The Virtual “Mom & Pop”

virtual mom and popI drove through a rural part of Maryland earlier this week.  The section of town was undergoing a lot of new development in response to a nearby growing military base.  I like to see new architecture but I started thinking about something else.

Every new real estate development I see is filled with corporate and franchise brands.  There is no corner deli or privately owned ethnic restaurant.  Every restaurant is a Jimmy Johns or PF Changs.

Developers do this because there is less risk in a recognized brand than in some guy who literally just got off a boat and wants to start a business.  Also, people are very likely to frequent a large chain because they know what to expect. You know what you’re going to get even if it is vanilla and mediocre.

Seeing this type of homogenization makes me sad.  There are very few places left that have personality anymore.  You can travel across the country and feel like you are in the same place for hundreds of miles.  The only places left are the little main streets in small towns and the central business districts of large cities.

What gives me hope is the “Long Tail” of the virtual world.  I recently read this article in Wired and got excited.

Some companies are larger now than ever.  Amazon and Ebay are mega retailers that may eventually rival behemoths like Wal-Mart.  What is great about these companies is they are not pursuing a strategy of crushing the little guys like Wal-Mart has (I love Wal-Mart as an aside).

These successful virtual retailers are pursuing a strategy of scale and then teaming with micro retailers.  Small retailers who have niche products can now exist and flourish like never before.

In the past, if you had a small market you had to appeal to as much of that market as possible.  This requires providing products right in the middle area of the bell curve.  The “Long Tail” refers to products that might only appeal to a small percentage of the population, but when that small percentage can encompass the whole country or the entire world, suddenly you can have a pretty sizable business.

There are still components of distribution that benefit from scale.  That is the beuty of this new model, micro retailers benefit from the scale provided by companies like Amazon who provides a large portion of the marketing and fulfillment component of the business.

The risk problem mentioned earlier is also seamlessly solved. The beauty of the virtual retail world is it that information flows immediately.  This is part of the shopping experience now.  You do not have to rely on a sales person you get feedback from people who tried the product before you.

Physical markets are still constrained. I know I probably still won’t be able to get traditional Ethiopian in a rural town off the highway, so I guess I can’t have everything.

In the area of products particularly the unique wants of individuals are being fulfilled by a huge diverse group of producers and retailers.  They are all benefiting from the platform created by much larger companies.  That is pretty neat.

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