Shelf space strategy in long-tail markets

TL;DR

This paper explores how online retailers leverage long-tail markets, examines the impact of sales turnover over time, and investigates shelf-space strategies for physical stores in these markets.

Contribution

It introduces sales turnover into long-tail distribution models and analyzes implications for physical shelf-space strategies in long-tail markets.

Findings

Sales rankings exhibit significant turnover over time.

Long-tail distribution remains right-skewed despite turnover.

Implications for physical shelf-space allocation are discussed.

Abstract

The Internet is known to have had a powerful impact on on-line retailer strategies in markets characterised by long-tail distribution of sales. Such retailers can exploit the long tail of the market, since they are effectively without physical limit on the number of choices on offer. Here we examine two extensions of this phenomenon. First, we introduce turnover into the long-tail distribution of sales. Although over any given period such as a week or a month, the distribution is right-skewed and often power law distributed, over time there is considerable turnover in the rankings of sales of individual products. Second, we establish some initial results on the implications for shelf-space strategy of physical retailers in such markets.