Abstract – How Not to Build an Online Market

A challenge I have in relating the article “How Not to Build an Online Market” to the book is the former isolates business-to-business (B2B) markets while the greater portions of Long Tail that I have read so far deal primarily with business-to-consumer (B2C). However the markets described still rely upon online technologies, breath of scale, aggregation of products, economics of distribution and the ostensible “demise of the middleman”. This last point seems to me to more closely model the more human element in business.

While so much of the Long Tail is about the new capabilities and business models that allow a greater number of individuals or small organizations to realize economic gain, it seems to me that humanness, if you will, is diluted. The article helps bring this to attention by pointing out that a key function that market participants fulfill in markets like commodity propane (analyzed in the article) is solving problems. Whether it is a matter of something going wrong in delivery, with the product, with billing, with market timing or some other issue, the strong sense of identity of the person who needs it fixed and the person who fixes it can establish “risk management via favors”. I wonder if this “favors economy” is modeled as customer service in the B2C markets? The better the service, the more likely you are to go to (or recommend/review well) that business again.

The descriptions of fragmented sub-markets are interesting as they challenge the Long Tail concept of a certain sameness of product. While the propane markets of California and Texas, examined at a behavioral level, are different, the Amazon book market purports a certain sameness across sub-markets. However, the differences between of my experiences of getting a current book shipped from Seattle or ordering an older, more niche title that is shipped from Delaware are worth taking into account. Still, regardless of experience, either title is available.

The article helps to expose more of the complexity of online markets than is presented in the book, but I don’t feel it directly opposes the Long Tail.

One thought on “Abstract – How Not to Build an Online Market

  1. Pingback: TLT, Part Two « Net-Centric Economics

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