In 2006 the Editor of The Wired magazine, Chris Anderson, wrote a book called “The Long Tail”. It was a best seller and still is one of the most talked about business books (I’ve put a quick summary at the bottom*).
For me it was the seed of an idea that grew into an Amazon-type online wine business that I almost launched (see About Me).
It is all about the millions of niches in the world and the successful businesses that have been built around this concept e.g. Amazon with books, iTunes with music, and Google Adwords with small business advertising.
Okay if I had a hero, it would be Chris
But the truth is the concept has a serious flaw.
In order to sell tiny niches you have to be able to lead people from the ‘hits’ they know to related niches that they don’t know (but want to).
This is why ratings, reviews, recommendations, search, navigation, brand focus URLs and pages are so important. It helps people get from a hit they know well to a niche brand that they are so interested in and so well sold into that they buy it.
Like Chris says,
“The secret to creating a thriving Long Tail business can be summarized in two imperatives:
1. Make everything available.
2. Help me find it.”
Stay with me, I’ll get back to my main point in a second! Supermarkets promote themselves as the cheapest grocery (and wine) shop in town.
Yet often the truth is they focus on a small basket of popular goods that they know shoppers do price comparisons on. They ensure they are price competitive on those goods and brands all the time or very regularly. The rest of their products can be quite expensive and often need to be to make up for the headline price discounts.
When you see them advertising one of your most popular brands for two thirds of your price, you know how – cross subsidization (and sometimes supplier discount).
How’s that relevant to the local wine retailer?
I think you should combine both of these strategies. Like the supermarkets, have regular (price if possible) promotions on key brands but then upsell and cross sell through ratings, reviews and recommendations to higher margin product.
Hard to do on the retail floor – pretty standard for a top eCommerce site.
*From Chris Anderson’s The Long Tail ,
“…our culture and 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 and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare.
Traditional retail economics dictate that stores only stock the likely hits, because shelf space is expensive. But online retailers (from Amazon to iTunes) can stock virtually everything, and the number of available niche products outnumber the hits by several orders of magnitude. Those millions of niches are the Long Tail, which had been largely neglected until recently in favor of the Short Head of hits.
When consumers are offered infinite choice, the true shape of demand is revealed. And it turns out to be less hit-centric than we thought. People gravitate towards niches because they satisfy narrow interests better, and in one aspect of our life or another we all have some narrow interest whether we think of it that way or not.”