A "Tail" That's True

Mike Hockett is CBA’s Training & Development manager. He has more than 28 years of experience in the CBA industry, and he manages the CBA Consulting Program. For more information about how you can apply the principles Mike mentions below, send him an email.

You know how sometimes you buy a business book, read it and find it to be so boring that you fall a sleep every time you see its cover. Well, that’s the way it was when I first read The Long Tail by Chris Anderson. Chris actually does a great job of explaining the Long Tail and illustrating some facts to back it up. For those of you who are Long Tail addicts and really understand everything that Chris says in his book you may find what I have to say elementary. However, I do think it follows much of Chris’s application in his more recent book, Long Tail, the Revised and Updated Edition: Why the Future of Business is Selling Less of More. For those of you who sell books and especially Christian books, I think you will find what I have to say interesting and beneficial.

Here is my short take away and application of Chris’s book. There are many more products available over the Internet than are available in a retail store setting. This availability of additional product is called the Long Tail. If a retailer can identify this product based on customer demand and have it in-stock when the customer wants it, you have a sale – a sale that you would not have unless you carried the product in-stock.  When you do not have this product in stock, guess where your customer goes to buy it? You’re right the Internet. It doesn’t take this old retailer long to figure out that Long Tail product is worth finding and selling. After all it is usually product that you can make full margin on and you don’t have to carry large quantities. I am selling less of more.

Currently Christian stores use a buying selection process of purchasing recommended frontlist (new product released into the retail channel) and re-ordering backlist product as identified as being sold on their POS system. I call this the Lizard Tail, because the Long Tail of inventory is not considered. Like a lizard tail, the Long Tail falls off and is lost for ever. What CBA has determined is there is a larger backlist that stores may not be accessing, because they don’t know about it. This product list is what makes up the inventory Long Tail list of product in CBA’s Customized Inventory List. Using this customized inventory process is a great way to freshen up your inventory mix with items your customers may be looking for in your store, but not finding. Because of competitive pricing of frontlist products by competition (Wal-Mart, Best Buy, Barnes and Nobel, Borders.etc.) the profit margins on frontlist products are lower than profit margins on backlist products.  All of this is part of the strategy of identifying a Longer Tail backlist product in categories that are consumer driven to increase sales, profit margins, and increasing return on inventory investment in your store.

In Christian retail, CBA collects inventory sales data for it members. Its system is called CROSS:SCAN.  At present, CBA collects this sales data from more than 450 stores on a weekly basis.

CBA uses its Customized Store Inventory Report as a starting point. It looks at what has been reported as selling in CROSS:SCAN during the past 52 weeks and weights the usefulness of the data to bring it closer to reality. Our initial category percentage breakdown is determined by looking at percentages of previous year’s sales and any direction based on your store’s current strategy to increase sales. Even with all of this scrutiny, the data still needs to be analyzed by a consultant, buyer, and owner to identify exceptions that may need to be deleted. The more we filter the inventory information, the closer we get to a customized inventory by department for the store.

While monitoring test store results we have seen category sales increases significantly from 12% to over 100% increase for sales compared to the same month last year. One of our stores had a 12.8% increase in sales in August after using the Customized Store Inventory Report to help them identify inventory they had not stocked before. Some of you may not think that 12.8% is very much of an increase, but consider this same store’s highest increase in books any month this year before august was 3.8%. If that’s not proof enough, there was also a store in September increased Bible sales more than 100% using this process. So, when do you want to start using the Customized Store Inventory Report?

Comments

[Jerry Bloom]

Mike,
Kudos to you for doing this article. I read the Long tail a couple years ago and believe it to be a pretty accurate book. so the question that surfaces is: How does the CBA independent retailer take advantage of the long tail wisdom. I believe that the short answer is that they can't, but the long answer is that they can capitalize on long tail data. Chris, uses the music industry as an example of how one online music provider was able to offer exponentially more titles that a brick and mortar retailer. The reality is that only 10 to 20% of the titles in the long tail are really worth putting on shelves, and that's what retailers need to be sharp on.
As one of the largest Christian bargain book dealers, I believe that e-commerce is more destination or title focused that the traditional retail customer. People tend to browse more in a retail store than on a website. The key is to creating a perceived value for the buyer. No one wants to pay full price for anything anymore! I believe that is where the independent retailer is suffering the most: creating a perceived value in the customers mind. The use of bargain books has been huge in the success of helping folks create traffic. I even have one customer that gives away a free book every month to each customer just to get people coming back. Bargain books are great for Buy One Get One promotions or to create a small bargain section in THE BACK of the store. You notice that milk is always in the back of the grocery store....so you have to pass the Triscuits and Coke and whatever else you end up coming home with. Once people see that you have a bargain section they will spend hours looking for a gem. I see it every day at Treasures.
To summarize, books are everywhere...so why should someone buy them from you? The answer is that you have to project that reason. Are you selling value? Using the data available to you? Using new releases? Are you communication with your customers via email or direct mail? These are all questions we need to ask ourselves, especially in these challenging times.

Jerry Bloom
Treasures Christian Books
Wholesale Christian Books