The Long Tail Theory

Wikipedia describes the long tail theory as the following;

Businesses with distribution power can sell a greater volume of otherwise hard-to-find items at smaller volumes than of popular items at large volumes. The term long tail is also generally used in statistics, often applied in relation to wealth distributions or vocabulary use.

Translated into English, this essentially means that large distribution companies such as Amazon, will have roughly half of their sales from uncommon items that wouldn’t find their way into big chains on the high street. An example of this would be a book you can buy on Amazon, you wouldn’t regularly find on the shelves in Waterstones.

In the picture below you can see the long tail theory visualized on a graph with products sold running along the x-axis and popularity running up the y-axis. As you can see companies generally shift a smaller volume of high popularity items compared to low popularity items at higher volumes. Although this may at first appear odd and illogical you must remember that these companies also stock a huge amount of low key products that make up a big number of their sales. 

Graphically the theory is represented as;