LONG TAIL
This retailing concept has become widely known and discussed in the past year. It was popularised in Wired Magazine in October 2004 by that journal’s editor-in-chief, Chris Anderson.
The long tail is that of the demand curve of products versus sales. The best-sellers are all at one end, but as we move to the other sales drop off in a long slow curve that never quite hits zero. Traditional retailers draw a line only part-way along this curve, because slow-moving items return less profit than the cost of stocking them. But online retailers backed by huge warehouses and fast stock deliveries can easily afford to keep them permanently available. Helped by clever search engines that can suggest possibilities for customers with special interests, these niche items suddenly become profitable. Amazon, for example, gets half its sales from outside its 130,000 top titles.
Chris Anderson is expanding his thesis into a book, The Long Tail: The Radical New Shape of Culture and Commerce, to be published in 2006.
The term itself, however, isn’t new. Insurers have used it for many years to describe business, such as that for liability insurance, in which claims may be made long after the end of the insured period; the opposite is short tail, in which claims arrive during the policy period.
The counterintuitive reality of the long tail is that its potential is based on aggregating supply and demand, but its realization is based on helping individuals find just the right thing, one scenario at a time.
[KMWorld, 1 Nov. 2005]
Westergren hopes to exploit what Wired magazine calls the ‘long tail effect’. The idea is that, while a small number of products make up a large quantity of sales, there are many products in relatively low demand that don’t sell well on their own, but which together can outsell the more popular products.
[Independent, 14 Sep. 2005]
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