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- The Essence of the Long Tail
Nyheder | The Essence of the Long Tail
Oprettet af Kia Aagaard | August 18, 2008 11:37
Haven’t found the time to read Chris Anderson’s eye-opening book “The Long Tail”? Forgotten what it was about? Here is the one-minute version…
By Jonathan Winch
The words “Long Tail” refer to the insight that, for some industries, the total sales value of niche items is larger than the sales value of mainstream product “hits”. Consider books. The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. The biggest money is in the smallest sales.
- Google, for instance, makes most of its money off small advertisers (the long tail of advertising)
- eBay is mostly tail as well – niche and one-off products.
- Netflix, which offers more than a thousand documentaries – because it can.
- iTunes brings all kinds of audio and visual content to niche audiences from one viewer and up
The Long Tail turns traditional business thinking on its head. Instead of focusing on a narrow offering of products, you consider whether you should make much more available to capture a larger market. Of course, such business models require that we can get over the economics of scarcity. And that is, of course, where the online world comes in as a distribution platform.
Clearly, the Long Tail is primarily an insight that’s useful for those who could resell ready-made products, or products that can easily be re-worked to appeal to niche audiences. So most of the examples described in the book involve entertainment businesses without physical outlets. But there are some exceptions worth thinking about:
- KitchenAid offers over 50 different colors of mixer that customers can choose online. The Long Tail is clearly apparent in the choices people make, i.e. virtually all colors are sold – and the company gets valuable, often surprising data.
- Over 90% of LEGO’s products are not available in stores due to, for example, shelf space limitations. Selling LEGO online lets the Long Tail come into play and boosts margins across the board.
What matters is not where customers are, or even how many of them are seeking a particular item, but only that some number of them exist, anywhere. As a result, for such businesses, almost anything is worth offering on the off chance it will find a buyer.
Perhaps you could try putting Long Tail glasses on and considering whether there’s an opportunity for your company to overcome the limitations of geography and scale, and discover new markets or expand existing ones?