It’s intriguing to realize that, as a culture, we are so influenced by hit-driven economics. Inasmuch as many of us may believe that we’re not easily swayed by “best of,” “top 10,” and other types of limiting hits lists, we cannot escape their effects. Also, the “80/20 Rule” in which 20 percent of the merchandise in retail stores accounts for roughly 80 percent of sales is rather thought-provoking.
But what’s truly amazing is to discover the reach of the long tail of economics — the mass of niche markets that make up the lower end of an ever-growing market share pyramid — as described by Chris Anderson in The Long Tail. Anderson explains that with the democratization of production tools and ubiquitousness of online distribution, we are increasingly experiencing the abundance and depth of the long tail of economics.
Anderson extols the virtues of the long tail of economics, but leaves a couple of matters up for debate.
- No bricks-and-mortar storefront? No problem . . . Well, not really.
The idea of the long tail is that retailers should offer as many product choices as possible —regardless the volume of sales — because there are bottom-line financial benefits even when customers make fewer purchases of more products. Anderson goes on to discuss shelf space in retailers’ storefront at length, explaining how to increase the volume of offerings may be accomplished on the Web. However, Anderson never fully acknowledges the fact that physical products still need to be housed in warehouses (or some other physical space) even if merchants are Web-based. Warehouses and storefronts are clearly two different kinds of physical spaces, but they’re physical spaces nonetheless. So while it’s beneficial for retailers to offer more products, especially on the Web, the reality is that they still may not be able to get around the fact that they still must have physical space for additional inventory.
Large businesses like Amazon have clever strategies that play up to the long tail. Amazon can use its platform to bring in other vendors under its umbrella, but that business model still feeds the short head more than it does the long tail. Additionally, for Amazon to continue to grow on its own accord, it must invest in warehouse space to house more products.
2. Paradise of choices or cluttered hell?
Anderson argues that more product choices are better for the consumer, but he does caution that too much choice can be oppressive. Indeed, I believe that a huge problem with the long tail is the overwhelming array of choices. That, coupled with the fact that the long tail is often plagued by poor organization and lackluster filtering, hurt the long tail of economics to an extent.
Niche markets are great and the mix of culture and subculture is a positive phenomenon of the digital age. However, as niche markets become less obscure, better and more refined choices are crucial. It’s exhilarating to have choices and to be able explore and appreciate niche markets. But the fragmentation of culture is bound to increase if better practices are no put into place. It’s imperative that the short head and long tail coexist harmoniously because a fragmented culture is not necessarily better for businesses and consumers in the long run.
