Cannibalize Your Own Sales?

I recently read an interesting article in Fast Company about how Wal-Mart and GE are deliberately planning to kill their sales of light bulbs. Its not that they don’t want to sell light bulbs. They have recognized that new lighting technology will eventually replace traditional light bulbs so they would rather do the replacing themselves than wait for someone else to do it to them.

The new technology is the compact fluorescent lightbulb (CFL), “In the energy business, it is called a ‘CFL,’ or an ‘energy saver.'” These products last up to 10 years and use 80% less electricity. That means they pay for themselves in around 5 months but it also means that GE and the Wal-Marts of this world will sell considerably fewer of them.

Its a big gamble for GE as it means they will have to close light bulb factories and after the initial bulge of new sales, the long replacement time could mean fewer long-term sales. From a technology and supply point of view, GE is ahead of their competitors which gives them a one-time use it or lose it opportunity. If they can become the leader with CFLs they will tie up the market and put themselves in a strong market position for the future. On the other hand if they are to stay with the traditional technology eventually they will lose their market to the new technology.

Wal-Mart has also seen the writing on the wall and is partnering with GE to make the transition to CFL a success. They will feature the new CFLs and explain to customers the long-term cost and convenience benefits.

So what does this mean for the average small business?
Probably a couple of things — firstly replace all your standard bulbs with CFLs as they will save you lots of bucks! Before you stampede out the door, also consider your own product line or service.

Are you hanging on to an old technology or an old way of doing things? It may feel safe or the easy way to go but as sure as the sun comes up in the morning (unless it’s winter in the NW), you will eventually lose your market.

Unfortunately you can’t stand still, like GE you want to ride the wave, innovate and keep ahead of the competition. I don’t think that always means you have to be on the bleeding edge but you do have to be where the benefits to the customer are obvious.

What areas of your business do you think you may need to actively cannibalize?

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