Traditionally, location planning considerations involve an organization’s supply chain (how near is the facility to suppliers or customers), business climate (tax breaks, proximity to competition, etc), cost of operations, availability of labor, and other such things. It has to do with, for a lack of a better description, the actual, physical location where the organization operates or does business.
So, when you have a business entity whose operations are conducted wholly, or mostly, from the web, is location planning still important?
The quick answer is, IMO, no. When your machinery and equipment — web-servers and such — are located half a world away, and your customers and suppliers are from every corner of the world, all while being connected to each 24/7 from some remote office, actual physical location takes on a drastically decreased role. Their concern becomes not location planning, but location targeting.
Companies such as Amazon, Netflix and Ebay, who leverage the potential of the Long Tail, are prime examples. In Chris Andersen’s 2006 book, The Long Tail: Why the Future of Business Is Selling Less of More, he put forth the idea that in the internet era the variety of goods and merchandise is growing, because constraints on shelf space — physical location —are eliminated, as well as the costs associated with it. This opens up the possibility of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. This effect results in a shift of the Pareto Distribution, or power law distribution curve, illustrated below:
Andersen’s ideas put forth the notion that, given the elimination of physical shelf-space in favor of the internet, many small markets in goods that don’t individually sell well enough for traditional retail and broadcast distribution will together exceed the size of the existing market in goods that do cross that economic bar. In other words, the shaded area under the curve will become bigger than the white area over time.[1]
All this, of course, depends on search engine results (SER), and is why I mentioned the shift from location planning to location targeting: in the era of Web 2.0, there is only one location you want — the first page of a SERP for your keyword. What’s left is knowing what to do to get there. But with the ease upon which consumers can search for anything they want, the market also exisits for an organization to distribute niche products.
The concept isn’t a particularly new thing: publishers and record companies have long known the value of having their products placed in prominent areas. Businesses and locations catering to niche products, such as Hidalgo in Quiapo for cameras, or Gilmore in Quezon City for computers, have already leveraged this potential by becoming hubs for that niche. But their biggest problem has always been the one that location planning has sought to minimize, but that the internet has eliminated: people still need to go to them to do business. No matter how convenient or well-trafficked the location is, nothing beats the convenience of being able to complete transactions on-line, from the comforts of home.
For web-based business entities, this means a paradigm shift from solving rectilinear distances between locations to practicing SEO, ensuring standards-compliant code and accessibility on their web sites, and concentrating on usability and user experience. For the rest of us, it means more choices and a richer consumer experience.
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