Its called the Long Tail, the next business revolution, and its already begun.

For decades the market has been based on scarcity and controlled by overhead and the cost of doing business as well as geographic limitations.

As such the market place for all but the large corporations has been localized. Sometimes as local as a block or two until you cross paths with another coffee shop, or perhaps a few miles of influence or maybe the entire state or even a few states. Only the most organized and with adequate financing can possibly compete on a national basis and far fewer on an international basis.

Clearly the hundreds of thousands of small businesses are limited by geography and overhead and thus define our markets and our competition by the standards created in a very localized arena. Pricing is high, selection is limited and mostly focused on the hits, the best sellers and most popular, as that’s what moves the fastest and is therefore stocked. No business can afford to stock product that does not move and thus scarcity reigns supreme.  Best sellers are supreme and all you get to choose from.

This is the current market philosophy.

Thus despite the fact that over half a million CD’s are released every year the largest music stores carries about a 2-3 thousand selections, the ones that move the fastest, limiting the customers choices and charging them as much as the market will allow based on limited competition and high fixed costs and overhead.

Then the Internet came and now with E-tickets for the airlines, Amazon.com. E-Bay, Itunes as three primary examples, a very different concept is playing out. Now we can order music from a source that has hundreds of thousands of items and all held electronically thus there is no cost to storage and shipping. Even if there is, say its a hard book, the warehouse is serving the entire country with an ability to stock unlimited selection thus appealing to a huge array of small niche markets collectively far greater then the best sellers marketplace.

What ends up happening is the consumer now has unlimited choice at exceptional pricing, and the previously unpopular  and unavailable very low volume niche markets, which were ignored by the brick and mortar stores because they were not fast enough movers with high enough volume are now collectively selling more then the previously identified top 3000 sellers.

The “tail” is now bigger then the previously identified  top movers, the previous “head”. Now we will focus on selling less of more….lots more.

The selection is now virtually unlimited thus the individual tastes of millions of different people are being satisfied with enormous revenue from previously unstocked and unidentified and unavailable items. The “tail” is now greater then the previous markets “head”.

If we look beyond the music market and understand the incredible equalizing factor of the Internet, we realize that any small business can identify a tiny niche and market internationally reaching a small demand market in a large geographic market that was never valuable before but now with an ability to reach this demand without geographic limitations and with insignificant overhead, we can sell small niche demand items throughout the world.  We can create large markets that were not available before and which are open to anyone with a niche product or service selling small quantities of specialized items into a hue market place…the tail.

Thus the Polish pottery factory can now sell polish pottery all over the world in very small individual order numbers wherever Polish pottery may be desired which collectively makes a valuable market but could never be reached or exploited before the Internet existed, in a cost efficient manor by any small business with access to the Internet and some business savvy.

Now any niche manufacturer can compete by reaching the individuals who want these obscure niche items which would never find their way into big box or even small box stores that depend on high overhead and local markets, high volume, resulting in high price and low selection, and definitely without the benefit of the previously uninteresting small niche market items.

Thus niche marketing to the small demand over a large market is changing the market dynamics.

Take heed, pay attention, look hard at what you are making and doing and determine how the Internet can work for you before your competition does it first and you find yourself out of business because of the “long tail”.

There is now a huge opportunity to compete profitably, nationally or even internationally no matter what your size and how limited your budget.

This is cutting edge information which you must evaluate and act upon. The large corporations are. Those that will prevail will.

Will you?

Chris Anderson, Editor in Chief of Wired Magazine has developed this theory and written much about it, its widely becoming accepted as the next wave that is already happening. He has written a book called The Long tail…get it, read it, do it.