Classic marketing assessments sugge that 80% of sales come from 20% of your efforts or customers. Is chasing "the long tail", or the smaller niche markets, for customers not even in that 20% still a viable strategy for online retailers? Online businesses certainly have the advantage at providing choices for a very limited customer base; whereas, brick-and-mortar stores must stock inventory for mass appeal. However, with consumer demand dropping drastically, is niche marketing, in particular, pursuing the long tail, still a profitable venture in a recession?
How the Long Tail Creates Demand
The short answer is "Yes", chasing the long tail still works. The reasons are two-fold: 1) Physical retailers must choose between keeping their doors open or reducing inventory and, therefore, limiting choices for their customers. Online retailers do not have to stock a large inventory and selection of products in order to offer it. 2) The very reasons that make it unappealing to brick-and-mortar retailers make it an ideal strategy for online merchants.
Even with demand slowing for the most popular electronics, games, or other items, the beauty of long tail marketing is that it is not about the best sellers; it is about the consumer's personal preference. A consumer that has a personal need or want for a certain product will find a way to get that item, regardless of the cost, even in a struggling economy. The consumer will also be looking even more at getting the utmost value for his/her dollar. Again, the online retailer has the advantage over a physical retailer due to the "just-in-time" fulfillment capability and the ability to quickly drop the price on an item because of the no-inventory factor.
Use Others for Order Fulfillment
The way for online retailers to capitalize on this strategy is to seek out and locate partners, affiliates and order fulfillment services to help market the long tail without having to create products or ship them. Let your partners and affiliates carry the physical inventory until you get the order and are ready to ship it to your customer. Line up multiple suppliers so you are the retailer offering a wide array of choices for that less than 20% of the customers looking for those items. This way, you create demand where there was none simply by offering consumers many things in one place that few physical retailers are able to do offline. Make it easy for customers to find your products online, and you will help customers satisfy their own needs specifically the way they prefer them.