End of the 80/20 rule

By Exclusive Concepts Blog Team

An MIT study has shown that many online shoppers value the availability of obscure items more than price.

MIT Sloan School of Management Professor Erik Brynjolfsson claims to have found that the ability to find products online easily—particularly niche and obscure products—is nearly ten times more important than price alone when it comes to shopping online.

For instance, Brynjolfsson’s research found that obscure book titles comprised almost 40 percent of Amazon.com’s sales revenue in the year 2000.

The widening of sales horizons on the internet is challenging the traditional 80/20 rule of retail which holds that 80% of a company’s revenues come from 20% of its offerings. With search marketing, online retailers can target customers looking for every one of their products.

It’s ideal for both the retailer and the consumer. Shoppers can now request an obscure or very particular item by way of a search query and be met with retailers offering precisely that product. The same supply and demand existed before but there wasn’t as efficient a way to mediate it.

Designtechnica speculates that the phenomenon may be short-lived:

While Brynjolfsson’s findings may be accurate, they don’t seem to consider the rapidly growing market for online branding, affiliate advertisement, and paid placements from companies such as Google, Yahoo, and Microsoft, all key players in enabling Internet users to find obscure and niche items. As these businesses grow, providers of rare products or items with narrow appeal may not be able to afford placement on increasingly-commercialized search services and product clearinghouses, effectively re-creating the traditional “brick-and-mortar” retail ghettos which can only be penetrated by products backed by substantial promotional and advertising budgets.

But Brynjolfsson says “The Internet seems to have significantly changed this balance [the 80/20 rule], and we think this trend will get more and more important over time,” said Brynjolfsson. (BusinessWire)

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