Why the Long Tail is Overrated!!

Chris Anderson's claim: "Internet has empowered consumers to find and afford products more closely tailored to their individual tastes, and so they will migrate away from homogenized hits. The wise company, therefore, will stop relying on blockbusters and focus on the profits to be made from the long tail—niche offerings that cannot profitably be provided through brick-and-mortar channels."

Why this is not entirely true: Soon after the book "The Long Tail" was published, HBS marketing professor Anita Elberse published an article in HBR questioning the validity of this theory. The long tail theory is quite intuitive but interestingly the ideas refuting the theory are even more intuitive! huh!!

When Prof. Elberse took a deeper look at the customer-transactions data of various online retailers, she found an interesting pattern among people who are actually responsible for the growing volume of business in the so called long-tail. - First of all, a disproportionately large share of the audience for popular products consists of relatively light consumers, whereas a disproportionately large share of the audience for obscure products consists of relatively heavy consumers; and secondly, consumers of obscure products generally appreciate them less than they do popular products. - This finding is in stark contrast with what long-tail theory claims!

Isn't that common sense - There are generally only two kinds of customers: those who buy a lot and those who buy a little. Those who buy a little (light consumers) flock to the popular stuff and those who buy a lot (heavy consumers), too, like what's popular, but they're more willing to try obscure fare. So, if you believed in the long-tail theory and started a niche retail store believing that niche buyers will flock to your store, you'd be wrong. People who buy niche stuff are generally heavy buyers and if there's a retail store that keeps popular and niche stuff both, they'd probably buy their niche merchandise from that store while buying the popular stuff!!  

The HBR article by prof. Elberse is a must read for anyone who's running or planning to start an online business.

Should you invest in the long tail - HBR - Prof. Anita Elberse
The Wrong Tail - Slate Magazine - Tim Wu