Yesterday, I watched a news report about the long-term growth of the second-hand clothing market. That made me think about the long-term future transition. Let’s talk about it.
Where is the profitable area?
Sometimes, we want to know which industry will be profitable in the long term.
It is easy to make profits when we are in a growing market. Despite its high demand, fewer people enter the industry. On the other hand, if we are in a field that has passed its growth peak, it is often difficult to make money due to intense competition.
Two factors drive this transition: trends among the majority of people and the competition rate. Many people want to make profits as quickly and reliably as possible. That makes them pursue only short-term trends. However, if there are many competitors, the profit per person will decrease.
That is why we want to identify markets that will grow in the long term. That allows us to make a stable profit with less effort in the long term.
Focusing on handmade markets might be profitable for the next 10 to 20 years. Today, I will explain why.
The long-term transition of a profitable area
Since the advent of the internet, profitable areas have changed over the decades. Although this is my opinion, the long-term transition would be as follows:
- The era of digital production by individuals (around 1995 to 2005): The birth period of the internet
- The era of digital production by large corporations (around 2005 to 2015)
- The era of digital subscription (from around 2015 to the present): The peak growth period of the internet
- The era of material production and distribution by individuals through the internet: The beginning of the decline of the internet’s growth
- The era of material production and distribution by large corporations through the internet
- The era of material subscription: One goal of the internet (the limit of the internet’s growth)
The long-term outlook is not so difficult. We can predict based on fundamental changes. The foundation that has created the most change in the last decades is the internet. In other words, the purpose of the internet shows us profitable areas.
Becoming rich informationally and materially
The internet is a tool for sharing information. However, its ultimate goal is to achieve material abundance.
In other words, the purpose of the internet can be divided into two stages, as follows:
- A stage of becoming informationally rich
- A stage of becoming materially rich
We are now in the final phase of becoming informationally rich. We already feel that information should be obtained for almost free or an affordable monthly subscription fee. On the other hand, we still have the common sense to pay money for material items.
In my opinion, we will gradually become richer materially. It is a similar process of enriching information. In the near future, the majority of people will buy material items, such as groceries and clothes, by subscription with the support of the internet. That would be the final stage of the internet’s growth.
Three periods of trends
When we become prosperous with the internet, there are three steps to follow:
- Individual distribution period
- Large corporation distribution period
- Subscription period
For example, at the beginning stage of the internet, individual developers created and sold internet apps and services. Internet users bought these apps and services from individuals. Since there was a high demand but low supply, many creators profited, even as individuals.
Then, once it became clear that it was profitable, large companies entered the market. Users opted to buy apps and services from large companies since they were more trustworthy than dealing with individuals.
In this period, an insightful individual made a profit by selling their business, app rights, or brand name to a large corporation. This was the time for innovators to create large-scale profits and exit their business.
The final period is the subscription period. There are many similar products and services in the world, and people’s desires begin to fade. People come to subscribe instead of paying for items individually. Naturally, the profit margin per product is diminishing.
Examples are creating software, selling apps, and becoming YouTubers. These trends shifted from individual to subscription.
Thinking as an investment
These transitions show us a profitable area. We can follow the long-term trends. Then, when a short-term trend comes, we can close the business.
It is the same logic as investment. We anticipate future changes, prepare when prices are low, and sell when prices become high.
This is the opposite behavior of the majority. They rush when it is high with a dream of success and stop when the market is crushed.
We can predict the future trends instead of dreaming about existing success. That would be one of the rational ways to make a long-term, stable profit.
Conclusion
That is why focusing on handmade markets might be profitable for the next 20 years.
Since the advent of the internet, profitable areas have changed over the decades.
Its ultimate goal is to achieve material abundance.
This perspective might show us where to make a stable profit with less effort in the long term.
Thank you for reading this article. I hope to see you in the next one.
