“What kind of products do you sell on Amazon?” asked one conference attendee to another at a lunch I attended while at Freedom Fastlane Live. Before the other attendee could answer, someone else chimed in and said “You don’t ask that question to another Amazon seller. Do your own market research.” There’s an unspoken rule that Amazon e-commerce entrepreneurs never tell anyone what products they sell due to the high-risk of someone finding their manufacturer through Alibaba, copying their product and undercutting them. I’ve seen this situation replayed at conferences, on podcasts and in forums dozens of times over the last five years. Some entrepreneurs are deathly afraid of sharing any information about their online business because they fear someone will copy their business model and steal their market share.
The Rampant Problem of Plagiarism in Online Business
It’s easy to see why anyone at an internet marketing or online business conference might want to keep their cards close to their vest. Any successful entrepreneur that talks openly about their business to the larger online business community will likely be the target of multiple copycats. Some would-be entrepreneurs believe they can’t come up with an original idea of their own that would be successful, so they just copy someone else’s business as best they can hoping they can reach the same level of success as the person they’re copying. Copying someone else’s online business is rarely effective, because the copycat rarely has the skills to build and execute on the idea they are copying. Unfortunately, a high failure rate does not deter most copycats.
For example, my good friend Spencer Hawes openly built an Amazon affiliate site about survival knives to teach people how to build niche websites, only to be copied by several would-be competitors. After John Lee Dumas launched an extremely successful daily business interview podcast in 2012, dozens of other daily entrepreneurship podcasts launched soon after. I’ve personally had several people try to copy MarketBeat with varying levels of success, including one company that received venture capital funding. As best as I can tell, there are now 5-7 other websites that offer a daily email wrap-up of stock brokers’ research notes. Fortunately, most of the people that have copied my business really don’t understand the financial news industry and haven’t successfully marketed their products. There are a couple of competitors that have done reasonably well in their own right, but it’s hard to say for certain whether they are taking a serious bite out of our business.
Is Secrecy a Competitive Advantage?
Secrecy can help relatively small online businesses avoid competition for a period of time. If you make less than $250,000 per year, you can generally fly under the radar and operate your business without getting noticed. After you grow past a certain size, you can’t realistically stay hidden from would-be competitors. If you’re one of the largest sellers of any item on Amazon, have the biggest AdSense account in your industry or are the largest affiliate for something like DirecTV, Proactive or another popular affiliate program, you are simply too big to fly under the radar. Potential competitors will eventually take notice of what you’re doing and begin to compete with you by replicating your business model. Success begets copycats.
While keeping your business model secret can prevent some competition early on, it’s not something you should rely on as a competitive advantage over the long term. If the only reason that someone hasn’t ripped off your business is because they don’t know what your business is, you just don’t have a very good business. You need to identify what competitive advantages your business has that will make it difficult for someone else to copy. If you have a unique supplier that no competitor can work with, you have a competitive advantage. If you have developed a marketing channel that would be very difficult for competitors to replicate, you have a competitive advantage. Try to build a business that has aspects that are very difficult to replicate in order to prevent copycats from ripping off your online business. Would-be competitors will still try to copy you, but they probably won’t be successful.
MarketBeat has several advantages that our competitors cannot easily replicate. We have a better understanding of SEO in our niche than anyone else. We can produce content at scale. We have direct relationships with some of the best financial advertisers in the industry. We know email marketing better than anyone else and have a world-class software suite that runs our business. People have tried to copy parts of our business, but no one has been successful at copying our entire business because there are simply too many moving pieces for any one person to copy successfully.
How Copycats Can Help Grow Your Business
It was eighteen months into building MarketBeat (then Analyst Ratings Network) that someone tried to copy part of my business. I would expect my first copycat to be an internet marketer from an obscure corner of the globe with a lot of time on their hands, but it was actually a sizable financial publishing company that was our first copycat. We had been promoting some of their products as an affiliate through our daily newsletter. After receiving several sizable commission checks from them, they came out with their own daily ratings newsletter that looked suspiciously similar to MarketBeat Daily Ratings.
At first, I was upset that a partner had ripped off our newsletter. Then, I noticed they had made a couple of improvements over what I was doing and added those improvements to my newsletter. Whenever someone copies my business, I inevitably learn something and improve my business as a result. Any economist will tell you that competition is good for consumers, but I believe competition is also good for businesses themselves. I’ve learned about traffic strategies, data sources, ad-networks, opt-in tricks, and many other things from people that have tried to copy my business. I personally believe that my business makes much more money today than it would if I didn’t have copycats and other competitors to learn from.
How to Build a Defensible Business
If your business is successful and is easy to replicate, a copycat will inevitably rip-off your business. You need to build a defensible business that cannot be replicated by a would-be competitor in order to survive and succeed over the long term. Avoid simple business models that don’t take much work to replicate. Develop processes, systems, technology and relationships that competitors can’t easily copy. Build a brand and acquire intellectual property such as trademarks and patents that your competitors can’t use. Do these things well enough and you will effectively become immune to copycats. Even if others try to copy your business, you can view these attempts as a chance to innovate, always staying several steps ahead of others in your niche.