Life really is getting more convenient. Think Uber Eats and even Uber itself. How easy is it to get a great meal delivered to your door? Or to have a clean car pick you up at exactly the right location for a relatively modest cost, whilst being able to see precisely when they’ll be arriving. It’s so easy, we even have people in our office get local take-away lunch orders delivered rather than ducking out to pick it up. Admittedly, this is almost exclusively reserved to Millennials.
Want to go out for dinner tonight? Just open an app on your phone, select your preferred location and DONE. Dinner is reserved. You might even have locked in a worthwhile discount. So not only easier but cheaper. We now simply expect it to be this easy; cheaper as well.
But there is a cost to this convenience. Restaurants that utilise these “connectors” are mostly doing more business. And making less money. With a cost to the business for every order taken of around 35% or more, their margin is somewhere between negligible and a loss. So why do they use these services? Well, if they don’t and the client has the choice of others that do, the order will probably go to them. So more business, less profit and happy clients. Welcome to modern business.
Such disruption is not unique to food or travel. The radio waves are saturated with vendor’s agents offering to make the selection of an estate agent convenient, competitive and without cost. Well, you do the maths. At least with food and travel, the client gets either cheaper or greater convenience. With real estate, it typically involves nothing more than the “connector” farming out the lead to whoever will pay them a cut or a referral fee. They clip the coupon, use the proceeds to do more advertising and add absolutely nothing to the client’s advantage. But like the restaurateurs, agents feel the necessity to get the business, no matter the cost and end up slowly bleeding money. And the client frequently gets to work with the desperate agent who needs the business. In today’s increasingly competitive environment, just watch the turnover and closure of these small businesses that get stuck on this self-destructive wheel.