I have been reading The Long Tail - Why the Future of Business Is Selling Less of More - By Chris Anderson (I just got it last week from Amazon); reading it slowly and I’m familar with most of what’s been discussed so far.    Just now, I ran across an excellent confirmation of the Long Tail in ReThink Wine.

"I did a quick graph of wine products sold by all IBG wineries. Each dot on the x-axis represents a single product SKU. The y-axis shows that product’s popularity.

 

"….. I think we can safely say that wines, just like movies and everything else, have a compelling "tail".

"I divided the products in quartiles by units sales. It turns out that 0.83% of products account for the first 25% (quartile) of unit sales. Approximately 2.36% and 7.51% of the products occupy the 2nd and 3rd quartiles respectively. A staggering 89.3% of wine products account for the last quartile of unit sales."

"Now consider this: the first three quartiles kick in roughly 22% each of the total gross revenues (excluding discounts, taxes, shipping and other fees). The remaining 36% of gross revenues comes from the fourth quartile.

So 89.3% of the inventory accounts for 25% of unit sales, and 36% of gross revenue. What this tells us is that products in the fourth quartile on average have a higher unit price than the products in the first three quartiles. There could be several reasons for this.

"I’d like to think that fourth quartile products tend to find their niche in a handful of people willing to pay a premium for the wines that they like. Conversely, the more expensive wines tend to be sold and bought in limited quantities. Either way, you are likely to find the most knowledgable drinkers shopping in the fourth quartile.

The more expensive wines sold in small quanities but when you take all the sales in the flat part of the Long Tail graph - it amounts over a third of the total revenue of  Wine Producer/ Distributer IBG wineries.

I’ll have more insights of my own once I finish the Long Tail book.