The long tail is still wagging

Hunter Valley, Australia

Back from a fantastic 3-day event about online retail here in Australia. I wish I had the time to write an account of what I've learned, people I've met, and more importantly the great wine I tasted :-)

One keynote session that I attended to was presented by a PIM vendor. I found it fine and informative. I also very much welcomed the effort of not mentioning the capabilities of their product and all the fluffy spin that you generally hear from vendors. Chapeau!

However, in a split second she deftly found the opportunity to recommend retailers to forget the long tail and focus on the ‘head’. It is this focus on the head, the argument goes, that gives you a solid foundation to sell more.

I have two problems with this argument but first of all, I'd encourage you to read what I wrote about the long tail here and here. In addition to that, I also have some reservations about the long tail strategy but they are of a completely different nature.

That said, the first reason I think her argument is weak is an apparent lack of understanding of what the long tail really is. As a matter of fact, no one has ever affirmed that the head and the tail are mutually exclusive. In other words, "focus on the head" is as wrong as saying "focus on the tail". Chris Anderson's seminal work was meant to show how our economy (and culture) is shifting from mass markets to millions of niches. This argument is hard to dispute. His opponents have in fact addressed the long tail in quantitative terms. And that brings me to the second issue I have with her argument. The actual debate revolves around the size of the head and the size of the tail, and not whether the long tail is correct or not. One of the fiercest opponents of the long tail, Gomes Lee, technology journalist at WSJ, affirms that the long tail has been oversold - that it's not as long as it's been made out to be. This story also prompted Mr. Anderson's rebuttal.

These remarks, however, presuppose that the overall argument is valid, namely, that economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve. Mr Gomes takes issue with the importance of this phenomenon and not with the phenomenon per se. In fact, he goes at great length trying to demonstrate that his numbers are better than Mr. Anderson's.

For what it's worth, I tend to agree with Mr. Gomes. Mr. Anderson at some point had to admit he made some mistakes and that the "98% universal rule" was inflated.

I personally have no doubt that the Internet has created a Long Tail effect, making it easier for customers to find and buy rare or specialized products. Anderson's book provides quite compelling evidence that that's true.

At the end of the day I think both sides of the debate agree that there is significant profit to be made in the long tail. Retailers have to figure out the size of the tail in their industry and evaluate whether it is worth selling to their niches. 

In conclusion, I'd have had fewer reservations if majority of retailers at the event and more generally in Australia were big chain stores. But this is not the case. I understand that big companies have enormous bulk-buying power but usually confine that power to a carefully selected range of products (the head), which are decided upon many weeks or even months before they reach the shop floor. Nevertheless, I have reasons to believe that even this trend is changing and many big retailers, in the effort of broadening their footprint, are seriously considering to invest more in the long tail but they also must recognise that this often requires overhauls in the supply chain management.

What can I say? I am inclined to think that it was just an odd comment that slipped. Or maybe sometimes the lure of the gotcha is too much to resist. 

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