Riding the long tail of e-commerce to increased profits

By Mikal E. Belicove: Director, Community & Education - Doba

If you look at a sales chart of all items sold, as shown below, you quickly see that a relatively small number of popular products account for a high percentage of sales, while a large number of not-so-popular products also accounts for a substantial percentage of sales.

The wide assortment of less popular products (illustrated by the green area at the bottom of the chart) comprises what is called the "long tail."

Note: The long tail concept is not exactly new. As explained in Wikipedia's entry "The Long Tail," this concept has been around for several years and is usually attributed to Chris Anderson, who first coined the phrase in an October 2004 Wired magazine article, which he later expanded upon in a 2006 bestseller, The Long Tail: Why the Future of Business Is Selling Less of More.

Riding the long tail

Generally speaking, popular products are those that are in high demand and supply. Sure, plenty of shoppers are buying these products, but because so many retailers are selling them, the competition is stiff. Shoppers can find these products anywhere and are more likely to buy them from big retailers who can buy in bulk and offer big discounts.

Products that comprise the long tail, however, are still popular, but they are popular in niche markets. For online retailers, this is great news, because...