Long Tail or Steep Tail? A Field Investigation into How Online Popularity Information Affects the Distribution of Customer Choices
The internet has made it easier for customers to find and buy a wide variety of products. This may lead to a "long tail" effect as more customers buy low-volume products. However, the internet has also made it easier for customers to find out which products are most popular. This could lead to a "steep tail" effect as customers flock towards the most popular products. Using data from a field experiment with a website that lists wedding service vendors, we find empirical evidence that a steep tail exists. The most popular vendors become more popular when customers can easily observe previous customers' click-through behavior. Then, we ask whether this steep tail effect "complements" the long tail, by attracting customers who would otherwise have chosen nothing, or "competes with" the long tail, by shifting customers from less popular vendors to popular ones. We find evidence of a complementary effect, where the steep tail indicates new interest in the most popular vendors from outside, with negligible cannibalization of interest for less popular vendors. The findings suggest that popularity information can serve as a powerful marketing tool that facilitates product category growth. They also explain the prevalence of firm practices to highlight bestsellers.
|Date of creation:||07 Dec 2007|
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