The long tail — Summary

Learn how to increase profit by offering more content through the Internet

The long tail can compete with bestsellers

The long tail is the part of the less popular items in the popularity curve. Traditionally stores had to focus on the bestsellers as the shell space was limited, so the best way to make use of it was by putting in the bestsellers.

Source:Quora

The internet solved that problem. The cost of having low-popularity items in an online store is negligible. This creates a great opportunity, Amazon’s Jeff Bezos recognized this opportunity and took advantage of it by offering an unprecedented amount of books. Traditionally bookstores could only carry 175.000 books whereas Amazon offers more than five million books.

Offering a lot of products has a big advantage, having a long tail makes up for a big percentage of total sales. On Amazon book’s which are not available in the average bookstore make up about 30% of the sales. Similarly, less popular music tracks make up 45% of sales in an online music-streaming service called Rhapsody.

Cheap production creates more products, making the tail longer

Modern technology like computers and the internet, not only have made it easier to consume products but also to produce them. The cost of producing music, videos, and many other products have dramatically been reduced. This decrease in cost has made it possible for many people to create content just for fun, why? When the production process is more costly, professionals are forced to take the return of their high investment more seriously.

Once the production price is very small or non-existent, however, many people are encouraged to participate in the creation of products. Wikipedia is one example, it is the biggest encyclopedia thanks to thousands of amateurs who volunteer to contribute to it.

Aggregators fatten the tail

For people to get the products they want, they have to be able to find them. It can be hard to do so often when searching for specific things. For example, a person searching for a rare out of print book could go to a bookstore and see if he or she finds it there. But the odds of finding it would be extremely low.

If there were a way to search all bookstores at once, the probability to find the product would be much higher. Companies which offer such a service are called aggregators. Amazon, Ebay, iTunes, and Rhapsody are such companies. There are two types of aggregators, digital and hybrid. Digital aggregators can offer virtually unlimited goods because offering them does not cost them extra money.

Hybrid aggregators like Amazon offer both digital and physical products. A physical product which takes up costly space has to make a minimum amount of sells to justify its storage.

Traditional vs. online retailers

Traditional retailers have a lot of overhead costs. They have to store their physical products which take up costly space as well as higher inventory costs. Traditional retailers also suffer “opportunity costs” for products customers can’t find.

Online retailers can offer a long tail because they don’t have costs associated with shelf space and inventory. Online retailer, much like aggregators, don’t have opportunity costs because of their long tail. They can offer practically every product.

Filters help us find good products

The high amount of products also creates a big problem. How to filter out the good products from the bad ones? That’s what filters are for.

Pre-filters are those filters which filter products before they hit the market. Post-filters are those who filter out what is already on the market. Today’s filters consist mostly of post-filters. Online services like Google, iTunes, and Spotify all help people to find quality products by creating playlists, reviews, recommendations, etc.

Studies have shown that traditionally retailers sell less because customers have no filters to help them make a decision. Online shopping’s in contrast offer ranking, which makes it easier to decide on a purchase.

Follow these steps to incorporate a long tail in your online business strategy.

  1. Reduce the cost of making a lot of products available
    2. Make sure customers can access your products easily from a variety of places, in other words, increase availability.
    3. Help your customers make a decision to increase a purchase likelihood.

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Personal remark: A Quote from Shane Perrish’s mental model’s post.

What the book doesn’t get at is the relationship between these standards-driven industries where the Long Tail doesn’t matter, and the content industries where it does. There aren’t Long Tails everywhere.

Karl Niebuhr

Karl Niebuhr

I'm Karl! I like to read, learn and share knowledge
Karl Niebuhr