commoditized

Commoditized refers to goods or services that have become commodities, losing distinctive features and primarily competing on price and accessibility. Commoditization is the process by which markets shift from differentiation to standardization, causing offerings to become interchangeable with those of competitors.

Causes include technological standardization, global supply chains, scale economies, mature markets, and the expiration of patents or licenses, all of which reduce unique selling points and make price the main differentiator. Low switching costs and long-tailed demand for basic inputs also encourage commoditization.

Firms faced with commoditized markets may experience squeezed margins and increased rivalry. They may respond by seeking cost efficiency, improving reliability, or differentiating through service, brand, quality, or bundled offerings. Some shift toward value-added services, customization, or vertical integration to maintain profitability.

For consumers, commoditization can lower prices and expand access but may reduce incentives for innovation or product variety if competition focuses mainly on price. Market dynamics may also be more volatile, with consolidation or rapid price changes in highly commoditized sectors.

Examples commonly cited include basic commodities such as agricultural products, energy, and metals; generic pharmaceuticals; certain manufacturing inputs; and cloud infrastructure services that are offered as standardized, interchangeable resources.

Related concepts include commodification, commoditization (the broader term), and product differentiation.