The Long Tail: Why the Future of Business is Selling Less of More
By Chris Anderson
Hyperion, 2006
A review by Ashutosh Tiwari
Early this year [2006], Kathmandu’s Bhatbhateni Supermarket broadened its premises. Despite this expansion, there is a limit to what it can stock and sell. Bhatbhateni will therefore continue to stock only those goods that it is most likely to sell. This means fewer choices for customers. What if Bhatbhateni went online?
Internet shelf space costs almost nothing. Bhatbhateni online could display hundreds of thousands of more goods, whose details could be had at the click of a mouse. And you could choose what you want from an array of selections and place an order.
When customers search and buy through an abundant of choices, the market, as we usually know it to reward scarcity, starts behaving differently. In The Long Tail, Chris Anderson explains these different behaviours as effects of the long tail (TLT), which he defines as unlimited online markets.
Anderson’s TLT model means that Bhatbhateni’s physical store might carry up to only 15 varieties of, let's say, imported beer. but its online store could well carry 1000 more varieties. Yes, even online, many customers would still buy only 15 to 20 most popular or “hit” brands (say, the Heinikens of the world).
Anderson’s insight is that the online store makes substantial money when it adds up the revenues from the sales of the remaining 985 to 980 “niche” beer (i.e. Kenyan, Brazilian, South African, etc). In other words, in a physical store, “hits”, as in what sells, matter. Online, with its unlimited shelf space, “niches”, as in what could also sell, become a surprisingly big revenue-generator.
One reason why that’s true is that online stores are free from the “tyranny of geography”. People sitting in Jhapa or Jerusalem can buy goods after checking out the vast selections of Bhatbhateni online. Collectively, they will buy not only the popular items, but also quirky, odd ones in large numbers -- thereby driving up the sales of the latter.
To illustrate this, Anderson gives an example of Bollywood movies in the US. Many American movie theaters do not show Bollywood movies. That’s because viewers of such movies are too scattered to be big enough to sustain profitable two-week runs.
The result is that Bollywood movies don’t get shown. Enter Netflix, an Internet-based DVD rental company. Anderson finds Netflix making serious money by supplying – along with the usual Hollywood hits – niche creations such as obscure documentaries, art films and Bollywood movies to customers living all over the US. So what if theaters don’t show Bollywood movies so long as there’s Netflix informing customers about Bollywood by supplying DVDs?
Anderson explains the rising importance of niche products as the result of the convergence of three technological factors.
First, invention of digital cameras, desktop music editing and blogging software have made it easier to create information and put it online.
Second, proliferation of information-aggregating sites such as Ebay, Amazon, iTunes have made it is easier for customers to find specifically relevant information quickly.
And third, Google, blogs, and online purchase recommendations have acted as filters to help customers find the goods they are likely to enjoy, but might not have found in physical stores.
That means, to cite an extreme niche example, if Sanskrit-chanting punk rock music is what you like to listen to on your iPod, chances are high that you will not find it in Tik’n’Tok, Bhatbhateni or even Walmart. But you are most likely to find it on iTunes, which carries, well, unlimited tracks. The Long Tail of massive online inventories helps you keep up with your relatively obscure interests while finding like-minded communities online.
What does TLT mean for Nepali businesses? Three lessons come to mind.
First, think global. Use the insight of TLT and the Internet as ways to access customers. Second, don’t rush to create web sites. Instead, find ways to be on Google, EBay, Epinions, and others in ways that add to your products’ visibility and credibility. Having customers endorse your products is more important than what you create. And third, don’t worry about creating “hit” products. Producing niche goods is fine, for it will give you a long advantage when you sell online to customers everywhere.
(Was this a good review? Or a jhoor and khattam review? Either way, read the magazine -- READ -- which carried this piece, and write to editors and/or contribute your own book reviews. Share your ideas about books, publishing, reading and readers' communities.)
Visit - http://www.fineprintbookclub.com/Articles/?Type=2
The book:
- http://www.amazon.com/Long-Tail-Future-Business-Selling/dp/1401302378
Something tangential, about the culture of reading in Nepal
- http://www.kantipuronline.com/kolnepalinews.php?&nid=100209
