Niche and the Net – From Obscure to Profitable
Internet search engines not only make it easier for consumers to find that partridge in a pear tree, but it has made it both practical and profitable for companies to produce, market and sell such niche products, according to new research by MIT Sloan Professor Erik Brynjolfsson.
“More and more people are shopping on line, and as search costs also keep getting lower, relatively obscure types of products are becoming a bigger share of overall sales,” said Brynjolfsson, who is also director of the MIT Center for Digital Business. “And as technology further lowers search costs to find obscure items, it creates even more incentives to create such niche products in the first place.”
While the Internet is typically cited for helping consumers find products at lower costs, Brynjolfsson found that consumers actually benefit far more — by up to ten times as much — from increased product variety than from lower prices.
Sellers gain as well. By using increasingly sophisticated search technology (such as recommended products, which are based on a particular shopper’s product search history), on-line merchants are able to help consumers find, evaluate, and buy a far wider variety of products than can be found either in actual stores or traditional catalogs.
Sometimes, search engines successfully steer web shoppers toward products they weren’t even initially seeking.
Photo by Yo Hibino.
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