DEFENDING AGAINST FOREIGN CLONES - ARE YOU A SITTING DUCK OR POISED FOR ATTACK?...
They say imitation is the most sincere form of flattery, but then, not everybody can take a compliment...
With the monumental growth of Groupon it's hardly surprising that other entrepreneurs have sought to enter into the newly created group-buying market space. What is surprising is that Groupon didn't roll out a global strategy quickly enough to become the only dominant player in the market.
Paying the Price
You might think that €100m is a lot to pay for website localization. Yet that is effectively what Groupon did when they bought Citydeal; a clone company. The first-mover advantage is invaluable in business as many web companies know, so letting this advantage go to someone else in a new market could be a costly mistake since Groupon could have had a global strategy from the start for a fraction of the price.
In addition to selling out to Groupon, the three Samwer brothers in Berlin have sold localized web clones to eBay and Verisign, as well as investing in Facebook in early 2008. The Samwers are smart at identifying opportunities, creating localized clones and deal-making.
A Wider Vision
It's easy to wrongly perceive that a lack of domestic competition means there is no international threat. While it would not make sense to take on eBay on its home turf (since more buyers beget more sellers), a competitor in a foreign market and foreign language can hide under the radar until it has its own local market sown-up. Thereafter the only option to achieve the global aspiration is to acquire.
The days of perfecting a business model or of dominating a local market before going global are behind us. As the director of an Internet company, I really do empathise with the juggling of priorities and challenges that come with scaling a business, but when it comes to implementing an international strategy and localizing for multiple markets too many companies leave it too late or try it alone only to find they've recruited an inexperienced team who need to learn on the job, which is also costly.
For any business with global aspirations the need to localize has never been stronger. Not just for the opportunity, but the threat that the longer it gets left the higher the price may become. With global virtual teams, Web-Translations has helped a number of Internet companies to pursue their international growth plans through a global web localization strategy (details of which can be found here: http://w-t.cm/solutions). We've seen how clients across leisure, manufacturing and financial institutions have worked to secure their position and grow into international markets, in industries particularly vulnerable to cloning.
Pushing the Boundaries
One battleground is China, where opaque rules and the great firewall of China have kept many American firms away, thereby leaving scope for Chinese entrepreneurs to develop similar services. Irizu, for example, resembles Airbnb; an American room rental platform. Zhihu; a question-and-answer service, looks a lot like Quora, another American first. If the American brands had pushed forward with web localization strategies from day one these clones would have never been born.
Personally I would not launch another Internet business without a planned rollout of the various language localizations. The risk of being successful and then being cloned is too great. The risk of being cloned and having the clone become more successful is also increasing as they learn of the mistakes of their counterparts. While the early bird may get the worm, it's the second mouse that gets the cheese.
Healthy or Harmful Competition?
Whether it's Britney Spears Vs. Christina Aguilera or Apple Vs. Microsoft, competition is a good thing; it gives consumers choice over service and pricing. But when you know you're onto a winner, the discovery that someone has stolen your inspiration is pretty gut-wrenching.
The moral of the story: It's time to get out of the bubble. Be aware of the wider markets available to you and your business, and whether or not you feel you're 'ready' at least explore the opportunities of a localization strategy – be prepared and if it's a desire to trade internationally take your share of the global market early doors, before others take it for you.
No-one said business was fair but at least you can level the playing fields.