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The long tail

20 January, 2016 - 15:30

In a conventional store, stocking a new item for sale is costly. Inventory must be acquired, shelf space allocated and the merchandise displayed. The cost of adding an item for sale at an online store is essentially zero. Low stocking cost leads to the concept of the “long tail.”

The long tail was documented in a 2003 study of Amazon.com. Eric Brynjolfsson and his colleagues estimated the proportion of Amazon book sales from obscure titles. 1 As we see in Figure 4.3, 47.9 percent of Amazon's sales were of titles ranked greater than 40,000th in sales. This leads a large online store like Amazon to carry approximately 3 million books compared to 40-100,000 for a large brick and mortar store. The result is increased profit for the vendor, increased choice for the customer, and increased incentive for authors with niche products.

Salesrank

Percent ofsales

Table 7.2 The long tail of Amazon book sales

>40,000

47.9%

>100,000

39.2%

>250,000

29.3%

 

The long tail is not limited to books. It is even more important in the case of information goods, where it is not necessary to deliver a physical object like a book. Consider, for example, the online music market. Both Apple iTunes and eMusic, which specializes in music from independent labels, offer over 2 million songs in their online catalogs. 2 Google advertising is another illustration of the long tail. A large percent of their ad revenue comes from advertising by millions of small, often local companies paying just a few cents per click (AdWords) or millions of Web sites, which display Google ads (AdSense). Vendors of software as a service also target the long tail – small organizations wishing to use packages previously affordable only by larger organizations.

Internet resources

Chris Anderson has extended and popularized the notion of the long tail, see:

  • Anderson's initial long tail article
  • Anderson long tail talk
  • Long tail blog
  • Anderson's long tail book
  • Interview on the long tail and the way he wrote his book
  • Review of the book