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The Long Tail approach applied to retail and marketing

long tail retailing

In October 2004 the idea of a ‘Long Tail’ graph was popularized by Chris Anderson in an article for Wired magazine. To put it simply, Long Tail describes a skew in the distribution of a graph where the majority is confined to a few key indicators on the left, with a wider, more spread out distribution of indicators trailing off to the right.

A long tail graph

How is this relevant to retailers?

For smaller retailers, using the long tail approach to selling stock can be a good way of differentiating your business from larger chain stores. These bigger companies have enormous bulk-buying power but usually confine that power to a carefully selected range of products, which are decided upon many weeks or even months before they reach the shop floor. It’s a process which enables these bigger companies to plan store layouts and shelving planograms a long time in advance, as well as scheduling end of line sales and all the associated overheads that go with them (more staff on hand, increased advertising, etc)

This pile ’em high and sell ’em cheap method works extremely well for companies like Primark and Poundland, but it can be inflexible and if the buying team gets their figures wrong, the companies involved can be left with thousands of items of unwanted stock that they either have to sell at a substantial loss or worse still right-off and pass on to charities or recycling firms (great news for charities though).

For smaller retailers, the solution could lay in a wider buying strategy and a long tail selection of products. By spreading your risk with a wider product list you can appeal to a larger group of customers who may not be interested in all your products, but may be excited about one or two. By stocking less of each item you’ll also decrease your risk of lost profits if the items fail to capture the public imagination.  The main downside to this strategy is a loss of buying power as suppliers are unable to offer large discounts when they are selling just a few items. One way around this is to foster a good relationship with your suppliers and buy a range of items from them all at the same time, so even if they can’t offer you a single product discount they may be able to do a deal on a pallet load of different items. –  don’t forget,  you can always buy more if the items fly off the shelves.

Customers can also benefit from this approach as well, particularly in the fashion sector.  By offering a limited (boutique) shopping experience where items are considered more special, customers begin to consider your store as a shopping destination and are much more inclined to spread the word about their recent purchases on Twitter, Pinterest other social media. You can also back up these ‘niche’ or limited products with a core range of everday essentials. So even if customers fail to buy your more specialised items, the lure of those products will at least get them in to your store why they can buy something else.

Using Long tail in your marketing and PPC strategy

The long tail approach is also gaining ground in PPC (Pay-per-click) marketing strategies. If you’re doing business in a highly competitive sector with very few differentiators, then Google Adwords or other PPC campaigns can be very expensive indeed. By using a long tail approach to your PPC budget you spread your risk on a range of less competitive and less generic keywords or phrases. However, you need to consider these keywords very carefully and really think hard about which words your potential customers might use in a Google search. As well as gaining more engaged customers (i.e. they have actually searched for your specific keywords) this technique also exposes your business to a much wider customer base who are actually more ready to buy, so conversions from these click-throughs are usually higher.

What are your experiences with Long Tail strategies –  have you got any ideas on how this can be applied to other industries or areas of the retail business?

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Sparkstone Retail Software manages customers, products & orders from multiple channels. Packed with over 50 modules to improve your productivity, your customers' experience and ultimately your profitability.

Whether you have fifty outlets or a single store, one warehouse or many, we supply one of the most fully featured epos, ecommerce and mobile commerce solution available.

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