The long tail, junkyard-style

I’ve been doing some early thinking about the supply-side implications of Chris Anderson’s fascinating long-tail model, particularly for the economics and strategies of retailers and distributors. I’ve been waiting for Chris to discuss long-tail markets that lie outside digital goods, but it looks like that he’s going to keep that material under wraps until his book comes out. (Let’s call this Chris’s thong strategy: Always keep a little of the tail covered. On second thought, let’s not call it that.)

I’m particularly interested in looking at past examples of long tails to see what can be learned about their evolution and the way the Internet affected their economics. Here’s the best example I’ve come up with: auto parts. Having briefly owned an ancient, obscure and altogether unreliable model of Renault station wagon after college, I can tell you that the auto-parts industry has always been pretty damn good at managing a very long tail of parts. I haven’t yet looked into the structure of that industry, but it must be fascinating, with distributors and retailers selling a mix of original-equipment, aftermarket, and junkyard parts and being able to find and deliver even the rarest of them quickly to service stations and private owners.

Today, of course, you can go to any of dozens of sites on the web and easily search for pretty much any part. Moreover, you can do what you weren’t able to do before: compare prices. When I had to replace a section of the gas line for that Renault, I took what I was given and paid what I was told. I pretty much had no other choice. That’s all changed. Parts buyers have lots more information now. So here’s my hypothesis: the arrival of the Internet has put pricing pressure on parts sellers, which is eroding profit margins, which is or will lead to a consolidation of the industry. (It seems, in fact, that a lot of the online parts sellers all use the same catalog, which may mean they’re little more than storefronts for the same distributor.) More broadly: When information on the long tails of physical goods becomes easily accessible, the importance of scale on the retailing end of the business increases. Maybe even this: Long tails of demand lead to short tails of distribution.

Does anyone know anything about the auto-parts business? Is there any validity to my hypothesis?

3 thoughts on “The long tail, junkyard-style”

  1. RTodd

    Wow, my wife owned a Renault when we first met. I remember getting to know the auto part store owner on a first name basis as well. I agree that the long tail exists for this industry. But with the advancement in quality for newer cars, did they have any choice but to cater top the long tail. Today, I may have visited the auto part store twice in five years and both times were for car batteries. My truck now has 150,000 miles while that junk pile on wheels had only 80,000 miles.

  2. Texas Venture Capital Blog

    The long tail (outside of media and entertainment)

    My previous posts on the long tail suggested that it might apply outside of media and entertainment. Here is the article I was thinking about: DOES THE LONG TAIL APPLY OUTSIDE OF MEDIA AND ENTERTAINMENT?

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