The Long Tail Theory developed Chris Anderson describes the niche strategy of businesses, such as Amazon or NetFlix, that sell a large number of unique items, each in relatively small quantities.
The distribution and inventory costs of these businesses allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The group comprising a large number of “non-hit” items is the demographic called the Long Tail.
Given a large enough availability of choice, a large population of
customers, and negligible stocking and distribution costs, the
selection and buying pattern of the population results in a power law
distribution curve. This suggests that a market with a high freedom of
choice will create a certain degree of inequality by favoring the upper
20% of the items (“hits” or “head”) against the other 80% (“non-hits” or
“long tail”).
The Long Tail concept has found a broad ground for application,
research and experimentation. It is a common term in the online business
and mass media, but also of importance in micro-finance, user-driven
innovation, social network mechanisms, economic models, and marketing. (Wikipedia)
