What implications does the Long Tail Theory have for small companies that do business online?

In 1896, Italian economist Vilfredo Pareto observed that 20 percent of people owned about 80 percent of wealth. Since then, Pareto’s Law, or the 80/20 Rule, has been used to describe many aspects of business, including the idea that about 20 percent of a company’s customers account for 80 percent of its sales. For instance, researchers in Japan analyzed nearly 100 million transactions and confirmed that 25 percent of convenience stores’ customers account for 80 percent of their total sales. Pareto’s Law also applies to a company’s inventory: 80 percent of a company’s sales come from only 20 percent of its products. The result is that managers focus their efforts on the “vital” 20 percent of items rather than the “trivial” remaining 80 percent.