Fighting fragmentation in the web industry

Jan 01, 2014

Table of contents:

1. The problem of fragmentation in industries
2. Fragmentation in the web industry
3. Ways to combat fragmentation
4. Conclusion

Since discovering the Internet at an early age, I feel in love with the possibilities of creating something from words in a text editor and putting it online for the world to see.

I think one of the most amazing things about the Internet is that anyone who wants to create something has the tools to do so. I don’t think there has ever been another medium with this kind of universal inclusion.

However, this can be both a blessing and curse if you are looking to build a career from the Internet. The low barriers to entry were enticing when you were a beginner, but it will also be the cause of a lot of fragmentation as you compete to earn attention.

In this post I’m going to be looking at the problem of fragmentation in the web industry, how the low barriers to entry are both a blessing and a curse and how you can position yourself to combat fragmentation and have your work recognised.

The problem of fragmentation in industries

Fragmentation in an industry can either be a good thing or a bad thing depending on which side of the fence you sit on and what you hope to achieve.

When an industry is fragmented there is no clear dominate company or product and new entrants have the same opportunity as existing companies. This is generally a good thing because it encourages competition and no one company can control the market.

However there are a lot of problems with fragmented industries too. Fragmented industries usually suffer from lack of clear standards, lack of transparency and unscrupulous characters. When anyone can participate in an industry, the average standard of quality will drop because amateurs will be able to command the same respect as professionals. This can lead to mistrust by consumers and a lack of respect for the industry.

Fragmentation in the web industry

The web industry suffers from fragmentation for four main reasons. Although there are many high quality companies and organisations doing work in the web industry, the scale from good to bad is extremely large.

Anyone can start

Starting a web shop requires no permission, no upfront investment and in reality very little ability to actually make websites. You probably got into making websites for these exact reasons too.

When an industry has such low barriers to entry as the web industry does, you will always get a massive range of abilities.

Too much choice

When anyone can start a web agency company, you end up with a huge amount of choice when deciding which company you want to build your small business website. Web agency companies can range from a single person in their bedroom all the way up to multinational agencies all of which cater for every possible budget, project and skill.

This is not to say someone in their bedroom is not as good as an international agency, rather choosing an agency is too difficult because there is so much choice.

No single product

When requesting a website to built, there is no one single product that you ask for. You would probably end up asking for some combination of a Content Management System and a design, but other than that, the possibilities are endless.

I think WordPress has in many ways become one of the standards of the web agency world. However even then, the extendibility of WordPress means it is not a single product.

When an industry as a tight range of products it is much easier to discern value and standards. With the web industry having such a breadth of product possibilities, this becomes impossible.

No set standards

And finally, there are no set standards, qualifications or best practices that must be adhered to. You can argue that as an industry we have more best practices than you could shake a stick at, but in reality none of these are enforced.

This means that an agency can create a website and flout best practices and standards and deliver a shoddy product to the customer. In fact many agencies do just that. For a non-technical client, as long as it looks good on the surface you would never be any the wiser.

Ways to combat fragmentation

So as we’ve established above, there really isn’t much stopping you from setting up your own web agency too. But how do you separate yourself from low quality and rise to the top with the best?

I think the best way of fighting fragmentation is to focus on one of the following 7 areas of the industry. By focusing on a specific opportunity you can separate yourself from the crowd who are just chasing after landing the next client.

Value added services for differentiation

Every two-bit web agency these days offered value added services such as SEO, conversion optimisation or marketing as a way to lock in recurring revenue from previous clients.

However instead of offering these services as a half-arse after-thought, why not flip the proposition and put emphasis on this value instead.

So you build the website as part of an ongoing relationship where you become a partner for the client in iterating on their website to meet their goals. Too many agencies create a WordPress theme and then let the client get on with stumbling around and not achieving their goal.

By putting the emphasis not on the website, but instead on the process you can earn higher margins through your services rather than fighting tooth and nail to develop a custom WordPress theme.

Specialise in a particular product

As I mentioned above, there isn’t one product that all clients ask for. Instead you end up picking an Open Source product like WordPress or Drupal depending on the clients needs.

Instead of picking one of various options depending on the client’s needs, why not only develop one type of application?

So instead of using WordPress for some clients, Drupal for others and Magento for others, what about only ever developing Magento websites?

This would mean you would turn away potential clients where WordPress or Drupal would be a better fit, but instead you would be specifically targeted by clients who knew the wanted a Magento developer.

By specialising in a single discipline, you negate the industry problem of having too many options. By having one core focus, clients will pick you over the competition because they will value your focus, attention and expertise in a single product.

Target specific customers

If targeting only one specific type of development is not viable for you, then targeting only specific customers is another opportunity to focus so you differentiate your company from the crowd.

For example, you could specialise in only doing Museum websites, or startup applications or websites for schools. By having a focused portfolio of previous clients, you will be able to show potential new clients that your expertise in that very specific area is invaluable.

Again this means turning away a lot of potential clients that don’t fit into your niche. But instead you will win clients who value your specific abilities.

Target specific orders

Instead of focusing on a single product or a single type of customer, you could focus on a specific type of order. For example, you could be a go to web agency who only deals with white label products or only building the API part of the application or only the illustration and design aspect.

Again by focusing on a single aspect of the order, you differentiate your company from the crowd.

Specific location

Despite the Internet being a global economy, some clients will always prefer to deal face-to-face. In this case you could focus your attention on this face-to-face support by offering attention to detail in meetings and in-person progress reports.

If you specifically target clients who want this level of trust and attention you will be able to charge more to offer this service.

With the web industry being so fragmented, it’s common to hear stories of how a particular agency burned a client due to lack of quality of ambiguity in their services. Showing a high level of transparency and customer service will go a long way to convince clients yours is a company that can be trusted.

No frills

The majority of small offline businesses really do not need a website. If you are a plumber or a gardener, a website is not going to be a viable way to acquire customers within your local area.

However more and more people are using the Internet to research and choose local services, and so the need to get online with a good quality web presence it still high.

As with nearly all industries, the low cost, no frills service is a very viable path to take. By offering a really low cost service that depends on boiler plate websites and very light customisation, you could be the go to provider for thousands of small businesses and self employed people who want a website but will never see a valuable return on their investment.

Specialist integration

And finally, with the number of charlatans we have in this industry, there will be a never ending supply of opportunities where you need to go in and pick up the pieces to deal with the problems of shoddy work or integration between disparate systems.

This can be a very high margin opportunity because the companies that require this service are having to deal with systems or applications that are falling apart.

If you can go into a company, resolve these problems and provide a clean and maintainable application instead, you can solve a lot of problems for medium to large organisations.

Conclusion

I really love that the web industry is so welcoming to anyone and everyone that wants to participate. But in order to separate yourself from the crowd, you need to focus and differentiate your abilities to ensure that you are sought after.

When everyone is competing for the same opportunities, the value of those opportunities plummets to the ground.

By focusing and offering specialist and bespoke services, you can rise above the race to the bottom to provide really high quality work to valuable customers who appreciate your effort.

So what are you waiting for?