22 April 2011

CPC Society or How Bartholemew Sold His 500 Hats

I love some of the things I overhear in this city, and just the other day I heard a tidbit close to my heart. One gentleman posited to another that the future of sales was not in large quantities of online sales with small profit margins, but rather in the large margin, low quantity trade of goods. He went on to stipulate that large volume interactions of any kind were inimical to good business.
As with most of the world, there is no either/or in e-commerce. I have heard such a number of people declaiming the Amazon revolution, but in a broad sense it is no different from any other commerce innovation. Commodities have changed in name but not in nature, and are still traded in bulk. Craftworks are still traded in single fashion. Boutique items are still exchanged on a smaller scale with greater profit margin. So why cry havoc when large corporations form their own market places? There is little room for conspiracy, no more so than ever before. The venue has changed, but the nature of trade has not.
In internet advertising there exists the term "CPC" or cost per click. The idea is that volume will generate revenue (a simplified but relevant definition). There are also "CPA" revenue plans, with greater gratification over fewer exchanges. So, by this definition, when our Bartholemew runs through the sack of gold given him for the last hat and finds the king to be too stingy, he can sell the other 499 hats at market. Since many of the hats are plain, they can be sold in bulk. That way, a cheaper item will move faster, requiring lower overhead and generating faster, more efficient revenue. The more elaborate hats may be displayed and sold piecemeal, being of greater value.
The former hats are Amazon. The latter hats are boutique.
Economics by dint of Dr. Seuss. There you have it.

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