Chris Anderson's book, "The Long Tail: Why the Future of Business Is Selling Less of More", is finally out.  Anderson, the editor-in-chief of Wired (my favorite magazine), maintains a popular blog about the journey of researching the book.  The article cited above is based on it, and it's brilliant.  As I like to think about emerging trends in a historical context, here is my favorite excerpt:

• "Before you shed too many tears for the declining hit, remember that the era of the blockbuster was an anomaly. Before the Industrial Revolution, culture was mostly local – niches were geographic. The economy was agrarian, which distributed populations as broadly as the land. Distance divided people, giving rise to such diversity as regional accents and folk music, and the lack of rapid transportation and communications limited the mixing of cultures and the propagation of ideas and trends."

When I came up with our company name, Bazaarvoice, I was inspired by The Cluetrain Manifesto and thinking about how word of mouth has always been the most powerful form of marketing.  Human nature hasn't changed; it isn't like we all woke up last year thinking, "We need to communicate with each other more".  What has changed is the ease of communicating in a globally-connected sense.  This has profound implications for word of mouth and is driving an explosion in consumer-generated content.  As Anderson writes, "the Internet's peer-to-peer architecture is optimized for a symmetrical traffic load, with as many senders as receivers and data transmissions spread out over geography and time".  For all of the wonder of the Internet, it may be the most wondrous medium of all due to its power to connect people like we used to be connected locally (before the advent of the one-way, controlled broadcast medium).

I would recommend that you read Anderson's article (I can't recommend his book yet as I haven't read it) and think about how it will change your business.  Here is how I think "the long tail" changes the world of retail and eCommerce:

• More personalized products
• NikeID is just the beginning
• Community-driven commerce is a window to the future
• More niche eCommerce opportunities with established and start-up businesses capitalizing on them
• Stay tuned for The Home Depot, Gap, and many other giants launching more direct-channel-only brands
• Talk about a niche – check out Black Socks, which offers sockscriptions and won the Customer Experience Council's prestigious Copernican award last year
• The "green" or "eco-friendly" niche is going to be huge and almost all large retailers will capitalize on this, especially after An Inconvenient Truth comes out, which is sure to be remembered as the most impactful documentary to date 
• Faster product cycle times due to better and more accessible information from customers about what they like and don't like about the product
• Product reviews will play a big role here; we are already seeing our clients make some pretty profound merchandising decisions based on our word of mouth analytics
• Better customer service
• Store reviews and customer reviews will also play a big role here
• With more choice, tighter community, and a greater demand for niches, personalized service will become an even more important differentiator
• Better multichannel integration
• Buy online and pick up in store initiatives are just the beginning; REI is a good example (30% of all online purchases are picked up in their stores)
• Retailers will have to leverage their use of channels to provide a better overall customer experience or risk losing them to niche businesses
• Customer-centric, multichannel database and analytics opportunities will be a huge area of opportunity and frustration; RFID will only make this more complex
• More private-label brands
• JCPenney's ana line is a good recent example but there are many, many others
• This bullet may be redundant with the second bullet as the reason these private labels are being launched is a combination of profit margin motives as well as focusing on attractive niches for revenue growth and differentiation
• An entire discipline will evolve on creating products that drive word of mouth
• I enjoyed Bryan Eisenberg's article on ClickZ this week and think that he and Roy Williams are on the right track here; Bryan cites three triggers – architectural, kinetic, and generous – and provides examples from our client's product reviews of these triggers driving five-star product satisfaction and word of mouth
• This will lead to much tighter communication between retailers and their suppliers with product reviews being one of the most important sources of data for these conversations (obviously returns and sales being the two longest-adopted sources)
• Members of the rapidly growing Word of Mouth Marketing Association will play a big role in this evolution

What am I missing from this list?  And how do you think it will change your business?

