Category killer

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Category killer is a term used in marketing and strategic management to describe a product, service, brand, or company that has such a distinct sustainable competitive advantage that competing firms find it almost impossible to operate profitably in that industry. The existence of a category killer will eliminate almost all market entities, whether real or virtual. Many existing firms will leave the industry, thereby increasing the industry's concentration ratio.

An example of a category killer business is eBay. eBay as an online auction site has a natural monopoly, as buyers and sellers will naturally gravitate to the largest, most liquid market. As a result, their business has almost no competition and has forced similar auction sites like the ones run by Yahoo! into a very small portion of the market. Jupiter Communications has estimated that eBay earned 90% of all revenues in the consumer-to-consumer auction market in the year 2000.^[1]

Another type of category killer, and the definition most associated with the term, is a big box retail chain such as Best Buy or Toys "R" Us which is focused on one or few categories of merchandise and offers a wide selection of merchandise in these categories at relatively low prices. The emergence of such stores has taken a toll on many department stores.