Lessons You Can Learn About Strategic Alliances from the GM/E-Bay Experiment

GM’s Alliance with E-Bay Was a Clunker General Motors tried an experiment in my home state of California to sell new cars through E-bay. Well, the trial period is over and will not be extended. The big auto maker won’t disclose how many cards were sold, but I believe this deal was doomed from the start for so many reasons:

1. GM’s Announcement Of An E-Bay Alliance Was Premature - Right after the car company’s July 10^th press conference, E-bay went on record to say that no deal was ever signed! How’s that for getting all of your ducks in a row?

1. E-Bay Is The Wrong Partner. GM was correct in its calculation that almost 30,000 cards were sold on-line. But had the car company mavens looked more closely at the figures, they would have realized that the vast majority of car sales were “pre-owned”.
2. The Process Of Car Buying Today Doesn’t Easily Translate. Car buying today is a convoluted maze of auto manufacturers, dealers, and consumers. In other California was the experimental state because some states forbid buyers from purchasing cars from dealers on line. In other words, GM created a test case scenario that it could never run nationwide!
3. The Internet mentality is different. As we know, part of the thrill of on-line auctions is being the highest bidder while getting the best merchandise at the lowest price. However, this is not how the GM process worked. Instead, the sales were simply a “buy it now” option. Consumers could submit a lower bid, but these offers were usually such minimal numbers that virtually no sales transpired. Further, dealers had to waste valuable time processing and rejecting these ridiculously low-ball numbers. And at the sound of the virtual gavel: no auction, no fun and no sales!

SIMMERING EXAMPLEHere’s an alliance with E-bay that does work. World of Good,  founded by Priya Haji, was created to sell thousands of products from artisans of developing nations around the world. Its partnership with E-bay gives it the marketing representation and exposure that allows consumers to shop with confidence in a risk-free, familiar way. Guidelines for a Successful Strategic Alliance If GM’s experiment didn’t work, how should a business pursue a strategic alliance? Here are a few guidelines:

1. Get the Right Partner – A good fit is a business that has the same target, offers a complementary product or service, or even is in the neighborhood. It should also be a person or partner that you like, trust, and respect.
2. Agree on the Terms – Before inking the deal, take a moment to agree on start dates, deal stoppers, remuneration for each party, etc. Remember: the devil is in the details.
3. Ensure a “Win” for Your Customer – If you are a building contractor, for example, teaming up with a real estate agent is a win for you both and the customer as well! Should repairs or renovations be needed, you are the immediate reliable and recommended resource. And here is one retail promotion I have often seen that I think is a mistake: Making your customer visit 7 different neighborhood stores and get a stamp in order to receive a free gift. Ugh! Too much work without enough benefit.
4. Develop Metrics for Measurement – It is important to determine the best criteria with which to measure your success. It could be the number of click throughs, phone calls, queries, or coupon redemption rates.

So, go out and find the right partner. If you need to sell a junk car, click here!Until next week…..Liz

Note from Heather: I've suggested partnership opportunities to a few of you and if you haven't considered a partnership before, I hope Liz's post encourages you to do just that. Look around you, online and in magazines -- what products and services are complimentary to yours? Who's sharing the market with you? There are SO many amazing mom entrepreneurs here in The Mogul Mom community -- you won't have to look far! :-D