In his 2006 book, The Long Tail, author Chris Anderson argues that the internet has changed the way the world does business, both in areas that most of us are now aware as well as many areas that very few businesses have yet to take advantage of. In the coming months, we are going to be exploring many of these principles along with real world examples of how businesses are putting those principles to work for them.
But first, I’d like to give a brief explanation of whatAndersonis referring to with the term “The Long Tail.”Imagine for a moment, a traditional bookstore located on the corner ofMainand Elm Streets in any American town in the early 1950’s. The store is 1000 square feet in size and almost all of their customers do business by walking through the front door.The proprietor pays rent to a landlord that owns the building and buys the store’s inventory from a regional book distributor.
Because of overhead, inventory costs and limited shelf space, the store needs to use what space it has to carry books that will sell in significant volume.They cannot afford to waste much shelf space on books that are going to sit for very long without generating some revenue.Therefore, most of his inventory is made up of the best selling books available at the time.If he has enough shelf space to carry 1,000 titles, he may carry the 1,000 best selling books at the time.
Now flash forward to 2008.The internet now makes it possible for that same bookstore to offer not just 1,000 books but 100,000, 1 million or 10 million titles.Limited shelf space is no longer an issue and inventory costs can be nonexistent since you don’t actually have to buy a physical copy of a book to present it to a customer.A picture and a description are enough.
And what Amazon.com has discovered is that those books that would not have made it into that traditional bookstore because they did not sell enough copies (those books ranked between #1,001 and # 10 million on the current best seller list), while selling fewer and fewer copies individually as you move out the distribution curve, when all of those books are looked at together they sell many, many more copies than the top 1,000.And because of this,Anderson points out that the real opportunity in today’s economy is not in the best selling “hits” but in the thousands and thousands of products, services and customers that make up “The Long Tail.”
Companies like Amazon.com, iTunes, eBay and others have already learned this.But what we find interesting here at Red Clay Interactive is that you don’t have to be a huge company with a household name to take advantage of these principles.We work with businesses of all sizes and in every imaginable industry to put these principles and concepts to work with them.And in so doing, we see companies growing and developing in ways they never would have thought possible just a few years ago.