Two other important notes that are relevant to this post:

1. In this same issue of Wired, I was happy to see "The Power of Peer Production" named as one of the six trends driving the global economy, by Chris Anderson no less.
2. Speaking of hits, Bryan and Jeffrey Eisenberg's new book, "Waiting For Your Cat to Bark?", is out and has already been named to the New York Times, Wall Street Journal, and USA Today bestsellers list.  Here is the praise I wrote for the book when Bryan was nice enough to give me a preview copy:

   "The Web is a democratizing force as the world's largest global brain.  It educates everyone on the pros and cons of every product, service, and even person.  An educated person doesn't react well to the traditional art of manipulation that some marketers attempt to employ in their campaigns.  As a matter of fact, it makes them angry and defensive … like a cat backed into a corner.  No one understands this new world of marketing better than the Eisenbergs.  Waiting For Your Cat to Bark? is the marketing manifesto of our generation.  Read it, weep, and then go do something about it."

- from Wired Magazine, "The Rise of Crowdsourcing", pages 177-183, June 2006

As I was reading my latest Wired magazine, I was really struck by this article.  The Internet has revolutionized business in so many ways, but "crowdsourcing" may be the most revolutionary application to date.  Think of Wikipedia, Linux, eBay, YouTube, Google's ads, and the many other businesses that have been created by connecting the power of the crowd via the Internet.

So how does crowdsourcing apply to eCommerce?  Well, it is leading to the creation of entirely new businesses.  For example, look at Threadless.com.  It is on track to earn more than $20 million in revenue this year by crowdsourcing designs for t-shirts.  They sell one-of-a-kind shirts that are vetted by the crowd as the best.  You can see something similar happening on Zazzle, which has a more professional feel (not as much of a MySpace community feel as Threadless.com).  In addition to t-shirts, Zazzle lets you apply the crowdsourced designs on posters, mugs, postage, and cards.  Although you could dismiss these businesses as too niche or fringe to matter, it would be a mistake to do so.  They are revolutionizing merchandising by crowdsourcing. 

Crowdsourcing may be best put in context by James Surowiecki's book, "The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations".  The book title is self-explanatory and describes how businesses can be revolutionized by "the crowd".  Add the Internet and the shift to consumer-generated content, and you create some very exciting business potential.

Think about JCPenney's launch of their new ana line.  The idea for the new private-label line for women came to JCPenney directly from customer feedback.  How does JCPenney evolve this line quickly?  They listen to the customer feedback carefully.  And online product ratings and reviews would enable JCPenney to do this in an archived fashion.  Although word of mouth primarily occurs offline, it is only in the online channel that it is archived for thorough analysis.

Remember the movie "Big" staring Tom Hanks?  What made his character, Josh, so successful?  He could think like a kid and spent his time around kids while designing toys.  The toy executives scratched their heads on how his seemingly absurd approach to his job was actually working, and there is some truth in this movie to today's modern merchandising world.

The fact is that a lot of merchandising research is done with traditional focus groups.  Put a toy in the middle of the table and watch how the kids interact with it while you stand behind one-way mirrors observing.  While this is insightful, it only tells a part of the story and is subject to group think, the personalities of the participants, and the environment that the subjects are placed in.  Do the same type of research by analyzing "the crowd's" opinion of the product, and you will learn far more.  Other techniques include executives doing store tours and speaking with the merchandising managers, which certainly help as well.  But they are also flawed by limited information.  Surowiecki says that the most intelligent decisions are made by the crowd when they are in conflict or disagreement.  And we see this happen frequently with product ratings and reviews.  One reviewer will correct the other with their "better" opinion.  How else do you explain the social phenomenon of over 2,600 reviews of "The Catcher in the Rye" on Amazon.com?

Here are some other interesting examples:

1. At WOMMA's first "Word of Mouth Basic Training" event, I learned about Kettle Chips People's Choice campaign to select a new potato chip flavor to produce based on the input of tens of thousands of customers via their website.  The public relations results from this campaign were unreal, with the media covering this from coast to coast.  And, as importantly, Kettle Chips got hundreds of legitimate ideas (cotton candy flavored potato chips not being one of them) and produced two new flavors (Thai Spice and Cheddar Beer).  They honored those customers that participated with their names printed on the bags, which you can find at your local grocery store (Whole Foods being a major carrier of Kettle Chips).

2. I already beat this example to death in the past, but it is worth linking to again.  Kryptonite is an example of a company that didn't listen to the crowd (see the Fortune article link). 

This is only the beginning.  Source your own crowd and reap the rewards.