Instead of concentrating on blockbusters, the main bulk of revenues is generated through a 'long tail' of niche products. Individually, these neither demand high volumes, nor allow for a high margin. If a vast variety of these products are offered in sufficient amounts, the profits from resultant small sales can add up to a significant amount.
How they do it: Instead of offering their advertising solutions to few companies, through Facebook all kinds of companies and initiatives ranging from small to big in advertising budget can use the platform to target their audience. Although individual small customers may don’t have a big advertising spend, the amount of companies adds up to significant revenues.
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How they do it: Amazon Kindle has a library of millions of digital books. A new Kindle e-book is published every five minutes. Amazon Kindle is offering bestsellers and a vast majority of niche publications on its platform while ensuring that they are competitively priced. Hence it allows them to adress a big audience of potential customers through its wide offering and good prices, rather than few high margin products. Individual margins might be low but the sheer majority of transactions add up to a significant revenue.
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How they do it: By making their search engine universal and allow customers to look for anything in the internet, Google has become the leading search engine provider. It’s value proposition is to give customers exactly the search results they are looking for, no matter how small the niche. This leading market position supports itself as with a large enough customer group, the probability that someone has searched for a certain thing before increases.
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How they do it: Amazon is offering all kinds of niche products on its platform while ensuring that they are competitively priced. Hence it allows them to adress a big audience of potential customers through its wide offering and good prices, rather than few high margin products. Individual margins might be low but the sheer majority of transactions add up to a significant revenue.
Learn more about Amazon Store →
How they do it: Blockbuster, at the peak of its powers in 2004, operated about 9,000 stores globally. For the first Blockbuster store, $800,000 were invested in order to outfit the store and its movie title inventory. At its opening, customers were spoilt for choice, as the store already then made around 10,000 titles available for rent.
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Below, the top industries for the pattern "Long Tail" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 5 firms using this pattern.
Below, the pattern "Long Tail" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
