samedi 15 décembre 2007
jeudi 13 décembre 2007
The Long Tail
This term is used in order to describe a certain business and economic model. Chris Anderson was the first to use this expression, in an October 2004 Wired Magazine article. It is under this notion that Chris Anderson explains the fact that businesses with distribution power can sell a greater volume of otherwise hard-to-find items at small volumes than of popular items at large volumes.
As an employee of Amazon describes, “we sold more book today that didn’t sell at all yesterday than we sold today of all the book that did sell yesterday”. Quite hard to follow but… In simple words, the products which have a poor demand can collectively represent a market share equal or higher that the one of the best-sellers, if the way of distribution and the offer are diversified. Indeed, there is proportionally much more offer for non hits than for hits and the demand is larger and more diversified.
The Long Trail can be viewed very positively for the consumers, who can find everything they are looking for, even if the author is very old, or if it was known 10 years ago and not anymore. In our society of consumption, everything is never enough so we are always looking for something we don’t have so this kind of business model can allow us to thing about something we wanted, ten years ago, we forgot and we now remembered.
Moreover, for the collectors, who are able to spend a lot of money for the old things they are looking for, it’s very positive.
Also, to have something special, rare can be important for people who have a strong wish of differentiation. Nowadays, it’s a kind of “fashion” to have something other people don’t have or cannot found.
I think that for the artists, it’s profitable cause their book or song can always be brought even if they produced it 10 years ago. As a consequence, they are never really “as been” and everybody who wants to buy it can do it easily.
Also, thanks to the best-seller and the method of Amazon for example to guide their clients in order to make them buying more.
For the seller, the strategy of differentiation permits it to face the competition. Indeed, offering a huge choice to the consumers is an element of differentiation.
I see one problem which can be highlighted is the inventory costs. Indeed, offering a huge choice of books or compact discs can be problematic if the companies like Amazon have to store them. Even if the stock of each book is low, if they have to store all the books, it requires a lot of space.
Moreover, the distribution cost can be a problem, when the books available are in different countries. It can cost a lot to deliver the good to the consumer.
Amazon.com is the most well-known company working with the Long Tail business model. Other companies like Barnes&noble.com and Priceminister.com use it.
In the physical market, I really think that this Long Tail exits too. Indeed, if you walk along the rue Saint Michel in Paris for example, you can find all the books you want in the various book stores. They buy all the books you want to sell, and they distribute them. As a result, you can find there both very old books and best-sellers.
This business model is sustainable as long as the storage of the goods is not a problem.
The companies can also decide to furnish themselves directly in bookstores but the logistic has to be very efficient in order to satisfy the demand. If this concept is used, the storage problems disappear.
As an employee of Amazon describes, “we sold more book today that didn’t sell at all yesterday than we sold today of all the book that did sell yesterday”. Quite hard to follow but… In simple words, the products which have a poor demand can collectively represent a market share equal or higher that the one of the best-sellers, if the way of distribution and the offer are diversified. Indeed, there is proportionally much more offer for non hits than for hits and the demand is larger and more diversified.
The Long Trail can be viewed very positively for the consumers, who can find everything they are looking for, even if the author is very old, or if it was known 10 years ago and not anymore. In our society of consumption, everything is never enough so we are always looking for something we don’t have so this kind of business model can allow us to thing about something we wanted, ten years ago, we forgot and we now remembered.
Moreover, for the collectors, who are able to spend a lot of money for the old things they are looking for, it’s very positive.
Also, to have something special, rare can be important for people who have a strong wish of differentiation. Nowadays, it’s a kind of “fashion” to have something other people don’t have or cannot found.
I think that for the artists, it’s profitable cause their book or song can always be brought even if they produced it 10 years ago. As a consequence, they are never really “as been” and everybody who wants to buy it can do it easily.
Also, thanks to the best-seller and the method of Amazon for example to guide their clients in order to make them buying more.
For the seller, the strategy of differentiation permits it to face the competition. Indeed, offering a huge choice to the consumers is an element of differentiation.
I see one problem which can be highlighted is the inventory costs. Indeed, offering a huge choice of books or compact discs can be problematic if the companies like Amazon have to store them. Even if the stock of each book is low, if they have to store all the books, it requires a lot of space.
Moreover, the distribution cost can be a problem, when the books available are in different countries. It can cost a lot to deliver the good to the consumer.
Amazon.com is the most well-known company working with the Long Tail business model. Other companies like Barnes&noble.com and Priceminister.com use it.
In the physical market, I really think that this Long Tail exits too. Indeed, if you walk along the rue Saint Michel in Paris for example, you can find all the books you want in the various book stores. They buy all the books you want to sell, and they distribute them. As a result, you can find there both very old books and best-sellers.
This business model is sustainable as long as the storage of the goods is not a problem.
The companies can also decide to furnish themselves directly in bookstores but the logistic has to be very efficient in order to satisfy the demand. If this concept is used, the storage problems disappear.
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