Many mature industries have had their teeth kicked in by smaller players doing what they do better, and even more have seen themselves rocked by worse products that out-price them. In revered marketing expert Clotaire Rapaille's The Culture Code, he bluntly states that the American mind-set is one that looks for something that 'just works,' which means that providing a similar product at a better price can oftentimes win.

Take Uber, the ubiquitous car service that competes with the traditional taxi industry that is raising a new round of funding at a valuation of $62 billion. They began by providing an easier, more-accessible cab service to the vastly under-served San Francisco metro area. However, they really began to grow when they provided a cheaper alternative to a classic cab by getting normal people to work for them using their own vehicles. While a Prius isn't as regulated or as reliable as a towncar or even a yellow cab, people would rather use their phones to conveniently and cheaply get from point A to point B.

Even further back was Amazon, who grew out of the stagnant brick-and-mortar book industry and began selling the same books, at times for the same prices, without the cost of real estate or in-person staff. They've now become one of if not the largest e-commerce player simply by providing the quickest service, the largest inventory and the cheapest shipping. By nullifying the shipping cost that oftentimes stops customers from ordering, they're reliably not having to lose margins on costly sales - they lock customers in using Prime (customers like me, in fact - I literally won't order something if it's not on Prime) and Amazon constantly.

As a result you're finding an increasing amount of companies taking the same margin-hit with shipping to try and lock in customers. That's why sites like Newegg have started programs like Premier, which offers (like Amazon) fast shipping for free, or faster shipping for cheaper, for a yearly subscription like Prime's.

Beyond shipping, others have seen success in their industries by undercutting their competitors without losing the soul of their product. Everlane, an online clothing company based in San Francisco, all-in-all isn't cheap clothing-wise, but the quality of their product (in my opinion) rivals things you'd find at Saks 5th Avenue. They manage to make quality products at much cheaper prices by having small amounts of inventory and specificity in what they do. They also, while charging comparatively less, don't do regular sales much like you'll find on almost every major clothing store or website. It worked, too, making them $12m in revenue in 2013.

Better yet, try something utterly boring people are willing to pay for because they need it. Founded by George Shanine, a 15-year IBM software veteran, MedPro has promoted itself as a way of getting rid of medical waste, which if done wrong is one of the more bad (and at times illegal) things that can happen at a doctor's office outside of disease and injury. The industry may seem as interesting as paint drying, but it's a multi-million dollar industry populated (currently and formerly) by incumbents that could be priced out of the game by a new player. When Shanine and his team noticed the opportunity, they teamed up with local haulers and built the business to scale intelligently and at a low cost while providing a vastly similar service. By saving local doctors around 30-40% of a thing that they literally have to do by law and doing the job right, MedPro has a customer retention rate of 96%, growing between 300 and 500 clients a month.

Shanine, one of Crain's 40 under 40 in his time at IBM, simply worked out a way to cut back costs that many elder businesses don't bother to as they sit unchallenged. The truth is that even hugely successful (and giant) businesses, as we've seen with Yahoo!'s fall from grace, can find themselves beaten to a pulp by a smaller company that learns how to do what they do better and more profitably. Can you?

Published on: Dec 3, 2015