Long tail Theory: Develop long tail and network viral propaganda

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In the Amazon story, we can see how Amazon uses new ways to cut costs and move along the long tail.
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Amazon's first innovation was the original vision of Bezos: online commerce could have the basic advantage of a centralized distribution of mail-order merchants, as well as a direct advantage of a catalog retailer, without the cost of printing and mailing million catalogs.

The next step is to continue to reduce the company's inventory risk, no longer unnecessarily for the existence of products in their own warehouses to pay costs. Amazon did this with a consignment project. This time, the company still starts from the book. The Amazon Advantage project to the authors ' advice at first glance, it's like a flip-side deal: Pay 29.95 dollars an annual fee, send your book to Amazon, and if it sells your book, leave 55% of the sales to it. Why does an author want to do this? This approach further eliminates the hysteresis and uncertainty of specific orders.

The third step in reducing costs is to expand the virtual inventory model and introduce other big retailers to leverage their existing relationships with producers and distributors. Amazon has provided sophisticated E-commerce technology to top retailers like toy Toys R "us" and target, setting up online storefronts for these giant partners to handle their entire inventory. With every new partner, Amazon's actual inventory will be more than millions of new products.

Of course, not all big retailers are willing to put their digital future in the hands of Amazon, and retailers who are willing to do so often ask to be the exclusive supplier of the field, such as household goods or toys. While this limits Amazon's space for expansion, in general, the role of playing such a "leasing aggregator" gives Amazon the economic advantage of this service model, eliminating the hassle of doing deals personally. Using your software and servers in exchange for service fees may be the most lucrative business, and ebay is an example of this.

But it turns out that the big development of the virtual inventory model is a "downward" rather than an "upward" process, that is, Amazon's partners are not getting bigger, but getting smaller. In the 1999, Amazon began to use its "market" (marketplace) project to provide services to all businesses big and small, extending its store-service model to ebay's territory. From a franchise store to a single person, retailers and distributors of any size can list their products on Amazon, as well as the inventory in their own warehouses-and customers who buy these products are just as easy to buy as Amazon. By the end of 2004, more than 100,000 market sellers had joined the Amazon, and those third-party businesses accounted for nearly 40% of Amazon's total sales.

The rise of this virtual sales model has accentuated the problem of traditional inventory patterns. We know that a chain retailer like Best Buy must allocate its products (such as cameras) to various stores, roughly guessing where there is demand and how much it needs. Needless to say, people and products must be together in the same place-demand and supply must meet at the store's shelves. But this retailer cannot always guess right, at least to some extent. If wrong, supply will be unbalanced: in some stores in short supply, while other stores have surplus inventory, both the depreciation of the product, but also in vain to squeeze valuable space.

Products are still placed on shelves across the country in the decentralized inventory of the Amazon Market project, but they have been incorporated into a unified catalogue, listed on Amazon's website in the same central marketplace. As a result, small businesses holding inventories can directly package and deliver products as long as customers order the same product. Like chain retailers, Amazon can connect centralized supply and decentralized demand, but its model has a unique feature: stores and customers need not be in the same place.

With the progress of this project, Amazon is approaching, and will completely break the autocratic status of the visible shelves. It does not need to guess where there is a need or how big a demand will be. All the risks in the Bazaar project were passed on to a small merchant network, which would decide what to do with its own economic characteristics.

(Anderson Chris Anderson, author of the Long Tail theory, has been editor-in-chief of Wired magazine since 2001.) Under his leadership, Wired magazine was nominated by National Magazine Award for five degrees and was awarded the Gold Award in 2005 by the "Magazine of Excellence" (General Excellence). "Long Tail" won the "Business Week" "Best Idea of 2005" award, and "GQ" magazine called "2006 most important creative." The book "Long Tail" has been published by Citic Press. )