The Changing Face of Retail

Thanks to an interesting post by Dave Caddick which linked through to an article from Wired discussing how the internet retailers such as Amazon and iTunes have changed the way consumers actually shop, due in no small part to the range they can offer.

Some of the figures quoted are quite fascinating. An average bookshop such as Barnes and Noble across the pond carries about 130,000 different titles – however Amazon does more than 50% of it’s sales from titles outside it’s top 130,000 titles. The same is true of the DVD rental market. The average Blockbuster store carries about 3000 titles, and yet a fifth of rentals from Netflix come from outside their top 3000 titles.

The mainstream of the entertainment industries, whether it be books, film or music, has always gone for stuff they know will be a sure fire hit – the costs of production, distribution and retail space mean that anything that won’t sell in large volumes doesn’t get stocked. For example the article quotes that Wall Mart needs to be able to sell over 100,000 copies of a CD to cover it’s retail overhead and make a profit.

The internet stores have changed all that, it is much cheaper for them to stock items that wouldn’t be profitable for a real store, but at the same time they are also opening up items that wouldn’t be considered popular to a wider audience. The example given in the article is of an almost out of print book that got a new boost of sales thanks to the “If you like this…” recommendations given by Amazon.

However, the same theory can be applied to other areas – Dave’s original article was applying the same theory to IT Consultancy – how he is now able to do smaller chunks of consultancy because he doesn’t have to go a customer site. I also think that although it is somewhat different, the theory does have a lot of similarity to some of the ideas in Hugh McLeod’s Global Microbrand concept. I’m wondering quite what other areas will find new life, and their market changed through the internet in the future…

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.