Guy Kawasaki and the Church of Near Zero

Guy Kawasaki, who is one of the best bloggers (and, of course, bestselling author) on business tactics, has a great post of prescriptive advice for people building Long Tail businesses. Here are three of his nine rules, which together make a key point: Long Tails emerge when you can lower the cost of offering products and services. And the lower the cost, the longer the tail.

1. Near-zero inventory carrying costs. If you plan to sell a few units of lots of things it can’t cost you much to keep those things in inventory. This is separate from the cost of production. It might cost Ferrari a lot of money to make cars, but if it will consign them to you for free, what do you care?

   Actually, you do care: there’s warehouse space, insurance, and shrinkage. Even digital content like music, movies, ringtones, and photographs require bandwidth and storage. Not only must the product be cheap to make, it must be cheap to keep in inventory.

2. Near-zero selling and marketing costs. Long-tail products must either “sell themselves” or external people must sell them for you. If you have to send one email or take one phone call to sell a Cecilio and Kapono ringtone, you’re dead. (Don’t know who Cecilio and Kapono are? That’s the point.) This is where two cool concepts butt heads: long-tail versus wisdom of the crowd. The former says a market of one is good. The latter says that when lots of people buy something, it’s probably good. How then does one person find something that’s good for her out of the millions of products to buy when there’s no crowd to follow?

3. Near-zero support and training costs. Do you see a pattern developing? One support call or email, and you’re dead too. Your offerings must either require near-zero support and training, or other people must support it for love and glory.

You'll also like his poll (below). Are you surprised by the results?

Comments

[Dale]

So much that you wrote is very true.Keeping a inventory thats easy to maintain is what its all about.However it does take long hours to make the inventory that is on hand.Will the merchandise sell is all you can hope for,hopefully you item will sell and all the hard work will be worth the effort you have put into it.

[Jason]

You seem to have been spammed.

I think Guy's poll skips another alternative: profitably use The Long Tail to spot the hits before they're hits

I tracked back my thoughts on this.

[Matthew Peschong]

hey loved the article. i made a trackback here. i wrote about why the long tail theory wont work too. i even got seth godin to tell me the reason why he writes books the way he does. check my site out for the info. http://www.CaffeineMarketing.com/

[Dirk Karl Maßat]

great site with good look and information...i like it

[Jonathan Trenn]

I'm trying to grasp this next to zero inventory/marketing/support costs. OK, I get the inventory part - Just in Time has been used for a while now.

But there will have to be, at least initially, some marketing costs - for awareness, for differentiaton if there is competition.

And support cost will always be necessary. One screw up by the long tail busines, and if it isn't rectified, could mean, well, you're dead. At least if the customer is a blogger.

These are business models that will have to be worked out. There will be marketing costs. There will be support costs. The ones that succeed will invest in those needs wisely.

[tim]

The poll is invalid, or at the very least skewed by the language it uses ("make" vs "help") -- so don't put too much weight into it.

[what now toons.com]

Aloha;
I saw your Charlie Rose segment last night and was very impressed with your editorial stance, and modern approach to the state of todays media, unfortuatantly I messed the first half,. Is there a transcript or video available somewhere? Thats all, Mahalo for your forward thinking, not enough of it in the mainstream media.

[what now toons.com]

Aloha;
I saw your Charlie Rose segment last night and was very impressed with your editorial stance, and modern approach to the state of todays media, unfortunately I missed the first half,. Is there a transcript or video available somewhere? Thats all, Mahalo for your forward thinking, not enough of it in the mainstream media.

[Clyde Smith]

Looks like you're linking to a different post than you're discussing:

Wrong Tail
http://blog.guykawasaki.com/2006/07/the_wrong_tale_.html

I haven't been keeping up with you or Guy like I should. But I do want you to know that I'm only one of a sharp group of hip hop bloggers who are influenced by your Long Tail thesis.

Peace