What is "category killer"

n. (context business US English) A retailer that offers a wider selection of merchandise in a category than existing retailers, at lower prices, thereby gaining substantial share of the market and "killing" the existing retailers.

A category killer is marketing industry jargon for a product, service, brand, or company that has such a distinct and sustainable competitive advantage over other firms in its market that competing firms find it almost impossible to operate profitably and almost all the competitors in the market, whether real " bricks and mortar" stores or virtual online stores, leave the industry, thereby increasing the dominant firm's concentration ratio.

Examples of category killers are big-box retail chains such as Home Depot, Best Buy or Toys "R" Us that dominate in the markets for home improvement supplies, consumer electronics and toys, respectively. These chains are focused on one or few categories of related merchandise and they all offer a wide selection of merchandise in these categories at relatively low prices. The emergence of such stores has taken a toll on specialised local stores in the same market (such as local hardware stores, stereo stores, and toy shops). Category killer big box chains have even had a serious impact on many larger department stores.

An example of a category killer business in the online marketplace is eBay. The online auction site has a near- monopoly because buyers and sellers naturally gravitate to the largest, most active and most liquid market. As a result, the site has almost no competition and has forced similar auction sites (like those run by Yahoo!) into a very small portion of the market. Jupiter Communications has estimated that eBay earned 90 percent of all revenues in the consumer-to-consumer auction market in the year 2000.