In the past 24 hours we have seen record profits of £2.6 billion announced from supermarket giant Tesco yet Yahoo has posted an 11% fall in profits at a mere £71m. Google, on the other hand is making around £525m every three months. Tesco’s main competitor, Sainsbury’s, only managed “a sharp rise” in profits of £267m last year – one tenth of Tesco’s. So here we have it – Tesco is clearly beating Sainsbury’s hands down, while Google is doing the same to Yahoo. But look at the market shares. Google gets 48% of search engine traffic while Yahoo gets 28%. Meanwhile, Tesco gets 31% of supermarket shoppers while Sainsbury’s gets 16%. In both these cases the successful company (Tesco and Google) gets around twice the market share of their main competitor, yet in both instances they are getting around ten times the profits. In other words, doubling your market share doesn’t double your profits, it clearly has a much more substantial effect. So, one way of helping boost your online business is to look at your share of your market place and then work out some steps which will help you increase that share. Small increases in market share can have substantial effects on your bottom line.
What Yahoo and Tesco can teach Internet marketers about your online business
18th April 2007 | General