The Long Tail Wags the Dog

Clever title, huh?

Whoops, not so clever; I just Googled the title and got 462 exact hits (more on this later).

But, let me first admit the truth. I just now got around to reading Chris Anderson’s best seller “The Long Tail”. It truly is an eloquent work: scholarly, footnoted, indexed, and a bit long-winded. A New York Times best seller! Everyone has read this book or says that they have. I recommend that you read it too, if you have not. And just about every speaker at a trade show or conference these days will throw in a couple of obligatory “long tails” to show that he or she is up to date.

Congrats Chris, you have created a cliché for the ages! By the way, Wikipedia defines a cliché as a phrase, expression, or idea that has been overused to the point of losing its intended force or novelty, especially when at some time it was considered distinctively forceful or novel. It is generally used in a negative context. Sorry Chris.

But, what the hell does it mean? What does long tail really mean to you and me?

OK, here goes. Long tail, in Chris Anderson “speak”, describes a new economy that provides an economic incentive for firms to offer many personalized or niche products instead of mass market products. This new economy exists because of technological advancement in the supply chain including manufacturing and distribution, along with new efficiencies in marketing largely due to the Internet. Think of an expanded market where there is more opportunity for little products.

Although Wal-Mart is currently a monolith as a mass marketer because of superior supply chain management and store management practices, the “new” marketplace is fragmenting into a giant virtual swap meet (I.E. the Internet) with sellers who are targeting very specific niche markets. This change is being driven by pent up consumer wants and needs for specificity, which is a rejection of the mass market products offered by Wal-Mart today. This means that over time (and Anderson thinks it will be soon or maybe now) more and more of Wal-Mart’s customers will seek the eminently available and preferable niche products offered by new long tail marketers.

The best example of a long tail marketer today is Amazon who sells tens of thousands of products one by one including my book (note to reader: please buy my book). Anderson feels that Amazon is blazing the trail for large-scale long tail marketing. Implied in this theory is that Wal-Mart is the dinosaur of the future unless they join the long tail bandwagon. Further, this new economy is creating endless opportunities for small firms or entrepreneurs like you and me who understand niche market needs and wants.

It would be very self serving for me to rubber stamp this theory as great news, since since this blog is all about being entrepreneurial while serving niche markets. But, one inherit weakness in Anderson’s theory is the issue of profitability. Most niche businesses struggle to break even, if not just survive. One might argue that those struggling niche businesses are delivering inferior goods or services, that some are poorly managed, and that some are poorly capitalized; this is true in many cases or maybe most cases.

Fundamentally it is hard for a long tail provider, big or small, to make money since the economies of scale are not there to leverage. It is hard to make money when you sell “onesies-twosies (a technical term for selling or making stuff one at time). Although Amazon sells a ton of stuff, they really have not returned profits like Wal-Mart or Exxon or Home Depot or Microsoft; all these firms are mass marketers with massive economies of scale. They do a few things very well.

And for the small niche (long tail) players, heck, we are lucky to just stay in the game. Being unique is a tough business. Try Googling a great idea like my blog title sometime: they all seem to be taken. And if you do create something special, try making money at it with a small business.

Long Tail. Woof. Woof.

John Bradley Jackson

P.S. Excuse my seemingly negative rant. Still, I remain very optimistic about the future of niche marketing. To be successful as a niche player you have to be truly excellent; being good is not good enough.

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