Long Tail Inventory Boosts Other Sales: Yahoo
The benefits of the long tail may go beyond selling large quantities of niche items. Having a comprehensive inventory makes your customers more satisfied and more likely to patronize you again, according to a new paper from Yahoo presented earlier this month at a web search and data mining conference.
The Yahoo research came out of data sets of users’ Netflix and Yahoo Music ratings and Yahoo search and Nielsen-measured browsing behavior. It turns out that a little extra inventory goes a long way. Yahoo’s scientists found, for instance, that movies that attracted only 2 percent of demand had the potential to grow the Netflix customer base by 7 percent as a result of attracting newly satisfied customers. They also found that fulfilling an additional 1 percent of consumption in the tail of search queries yielded a 6 percent increase in the number of people who were very satisfied with search result inventory.
The kind of inventories you can find at big-box retailers or in the top 10,000 web sites leave out somewhere between 13 and 34 percent of consumption, depending on the category, and Yahoo’s scientists proved out theories of a material value in satisfying those long tail customers. And further, they found that everybody is really a long tail customer — we all have some niche we want scratched. Yahoo’s scientists did admit that their results may actually be more validating for other people’s businesses, like Amazon Marketplace and Half.com.
Their conclusions:
“Tail availability may boost head sales by offering consumers the convenience of ‘one-stop shopping’ for both their mainstream and niche interests.”
“Return on investment of niche products goes beyond direct revenue, extending to second-order gains associated with increased consumer satisfaction and repeat patronage.”
The authors have a blog post about this as well at http://messymatters.com/longtail
Fantastic, thanks.
daniel – i’m going to read the blog post soon enough. i think it’s a great study & we’ll prove how viable a long tail focus can truly be.
It’s always seemed to me that long-tail naysayers take too narrow a view in determining value, and this is an interesting angle. Presumably better discovery tools should go hand-in-hand with larger inventories, to help customers take advantage of (rather than being overwhelmed by) the variety.
phoebe-
exactly! that’s precisely our focus @ http://GoRankEm.com
we’re hoping to sort the catalogs of every artist of all-time. in order to do so, who would know their material better than their own fans? thus, we’ve created a platform for the fans to rank their favorite songs from all their favorite artists.
we call it ‘crowdsourcing music discovery.’ we’ll be in private beta for just one more week, but if you want to get a sneak peak type in “PB2″ to the special code option. love to have you take a look & hear your thoughts :)
-adam w
It remembers me an old post on turning the tail…