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.”

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