Black Barbershops, Korean Greengrocers, and The Long Tail of Market Segments

When I try to explain the notion of the digital environment to people, I start by contrasting it with the physical environment.  The physical environment is the world of brick and mortar, flesh and bone.  Whereas the digital environment  is made up of symbols and meanings  – text, music, videos, and data.  These two worlds are distinct, with different rules governing them.  But they are connected, as people move back and forth between them, importing and exporting norms and understandings.   This way of thinking about the digital environment makes it fun for the sociologist, because she can use all the ideas and tools developed to study the physical and apply them to the digital.

A few weeks back, I had a minor adventure.  I got three haircuts in the span of 20 days.  I found it difficult to find a barber who could give me the trim I wanted.  Consequently, I have very little hair left (a bit of a concern, because at my age there is a real possibility that the hair will not grow back).   Once the shock of my buzz cut went away, I became aware of the fact that all of those barbershops were black owned and operated businesses.  Indeed, I have never gone into a non-black owned barbershop.  Now that I think of it, I’ve never gone to a family funeral that was not conducted by a black owned and operated funeral home.

Brick and mortar businesses owned by minorities and immigrants are common components of the American economy.  They tend to be local and they tend to fill a very specific niche – take the Thai nail salon, the Korean greengrocer, the Indian convenience store…or the black barbershop (unfortunately, there are not enough black owned businesses…but that is a different issue).

A question we can ask ourselves is whether the pattern of immigrants and minorities owning niche businesses in the world of brick and mortar reconstitutes itself in the world of bits and bytes…

The Long Tail Meets Market Segmentation

Chris Anderson’s notion of the “Long Tail” suggests to me that the digital environment is more open to niche businesses.  In brief, the long tail connotes the ability of businesses, not hampered by having to pay for retail space, to sell small quantities of niche products and still be profitable.  Anderson uses the example of Amazon making a killing by selling small numbers of a lot of things – they sold less of more things.  Contrast this with a large retail store anchored in the physical environment that must only stock products that will sell because space (along with other overhead associated with stocking products) is costly.  As a result, these stores shy away from niche items and focus on those that are the biggest sellers.

 

longtail_1

Most big box stores focused on products in the green area, while online companies focused on products in the yellow area. While the green has a higher peak, the total area between green and yellow are the same. Selling in the long tail can be just as profitable. “Long tail” by User:Husky – Own work. Licensed under Public domain via Wikimedia Commons – https://commons.wikimedia.org/wiki/File:Long_tail.svg#mediaviewer/File:Long_tail.svg

 

The idea of the long tail can be applied to businesses catering to minority groups.  But this time, instead of the long tail being populated with niche products, it is being populated with niche people.  Amazon can and will be able to sell niche products to any and everyone.  However, Amazon cannot create a storefront, a message, and a type of customer service that caters to every minority interest.  It is a mainstream online retailer, but minority companies can look for segments of the market at the long, long, long end of the tail that are looking for personalized service.  Just like with Amazon being able to sell less of more things because it did not need to worry about paying for storage space, a small minority company can stay in business because it has even less overhead.

 

longtail_minority

The long tail of customers can be segmented, with small businesses divvying up the part of the tail filled with customers looking for specialized service.

 

Room for Growth

There are many businesses online that cater to minority interests – minorities here are understood broadly (racial, ethnic, sexual, religious, political, etc.).   But there is still room to grow.  Amazon dominates the online marketplace, selling more online than the next twelve competitors combined.  This is like the heady days of iconic businesses like Coke, McDonalds, Microsoft, and Wal-Mart.  But history suggests that big companies tend to get their comeuppance at some point.  My guess is that as shopping habits online become routinized, more and more people will begin to look past Amazon and find companies that offer unique online shopping experiences.  The long tail of customers will get longer.  As this happens, minority businesses will be there to serve them.

Now…what is the equivalent of a barbershop or a greengrocer online?

 

 

One comment

  1. It’s really a cool and useful piece of information. I am glad that you shared this helpful info with us. Please keep us informed like this. Thanks for sharing.

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