Jon Krouse is in a perfect position to help me test a hypothesis about long tail behavior. AÂ co-founder of OnMilwaukee.comÂ (a rareÂ success story among regional online communities), Jon recentlyÂ joined BuyCostumes.com. This is the world’s largest online retailer of costumes. As you can imagine,Â the month of October is major crunch-time for him.
Nonetheless, when I instant messaged himÂ the other day to see if I could test an assertion from Chris Anderson, Jon was willing to help. Anderson is aÂ Wired editor and most notably the author of The Long Tail.Â He contends that for companies with virtual inventories,Â just aboutÂ anyÂ item they post for sale — no matter how obscure — willÂ sell (i.e., be downloaded for a price) at least once every three months or so. Using sales statistics from Rhapsody.com, he made it sound like this was nothing short ofÂ an immutable law.
That’s for virtual inventories. Anderson admitsÂ it’sÂ a little trickier for companies with real ones.Â That’s the case withÂ BuyCostumes. I’ve visited their warehouse, which stores overÂ 13,000 very realÂ SKUs. Yow!.
Companies like this must mark down some items teetering at the tip ofÂ the tail before they finally sell. Carrying costs are a constraint thatÂ virtual inventory merchants simply don’t have. But the fact is, even real inventory items sell with some price manipulation. Or so Chris Anderson contends. I wanted to know for sure, andÂ asked Jon.
He reported thatÂ minor adjustmentsÂ to price do indeed make the most obscureÂ costumes and accessories sell. Sure, there are the rare dogs, but priced properly, nearly all SKUs generate profits. This is huge, because the number of items offered is a precedent for the industry.
Imagine how many items a bricks-and-mortar costume shop can physicallyÂ stock. Now consider that at one time quite recently, conventional wisdom was that no one wanted more selection than could be held on a really well-stocked costume shop’s shelves. Or, for that matter,Â inÂ music store’s bins, or along a bookstore’s stacks.
The web, with its power to categorize, search and suggest,Â has exploded that myth. Which would meanÂ little to a company like Jon’sÂ if the demand for these products wasn’t so large.
How many sales are anticipated in the next couple of weeks for this humble little online costume shop?
“At our busiest, we’ll be doing 20,000 orders a day*,” Jon reports. Tune in November 1 to see a photo featuring the costumes that my wife and I chose and wore at Jon’s Halloween party, the first in his and Peggy’s new home.Â
*It never hurts to advertise. BuyCostumes has major private label deals with major retailers, plus an effective search engine optimization and pay-per-click advertising strategy in place.