Etsy – Conquering the Long Tail

Every young web developer dreams of creating the new Facebook, or the next Google, however history shows that it is more effective to aim smaller and conquer the Long Tail of the Internet. Small sites make up the majority of the Internet’s content with only a select few catering to all users, it is the narrow niches that are available within the Internet that provide possible applications to monetize markets previously too small to capture. This concept is called “Leveraging the Long Tail” and encompasses the ideology of striving to provide a new service in a niche market (within the Long Tail), rather than trying to overtake the most popular products (within the Head).

Products and Services with the “Head” of the Internet usually provide a general experience or benefit to users, this allows them to be useful to a large amount of users however make them less effective then specific services. A downturn of this is that with large general companies there lacks any specificity to unique niche markets and by trying to provide a good overall service they neglect enhanced features for smaller markets. This is where the “Long Tail” of the Internet strives, by developing in a niche market overlooked by the more general businesses you provide a more tailored experience to users in that market.

In this post we will discuss the Best Practices Etsy used to Leverage the Long Tail left over by eBay’s general eCommerce business by developing in the niche market of hand-made personal goods. This has provided customers a specialized service which concentrates on this specific area of eCommerce, while also providing makers a unique area to sell & distribute their goods.

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1. Build on the Driving Forces of the Long Tail

The driving forces of the Long Tail of the Internet are present in the easy creation of services in further niche markets (making the long tail longer), decreased costs of selling & distribution and new forms of connecting supply & demand. Etsy was created due to the difficulty in buying & selling homemade goods through eBay, as no additional merit was added to homemade goods over mass-produced goods on eBay. Etsy gained success through providing users specialized features to buy, sell & distribute homemade goods.

2. Use Algorithmic Data Management to Match Supply & Demand

Once customers have been attracted to a web service it becomes a vital practice to keep them returning by meeting their needs. This becomes increasingly important when leveraging the long tail as niche markets will have a lower possible customer base, therefore reoccurring customers become the foundation for continued success. Providing products of similar interest to consumers can be achieved by storage of algorithmic data relating to products purchased by similar users. Etsy does this by suggesting further products to users based on previous purchases, web services and purchases from similar users.

3. Use an Architecture of Participation to Match Supply & Demand

By making use of the “Wisdom of Crowds”, matching supply & demand becomes easier by allowing users to rate products and filtering based on these popularity ratings. Etsy allows companies and users to “Add to Favourites” their favourite companies, allowing other users to search through similar users or popular companies favourite lists. Furthermore each company gets feedback ratings from customers which are displayed on their profile page, allowing other users to view the trustworthiness of companies.

4. Leverage the Low-Cost Advantages of Being Online

Unlike traditional product sales companies, online eCommerce stores work at minimum cost as they only act as middleman in purchases. Etsy allows users to list their products for a small listing fee, receives advertising revenue and takes a small cut of product sales. Therefore Etsy fulfills an aggregation role where no products need to be stored and the company only incurs regular online web company expenses.

Businesses should not neglect the potential of the "Long Tail"

Businesses should not neglect the potential of the “Long Tail”

When leveraging the long tail there are some guidelines & issues that need to be understood to achieve maximum effectiveness in the market, these will be listed below.

Some Markets and Goods Benefit More

Digital goods with low costs of production and distribution have been found to be particularly effective in leveraging the long tail of the internet. Since niche markets have a smaller market it is important to minimize costs, Etsy in particular accomplishes this by simply acting as a middleman which removes any costs in production & distribution.

When the Tail is Smaller

As discussed below, leveraging the long tail requires meeting specific requirements of smaller niche markets. By aiming at smaller niche markets you can better meet their demands however finding the right incentives to attract customers, as well as demonstrating and reinforcing the value of your product is vital. This concept is called “Making the Tail Fatter” and concentrates on attracting more returning customers to your service.

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