Companies usually have to establish strategies that align with your customers, employees, investors and regulators. The more they know about how the other party will decide, the clearer their own strategies will be.
If regulators always prefer consumer choice, then it’s easy for a platform to allow multiple payment options – Shopify allows multiple payment options from its partners, Apple doesn’t.
For regulatory intervention, you will have to do it now.
Nash equilibrium and Netflix time
The Nash equilibrium is a fascinating post-facto explanation for some of the interesting decisions you will often see in business.
In simple terms, the Nash equilibrium states that if you are clear about the other side’s decision, you can make your own without regret. In other words, there is no incentive to change strategy once each party knows the optimal position of the other party in their combined transaction.
All physical products cannot escape retail, because ignoring retail means a smaller useful market. But it is a choice that companies can make.
I see this unfolding every weekend at home. I don’t mind reading a book alone or watching Netflix with my child, but when I’m available for Netflix and my child decides to read a book, it’s a bummer.
DTC, DNVB and game theory
At DTC, how companies decide on their omnichannel strategy depends on how well they know what their customers’ options are and what their ideal strategy will be. In many transactions, constraints are actually good forcing functions – they narrow down the options and help you strike a balance faster and cheaper.
Marketing and public market presentation languages offer fascinating reading in the minds of companies.
When Warby parker submitted its IPO prospectus last month, the company referred to its digital native status in the past tense. The model was effectively changed in 2020 as its share of online sales over total sales dropped from 65% to 40%. Meanwhile, its number of physical stores increased from 126 to 145.