THE LONG TAIL THEORY

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The Long Tail Theory was coined by Chris Anderson, editor-in-chief of WIRED Magazine. In a nutshell, The Long Tail Theory is that our culture and economy is increasingly shifting away from a focus on a small number of “hits” in the market and toward a huge number of niche markets.

A common example of The Long Tail Theory is one of the most successful e-commerce websites, Amazon. Since the websites online launch in 1995, the store has had access to a range of cd’s, dvd’s, games, and novels, in just about any genre available. However, Amazon’s Top 10 Bestselling range does not generate the most revenue. Amazon’s huge success is due to them supplying to a niche market with niche items. The company makes far more money from selling one or two hundred copies of a ‘hard-to-find’ product in their niche markets, compared to a few thousand copies of a popular item from their bestselling range. By implementing this business theory, Amazon has a huge advantage over their competitors.

Although, the launch of Amazon has led to the closure of large bookstore businesses such as Boarders due to the low profits in physical stores. The Long Tail Theory is a strategic advantage for online businesses and can be actively seen in companies such as Netflix and Apple iTunes. However, we must be aware of the consequences that online websites create to the physical store suppliers.

 

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4 thoughts on “THE LONG TAIL THEORY

  1. dailysonny says:

    Hi Kayla, nice post! The image got straight to the point and speaks to the 80% of niches that are not acknowledged in legacy media content providers. Will this impact the way we consume and produce content? Without the use of technologies how would these tiny markets be reached? It is important for us as aggregators to influence what is seen and available.

    So, what will Amazon stock in their physical bookstores? http://www.forbes.com/sites/greatspeculations/2016/02/11/why-would-amazon-open-physical-stores/#7f0c5d5f3a1a. Thanks for sharing!

    Liked by 1 person

  2. claire says:

    Great post Kayla!
    I like how your meme illustrated the growing interest in niche markets before I even read the post. Amazon is such an interesting example. To further your example, here is a source (http://seekingalpha.com/article/4002570-amazon-quietly-dominating-one-fastest-growing-world-economies) which discusses Amazon’s expansion from the West into countries such as India and China, and the factors which influence (or inhibit) this.
    You make a note of the importance of being aware of the consequences of the book industry moving online, moreover the impact on physical stores. In my opinion, physical stores need to build themselves strong online presences now in order to compete with services such as Amazon. Being proactive to the digital revolution should provide book stores with some competitive edge.
    – Claire

    Liked by 1 person

  3. rebeccaneilson says:

    Hi! Great blog post for this week, you really hit the nail on the head with using amazon as an example of their success being made by niche markets rather than popular markets. Other businesses I found to be doing somewhat of the same this could also include Spotify and also iTunes! I found this website to really help me and was thinking that it could also help you expand your ideas! https://tombobadoodle.wordpress.com/step-2-examples-of-the-long-tail-theory/
    Overall a very good post which I think gets straight to the point which is appreciated!

    Liked by 1 person

  4. serenabuckley says:

    Hey Kayla,

    A very brief and fluent post which correlated nicely with the lecture for the “Long Tail Effect.” You used relevant terminology which made your blog post which enhanced the standard of your blog post. I found your final statement a valid point to raise and question why you did not decide to delve into the impact on local stores further?
    If you were to consider expanding on this argument you should read this article on how online niche markets are damaging business owners. https://www.ampcapital.com/site-assets/articles/insights-papers/2013/2013-11/the-impact-of-online-shopping-on-retail-property

    Liked by 1 person

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