3 things ISPs need to learn from petrol stations

Recently, I wrote a post about Koos Bekker and MWEB’s decisive masterstroke over South African Internet Service Providers (ISPs), and this post is meant as something of a follow up. It’s a, “Okay, so you’ve been played… now what?” piece.

When I was growing up, if you wanted supermarket-style shopping, you had to do it at your local Spar between 9am and 7pm, any later and you’d hit the corner café. This model worked for years until one day a new player came back and obliterated it. That player was 7-11 and it was a major retail breakthrough – supermarket shopping at better-than-café hours. Within months the corner café went the way of the dodo and 7-11s and 8-till-lates (eh?) popped up everywhere. A new era of shopping was upon us.

Of course history then showed us that success can be extremely short-lived. Why? Because some dude in a petrol station realised that his little convenience store was open 24-hours anyway, so why not jump on the supermarket bandwagon? He did, and 7-11 all but went belly-up overnight (if you’ll pardon the pun).

So what’s the lesson here? Once the new paradigm for convenience shopping was pushed out to 24-hours, time ceased to be a factor. Sure, you could try discounting your prices slightly within that timeframe, but that’s just discounting. Thus the forecourts needed to look to new things for their competitive edge. Some added a bakery, some a coffee shop… then a Steers, then a FruitSpot – and now even Woolies. When the vertical line of differentiation reached the edges, the forecourts were forced to innovate laterally. This is the lesson for the ISPs.

Lesson one:
The cap-for-cash era has died, we’ve reached the edge. Acceptance is the first step for moving forward.

Lesson two:
If we want to innovate further, we need to look at the problem with completely new eyes, the question is this. Assuming bandwidth is no longer a factor, what value can I now offer? Vertical is at the edge, you need to look lateral.

Lesson three:
The 24-hour thing simply made shopping more convenient. For Joe Public, the timeframe was simply a factor of convenience, the actual money came from what I did once I was in the stores. The ISPs need to ask themselves what value they can offer now that money and bandwidth is no longer that big-a-deal. That’s where they’ll get rich.

Of course, they could also just stick to discounting the commodity, but what fun would that be?