This business model pictured above is a perfect illustration of the concept of the uncontested or underserved market niche. Is this business model uncontested or Underserved?
When looking for an underserved or uncontested market niche, you have to spend time researching the marketplace in order to identify it. In real estate or any other business, it means that there are very few concentrating on that segment of the market. Real estate professionals often focus on working in areas where there is plenty of competition. Their logic is simple driven by the notion that they can do a better job than the agent or business that is thriving there.
In our commercial real estate career, we assumed that there was money to be made in working the Beverly Hills triangle, because of the high lease rates and high prices for the commercial buildings. However, there was very little money to be made, because there were three dominant players who owned the marketplace. All three were excellent agents, and two of the three owned commercial buildings in what is known as the Golden Triangle.
Trying to carve a dent in that market area was equivalent to swimming with the sharks, also known as a red ocean strategy. (This refers to a book titled Blue Ocean Strategy, “How to Create Uncontested Market Space and Make the Competition Irrelevant”, written in 2004 by W. Chan Kim and RenéeMauborgne,two Harvard professors.} When you swim with the sharks, the competition is fierce and to remain alive you have to battle for a piece of the action.
Blue Ocean Strategy refers to finding an arena where you can thrive without major competition, and become the market leader. This led us to researching different areas of the Los Angeles Westside. We noticed that the marketplace outside of the Golden Triangle had very little professional representation with many “for lease or for sale by owner signs.” This area became our blue water market place. Within a few years, we were known as the go to agents in that marketplace, and had our signs on every new development. Those who tried to compete eventually gave up.
In our opinion, “milk and eggs.com” is swimming in shark infested waters. Food delivery to busy households is an arena dominated by big players with large marketing budgets like Amazon’s Whole Foods, Kroger and Albertson’s. Their claim to fame is that they pick up from farmers their produce and products, so they are the equivalent to shopping at the famers market, which is what they were doing in our neck of the woods where many farms and avocado ranches are located. Eventually someone is going to fold or be acquired.
Are you swimming with the sharks or enjoying an uncontested market niche?