Long Tail versus Traditional Retail


Traditional retail mortar must have hundreds of products disregarding the space, the demand, the interest.

To be strtegic we can just say that traditional retail economics dictate that stores only stock the likely hits, because shelf space is expensive whereas online retailers (from Amazon to iTunes) can stock virtually everything, and the number of available niche products outnumbers the hits by several orders of magnitude. Those millions of niches are the Long Tail, which had been largely neglected until recently in favor of the Short Head of hits.

Let us take the example of books and music.
Amazon and other networks of used booksellers have made it almost as easy to find and buy a second-hand book as it is a new one. By divorcing bookselling from geography, these networks create a liquid market at low volume, dramatically increasing both their own business and the overall demand for used books.
On other hand taking Itunes for a music example we can notice that opinions are still mitigated. Even though 99 cents per track works out to about the same price as a CD, most consumers just buy a track or two from an album online, rather than the full CD. So from a label perspective, consumers should pay more for the privilege of purchasing à la carte to compensate for the lost album revenue.

Understanding Long Tail theory can help us see the world of tomorrow. Whether we are for or against it, in business world we must always look at the most appropriate way of optimizing space and time which are equivalent in a sense to money.

Hope you liked my analysis. I will be looking forward to your comments.

More info about Long Tail theory on the following links :
Long Tail by Chris Anderson
Wikepedia
Wired Magazine