the
technology proved to be more complex than anticipated and suppliers
soured on the idea of competing for business online."
http://news.com.com/2100-1019-999562.html "Covisint CEO steps down
after one year" by Alorie Gilbert, CNET News.com, May 2, 2003
A third model is the sharing of data or services. An example would be
the replacement of AOL's search engine with Google (and displaying
Google's brand name on AOL to communicate this fact to their users).
Google gains the benefit of additional exposure to users and fees from
AOL, while AOL loses a bit of its stodgy image by providing a trendy
technology that improves their user's experience. If AOL became a
very large percentage of its business, they could potentially dictate
unfavorable terms to Google. Conversely, AOL may lose some Web
traffic directly to Google's web site, where user's may purchase other
types of research services, such as Google Answers. Advertisers may
also find Google more attractive relative to AOL at some point if more
users use Google than use AOL.
"Google's Award-Winning Search Engine to Power Search Functions Across
America Online's Brands, Providing Consumers Easy Access to the Most
Popular Search Engine Available" Google Press Release, Google Inc.,
May 1, 2002
I hope my discussion of these three examples of coopetition is helpful
to you. Please request clarification if needed
Sincerely,
Wonko |
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