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Authors: Chris Anderson
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elsewhere for meat, produce, baked goods, dairy products, and other items. The supermarket collected all these products under one roof. What’s more, the number of unique products it carried climbed: to 6,000 by 1960, 14,000 by 1980, and more than 30,000 today.
THE TOUCHTONE CONSUMER
The next great expansion in variety took place in the home again, with the introduction of toll-free 800 numbers. They started with modest expectations. In 1967, AT&T launched a new product called “inter-state inward WATS (Wide Area Telephone Service),” also known as “Automated Collect Calling,” which was mostly intended to combat an anticipated shortage of telephone company operators. Operators were becoming overwhelmed by the number of collect calls being accepted by businesses. AT&T thought that the new service might help with that labor shortage but would otherwise have limited appeal. The company never dreamed that by 1992, only twenty-five short years later, 40 percent of the calls on AT&T’s long-distance network would be toll-free calls.
What toll-free calling enabled was the return of catalog shopping. The modern automotive age had shifted the population out of the city and into the suburbs, where selection was limited to local shopping centers. An increasingly affluent and materialistic suburban generation was ready to spend again, and by the mid-1970s, they had credit cards to help them act on those desires. The 800 number was the necessary catalyst for a home-shopping boom.
In contrast to the Sears era of massive centralized warehouses containing everything, this later wave of catalogs was more about targeted niches. Color printing technology made it possible for niche retailers to print hundreds of thousands or even millions of catalogs that carpet bombed targeted mailing lists with magazine-quality showcases of their wares. Response rates as low as 1 percent could still be profitable.
Niche products had once again found a way to reach mainstream audiences. Sporting goods, branded apparel, interior design, lingerie, outdoor furniture, hobbies—each month brought a new parade ofdeep inventory in specialized retail. All it took was a phone call and a credit card, and consumers would have their products in hand in a week or two. But as impressive as this postal cornucopia might have seemed, what the personal computer could offer would soon dwarf it.
THE ULTIMATE CATALOG
The rise of e-commerce on the Web in the early 1990s started by simply building on the catalog model with even more convenient ordering, larger selections, and broader reach at lower cost. The Internet provided a way of offering a catalog to everyone—with no printing and no mailing required. It would clearly work everywhere catalogs worked, and then some.
Of course, some categories were more promising than others. But which?
This was the question Jeff Bezos asked himself as he sat at his desk at the hedge fund D. E. Shaw in New York. It was 1994 and the Internet was starting to take off, growing by 2,300 percent a year from its small existing base. A budding “quant” (math geek), Bezos was asked by his boss to find Internet business opportunities. As he explained, more than ten years later, at an event in Silicon Valley:
I went to the Direct Marketing Association and got the list of all the things that were sold remotely. Apparel was the number one remote sales category. Gourmet food was number two. Way down at the bottom of the list were books, and the books category was only on there because of things like the Book-of-the-Month Club, because there really are no paper catalogs to speak of that sell books.
The early 1990s were a boom time for the U.S. book industry. Crown Books had already transformed the business with a chain of discount stores, spurring record sales and triggering a wave of similar discounting. Then Barnes & Noble and Borders took it one step further by introducing massive superstores. Sometimes built in converted movie
THE TOUCHTONE CONSUMER
The next great expansion in variety took place in the home again, with the introduction of toll-free 800 numbers. They started with modest expectations. In 1967, AT&T launched a new product called “inter-state inward WATS (Wide Area Telephone Service),” also known as “Automated Collect Calling,” which was mostly intended to combat an anticipated shortage of telephone company operators. Operators were becoming overwhelmed by the number of collect calls being accepted by businesses. AT&T thought that the new service might help with that labor shortage but would otherwise have limited appeal. The company never dreamed that by 1992, only twenty-five short years later, 40 percent of the calls on AT&T’s long-distance network would be toll-free calls.
What toll-free calling enabled was the return of catalog shopping. The modern automotive age had shifted the population out of the city and into the suburbs, where selection was limited to local shopping centers. An increasingly affluent and materialistic suburban generation was ready to spend again, and by the mid-1970s, they had credit cards to help them act on those desires. The 800 number was the necessary catalyst for a home-shopping boom.
In contrast to the Sears era of massive centralized warehouses containing everything, this later wave of catalogs was more about targeted niches. Color printing technology made it possible for niche retailers to print hundreds of thousands or even millions of catalogs that carpet bombed targeted mailing lists with magazine-quality showcases of their wares. Response rates as low as 1 percent could still be profitable.
Niche products had once again found a way to reach mainstream audiences. Sporting goods, branded apparel, interior design, lingerie, outdoor furniture, hobbies—each month brought a new parade ofdeep inventory in specialized retail. All it took was a phone call and a credit card, and consumers would have their products in hand in a week or two. But as impressive as this postal cornucopia might have seemed, what the personal computer could offer would soon dwarf it.
THE ULTIMATE CATALOG
The rise of e-commerce on the Web in the early 1990s started by simply building on the catalog model with even more convenient ordering, larger selections, and broader reach at lower cost. The Internet provided a way of offering a catalog to everyone—with no printing and no mailing required. It would clearly work everywhere catalogs worked, and then some.
Of course, some categories were more promising than others. But which?
This was the question Jeff Bezos asked himself as he sat at his desk at the hedge fund D. E. Shaw in New York. It was 1994 and the Internet was starting to take off, growing by 2,300 percent a year from its small existing base. A budding “quant” (math geek), Bezos was asked by his boss to find Internet business opportunities. As he explained, more than ten years later, at an event in Silicon Valley:
I went to the Direct Marketing Association and got the list of all the things that were sold remotely. Apparel was the number one remote sales category. Gourmet food was number two. Way down at the bottom of the list were books, and the books category was only on there because of things like the Book-of-the-Month Club, because there really are no paper catalogs to speak of that sell books.
The early 1990s were a boom time for the U.S. book industry. Crown Books had already transformed the business with a chain of discount stores, spurring record sales and triggering a wave of similar discounting. Then Barnes & Noble and Borders took it one step further by introducing massive superstores. Sometimes built in converted movie
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