Reading Reflection No. 3

The book I read for my third reading reflection was "The Long Tail: Why the Future of Business is Selling Less of More"

The general theme of this book is that the internet has opened up many new opportunities for business and has, and continues, to change business as we know it. The book states this is because we have access to much more than we ever have and because online stores function so different from normal stores. Online stores are able to have a "long tail" distribution of product sales and still make profit. What this means is that an online store can have a few products that are hits and a ton of products that are niche products and the niche products may only sell a couple of units each, but the combined profit from these low quantity sales of niche product can add up and bring in tons of money. The author argues that some of the most successful companies, like ebay and amazon, make money from the "long tail".

I think this book connected and enhanced what I am learning in ENT3003 by explaining the importance of niche markets in online shopping. this connected and enhanced what I am learning because if I am to create a business venture online I need to realize that not only the best sellers make up the revenue for a successful online business. There is basically infinite shelf space for an online store so it doesn't hurt to keep large amounts of less frequently selling inventory because it adds up. Realizing this strengthens my understanding of online markets as an entrepreneur, therefore connecting and enhancing what I am learning in ENT.

If I had to develop an exercise for class based on this book it would involve finding successful "long tail" online businesses and if possible looking at the statistics behind their sales. For example, looking at how much of their revenue comes from items that don't sell frequently and how much of the revenue does come from items that sell frequently. Another part of this assignment could be to look up how much it profit margin you can make off of niche items vs. hit items.

One of the most surprising things I learned from reading this book was why Wal-Mart is so successful. It almost has the same attraction as an online store - seemingly unlimited choices - but in fact Wal-Mart is far more limited than you'd imagine. While Wal-Mart usually carries more than two of each product it has, it still barely scratches the surface of what is out there. This illusion of unlimited choice (along with low cost) is what makes Wal-Mart so attractive. Wal-Mart is an inspirational business model and really bridges the gap between traditional retail and online shopping.