Chris Anderson’s ears must have been burning after yesterday’s “long tail” post, because he referenced it on his own blog, further answering our questions. Here’s the kicker:
“Jeff Bezos has often said that he thinks that online retail (which is the best, but not the only example of the ‘infinite shelf space’ markets where the LT flourishes) will probably stabilize at 10%-15% of all US retail. Our own calculations, meanwhile, suggest that the LT is likely to account for no more than 50% of that (it’s now between a quarter and a third for most such retailers, a percentage that’s growing by a few percent each year as inventory expands, filters improve and buyer behavior adapts). For now, let’s be conservative and call it a third.
“If so, a back-of-the-envelope sizing calculation would put the potential size of the LT at 33% * 10% or 3.3% of all US retail. If that sounds insignificant, recall that annual US retail sales are $3.9 trillion (about 70% of the US economy). That would still make the LT a $125 billion opportunity.”
As Anderson observes, “A small percentage of a big number is still a big number.”