By Flemming Wisler Futureorientation December 2006
The Internet’s breakthrough as the world’s biggest market place means that there is a market for almost everything. Leap over the traditional sales channels, build your own microbrand with personality as a driver and gain dedicated customers around the world.
Until now, we have normally been able to see only a small part of a market – the part we see in the physical market place. But markets are like icebergs – much more is under the surface than above. The Internet’s development in terms of greater access, speed and simplicity makes visible the “long tail” that is found behind every market leader — and that opens up enormous business potential.
What do Amazon, eBay, Yahoo and Google have in common? They are all Internet megabrands and base their business model on the market place that is found on the Net. They are also Internet pioneers who, with great investment, gained control of new technology in the Net’s infancy.
The business models for these companies are based on meeting the customer on the screen instead of physical markets. They exploit one of the Net’s unique advantages: the cost of using the screen as a display window. This costs only a fraction of what it costs to display products on store shelves.
This gives small and smaller products their chance to take part in the searchable marketplace and appear on the screen together with big products. The big products are often better packaged and supported by more marketing investment, but the small products are carried by another and far more sales-driving factor: the customer’s own motivation.
The Long Tail
Already in the beginning of the 1990s, the discussion started about how the Net, with its global and technological perspectives, could break down and revolutionize the classic production-marketing chain.
The simple argument was that traditional sales channels mainly expose the most popular products — those with greatest sales and least risk. Small products are remanded to secondary and sometimes obscure marketplaces. But the Internet makes these marketplaces visible for the many.
It was Wired editor Chris Anderson who in 2004 first described the iceberg as the “The Long Tail,” using a simple diagram with sales volume/popularity on the Y-axis and market’s size on the X-axis. The point is that the sum of the less visible products – the “tail” (in light gray) – is much greater than the sum of the relatively few popular products you see on store shelves.
Web 2.0 tools make the tail wag
The large web entrepreneurs created their brands with a combination of timing, investment and, not least, technological development. A number of barriers made it hard for small and medium sized businesses to follow along into the world’s biggest market place.
With new web applications based on open and easily accessible technology, The Long Tail came within range of everyone that had something to sell. A number of new mastodons such as Skype, MySpace, YouTube, Netflix, flickr, iTunes and Wikipedia have seen the light of day in the wake of Web 2.0, but what is interesting is what’s happening in the small markets.
Blogging, first and foremost, has opened up the world to small producers and entrepreneurs. The weblog offers every opportunity to present products cheaply, always updated and most of all with a personal touch. Blogs are searchable and, most important, easily found since Google loves blogs.
The tailor who became world famous
When the English tailor Thomas Mahon met the creative nerd and blogger Hugh McLeod in a local pub in Savile Row, there arose one of the best cases of a global microbrand: English Cut (www.englishcut.com).
Mahon is a skilled tailor, but only one of many on Savile Row. Yet, in a very short time, and entirely through his blog, he has attracted a large circle of affluent customers in Europe and USA. That made it possible for Mahon to realize his dream of moving his business to a country house in northwest England from which he today he “goes on tour”, taking the measure of customers in the most interesting cities around the world. Not bad for a website that has cost less to develop than one of Thomas’ tailored shirts.
Business model #7: Microbranding
Microbranding give small and medium-sized business access to highly motivated customers outside established sales channels on the world’s biggest market place.
- Use blogging.
- Present your product attractively, but remember the story, background and details sell the product. Price is not necessarily the most important parameter on the Net’s small markets.
- Make yourself discoverable. Google is the key to sales.
- Thing internationally. The market is global.
- Ensure that your product can be bought through the large suppliers on the Net. Amazon’s most popular books carry small books with them through the systems recommendations. The same happens on iTunes, where hits lead to investigating more obscure tunes in music’s “Long Tail.”