Good ideas are rarely well-received. In 2004, Chris Anderson wrote, ‘The Long Tail’ for Wired. Although his ideas were great, online marketing has a long history of failure. Anderson recognised that online marketing was a good idea, but realised that retail stores with limited shelf space were here to stay. People want the instant gratification that brick and mortar shops provide, and they also like to do things with other people.
In 2009, five years after his article, with all the growth in e-commerce online shopping still accounted for less than 10 per cent of American retail sales. Fifteen years later, the figures quoted for Australia in 2019 was 9 per cent of all retail sales and worldwide it was 14.1 per cent. Benedict Evens says that Amazon for all its might has only 35 per cent of all retail sales in America. Hardly great traction for a good idea in online marketing.
Anderson could not have predicted, 16 years later, COVID-19 would cause us to revisit his vision. Perhaps online marketing’s time has now come.
In hospital procurement, in 2004 when I first read the article, I pivoted from controlling to facilitating choice. Anderson’s ideas about an entirely new business phenomenon that was revealing itself in the entertainment and book industries resonated with me. Online marketing was expanding these industries and creating millions of niche markets at the shallow end of the bitstream. I wondered if the same could be done in healthcare. There were many small vendors with great products that wanted a foothold in the healthcare market.
The main problem Anderson identified was that we lived in a world of perceived scarcity. The marketing solution was to offer consumers what was seen as popular and flew off the limited-shelf space quickly. His article identified the cost of shelf space as the limiting factor. The emerging alternative was online shopping which gave people the ability to choose not only what a physical store had, but also what it did not have. Unlimited choice delivered a world of abundance.
Although the long tail was seen as an internet phenomenon, it dated back to a long string of innovations. For Amazon to succeed, it required FedEx, ISBNs, credit cards relational databases and barcodes. The web simply extended our reach and enabled us to choose to satisfy individual taste.
What started as a new phenomenon for the digitalised entertainment industry quickly spread to physical goods in other industries as well. Notable is the Amazon Marketplace for physical goods. According to Anderson, three new rules of engagement for these industries emerged:
Make everything available. Providing quality was acceptable, curation was more expensive than merely customer’s unfettered choice.
Cut the price in half and then lower it. Anderson made this point specifically for digital products, however, Jeff Bezos has followed through with this for physical goods as well. Chris Anderson argued that by offering fair pricing, ease of use, and consistent quality, businesses could compete equitably.
New businesses needed a familiar point of entry. By offering what was on popular demand in the physical world online businesses got customers to engage. But, offering only popular fare businesses stagnated. He argued that Netflix and Amazon showed that businesses needed both ends of the curve. They needed to offer both popular items and huge catalogues of less-mainstream fare. After customers engaged, they could be guided down the long tail with recommendations, similar fare, and by suggestions about what others bought.
This was the difference between the traditional businesses that pushed product and online businesses that pulled customers towards what attracted them.
Can the principles of online marketing apply to hospitals?
With COVID-19 and the scarcity of everyday physical goods and local-services, it’s time to revisit Chris Anderson’s thoughts about online marketing. For a detailed explanation, it’s best to refer to his book, which is titled the same as his article, ‘The Long Tail: How Endless Choice is Creating Unlimited Demand’.
Certainly for hospitals and other B2B purchasers’ instant gratification and doing things with others was never a factor. Most B2B shopping is done online in the form of electronic data transfer (EDI), but staying within the narrow confines of EDI is similar to staying with the narrow bandwidth of yesteryear.
- Will hospital executives come to accept that curation and control are more expensive than unfettered choice?
- If hospitals embraced price transparency rather than preferred vendor contracts, would they be able to cut prices/costs of materials by half and even reduce them further?
- Given that medical products are used by clinical experts, would hospitals ever consider a pull strategy rather than a push strategy?
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