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Tuesday, February 27, 2007

The Long Tail/Anderson 132-134

133 Because of low cost of inventory, the margins for non-hits can be far higher in Long Tail markets than in traditional bricks-and-mortar.

134 That’s why Long Tail retailers have such an advantage—they have the shelf space to carry the older titles.

Long Tail products may not account for most of the sales, but because they’re often cheaper to acquire, they can be very profitable, as long as inventory costs are kept close to zero. So the 80/20 Rule changes in 3 ways in Long Tail Markets.
1) You can offer many more products.
2) Because it is so much easier to find these products (thanks to recommendations and other filters), sales are spread more evenly between hits and niches.
3) Because the economics of niches is roughly the same as hits there are profits to be found at all level of popularity.

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