In comparison to a blockbuster' model, which sells large quantities of a small range of products, the Long Tail business model focuses on selling small quantities of a very large range of products. While the Long Tail has lower margins and lower volume sales of individual products, profits are significant over the long run due to the breadth of products sold. The Long Tail pattern deviates from the classic 80-20 rule, according to which a business typically earns 80% of its profits from 20% of its products. With this model, mass and niche products can generate equal revenue shares, and in some cases, niche products can generate a greater revenue share than mass products. The model enables businesses that sell niche products to differentiate themselves from those that sell blockbuster products and to generate additional revenue. The Long Tail pattern provides customers with the distinct advantage of browsing a much larger, more vibrant range, increasing their chances of discovering products that meet their specific needs. To succeed with the Long Tail model, a business must be capable of efficiently managing distribution costs. More precisely, the cost of marketing a niche product should not be significantly higher than the cost of marketing a blockbuster product. Additionally, customers must be able to locate these specialty items without incurring significant search costs. Intelligent search and recommendation systems that suggest products to customers based on their previous searches and purchases can be instrumental in assisting customers in easily locating the right niche products. Another way to cut down on search costs is to allow customers to design their own products. This concept is implemented in the Mass Customization and User Design business models, which enable customers to modify or even create products from scratch to meet their unique requirements. 

When and how to apply Long Tail:

You, too, may believe that offering everything under the sun will simplify your life and keep you from having to choose which products to focus on. However, far too many mature businesses are floundering in the face of competition due to their inability to focus exclusively on a few core products and competencies. If, on the other hand, you are able to apply your complexity knowledge to useful products, technologies, and markets while keeping complexity costs below those of your competitors, the Lang Tail pattern holds great promise for you. This is particularly true if your business involves highly specialized or customized offerings. Well-known companies that use this pattern are Zalando and ING Direct.