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Anatomy of the Long Tail: Ordinary People with Extraordinary Tastes. Presented by Maria Avraleva To Prof. Dr. Eduard Heindl. Long Tail as a property of online market. Amazon as an example of the effective Long-Tail model. 30% of sales are from the category of “unpopular items” (tail)
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Anatomy of the Long Tail:Ordinary People with Extraordinary Tastes Presented by Maria Avraleva To Prof. Dr. Eduard Heindl
Amazon as an example of the effective Long-Tail model • 30% of sales are from the category of “unpopular items” (tail) • Advantages that Amazon.com takes: • Ability to sell rare items; “one-stop shopping” for both mainstream and niche interests • Building effective advertisement system • Building a powerful recommendation engine.
Recommendation engine Amazon.com: the store will recommend additional items based on a matrix of what other shoppers bought along with the currently selected item.
Eccentricity: two theories 2. Everybody is a bit eccentric, consuming both popular and specialty products. 1. Majority of consumers prefer popular offerings; only a minority seeks for niche content Are people satisfied with a small inventory of goods?
Data Analysis • SharadGoelet al. “Anatomy of the Long Tail: Ordinary People with Extraordinary Tastes”
Data Analysis Results • Two main conclusions: • A relatively small number of items account for a disproportionally large fraction of total consumption • The tail in aggregate is nevertheless heavy. 100 most popular movies – 15% of consumption 3000 most popular movies – still 13% of consumption unmet
Individual Eccentricity • To what extent do individuals have niche interests? Given inventory: k most popular items. Find: How many customers are 100% satisfied? 90% satisfied?
Cumulative popularity function in different domains % of users satisfied Cumulative Popularity
Tail Consumers • Large share of audience for popular products consists of relatively light customers; • Large share of the audience for niche products consists of relatively heavy customers; • Consumers of the most obscure products are also buying the hits. • Consumption of long-tail offerings is more prevalent among people who stick to a genre.
Advice to Retailers • If the goal is to cater to your heavy customers, broaden your assortment with more niche products. • Strictly manage the costs of offering products that will rarely sell. • Acquire and manage customers by using your most popular products. • Even though obscure products may have a higher profit margin, resist the temptation to direct customers to the tail too often, or you'll risk their dissatisfaction.
Conclusion • Vast majority of users are a little bit eccentric (sometimes we all consume tail – items) • Convenient one-stop shop for mainstream and niche is provided by “infinite-inventories” • Users value specialty items
