The WSJ reports that car dealers are pretty angry at Stellantis, maker of Jeep, Ram, Dodge, Chrysler. They want Stellantis to offer more discounts to consumers to get us to buy more cars. For small business owners, as Seth Godin often write about, selling a commodity is very tough.
Small businesses face a growing challenge: the commodity trap. Selling products alone no longer cuts it. To thrive, companies must offer unique experiences that set them apart. Let’s explore why commodity-based models struggle and how experience-focused businesses are hitting it out of the park.
The Struggle of Car Dealerships
Car dealerships exemplify the pitfalls of a commodity-based business model. With identical vehicles available across multiple lots, price becomes the primary differentiator. This leads to:
- Razor-thin profit margins
- Intense competition between dealerships
- Difficulty building customer loyalty
- Vulnerability to economic downturns
Many dealerships now grapple with declining sales and uncertain futures. The rise of online car-buying platforms further threatens their traditional business model.
Small Businesses Feel the Squeeze
It’s not just car dealers feeling the pinch. Small businesses across industries face similar challenges when selling commodities:
- Large retailers undercut prices through economies of scale
- Online marketplaces offer vast product selections at competitive prices
- Customers have little incentive to choose one commodity seller over another
- Brand loyalty becomes increasingly difficult to cultivate
The Savannah Bananas: A Home Run in Experience-Based Business
Enter the Savannah Bananas, a baseball team that’s rewriting the playbook on fan engagement. They’ve turned America’s pastime into a must-see spectacle by:
- Choreographing dance routines with players
- Implementing quirky rules that speed up the game
- Fostering a carnival-like atmosphere at every event
- Prioritizing entertainment value alongside athletic competition
The result? Sold-out games, a massive social media following, and a brand that transcends traditional sports fandom.
Why Experiences Win
The Savannah Bananas’ success highlights why selling experiences trumps selling commodities:
- Uniqueness: Experiences can’t be easily replicated, unlike products.
- Emotional connection: Memorable experiences foster customer loyalty.
- Word-of-mouth potential: People eagerly share and recommend remarkable experiences.
- Higher profit margins: Customers willingly pay premiums for exceptional experiences.
- Adaptability: Experience-based models can evolve with changing consumer preferences.
The Takeaway for Small Businesses
To avoid the commodity trap, small businesses must focus on creating unforgettable experiences around their products or services. This might involve:
- Offering personalized customer service
- Creating immersive shopping environments
- Hosting events or workshops related to your products
- Developing a unique brand personality that resonates with your target audience
By selling experiences, not just goods, small businesses can differentiate themselves, build lasting customer relationships, and thrive in an increasingly competitive marketplace.
