Is the long tail a market worth pursuing?

December 22, 2008

You probably know what your best sellers are on eBay, they may be the same as your top sellers on Amazon and your own website too, but The Long Tail, a book by Chris Anderson, suggested that there’s just as much (if not more) money to be made from rarer slow selling products.

The theory goes that as online selling is very low cost in comparison to bricks and mortar stores the cost of holding large inventories becomes affordable. This is none more so than when the product is digital with no warehousing required. Retailers could make money by offering obscure products via the Internet as there would always be someone who would buy.

An article in today’s Times turns that theory on it’s head - far from being an almost endless source of products that buyers are searching for, the long tail has been found to be a derelict back alley, full of junk that no one wants.

According to the Times there are around 13 million music tracks available online, but 10 million of them didn’t manage a single sale in the last year. It’s even worse for albums, from 1.23 million available only 173,000 were ever bought with 85% failing to get a sale.

The long tail was lauded as an untapped gold mine where collectors could source that long lost item. That’s not proving to be the case, at least not for music downloads, where 80% of all revenue came from the top 52,000 (top 0.4%) tracks.

Where does this leave online sellers? The 80/20 rule has traditionally been accepted, 80% of sales come from the top 20% most popular products. The long tail suggested that the remaining 80% obscure products could generate just as much if not more income, each individual product may not sell as often but everything would sell a few.

It’s important to realise that there is always a cost to inventory, whether it be the cost of uploading and cataloging 10 million music tracks that no one will ever buy, or whether it be physical warehousing for slow moving stock.

The are definitely sales to be won from holding a wide selection of inventory but there’s also a big risk that relying on an ever expanding range to increase sales will probably end in failure. Someone, somewhere might buy that long lost track some day, but is it worth the cost of several million more sitting on the shelf gathering dust that will never sell?

Whilst it’s certainly true that you can buy almost anything on eBay, the question has to be asked do you want to sell almost anything on eBay? Would you rather stock and sell fast moving popular lines, or do you want to hold 13 million items, 85% of which won’t sell even once a year, to take advantage of the long tail?

Written by Chris Dawson · Filed Under Selling Tips | 22 Comments 

eBay Elsewhere : links for 6th July 2008

July 6, 2008

Unsurprisingly, eBay’s fine for sales of fake Louis Vuitton via the site has garnered rather a lot of comment over the week. The Times predicts a run of copy-cat lawsuits from other manufacturers, while the LA Times asks should eBay be the world’s copyright cop?, and seems to come out on eBay’s side:

There’s a fairness issue too. If Vuitton is responsible for enforcing its trademarks, the costs are passed on to Vuitton customers. If EBay has to enforce them, the costs will be borne by everyone who buys or sells there — most of whom aren’t in the market for haute couture.

Tiernan Ray on Seeking Alpha also comes out against the fine.

The Telegraph tells us how to spot a fake on eBay, and also observes that eBay’s changes are making it more like a shopping mall than a car boot sale.

And the award for headline of the week goes to The Guardian for A handbag? eBay is going to have to be more earnest.

Written by Sue Bailey · Filed Under News | Comments Off 

“Because the feedback looked so convincing I sent the cheque anyway”

May 18, 2008

This post was written in May 2008; specific information contained within it may be out of date.

Sellers protesting eBay’s plans to make offering PayPal compulsory might like to cast an eye over a report in today’s Times, about ways to scam people on eBay. I’m sorry to say that much of the piece is stuff we’ve heard all too many times before: “buyer spots bargain, buyer posts cheque, buyer receives nothing” just about sums it up. But this statement from one of the victims caught my eye:

“The worst thing is that I knew we shouldn’t pay by cheque but everyone - my son, friends and even the lady in the bank - said it was not unusual.”

The Times goes on to comment

About £20m day is traded on eBay worldwide. The site recommends buyers pay via its own system, PayPal, which offers up to £500 cover for transactions that meet its criteria, but there is nothing to stop vendors demanding other methods of payment.

If eBay is ever going to move beyond its “dodgy” reputation, we have to put an end to stories like these; you and I might look at the story and be able to pick holes in The Times’ reporting, we might try and blame the buyer who don’t investigate their seller closely enough, or the sellers who let their accounts get taken over. But think of the dozens, maybe hundreds of people who have been put off eBay yet again by this article. How many customers does each of us lose to a story like this? Many of us might not like the idea of being forced to offer PayPal, but it’s worth it, to be able to tell the world that eBay’s a safe place to shop.

Written by Sue Bailey · Filed Under Featured, News | 17 Comments