Such a cost structure implies that a firm must secure sufficient sales to break even. Large firms with capital and brand recognition will have the upper hand in this game of survival. Size does matter in the electronic marketplace, and a sizable venture capital seems to be a prerequisite for Internet business. The size advantage works only when products are standardized, in which case a large number of production and sales leads to lower average cost and price. When products are customized, however, the law of declining average cost becomes less powerful.
Firms compete through quality and customer satisfaction.
Markets for customized products are often equated with niche markets, which refer to market segments that are not served by dominant products or brands. Dominant products are designed to appeal to the most number of customers, usually of average quality or taste that matches customers' lowest common denominator. If offered, however, these customers are willing to pay more for better matching, personalized products. Thus with customization, the so-called niche market will expand along with opportunities for SMEs. The key ingredient of a successful e-business is to offer flexible and responsive solutions for individual needs.