We live in a truly limitless world. Our world is both large and small. We have access to nearly infinite options in nearly every facet of life and industry. Meanwhile, our reach has expanded exponentially, while making the world much smaller and more reachable.
In July of 1970, disc jockey Casey Kasem launched onto the popular music scene and introduced the American public to the Top 40. The “American Top 40” introduced Americans to hit songs until 2009. It was the age of the hits.
And then our world shifted. Permanently. Where success was once held at the very top, the internet changed all of that. Where the brick-and-mortar world required physical inventory, the internet effectively removed that barrier altogether. Where we were once limited to what can fit on the shelves, we can now store exponentially more digital inventory on data servers for a fraction of the cost.
The internet has been the great equalizer of the past generation. It’s effectively democratized nearly every industry it’s touched, from music and movies to college textbooks and fiction books. Where we were once limited as consumers, we are now free.
What was once limited to the Top 10 or Top 40 is now effectively limitless, as are our options.
The music industry is an excellent example of the long tail in action. Where success was once limited to the top artists, digital distribution largely decimated the old business model. That model revolved largely around producing hit songs and content, then sandwiching hit records in between 16 or 17 songs most people didn’t care to listen to.
Today, services like Apple Music, Amazon Music, Pandora, and Spotify put more than 30 million songs at our fingertips. With a few taps on your smartphone screen, you essentially have the entire history of music at your beckoned call.
Even seldom heard bands and artists at the very tip of the long tail can claim a few downloads per month, which has created a niche-driven marketplace. In other words, there’s room for just about everyone.
And that’s an important point for all of us to remember. No industry is safe from digital destruction. We’ll need to continually reinvent and evolve ourselves and our businesses to stay relevant and successful now and well into the future.
The long tail spares no one. For tire dealers, that equates to the dozens and dozens of tire brands that are available to all of us with just a few clicks of a mouse. The growth in the distribution segment has brought those dozens and dozens of brands to your doorstep with free daily or sometimes even multiple daily deliveries. Logistically, our world has never been smaller.
The long tail of the tire industry also gives us the best of both worlds. With all of those tire brands and literally thousands of in-stock SKUs available, you can be all things to all people. Meanwhile, your unique service capabilities and tangible industry knowledge allow you to service very specific niches within the marketplace.
A farmer wants a Firestone Ag tire? No problem, you can get it. Michelin, BKT, Goodyear, Titan, Mitas and Trelleborg? Not a problem, you got it. Every brand and every size available right now at your fingertips. Everything to everybody.
On the opposite end of that spectrum, what is your unique capability? Maybe your service truck technicians are particularly skilled at catering to the forestry industry in northern Wisconsin and Minnesota. That’s a very specific niche of the market and you’re naturally well-positioned to service that market.
Meanwhile, down south a few miles inland from the Gulf of Mexico in Louisiana, tire dealers cater to rice farmers, another very specific and relatively small niche of the broader tire market. Those tire dealers are innately qualified to service that tiny segment of the market.
And because that market niche is relatively small, there simply isn’t room for dozens of competitors. And because there aren’t dozens of competitors, profit margins can be a little better. Where revenue is vanity, profit is sanity.
The long tail has made that possible. All things to all people. This represents the continued evolution of the tire industry.
SKU proliferation is something that’s been talked about and written about endlessly. I won’t dwell on that here. That’s largely been driven by the OEMs as Ag equipment has gotten larger, heavier and more specialized. It’s probably an inevitability of the agricultural industry, and the Ag tiremakers have responded with their own share of technological evolution mixed with a little bit of innovation.
Of course at the distributor level and certainly at the dealer level, stocking the right brands, tread patterns, sizes and load ratings is, at best, nearly impossible and, at worst, incredibly expensive. If cash is king (and yes, it still is), inventory expenses can and do kill businesses.
Luckily, distribution has gotten much better and more sophisticated logistically. You can have just about anything you need delivered right to your doorstep with a few clicks of a mouse and the right business partnerships.
In the 1940s, an American researcher named George Zipf discovered that the populations in the largest cities in a particular country are usually about twice as large as the second largest, three times as large as the third largest, and so on.
It’s proven to be interestingly accurate over time. For example, the population of New York City currently stands at around 8.5M whereas Los Angeles is just shy of 4M and Chicago is around 2.7M.
In the tire (and automotive) industries, the law is not much different. Continental AG is the behemoth with annual revenues in excess of $42B to number two Bridgestone’s $31B with Michelin rounding out the top three at $21B.
Whereas the major industry players are huddled at the extreme left side of the demand curve along with the hit songs and blockbuster movies, the products themselves fit nicely into the long tail.
So what can we all learn from this? What can we learn from other industries that have been permanently and profoundly impacted by digital technologies?
First, barring some major technology revolutions in artificial intelligence, the internet will probably never be able to install a farm tire in a rural wheat field in Nebraska. And even if that was possible, is that really what we want? The smart money is on highly-skilled people winning that battle in the long run.
But what we can all learn from the long tail is that we can have the best of both worlds. We can have all brands and tread patterns and SKUs available to us nearly 24/7/365. But that also allows us the opportunity to focus our resources, energy, skills and knowledge toward catering to very specific market niches as well.
Although we can be all things to all people, does that mean we should? In nearly any marketplace, the majority is massive. But of course the competition is equally massive. So unless you’re one of the largest tire dealers in the country, you may find continued success by catering to market niches instead.
The long tail of the tire industry is an inevitability, but it’s also an incredible opportunity. It is the great equalizer. It democratizes our industry and creates an environment where even the small players can effectively compete with the big boys.
Get that part right and odds are that you’ll be successful for years and decades to come. Ignore the long tail at your own risk. Where is your niche?