This amazing statistics that there are 1.65 Billion active users on Facebook, which generate 4.5 billion likes every day and that 1.09 Billion people enter Facebook daily, has more than the usual reason why it attracted my attention.

It is the world’s biggest platform, an equivalent of a gigantic market place where these users potentially could be the future buyers of products that are on display through virtual conversations of all kind. The probability on the other hand that a product will catch the eyeball of a certain percentage of people to fit in their conversations, is infinitesimally low, given the high number of products on display and the shrinking attention span, but that is where marketers have to work. It is a good challenge to work on.

Our current market looks more like a place where on one hand we have more sellers than buyers, while on the other part of the market, there are more buyers than sellers. But these are never fixed but variable depending whether you are on a platform or in a physical market and whether you have a large brand connection.

Imagine the Harold Hotelling example of an ice-cream seller in the beach. Let us tweak his example and have a beach where there is only one ice-cream seller. He will make a kill surely, but he has a problem that he has zero switching cost, so we have one more ice-cream seller the very next day taking away a chunk of his sales. If both continue to keep their stuff relatively same, we will have one more entering the fray. Harold Hotelling in the 1920s did not attempt to solve this puzzle of diminishing prospects for the ice-cream sellers, but wanted to explain as a Mathematician that the market of ice-cream on a beach would consist of sellers who are as close to each other as possible, by this way they are able to reduce the logistics cost for the customers on the beach. That explains why fish sellers stay together in a market or why same things are sold in one place than being dispersed all around the city.

The solution to the ice-cream sellers losing on their revenues as more enter the market is simple. As Michael Porter showed us in the eighties that by creating more barriers to entry or by increasing the competitive advantage one ice-cream seller could actually do far better than the other.

But it took almost sixty years to understand this concept of differentiation from the 1920s to the 1980s. Much of the world’s thinkers, which consisted of Economists and Scientists, had spent all their lives trying to explain the economies of equilibrium as in General Equilibrium Theory, they were concerned more about stability in economies. What happens when one innovator gets an outsized pie of the total market was never in their syllabus of things. The concept of branding would have had the General Equilibrium Theory struggle to get anywhere.

The marketers of the world waited patiently, as their road to success never had any mathematical proof.

The economists were more concerned about a system where everything should add up; the marketers of the world were busy in finding out what didn’t; what gets sold today in a market of sellers that balanced demand with supply was hardly of any interest to them. Their attention was to find, how one category of products could outsell the others and create the foundations of a brand, which would make them connect with the customers forever.

But it was so obvious that when products compete, there has to be something defining what differentiates one from the other. This is where markets collided and brands became far more powerful than the physical markets where they were bought and sold based on demand and supply.

For brands or for platforms, it is never the economics of demand and supply.  Let me take the most extreme example of recent times, who would have known what the demand of iPhones would be, when Steve Jobs started with his first demonstration a decade back? Or for that matter when Google started their work on search engines, did they have a market in the first place that had defined buyers and sellers?

But with platforms this equation is changing as we are dealing with a two sided market, on one side we have sellers who are using the platform to get their merchandise get sold to potential buyers and on the other we have platform owners wooing the users of the platform to get connected with each other and with a plethora of things. Think of Amazon or eBay and you will get this.

Let us go back to Facebook, this is a platform where on one hand millions are connected with things that have nothing to do with the buying or selling of specific products, but on the other they are part of buying and selling in so many ways as they get to know products and services which they would not have otherwise have their attention get a chance to peek.

But we have an unusual challenge now that we have far more such sellers trying to find a place with a particular buyer, the attention of the buyer with all its limitations can hardly do justice to the multitude of offerings on the platform.

You could get your attention drawn to any range of things from buying homes to getting your lawn mower;  the probability of your mind catching on to a product for a definitive sell is a function of how many such products are being offered in a limited time span. This probabilistic rather than deterministic nature of buying and selling through the platform is a distinct area of study.

The earlier model had too few sellers in the market place, but now through the platform we have increased the numbers of sellers. The ability to reach millions has increased in the process for any product, but the probability of a genuine connection, the one that would fructify into sales is a probability weighting function.

From the world where our needs determined what we wanted to buy, to a world, where needs are created by the brands on the platform, we have added many more puzzles to be solved for the newly initiated products through the platform. For now the puzzle for them is one of increasing the very low probability of success when the weighting function is skewed in favor of large brand presence in the world of virtual market place.

When the attention span is limited it is the virtual attention that takes over, the one which is influenced by the many- faceted conversations we have daily and how an undivided attention span can be drawn through specific interventions is the real challenge of the marketer.

Too many buyers could be a curse or a blessing, the challenge is wide open.

More Sellers than Buyers Vs More Buyers than Sellers: The curse and blessings of a digital marketplace

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