Text

Long Tail Business Model

---

It would not be an exaggeration to state that the future of retail lies no longer in traditional brick-and-mortar stores, but in online retailers and e-commerce platforms. In 2020,
e-commerce sales accounted for 18% of all retail sales worldwide, and are expected to reach as high as 25% by the end of 2025.

This represents a strong upward trend that has been gaining momentum since the mid-2010s, with the online retail industry in the U.S. contributing over $870 billion in 2021. This figure, however, pales in contrast to the total annual retail trade value of the US in 2021, a mind-boggling $6.6 trillion.

Rather than be discouraged by this disparity, investors see this as a significant opportunity for future growth and realize that the online retail industry is a burgeoning market that has not yet reached maturity. Nearly six out of every ten people in the U.S. use some sort of retail app, and the increased acceptance of online retail apps has been increasing over the years — not only by millennials, but by older generations as well.

Therefore, like all relatively new markets, the online retail industry has attracted innovators and investors from all corners of the globe and numerous fields. This has led to the rise of different business models, niche markets, and online e-commerce platforms. However, all this opportunity does come with some increased difficulties as well.

One of the most significant challenges is the high rate of competition in the industry. The rise of numerous online e-commerce platforms has led to increased competition

among online retailers for customers and saturation of the market. This in turn drives up the total cost of customer acquisition (CAC) — how much a company expands in terms of cost when acquiring new customers and driving sales.

In response to the ever-increasing total cost of customer acquisition, many business models adopted by online retailers have directly or indirectly focused on the Pareto Principle regarding product sales and revenue. This asserts that 80% of inventory sales are made up of about 20% of high-demand items, or similarly that 80% of inventory sales are driven by 20% of loyal customers. Therefore, they have focused on marketing a small range of high-demand products to a small group of consumers.

This strategy, while effective, does little in the way of solving the issue of ever-increasing competition, and may even lead to increased market saturation. However, within this situation, another unique business model is crept up which seeks to take advantage of the current inadequacies of the market. It does this by capitalizing on the underserved consumer base and low-demand products, which most digital retailers ignore. We’re referring to none other than the Long Tail Business Model.

---

Có thể mượn

KT-QT131-Q1				Available
KT-QT131-Q2				Available
KT-QT131-Q3				Available

Thông tin chi tiết

Tuyển tập

-

Nhà xuất bản

: .,

Số trang

-

Ngôn ngữ

English

ISBN/ISSN (mã sách)

-

Vị trí để sách

NONE

Loại nội dung

-

Ấn bản

-

Chủ đề

Kinh tế - Quản trị

Thông tin thêm

-

Ấn bản khác/liên quan

File đính kèm

Comments

---

Bạn cần đăng nhập để có thể comment