Tale of the long tail, Part 2

MY JUNE "MoJo” column, "Tale of the Long Tail, Part 1," examined how the machine-builder marketplace in North America fits the long-tail model. This means the builders and their relative sizes collectively make up a distribution chart that looks like a mouse with a very long tail. This time we’ll look at how the small machine builders in that long tail—and their suppliers—use the Internet and other tools in a way that lets them enjoy the same level of service as their larger brethren.

As Control Design’s March 2006 survey revealed, machine builders often turn to the Internet for supplier information. Specifically, they often go to automation-supplier websites first. Suppliers can’t send an automation specialist to each of the thousands of small North America machine builders, but they can afford to provide lots of useful information via their websites.

AutomationDirect was a pioneer in this area. First with its print catalogs and now with its website, the company reached out aggressively and successfully to the long tail of the machine-builder market via a direct-sales model. The company’s success indicates that its model has in many cases served your needs better than the traditional, local-distributor sales channel.

“The ability to sell high-technology automation products for very low prices depends on the efficiencies inherent in direct marketing,” says George Kaufman, AutomationDirect’s director of product development and management. “Customers can use our website to select appropriate products, view specifications, get pricing, and view technical manuals. They also can access their orders’ status, open invoices, and generate quotes on line.”

AutomationDirect finds the best way to provide high level service to small machine builders is via access to remote experts. “We provide free phone and e-mail support that has been rated the best in multiple product categories for five consecutive years by the readers of Control Design,” concludes Kaufman.

Opto 22 also makes smaller machine builders an important part of its market. “We cater to customers in the long tail because we’re also in the long tail of our market as a niche provider of control products,” says Benson Hougland, Opto 22’s marketing vice president. “Because of our relatively small size and our dedication to our long-tail customers, we can engineer products and implement programs quickly. The Internet then allows us to get the word out immediately. Moreover, customers in the tail tend to be technologically ahead in how they obtain information, primarily via the web and e-mail.”

Larger vendors now often charge for service, support, and training, adds Hougland. “Customers in the tail can’t shell out the big bucks for these services, so they look to vendors like Opto 22 that provide these basic services as part of their purchases,” he says.

National Instruments (NI) targets smaller machine builders. “It used to be difficult and expensive to commercialize and explain the benefits of new technologies for niche applications,” says John Hanks, NI’s marketing director. “Because of the Internet, we can develop online technical content inexpensively. Technical diagrams, example code, and application notes now are online, and being updated by our community of users at an increasing rate.”

Hanks says customer surveys show that 7% of the cost of new designs is related to searching for the right supplier and components. “This problem is accentuated for small machine builders since they don’t always have a team of purchasing agents locating alternative solutions,” he adds. To help in this area, NI created several on-line product advisors aimed at helping machine builders locate cost-effective solutions quickly.

“Before a long-tail economic event occurs, the market hits are the popular items like PLCs,” says Hanks. “But when the costs of product design, marketing, technical support, and distribution fall, a wide range of substitute products become available, such as programmable automation controllers derived from PC-based designs. The mass market of machine builder automation is dwindling, and being replaced by masses of niches. This could deliver more choices and lower prices for all machine builders.”