long tail

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The situation in which a wide range of items sell in modest quantities individually but make up a considerable volume of sales collectively. The term alludes to a distribution curve in which a peak at the far left of the graph (representing the top-scoring 20% or so of items) falls away sharply to form a long thin ‘tail’ to the right (the remaining 80% of items: see Pareto's Rule). Traditionally, the long tail has provided opportunities for small-scale niche selling, in which specialist companies have made modest profits by targeting a small segment of the market (see concentrated segmentation). However, the advent of e-commerce – with its low inventory, marketing, and distribution costs – has focused attention on the gains to be made from ‘selling less of more’. The classic example of a company that makes serious profits from selling small quantities of a very large number of items is Amazon.

Subjects: Business and Management.

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