Question

How does the Long Tail affect the retailers ? Evaluate from ( marketing, stock management, competition etc. )

Answer 1

As asked in the question, how does long tail affects the retailers. Before discussing this let's understand about long tail.

" Long tail approach is related to selling low volumes of hard to find products to many customers instead of selling a large number of reduced popular products."

" In marketing terms long tail stands for focusing on niche markets rather than focusing on the normal markets."

After understanding the long tail let's evaluate it's affects on the retail business in terms of marketing, stock management, competition etc.

We can include following points to understand:

• Products with low demand or low sales volume can make up more market share for the retailers than the competitors provided if the store or distribution channel is large and strong enough.
• Hard to find or low demand products are called long tail products and they can lead to increased profitability for the retailers because customers navigate away from the mainstream markets to get the products.
• Less bargaining happens with long tail products as they are hard to find thus reducing the overhead of bargaining for the retailers.
• Long tail products leads to increased profit margins for retailers because is low in the case of these products.
• Online marketplaces support this long tail approach by reducing the competition of having shelf space which is somehow related to stock management. Unmeasurable amount of items can be sold by using internet thus reducing the overhead of keeping high stocks of products for the retailers.
• Mainstream products get a large number of hits via leading distribution channels and shelf space, which leads to high intial costs thus reducing the profit margins for the retailers.
• With long tail products customers come to the doorstep and no need for high shelf space and leading distribution channels for the retailers. Increasing the profit marginsmargins with low initial costs.
• Long tail products remains in the market for a long period of time and can be sold via off market channels also, this also adds value to the retailers.
• Long tail products have low distribution and production costs and are ready for sale evertime. This reduces the costing for retailers thus increasing profit margins.
• Chances of going out of stock for the long tail products are very low so, they show higher level of availability for the customers thus reducing the overhead of keeping high stock or inventory for the retailers.
• From the marketing point of view, target markets for long tail products are niche markets which are specific in nature. So, cost of marketing for these products is low in comparison to the mainstream products thus reducing the overall cost for retailers and resulting in increasing profits.
• Long tail products facilitates the niche or artisan buying from the consumers that creates a shift from mass market buying.
• From competition point of view, long tail products facilitates low competition due to the rare availability or demand resulting in high profits for retailers.
• Less number of competitors leads to increasing profits for all the retailers.
• By selling long tail products retailers may survive for a long period of time in the market.
• Retailers gets customer satisfaction and loyalty by selling long tail products because competition is low and demand is rare.
• No price bargain for retailers and overhead of offering discounts to the consumers is less for the retailers with long tail products.

So, we can say long tail products may lead to better position in the market, better profit margins and customer satisfaction for the retailers.

If you like the answer then kindly give good ratings this will motivate me to answer well. Thanking you.