Last week, the Wall Street Journal published a fascinating and deeply reported article about how startups around the world are beating global consumer goods companies. In "Outfoxed by Small-Batch Upstarts, Unilever Decides to Imitate Them," Saabira Chaudhuri describes how consumer preferences for household staples like ice cream, toothpaste, and shampoo have changed.
"The world's biggest brands are facing a broad-based revolt among shoppers, threatening a business model that has served them, and their investors, for decades," she writes. Consumers aren't impressed by 'new and improved' versions of the same old products. Instead, they've "gravitated in droves toward smaller, niche or locally made products.... and are seeking out healthy alternatives and more natural ingredients."
To earn back the market share they've lost, packaged goods behemoths like Unilever are mimicking the marketing strategies and practices of smaller, newer companies whose products are eclipsing theirs.
This is not only true here in the United States, where Halo Top Creamery -- a seven year-old company lead by 38 year-old Justin Woolverton -- became America's best-selling pint of ice cream last year. (Reportedly, to the astonishment of Ben & Jerry's executives.)
Unilever is facing stiff competition from local upstarts in India, Indonesia, Italy, China, and Brazil as well.
"We have to match them in terms of insight, speed and the ability, frankly, not to be 110% sure all the time that what you've got is going to work," said the executive in charge of overseeing Unilever's response.
Reading this news was not one bit surprising to me.
There are three pints of Halo Top in my fridge right now, even though I'm making an effort to no longer eat any sugar. That's what my wife bought for our guests over the holidays, more specifically my younger daughter Elizabeth and her boyfriend. My other daughter is a longtime fan of Ben & Jerry's -- but she told me she's trying to avoid eating ice cream period.
I often hear the same complaint from inventors and entrepreneurs: Because of our size, there's no way we can compete. Founders underestimate themselves. "We just don't have the money." "We just don't have the resources." "We just don't have the experience."
What these people don't realize is that their small size is an asset! You can compete because of your size. You can be nimble, quick, and offer a point of difference. You can focus on understanding your customer's needs. And you can actually beat the big boys.
Market leaders struggle to communicate with their customers organically because of their size. They can't be personal: They're thinking about scalability, not localized preferences. But the trend is clear: Consumers want products that reflect themselves. They're looking for goods that are manufactured closer to home.
Selling the same things to people all over the world is cost-effective, but it's no longer cutting it.
Which is why small is especially beautiful in today's world.
The public's appetite is clearly shifting. It has been for a while now. More of us are demanding that the products in our home are better for our health and the environment. Even at my age, I'm beginning to agree: I want less of what I buy to be processed. I want to buy local. I've been reading journalist Michael Pollan's 2008 book In Defense of Food, a Christmas gift. A new generation of shoppers will not support companies that are only looking out for their bottom line.
The weaknesses of your larger competitors should be fairly easy to spot. You can use social media and e-commerce to exploit them.
Within three years of co-founding a company that sold guitar picks, my designs were in 10,000 stores. How did we scale up so quickly? First, we studied how the major players were selling picks at the time. When we visited stores that sold musical accessories, we were often presented with a tackle box to dig through. So we knew we could improve on packaging. We couldn't afford an endorsement from a big-name band, so we went the other direction: We sponsored garage bands that had a lot of fans on Myspace. Our picks were really for the fans. There are a lot more fans than guitarists, after all.
Basically, we changed our thinking. We used social media to establish mutually beneficial relationships. We didn't try to fight head-to-head with the leaders in our industry -- we identified and then focused on areas that they were not servicing. On Myspace, we could message our customers directly. We had a unique and interesting story to tell, whereas our competitors did not. That's how we made it into Walmart and 7-Eleven so quickly.
Chaudhuri's article makes clear the benefits of being small and truly listening to your customer.
Startups: Find the holes, embrace being local, and stay current. That's how you win today.