In the February issue of the German marketing magazine Absatzwirtschaft, one can read an interesting analysis of the Long Tail for eCommerce applications in today’s web 2.0. I would like to refer to this issue and put the thoughts up for discussion.
Traditional management/economics has focused on Pareto’s 80/20 rule – i.e. that usually a company makes 80% of its revenues from 20% of its products. A a consequence offline-companies have sought to hype “hit products”. Hence a huge gap existed between e.g.
The establishment of the internet changed this picture . With the new medium it was now possible to display and sell an almost endless number of products – independent from storage or shop-window capacities. Amazon, as a first pioneer in eCommerce, offered far more title than the ordinary bookshop around the corner. This concept works successfully and shows the strategic adaptation. Amazon now makes a large part of its revenues (25%) through title that are not stocked even by large bookshops (> 100,000 titles).
Web 2.0 has accelerated this development. On the one hand, social aspects enable customers to quickly search and find products that are more suitable than mainstream, on the other hand the growing network leads to tapping niche groups that could not be reached before or that were too scattered to profitably address their needs. Furthermore, digital products from eBooks to movies allow to use the Long Tail even for the very last product.
To leverage Long-Tail-benefits as a company, the magazine Absatzwirtschaft has selected five success factors:
- Minimal Storage-Cost
- Minimal Sales- ad Marketing-Cost
- Flexible Sales-Structures
- „Endless“ Selection of Products
- Minimal Price
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