Vlasic, one of the world's top pickle producers, delivered a top selling item to Walmart -- a gallon of pickles for about $3. It was huge, Walmart shoppers went pickle crazy, and bought them by, well, the gallon. The only problem was that the gallon jugs of brine were only minimally profitable -- picklers make their real money on cut and prepared pickles. But Walmart and Vlasic were caught up in the pickle-fever, and Vlasic ignored the shrinking margins as their business shifted from premium gherkins to dime-a-dozen salted cucumbers. Finally, Walmart's continued pressure to lower the cost of a gallon of pickles, and the total loss of more profitable business, forced Vlasic into bankruptcy.
Simplicity Manufacturing, a premium lawnmower manufacturer, was offered the opportunity to become Walmart's house brand of lawnmowers, guaranteeing millions of sales. But that would have watered down Simplicity, forced them to lower their standards, and to reduce their profit margins. Ultimately, they said "no," and continue selling high priced and high quality lawnmowers today. They haven't filed for Chapter 11.
Your iPhone application is a shiny red lawnmower, and you're selling it for 99¢ a gallon.
It would be flattering to call the App Store Walmart on Black Friday. Sure, it generates a ton of traffic, but that traffic is a bunch of sweaty bargain hunters digging through endless shelves of games and applications, guided by $1 flashlight applications, haphazard search and vague and untrustworthy reviews. It's a great place to sell if you're willing to sell your app at the absolute lowest possible price (quality be damned!), and be in cutthroat competition with the next guy who can give the Walton family some pickles for half a cent less per gallon. Unless you're as good at the low price game as Walmart, you'll be in a race to the bottom.
Remember Simplicity and their shiny red lawnmowers? Not only are they unavailable at Walmart, they're also nowhere to be found on Amazon, or at Sears, or most anywhere else. They're sold exclusively through certified dealers, each of which is equipped to be a full service support shop for the mower. There are two such dealers within 100 miles of my house. But that's all right, because if I'm going to spend over three grand on a lawnmower, I'm happy to make the trip.
You've got this great application that's well worth a premium price. Why are you trying to draw people in who are window shopping at Walmart's app store? It's time to to quit bitching and build your dealer network.
Start with your own storefront -- make it a killer website with the sort of depth and trustworthiness that makes people happy to shell out a thousand bucks to upgrade their copy ofAdobe Creative Suite. Heck, make ten killer websites, each targeted at a specific market segment or use for your app. Or give away a thousand copies of your app as coupons in MacHeist-like promotions to get the word out. Put a quarter of your money into advertising and search marketing. Get endorsements from the people in your very particular market niche telling other enthusiasts and professionals how critical your app is to their lives. And keep investing in quality, design, and support, the last thing you can afford is customers who feel cheated.
Yes, this costs money, and time, and has huge risks. Welcome to the world of business. And seriously, what's the alternative...?
Pickles, that's what.
