Wednesday, March 17, 2010

Understanding Online Business Models

Obviously, Amazon and Ebay are two of the most mentioned companies when talking about online businesses. After reading "The Long Tail," I didn't quite realize how launching your product on either of these sites could make it so popular. The fact that someone can feed off of another person's popularity and creativity without copying or plagiarizing their work is really mind-boggling at this point in time.

How many sites do we travel to and make a purchase, only to be directed to the side of the screen to more items with the title, "Users Who Bought This Also Bought:"? I know just the other day, I ordered a Kate Spade cover for my iPhone, and I was directed to a link that provided other links to headphones, workout straps, and other iPhone accessories that I didn't originally intend to buy, but they were looking kind of interesting. Obviously, according to "The Long Tail," people often do click those links and make their purchases larger than they had originally intended.

The Internet makes business easy because it is measurable, but it is vast. Even though a small percentage of the world is online than most think, the Internet allows businesses to do business without having physical stores within reach of consumers. I remember visiting the Mall of America in Minneapolis, MN one Christmas, and my dad commented to a sales clerk that they were not as busy as he was expecting. She commented back that most people prefer to online shop. It gives consumers the convenience of getting everything they need in the comfort of their own home (and possibly their own pajamas).

I think one of the challenges of online businesses are the fact that they are impersonal. People like the idea of having a salesperson help them. What if the size is off? What if the watch doesn't work? What if there are more iPod colors available? A person can help in all these areas in which a computer cannot. However, the opportunities for online businesses seem to exceed the challenges. Businesses can expand and become worldwide without actually having worldwide locations. Online shopping is also more vast than in-store shopping. If Target runs out of green sweatpants in a size Medium, I can just order them online.

I think online businesses are only going to become bigger and better as the years go on. With things like Facebook and Twitter out now, consumerism is getting huge. Conan O'Brien tweets that he loves popcorn jelly beans...and all of a sudden there is a popcorn jelly bean shortage. :)

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