A physical book store won’t have the shelf space to keep niche books as there is a cost of shelf space and the book should have enough sales to justify it. Thus they keep books which can be sold in sufficient quantities to make it feasible to stock and display them.

A bookstore has a certain amount of area around it which is its market. It’s not that there isn’t a market or demand for these niche books. But the demand is spread thinly over a very large area. The demand isn’t in sufficient amounts in local areas to make sense for local bookshops to store them. Same is for a multiplex. It can’t show that movie which is away from mass appeal.

The result is what is called ‘tyranny of lowest common denominator‘ – you may like it or not you will be offered a product which is the most popular one.

This low volume hard to find stuff is referred to as ‘The Long Tail‘. The term was coined by Chris Anderson in 2004.

The Internet has opened up the product for the long tail. In the age of internet, geography mattered less as low cost distribution enabled niche products, catering to a very specific tastes, to attract large audiences.

Amazon can list thousands of extremely niche low volume book titles on its website. And deliver them across a large geography. While there might not be a feasible market for a small area when aggregated over a very large area there is a market for the long tail.

Amazon can profitably cater to the long tail spread thinly over a large area, something traditional bookstores can’t.

Moreover, for services which can be delivered over the internet like Over the Top video services eg: Netflix and others – niche stuff can be delivered without any marginal cost driving its consumption. A traditional linear TV Channel has limited amount of streaming time in a day (functional equivalent of limited shelf space in a store), it can’t afford to stream not so mass appeal shows.

Moreover, the internet enables the sellers like Amazon, Netflix etc to collect a lot of data and figure out the preferences of the consumer and then recommend similar stuff. This opens up the market even more for the long tail products and services.

Search engines like Google and later social media companies opened up the long tail of the advertisement market. In earlier days to run an advertisement campaign in the media one required huge sums of money. Only large companies could do it. Today, small businesses can run targeted localised campaigns. This has expanded the traditional advertising market.

While at a localized level, the long tail might not be a feasible market at an aggregate level it is. These internet companies or internet driven firms have opened up the long tail of the market.

Would love to hear your thoughts….

Get one such article delivered every day on Whatsapp. Subscribe at bit.ly/finixschool

3 thoughts on ““The Long Tail” – How Internet enabled low cost distribution opens up new markets.

  1. This is indeed a fact. Also it has opened up market for people located anywhere to sell everywhere across the globe. Market places like Amazon and flipkart have opened up tremendous opportunities for small businesses and artists.

Comments are closed.