Long Tail Theory

Long tail theory involves selling a large number of unique items in relatively small quantities. Amazon.com is an examples of a company that has used this strategy.
The advantage of Long Tail Theory means that companies are able to realise the potential profits from selling small volumes of hard to find items to a larger number of customers instead of only selling large numbers of not so popular products. The total sales of this large number of "non-hit items" is 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 (as shown top right). 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").