In the fast-paced world of e-commerce, businesses constantly strive to stay ahead and meet the ever-changing demands of consumers. One of the challenges they face is the Long Tail phenomenon. This creates a dilemma for e-commerce companies as they need to find an efficient way to promote and manage large inventory while catering to customer’s needs.
In this article, we will explore the Long Tail challenge in e-commerce and how it can help you grow your businesses in this competitive industry.
What is the Long Tail?
Coined by Chris Anderson in 2004, long tail refers to selling small quantities of difficult-to-find items to customers. Contrary to the popular strategy of selling bulk volumes of a few popular items, the e-commerce long tail can bring significant revenue for a company.
Anderson believed that selling low-demand products can create a market share that will cross the few current best-sellers. However, to achieve this, you need to have a store or distribution channel that is large enough.
Why is the long tail challenging for e-commerce businesses?
There are mainly two main challenges haunting the ecommerce business, which are as follows:
- The long tail challenge in e-commerce is daunting as it requires managing a large and diverse inventory of niche products. This can be more difficult to sell and promote than popular products.
- You must invest in advanced analytics tools and algorithms to track customer behavior. This increases company costs and reduces profit margins.
- You have to compete with other online marketplaces that offer similar niche products. This makes it challenging to differentiate and stand out from the competition.
Understanding the Long Tail Market
Mentioned below is the ultimate guide to help you understand the long-tail market.
Identifying niche products
Niche products typically refer to those items that attract a smaller and specific audience base. One way to identify the same is by narrowing down a broad product category into unique subcategories. Once you have determined the niche products, you can market them as add-ons to your superstar products. In this way, you can stand out in the market and increase the customer’s lifetime value.
Analyzing customer bases and market shares
With the help of customer analysis, you can use your customers’ existing data to understand their needs and preferences for long-tail marketing in e-commerce. This can range from demographics to purchasing behavior. The ultimate goal of customer analysis is to determine your customers’ needs and then position your business or brand to fulfill their requirements. This lets you easily establish a strong bond with your audience and attract newer businesses.
Researching obscure products and tail keywords
Your e-commerce website might get more visitors if you use less popular but specific keywords. For example, a website might have numerous competitors regarding the most popular keywords. This can make it quite difficult to rank on a search engine’s first page. However, the competition for the same website will significantly decrease when long-tail keywords for e-commerce are used.
Google Suggestions work wonders when finding out long tail keyword variations. You can simply type your primary keyword in the search box and wait for the variations Google suggests. You can determine what your customer base is looking for and use the same on your website to advertise the hard-to-find products.
You can also try out other options such as Google Trends and social media tools like Twitter Search and Youtube’s Keyword Tool, among others.
Understanding the chunky middle of the long tail
The chunky middle of the long tail represents a section of moderately popular products. They usually have moderate demand but are not among the most popular or best-selling products.
Usually, these products fall in the middle of the demand curve, between highly popular products that make up the ‘head’ of the curve and the low-demand niche that make up the ‘tail’ of the curve.
The chunky middle is an important aspect of long tail e-commerce as it highlights a significant portion of your business revenue. While niche products have low demand, the collective demand for chunky middle products can be substantial.
Strategies for Tackling the Long Tail Challenge
Following are how you can successfully tackle the long tail problem in e-commerce.
Search Engine Optimization (SEO) strategies
A long-tail SEO strategy typically focuses on lower-volume search terms. So instead of competing for a small set of high-volume keywords, you will essentially go for many low-volume keywords.
Although it might not seem attractive, the more you compete for them, the greater your revenue and sales will be. This enables you to gain traction in a new market and generate highly relevant content that adds value to your business.
Leveraging recommendation engines and social networks
Suppose you have recently purchased a baking mat from an e-commerce platform. The next time you log in, you start finding recommendations for similar baking tools. This brings us to the question, how does technology know what we might need next? Well, it’s all because of Recommender Systems, commonly known as RS.
With the help of algorithms, RS helps to determine related products based on the customers’ purchasing behavior. It plays a pivotal role in the current e-commerce market, allowing brand owners to better cater to their customer’s needs.
By harnessing the power of RS, you can help your customers find commodities that might not always be available in their local vicinity. Furthermore, you can also promote your niche products in a much more effective and efficient way.
Evaluating popular items and keywords in the e-commerce space
By evaluating popular keywords in the e-commerce space, you can accurately determine when there is an increased demand for a particular product. To help you with the same, various keyword research tools are available in the market. Such include Google Keyword Planner, Ubersuggest, and Keyword Tool, among others.
One important point to note is that you should always look at sales when considering a particular keyword. This means that, whatever keyword you have selected must be able to increase your sales, and not just drive traffic.
Enhancing user experience to increase online shoppers’ adoption rate
Another effective way by which you can tackle the e-commerce long tail challenge is by enhancing the user experience. A few ways to achieve the same might include:
- Responding quickly to public feedback.
- Reducing redundancies in your whole business process.
- Developing content that can adapt to multiple device sizes.
You can apply responsive design techniques to your business. This will enable your customers to access your online store via mobile devices. Furthermore, you can also add a section for customer reviews on your website. This can greatly increase your business’s credibility since most consumers tend to believe in one another’s opinions.
Developing product solutions that meet customers’ needs
One of the most common rookie mistakes businesses make in new product development is jumping right into the product’s design. They do so by assuming they know exactly what their customers need. However, this can inevitably lead to new product failures.
To prevent this, you must first figure out your audience’s pain points. Based on that, you can develop product solutions to solve a customer’s problem or fulfill their needs. You can also garner potential customer feedback by sending out the initial prototype. In this manner, you can cater to customers’ diverse interests and needs and tackle the e-commerce long tail challenge.
Optimizing distribution channels for maximum reach
One of the ways to tackle the long tail problem in e-commerce is to optimize your business’ distribution channels. It enables you to market and sell products in the long tail effectively. You can maximize your profit and revenue alongside your market reach.
To cater to a diverse range of customers, you need to reach out to many distribution channels and have a diverse distribution network. One way to achieve this is by consolidating all your distribution channels into one platform. You can also use social media platforms, online marketplaces and other digital channels to reach customers looking for specific products.
Understanding sales volume in relation to the retail environment
Sales volume highlights the units usually sold over a given period, which can be a month, a quarter, or a year.
To tackle the long tail challenge in e-commerce, you must shift your focus from popular products to promoting and selling niche products. You can tap into potential sales that the long tail e-commerce represents, increasing your overall sales volume and profitability.
Long Tail Probability and Profitability
The long tail probability of distribution represents when selling less popular products, as opposed to the top-selling items, will generate profit. This can mainly be attributed to the decrease in the cost of marketing and distribution. All in all, the long tail happens when obscure goods or less popular items are sold in bulk amounts.
Furthermore, the long tail in e-commerce can also be viewed as a statistical property. It indicates that a large part of the population falls inside this long tail of the distribution. This is in contrast to most retailers’ traditional concentrated tail model. They believed that by stocking up their stores with large volumes of top-selling products, they would be able to generate more revenue.
The long tail in e-commerce presents both opportunities and challenges for your business in the e-commerce industry.
While popular products drive significant sales, niche products in the long tail contribute significantly to your business’s profits and sales volume. If you wish to sustain your loyal customer base, offering them a wide variety of niche products can be the best way.
However, remember that you should not often subject your customers to long tail since their satisfaction level can be affected. You should focus on efficiently recommending products from the long tail and offer a wide range of products. You can use data-driven insights and invest in targeted markets to increase sales and profitability.