value chain arbitrage

value chain arbitrage

There may be a niche in the market, but is there a market in the niche?

This question was posed to me many years ago as I pondered a new product business plan.

There was pretty clearly a niche in the market that was not well inhabited by competitors, but I was asked:

“Is this because you are just smarter than others, and had seen something they had not, or was it that they had concluded that there was no market in the niche”

Identifying a niche with no commercial potential that would deliver an ROI on the investment may be an interesting observation, one to be filed away for a look again later, but no real value now.

I have kept an eye on that niche for years, way after I left the employment I had at the time, and observe that at the time there was no return in the niche, but now, post digital marketing, there is, and it has been mined extensively and profitably by those who saw it.

The parameters of marketing have changed radically since I first identified the niche.

No longer are we constrained by geography, value chain middlemen who control key points and strangle out rents on the arbitrage value, and  expensive, pot luck advertising.

Those constraints are gone, and we are left with a landscape of niches that do have a market in them, recently uncovered by the power of the digit.

Small and medium sized businesses have been delivered the means to scale their operations in ways not  imagined 20 years ago.

Niches are now global.

They may be narrow, and deep,  but when you find someone down there, they are there for a very good reason indeed, and are usually very receptive to offers that reflect their deep engagement with the niche.

Rich pickings for niche Small and medium players who move quickly, play well, and play smart.