Long tail business model case: many a mickle makes a mickle.

Contrary to the hot-selling product model with few varieties but large sales volume, the long tail model is characterized by supplying products with small sales volume but rich varieties. Although the profit of selling personalized products with the long tail model will not be too high and the sales volume will not be large enough, in the long run, enterprises can still make large-scale profits (why). The long tail model is different from the classic "28 principle", which holds that about 80% of the company's profits come from 20% of its products. In the long tail model, mass products and niche products (also called niche products) can bring the same profits; In some extreme cases, the profits brought by niche products even greatly exceed those of mass products. This model distinguishes enterprises selling niche products from those selling popular products, creating another source of income (why). The long tail model also gives consumers a unique benefit, enabling them to find products (what) that meet their personal needs in a wider and more diverse product system.

In order to successfully apply the long tail model, enterprises must be able to effectively manage distribution costs. More specifically, the sales cost of minority products can't be higher than the sales cost of hot-selling products (why). In addition, consumers can easily find the niche products they need without paying high search costs. Intelligent search engine and product recommendation system designed based on consumers' previous search habits and buying behaviors can effectively help consumers find the products they need effortlessly (how to do it). Another way to reduce search costs is to let consumers design their own products (how to do it). This concept is widely used in mass customization and user design patterns. In this mode, consumers can adjust or even create a brand-new product to meet their personal needs.

The long tail model was first proposed by Chris Anderson, editor-in-chief of Wired magazine, in 2006, and it has achieved great success in the Internet field. In the end, enterprises no longer need to be bound by certain factors, such as physical distance or absolute demand. The development of this model has brought brand-new opportunities for the sales of minority products. Digitalization enables enterprises to digitally store goods at minimum cost. Nowadays, product distribution, especially niche products, is much more cost-effective than it was 20 years ago.

Amazon, an online retailer founded in 1994, and Yi Bei, an online trading platform founded in 1995, are pioneers in applying the long tail model. According to relevant statistics, 40% of Amazon's operating income comes from online book sales, which is difficult for traditional bookstores to do. For Amazon, the long tail effect of niche products not only brings valuable income stream, but also makes it different from the traditional book trade. In Yi Bei, individuals have created the long tail effect through online commodity trading. There are millions of transactions in Yi Bei every day. There are also some rare and unique products, such as Pope XVI's Volkswagen-Golf brand car, or the opportunity to have lunch with Warren Buffett.

With the rapid expansion of the Internet, other innovators began to follow the example of Amazon and Yi Bei. Netflix applied the concept of long tail to video rental business, which made its streaming media service expand rapidly. Netflix users can browse more than 654.38+10,000 movies, TV series and performances in official website, which is about 100 times that of traditional audio-visual rental stores. With its unique product line, Netflix has completely surpassed the traditional audio-visual rental store. By any standard, Netflix, with 26 million users, is a well-deserved leader in this industry.

Apple also successfully used the long tail model. Its music software iTunes and App Store are the largest online music and app stores in the world. The massive choices provided by Apple's online store not only brought huge profits to Apple, but also successfully won the loyalty of consumers. Although Apple Music software has sold as many as 25 billion songs, the sales of its app store are even more amazing. As of May 20 13, Apple has sold more than 50 billion applications.

The last example is YouTube. It is also one of the companies that successfully use the long tail model. YouTube was founded in the United States in 2005, and it is the largest online video sharing website in the world. In 2006, after Google acquired YouTube for $65.438+65 billion, YouTube became a subsidiary of Google. Professional users and amateur users can upload and share rich videos on YouTube for free, including personal videos, movies, TV clips, short films, educational materials and video blogs, and there is almost no time limit. The low cost of video storage creates conditions for the provision of large-scale diversified content. Search engines and directory browsing functions can help YouTube users quickly search and play millions of short videos on websites and videos shared by other websites and social media platforms on YouTube.

You have imagined countless times that if you can make ends meet and reach for clothes, life seems a little easier, and you don't need to spend time and energy to decide which product to buy. But in fact, too many mature enterprises are trapped in fierce competition because of the lack of core products and qualifications. However, if you want to try to use the knowledge of dealing with complex problems-products, technologies and markets-to make the cost lower than that of competitors, especially when you provide highly specialized and personalized products, it is very useful to choose the long tail model.

Can consumers get added value from any service we provide?

Are we better at dealing with complex situations than our competitors?

Can our production process and IT system handle large-scale products?

Can we do backstage processing? Such as online shopping, order processing, physics, information technology?

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