Call it the Market-Access Divide. In any sector of the economy, big players can deploy Internet technologies for selling that gives them a new level of responsiveness and efficiency. Small traders can not access the market in the same way.
Look for a hotel room on Expedia and you’ll probably find one that’s cheap and easy to buy. That’s because of the yield management, market analysis, user tracking and live pricing calculation behind the scenes on the site. It’s good for the hotel you book and seems good for you. But it’s less good for me if I have a spare room I’d like to let out tonight. I can’t access anything like those efficiencies. That’s unfortunate because my room might meet your needs, or budget, for an overnight stay better than the easily accessible alternatives.
Massively parallel
There could be hundreds of spare rooms available where you want to stay, some of them only available for odd nights each year, many only on offer to someone with your track record of probity. You’re not going to find them. Expedia and its competitors aren’t set up to solve that problem. Irregular assets, with haphazard availability, from sporadic unproven sellers are an infinitely more complex and risky market than hotel inventory. So, those resources stay out of the economy.
Local deliveries offer another example of the Market-Access Divide. A householder who needs some groceries but doesn’t have time to shop can quickly visit a supermarket website and select a drop-off time tomorrow. But a 1940’s housewife would have called a local store which could dispatch a delivery boy instantly.
The teen-on-a-bike method of delivery was faster, greener, often cheaper and spread economic opportunity around more than today's home shopping operations. But no market for genuinely local point-to-point deliveries can compete with the effortless reliability of modern supermarket websites.
Throughout first world economies, markets have constricted around big sellers because those companies have the IT systems that make purchasing from them so fast, cheap and dependable.
Efficiency: for who?
Economic data confirms the Market Access Divide.
As spending on IT has risen around the world…..
….so has the share of economic activity taken by corporates……
……who have become increasingly efficient, needing to employ fewer people.
Whose problem?
The big players aren’t to blame. They have responded to new technologies the way they’re supposed to: leveraging their authority and assets to increase profitability as the business environment evolves. The problem is: no-one's doing the same for the potential millions of micro-sellers at the bottom of any economy.
Of course, the private sector tries to unleash micro-sellers. There are hundreds of sites for letting a room in any City. Companies like handshake.com in the US burned through millions of dollars failing to create a market in just one tiny part of the domestic economy: household services.
Handshake's problem? Too many others were trying to do the same. None of them could achieve the deep pool of buyers and sellers that makes any market so valuable. Outside of online car boot sales where eBay dominates, markets for potential micro-sellers are dissipated among so many rival marketplaces each with their own:
Policymakers have access to facilities for e-markets that no private sector marketmaker can match. Politicians need to understand why those facilities should be released through a legal framework to create a new generation of markets that can kickstart new economic activity.
