In October of 2004 Wired Magazine published the article The Long Tail, addressing the changing retail environment. The article laid out the challenges bricks and mortar retailers’ face and the rise of internet retailers. Ironically, Tower Records*, Blockbuster*, and Barnes & Noble (a close surrogate for Borders*) were among the bricks and mortar retailers referenced (*each is no longer in business).
The Long Tail is a term that describes the retailing strategy of selling a large number of unique items (selection) in relatively small quantities – usually in addition to selling fewer popular items in large quantities where the sum of the less popular items is often more than the most popular.
Before the Long Tail
Before the Long Tail, 20th century commerce was dominated by:
- An intense search for one-size-fits-all products
- Companies trying to predict demand for their goods
- Products that didn’t sell being immediately pulled
- A limited range of popular products were available
The 21st Century
The introduction of the internet has created an era of unprecedented choice for consumers. When you have a store with unlimited shelf space, you are able to serve the long tail part of the demand curve – providing consumers access to hundreds of thousands of bits of information, products, and services they’d have never been exposed to otherwise.
Consider for a moment that a boutique bookstore carries 10,000 titles and a superstore stocks 130,000 titles max. Conventionally bricks and mortar retailers concentrate on the 20% of titles that bring 80% of the business, and avoid the other titles. As revealed by The Long Tail, Amazon discovered that 50% of its book sales come from titles in its ‘long tail’ i.e. beyond the 130,000th bestselling title – these are titles which bricks and mortar stores cannot economically keep in stock.
The Long Tail theory states that when the cost of reaching niches gets reduced to a low level, “long tails” emerge as a driving force of commerce. Three forces can cause the cost of reaching niches to fall:
- Production tools become more available and efficient
- Distribution costs are cut appreciably
- Supply is connected to demand more efficiently
Align for Success
Often I’m asked what Sheridan does – when this occurs I need to exercise great restraint not to lead with products, services, or the latest piece of equipment purchased. After all the correct answer and blueprint for success was provided to us ten years ago:
- Help Publishers reduce the cost to make and procure books
- Help Publishers lower the cost to distribute books
- Help Publishers sell books by connecting their content with readers
As a publisher in the long tail world, review your strategy for each of these items with your suppliers and look to them for solutions to help you succeed.