Published on: December 22, 2015
We had a story the other day about how Procter & Gamble has filed a lawsuit against Dollar Shave Club, alleging that the disruptive startup has stolen intellectual property from P&G's Gillette brand, violating its technology trademarks.
I commented:Not saying that this lawsuit isn't legitimate, and I do think that patent infringement is a serious issue. But ... in these cases, my first impulse is to be sympathetic to the disruptor. I'm sure that when Dollar Savings Club started, the folks at Gillette figured it wouldn't be a threat. Then they figured it wouldn't be much of a threat. Then they figured they could dominate the online market just because they are Gillette. Then they called the lawyers.
Sort of like Elisabeth Kübler-Ross's five stages of death, except that there are just four of them ... and unlike death, maintaining market share isn't inevitable.
One MNB was less sympathetic:To quote a famous blogger: “to compete is a verb.” I never understand why you criticize companies for using EVERY tool in their competitive toolbox. One tool that should not be ignored is the legal tool. Gillette has many good lawyers who are paid well to use their skill on Gillette’s behalf. Forcing Dollar Shave Club to expend resources, change their marketing or packaging, etc. are just other ways of competing - in ADDITION to what Gillette is also doing on the Product Development, Marketing, or Sales front.
When my company is assessing competitive threats, we look at every aspect of the situation, not just their products and services. We consider their financial makeup, their leadership, and yes - the legal angles. We compete against the whole company, not just their product teams. “Compete” is a multifaceted verb, if you’re doing it right...
MNB reader Bob Thomas concurred:The theft of intellectual property is a crime. Whether it be patent infringement or trademark infringement it is a crime of property theft. A “disrupter” using stolen intellectual property is a criminal, not a victim. The proceeds of trademark infringement benefit terrorists and organized crime (based upon reports by OECD, Interpol and Ernst and Young). A company can spend millions of dollars on R&D and endorsements. It is not legal or fair competition for a company to hijack that property.
To be clear - because apparently I was not - I think trademark infringement is a crime, and I am not sympathetic to criminals. If that's how this case plays out, my sympathies will be with P&G ... we just don't yet know how it will play out. (Just because P&G says it is so doesn't make it so.)
My broader point, which was obscured, is that some companies may allege trademark infringement when all that has really happened is that a disruptive company figured out how to build a better mousetrap, not an imitative one.
By the way, there appears to be a certain amount of antipathy toward Gillette out there. One MNB user wrote:Gillette’s answer to Dollar Shave Club was to advertise that a man could use the same, Fusion blade for a whole month. This would then make them more cost efficient that the Dollar Shave Club blades.
Show me the man who uses the same blade, every day for a whole month. Nobody does that.
From another reader:As the old adage goes, “Sell them the Razor and we will have a customer for life selling them the razor blades.” Having gone through about 6 generations of Gillette razors and razor blades, the blades have become much too expensive. Go out and price the various Gillette blades, especially the newer Mach Series. One would have to take out a small loan to afford what Gillette is charging.
Dollar Shave Club took advantage of the high priced blades that Gillette has and used Creative Destruction to find a new and better way to save on blades for the consumer. I hope they prevail in this lawsuit that P & G has brought forward against Dollar Shave Club. Obviously, P & G does not like competition.
And from still another: I’m a proud member of the Dollar Shave Club because quite frankly I got tired of feeling ripped off every time I had to plunk down $16.00 for a few razor blades! Are they as good as Gillette? Maybe not, but I can either grow a beard or send my daughter to college with my Dollar Shave Club savings…or maybe save up for that elusive Porsche 911. Hmmm...
It will be interesting to see how the lawsuit plays out, and where the line gets drawn between infringement and disruption.
Responding to our story the other day about theme parks installing metal detectors so they can reduce the likelihood of terrorist attacks, one MNB user wrote:I was surprised that they WERE NOT already screening upon entry. With all major sports venues having ramped up months ago, I find it hard to believe that they didn't do it quietly. It may be the happiest place on earth, but that only makes it a target for the bad guys.
And I still think it won't be long before Walmart installs metal detectors.
Regarding some of the problems being encountered by retailers offering click-and-collect services, one MNB user wrote:While I can appreciate the need for new and innovative strategies to meet shoppers where they want to be/are, there are still monumental hurdles in the store. I'm concerned these new initiatives will take needed attention from the more basic aspects of blocking and tackling at retail. In stocks and shoppability, which should be considered retailing 101, are the worst this time of year. Is it too much to ask that a merchant have items on the floor in the merchandising vehicle for which it was designed and correctly priced? Where is the departmental ownership of the front line? And then to get slapped with requests for markdown money for said poor execution is amazing to me.
