The Long Tail
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The Long Tail: Background
The term 'long tail' has traditionally been confined to the field of statistics where it was used to describe the distribution of wealth within a system. However, in the October 2004 edition of Wired Magazine, writer Chris Anderson applied this term to a unique collection of modern business models. These business models based their corporate success on selling lower quantities of a larger selection of products. This formula, surprisingly, allowed online distributors to corner a unique niche in the market and they made a killing.
The Long Tail Business Model
The long tail business model is based on a unique business strategy, sell lower quantities of a lot of different hard to find items. For example, instead of selling 10,000 copies of two or three best selling videos, an online store can make more money by selling 10 copies of 10,000 harder to find videos. Stores like 'Amazon.com' further improved their profit margin by coupling popular items with harder to find items. This way they were able to cash in on both business market advantages.
Amazon.com is the Best Example of The Long Tail in Action
As mentioned above, 'Amazon.com' is one of the most successful examples of the long tail business model. Amazon was one of the first online companies to really perfect this marketing strategy. Today the site offers hard to find items like out of print books and collectibles, as well as in-demand items like newly released DVDs, bestselling books, popular clothing items and in-demand household items. Amazon also offers new textbooks and text book exchanges.
Developing a Business using The Long Tail
In order to develop a successful long tail business you first need to understand why they are successful. You can do this by studying successful long tail businesses like 'Amazon.com' and 'Netflix.' Next you will want to figure out what merchandise you can offer that people will be interested in. For example, you can sell hard to find candies, you can sell hard to find auto parts or you can sell hard to find toys. Finally, you need to develop an online interface that will: attract a lot of traffic, be able to display your available items in an attractive manner, allow easy searches of your inventory and that will be able to handle online sales and be integrated into your inventory and bookkeeping systems.
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