Threat of Substitution
According to Statcounter, Google accounts for over 92% of the global market share of search engines. However, the tech conglomerate is now being threatened due to the change in consumer behavior regarding online shopping habits. The rise of e-commerce has grown exponentially during the pandemic as offline stores are forced to closed. Shopify, an e-commerce platform for online stores, has forecasted that global e-commerce sales are expected to reach US$6 trillion by 2024. Online shopping has become the “new normal” for many people; thus, their shopping behavior has certainly changed over the years.
SHIFT IN CONSUMER BEHAVIOR
While consumers turn to online platforms for purchasing everything from apparel to office supplies, they search directly on e-commerce sites for desired outcomes. There have been signs since 2014 when Eric Schmidt, then Google Executive Chairman, mentioned that Amazon had become the most significant force against Google in the mobile search engine market. This is due to the nature of Google being a mere pathway for people to browse before going onto other web pages. Prabhakar Raghavan, Senior Vice President of Google, mentioned that its services were affected by the social media preference of Gen Zs. This demographic does not use Google services such as the map or search function to look for products to buy or places to go. Instead, they go directly to TikTok or Instagram, as these are their primary platforms. According to the Digital 2022 Global Overview Report, Instagram and TikTok are the fourth and sixth most used social platforms, respectively. With the increasing social media usage, brands are migrating toward these aforementioned platforms for advertisements.
THE RISE IN TECHNOLOGICAL BREAKTHROUGH
Additionally, the recently launched AI-powered chatbot, ChatGPT, is another potential disruptor as it has the ability to reinvent or replace traditional search engine. The ChatGPT has the capabilities to answer questions in natural human-like language using information from the internal. Although it is still early to tell as many chatbots in the past were closed down due to the generation of false, toxic, and biased information. The popularity of the ChatGPT has threatened search engines such as digital ads because some consumers turn to chatbot to look for answers and follow the suggestions to shop on other websites. That being the case, search engine and social media providers need to act toward a more resilient portfolio.
The foregoing case shows that even the most dominant market leader can face unexpected disruption from indirect competitors. Therefore, if brands are slow to react, they could indeed risk being substituted. At BRANDi, we have always considered the potential disruptions that brands may face; we believe GREAT brands should be able to withstand any interference in the market. Therefore, Above the Ocean Strategy (AOS), one of our flagship services, is designed to portray the business resilience framework. With AOS, brands can succeed with the ecosystem through the unique design of their value system, while enhancing business exploration and monetization.
Read more about AOS at: https://bit.ly/3SEX5vE
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