From another reader, Tom Murphy:I had the ultimate Click & Collect experience for any retailer today. Due to the death of my desktop yesterday, today at 6:30 am during breakfast, I configured and ordered online for pickup in an Apple store. I customized a MacBook Air and a printer, paid online, and selected the pickup to a local store...pretty much like you can do at most retailer ecommerce sites. But that is where the similarity ends.
As many of your readers know, the Apple in-store experience makes shopping in most other retail outlets...well...embarrassing! In this case, I walked in the door, showed the Apple associate my order barcode which he scanned, and then waited for almost 2 minutes while both were being brought directly to me where I was standing in the store. During that two minutes, I was told about special tutorials and services, how to contact someone for help, and that I could go to the back tables to have the laptop setup and configured...which took almost 5 more minutes. Total transaction time...7 to 10 minutes.
When I go into a grocery store or a department store, and need to ask a question, it might take 10 minutes to find someone to ask and another 10 minutes while they search for someone that knows the answer.
Now, to be honest, you cannot expect the Apple experience in most retail outlets...just saying, "if you want to see how Click & Collect could work...."
And, from MNB reader Peter Grimlund:The article “Broken Promises Of Click-and-Collect Marketing” points to a pernicious problem in the retail industry that frankly both saddens and maddens me that it continues to exist. The technology to solve this problem has been around for a decade but the retail industry can’t seem to get beyond their belief that current infrastructure and process are up to the task of matching on-hand inventory – what is really available, right now – not committed elsewhere, not misplaced in the store or worse not in the store because their POS system is off – with the lighting fast demands of online consumption.
I co-founded a company in 2005 to leverage the unique opportunity provided by RFID technology to capture item level inventory in real-time - real-time mind you not hours or days later - to provide retailers with accurate and actionable intelligence to prevent out-of-stocks and customer disappointment. We suggested that the cloud application could be married to a retailers online system in a way that would allow the consumer to select an item, see where it was available for in-store pickup and if ordered, know the serial number of the item that was purchased. The system would generate a note to transmit to the stores personnel and its POS system alerting them to pull the item from inventory to await pickup and to prevent it from being sold through the front of the store. The solution was and is totally automated – no store personnel running around scanning inventory. Also no disappointed customers discovering their purchase has been sold to someone else.
While I am no longer involved with the company, it has found traction in other industries, and I am proud to say that it is contributing to improved profits for the companies it serves because they experience fewer lost sales due to OOS. And I would assume that their customers are more satisfied when they face fewer empty shelves.
Retailers need to wake up. Their inventory systems were not designed to deal with the demands of a virtual customer shopping in the same aisle as the one physically present in the store. The person shopping in the store can see when the item they want is no longer available. The salesperson helping that individual can also see when it’s not there. But the stores POS system may not be aware of this fact let alone the retailers online system. Leaving the online customer hanging and disappointed when they show up to collect their goodie, not to mention vowing to tell everyone within shouting distance about their negative experience with that retailer.
Kevin, sorry to rant, but it just touched a nerve. I just thought you might want to know that solutions are available to fix the problem if the industry would take the time to lift their heads out of the sand long enough to look around.
We took note yesterday of a Bloomberg
story of some of the digital advances being made by the Washington Post
since it was acquired by Amazon founder/CEO Jeff Bezos.
MNB reader Scott Negro responded:I found it amusing that the first article talked about Amazon’s CEO owning the Washington Post, then the next article is a Washington Post report that traditional retailers are poorly executing online shopping. I’m sure it’s a legit article, it’s just really funny that a paper owned by the world’s largest online retailer is reporting on how poorly the brick and mortar companies are doing with click and collect.
Just FYI ... in every story the Post
does in which Amazon is referenced, it is fully transparent about who owns the company. And I have it on good authority that he has not gotten involved in editorial coverage.
And, from MNB reader Karen Alley:I admit I was wary when Bezos bought the Post. But it has been interesting to see how things have gone, and I'm glad to see your Monday Morning Eye-Opener that has a quote from Baron about taking the long view. That's very important.
I will say that on a very personal experience, I've seen some of what Bezos is doing working. My 11 year old daughter has an Amazon Kindle. One day she asked me what abortion was, and when I asked where she heard it, she said she read something in the Washington Post. Digging a little deeper, I found out she was reading the Washington Post on the app that comes on her Kindle. Granted, she mostly reads the comics, but she is also reading other news, and is more on top of current events than ever before. This from a kid who wouldn't even think about picking up a newspaper, or even watching the evening news. Looks like Bezos is picking up a new generation to help keep true journalism alive.