Beyond the Crowd: Spotting the Open Space in Highly Competitive Sectors 🌟
Is the Market Really Crowded or Simply Converged?
Crowded vs. Converged Markets
When I hear the words “crowded market,” what comes to mind is “convergence" the phenomenon in which competing companies offer extremely similar products or services, making them difficult to differentiate. Renowned strategist Michael Porter once said, “The essence of strategy is choosing what not to do.” In a converged market, companies often choose to do the same things, leaving untapped opportunities for new entrants to stand out by doing something different.
Logistics: A Real-World Example
Let’s explore the logistics sector, specifically route management software. At a glance, the market may seem saturated. Indeed, the global route optimisation software market is projected to reach $9.3 billion by 2027, growing at a CAGR of 14.3% from 2020 to 2027 (Source: Allied Market Research). You would think this is“crowded.”
However, a closer look reveals a convergence:
- Over 90% of these software solutions offer strikingly similar features. Well this was true for the competitors I uncovered.
- Their websites use nearly the same language to describe their value propositions.
- Buyers often struggle to find a truly differentiated product that meets their unique needs.
From a buyer’s perspective, discovering the right solution becomes a nightmare because it’s difficult to tell these converged offerings apart. Yet this convergence signals a golden opportunity for a new market entrant with a fresh angle or an unaddressed feature set.
Finding the ‘Open Space’
Visualise a conference panel featuring the top three route management software companies. After the panel discussion, a swarm of delegates flocks around these speakers in one corner of the room, leaving the rest of the space empty. That empty space metaphorically represents the unaddressed pain points and opportunities:
- Unaddressed buyer pain points: Most established vendors converge on the same feature sets, neglecting niche but crucial customer requirements.
- Entry point for new entrants: Novel companies can step into the gap and build solutions that address these overlooked needs.
- User-centred research: By engaging potential users before building, a startup can identify specific unmet needs.
- Validation through MVP: Testing an initial product in the real world enables you to collect behavioural data, confirming which features truly matter.
Why Do Companies Converge?
“People don’t buy what you do; they buy why you do it,” says author and speaker Simon Sinek. Yet in many industries, the “why” gets lost. Companies tend to mimic what’s already working for competitors, falling into the safety of the pack.
Humans, by nature, love belonging to a tribe, and businesses are no exception. But this “herd mentality” can be lethal when external forces, new technology, legislation, or market shifts, lower barriers to entry and allow innovative competitors to swoop in and capture neglected niches.
Key Takeaways
- Crowded does not always mean saturated: Sometimes it means most players are clustered around the same offering.
- Opportunities lie in neglected pain points: By identifying what established competitors overlook, new entrants can carve out a unique niche.
- MVPs validate assumptions: Early user feedback clarifies which new features solve customer problems.
- Convergence can make disruption easier: If everyone is doing the same thing, an innovative approach stands out more dramatically.
As you navigate any market, logistics, finance, or even software development look beyond the labels of “crowded.” Instead, investigate whether the players are converged. If they are, you might find a surprisingly wide-open path to differentiation.
Examples of Highly Converged Markets
- Streaming Services (Entertainment)
- Netflix, Hulu, Disney+, HBO Max, Amazon Prime Video, all offer vast libraries of movies and TV shows. While each platform attempts exclusivity with original content, the overall offerings and user experiences are increasingly similar.
- Smartphone Industry (Consumer Electronics)
- Apple, Samsung, Google, and other manufacturers compete heavily on camera quality, screen size, and performance. Many flagship smartphones converge on similar technical specs, design elements, and price points.
- Ride-Sharing Platforms (Transportation)
- Uber, Lyft, Grab, and Didi largely provide the same core service on demand rides. Differentiation often boils down to user experience nuances, pricing strategies, or local availability.
- Online Travel Agencies (Hospitality)
- Booking.com, Expedia, and Travelocity aggregate accommodations, flights, and car rentals. Although they each claim unique features, the core value proposition remains the same: bundling travel solutions.
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