If you have not heard about Chris Anderson’s The Long Tail, it’s time you checked out his blog at http://www.longtail.com. In fact, there is even a PDF download from ChangeThis.com or you can purchase the book from Amazon.com.

What is the Long Tail?

The relevance of the Long Tail to selling online is strong and apparent. In a nutshell, the Internet has changed the way we buy and sell things. In essence, the dynamics of supply and demand have also changed.

Products and services that have previously faced strong barriers to entry are now sold online as niche products. Before the advent of the Internet, floor space for product display was limited. Thus, only products with proven significant demand had the opportunity to be distributed and sold.

Today, diverse personal tastes have resulted in the emergence of niche markets. The beauty of this is that demand from these niches is met by smaller online sellers. In addition, improvement in postal and courier services, have made these products available to anyone, anywhere in the world.

It is also easier than ever before to set up a virtual store, and literally sell anything to anyone. There is no longer the issue of insufficient floor space – Amazon.com holds more titles than any individual bookstore, while Netflix rents out millions of movie titles.

When these companies analyze product sales and plot sales volume for each product in a chart, the Long Tail graph appears. While a group of popular products generate a large sales volume, there is also a long tail of niche products, each with a small sales volume, but not nearly hitting zero sales. What’s most interesting is that, the collective sales volume of these niche products account for 25% of their total revenue!

Why do I reference to the Long Tail?

As a sales channel, the Internet is a platform with the potential for exponential and rapid business growth. It is now easier to start an online business at low cost and relatively low investment, with the sales potential of any brick and mortar store.

On the flip side however, the Internet has also become a truly competitive market. There are millions of online small businesses, with everyone competing to reach out to their target market.

What everyone wants is for to reach out to as many customers as they can, at the lowest cost possible. This means that they need to be able to draw traffic to their website. No matter what internet business you are in, you won’t be able to make significant money without WEB TRAFFIC. This is similar to a brick and mortar store – you can’t have a high volume of sales if you don’t have enough people visiting your store, and browsing through your inventory.

There are 3 major ways to draw traffic:

a) From Search Engines

Most people start with this when they are researching on a product they intend to buy. To do this, you need to optimize your site to draw FREE traffic. Most new internet marketers start with this. Locating and using the right keywords here are very important here for success. Your aim is to get your site listed in the first page of search engine results for optimized keywords.

b) Incoming links from other websites

This is also popular. Your products or services are promoted on other websites, which are then linked to yours.

Keywords are not so important here, and for this strategy to work, you’d need a high volume of incoming links, to create buzz with a strong and unique product, or great content, and to network with other internet marketers or affiliates who sell to the same niche market as yours.

Alternatively, you can use sites such as eBay to market your product. Then again, with the strong competition from within eBay, you’ll once again need the ability to be able to drive traffic to your product page from within eBay.

c) Off-line website promotion

Advertising your website URL on billboards, magazines or any tangible marketing collateral is one of the ways corporations use to market their website. However, this may not be feasible for small business owners, unless they have allocated a chunk of their investment for large scale advertising.

KEYWORD significance in starting an online business

The quickest way to draw traffic is through search engines. While building links, creating buzz and utilizing online traffic are excellent strategies, these require time and effort to build up. Therefore, search engine traffic is one of the first things you look at when creating a website for online sales.

The greatest challenge however, is PICKING THE RIGHT KEYWORDS. Keywords or key phrases that are too generic are subjected to stiff competition.

On the flip side, keywords that are too specific may also mean there are not enough people searching with these words. Even though your site may be listed at the top for these keywords, there still wouldn’t be adequate traffic going to your website.

With this, the FIRST STEP in identifying what to sell online is to determine which keywords and key phrases have a significant search volume, and relatively low competition. Of course, if you already have a product in mind, you should then select keywords that are relevant to your product.

Otherwise, you may even try to sieve out keywords with marketability potential, and THEN acquire the knowledge to market them. Of course, if you are dealing with intangible products such as e-books, you could then set up an affiliate website to promote someone else’s products instead.

Your role then, would be to provide information to your customers (via your website), simultaneously optimizing your site for top search engine listings.

To take this a step further, you could identify a group of long tail keywords, all which are relevant to your product and optimize your site for these keywords. With this, you are essentially drawing traffic for EACH OF THESE KEYWORDS, collectively generating a significant amount of web traffic.

Further Reading

The following are some excellent resources on optimizing the right keywords:

Aaron Wall’s SEO Book - Great All-In-One 328-page Resource
with everything you need to know about Search Engine Optimization

How to identify niche items to sell online? - If you have no clue where to start in finding a niche, read this first.

Putting the Thirty Day Challenge into practical use – Part 1 - Discover the power of Google Trends and WordTracker in finding the right keywords and niche markets

How to find a profitable niche market? - Learn how to relate keywords to profitable niche markets

Celebrity Bloggers: How Google Found them - Something more about the Long Tail

Tools and Resources for Keyword Research – A review on 3 major Keyword research sites

Finding Good Keywords for your Niche – More about the use of keywords in content