costco, the long tail, and exposure thory

After reading Elberse’s article and trying to make sense of both the ‘long tail’ model and the ‘theory of exposure’, I wondered if companies like Costco are actually using a hybrid approach to marketing…

Costco is known to never carry more than X number of products in store. If an item doesn’t sell, you won’t see it back on the shelf anytime soon, in fact, it probably won’t be there the next day when you decide you actually want to buy it.

On the other hand, Costco online offers many products that might be referred to as ‘niche’ products… these products often can’t be found in stores…

My question is: is Costco applying an exposure approach in-stores, and a long tail approach online then?

Makes sense to me, bulk sell as much as you can where the overhead is high, but still catch the whimsical buyer where the overhead is low…

2 comments


1 davidp { 10.06.08 at 12:52 pm }

Nancy …

Thanks for picking up this article and posing the question. I agree it’s a fairly difficult article to read, but the sidebar on the “long tail” and the examples cited provide a very nice point and counterpoint approach to examining “blockbuster” (exposure) marketing and long-tail marketing provided by the web.

There’s also a debate on the HBR site that features Chris Anderson and Anita Elberse in a back-and-forth on the article:

http://conversationstarter.hbsp.com/2008/07/the_long_tail_debate_a_respons.html

Your example of Costco may be precisely the one that underscores the strengths of each approach. What Costco sells online are likely the niche products that may be hard to display at warehouse locations, or may appeal to a very limited consumer base that has little interest in the more popular commodity products that populate its warehouse locations.

Clearly, Costco has determined that it can make money with both approaches.

Nice catch on this one.

d.


2 nancy castonguay { 10.06.08 at 3:14 pm }

Thanks for your post David. I will be sure to follow this debate so that I might gain more insight of the topic.
Best,
Nancy

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