| The Internet as we know it is about to change forever… Solving for Shelf-Space Scarcity The essence of traditional retail is to bring products physically within browsing distance of a local customer. Local shelf space is the indispensable, scarce, and expensive resource for that strategy. Retailers must limit consumer choice to products that turn over quickly enough to pay the rent. If the item doesn’t qualify, you cannot readily find it for whatever price. Try this for any traditional retail store. Draw a graph showing the numbers sold for any one product on the y axis. On the axis, rank the items by numbers sold, with the best-selling item at the extreme left. What you will get is an L-shaped curve with the horizontal foot of the L cut off quite short as it drops toward y = zero. Even before that point however, the curve will come to an abrupt halt: what would be the next ranked item won’t be offered in the store at all — there’s not enough money in it to justify the shelf space. Shelf space limits consumer choice. Bezos saw that online retail could change that. He saw that without retail shelf space to pay for, he could provide near-infinite choice. He could offer long-tail products and make money even on items that sold only hundreds of copies a year, especially if he could find millions of items that sold only hundreds of copies a year. That is one of two specific advantages of online retail. (I’ll get into the second advantage in a bit.) Books were the obvious demonstration case. There are millions of titles that sell (or would sell if buyers could find them) maybe 50 to 1,000 copies a year, most of which would not merit an inch of shelf space in prime retail real estate. Now, Bezos did not coin the term “long tail.” That was Chris Anderson in a famous article in Wired, and later in a book published years after Amazon launched. But Bezos saw it first — and most clearly. He knew that as a long-tail vendor one could even charge a premium for these otherwise hard-to-find items. And as the go-to vendor for the hard-to-find items, you could build a loyal constituency This was a great insight. Bezos went beyond insight to transformative action in the physical world. From the beginning, Amazon straddled the ephemeral realms of light and logic and the sweaty business of moving heavy objects from the here to there. Bezos kept stretching the long tail by driving forward the very technologies that made it possible in the first place. More on this tomorrow... Regards, 
George Gilder
Editor, Gilder's Daily Prophecy | 
Dear Daily Prophecy Reader,
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