Digital Trends

An MIT professor finds that the ability to find products online is almost ten times more important then price alone when it comes to buying online.

MIT Sloan School of Management Professor Erik Brynjolfsson claims to have found that the ability to find products online easily—particularly niche and obscure products—is nearly ten times more important than price alone when it comes to shopping online. Furthermore, the ability of buyers to find rare and obscure items may be overturning one long-held retail standard.

For the last several years, the growing popularity of online shopping has often been attributed to price and convenience, since buyers usually have an easier time comparing prices and availability via the Web than by travelling to different brick-and-mortar retailers. Conversely, Brynjolfsson finds that consumers are less particular about price if they can find that special something which may be difficult or impossible to purchase otherwise. "People do save money by going on line, but when we compared lower prices to greater choice, we found that the value to consumers of having the extra choice was 10 times greater than the value from price alone."

For instance, Brynjolfsson's research found that obscure book titles comprised almost 40 percent of Amazon.com's sales revenue in the year 2000, and that Top 40 selections from online music subscription service Rhapsody are outstreamed each month by songs ranking below the company's top 10,000 selections. "Relatively obscure products end up getting purchased as a result of the ability to search things on line," said Brynjolfsson.

If true, this trend may lead to a revision of the "80/20" rule of retailing, under which roughly 80 percent of a company's revenue stems from the sales of only 20 percent of its offerings. The Internet's ability to help buyers locate and purchase obscure and hard to find items may also be a boost to authors, artists, musicians, and others who could not otherwise find their way into traditional retail distribution. Brynjolfsson says, "Markets that used to be limited to people who could sell relative blockbusters can now also focus on narrower niche audiences for particular products."

While Brynjolfsson's findings may be accurate, they don't seem to consider the rapidly growing market for online branding, affiliate advertisement, and paid placement from companies such as Google, Yahoo, and Microsoft, all key players in enabling Internet users to find obscure and niche items. As these businesses grow, providers of rare products or items with narrow appeal may not be able to afford placement on increasingly-commercialized search services and product clearinghouses. Over time, this might effectively re-create traditional brick-and-mortar "retail ghettos" on the Internet.

In the meantime, if you're looking for obscure covers of classic holiday songs or those one-of-a-kind Babylon 5 collectible plates, the Internet may be your best bet.