With advances in communication and the growth of internet services, digital marketing has become an important component in the marketing effort of most companies. Digital marketing involves the application of marketing strategies and technologies using electronic media, such as computers and smartphones. Digital marketers capitalize on digital technologies to differentiate their products and services from competing offers (Gaikwad & Kate, 2016).
Online retail sales have exploded, as internet retailers, such as Amazon, provide informative, convenient, and personalized experiences. By saving on overhead costs associated with brick-and-mortar stores, inventory, and staff, these retailers can offer competitive prices and can profitably sell low-volume merchandise to their niche markets. While customers scan websites searching for the lowest prices, online retailers compete to offer the customer a top-caliber online experience, delivery, and handling of customer complaints and issues. E-commerce allows customers to connect and interact with the brand of their choice. Accordingly, customer service is crucial to the success of these retailers. In addition, B2B commerce is increasingly being conducted online, profoundly changing the supplier-customer relationship (Kotler & Keller, 2015).
Digital marketers provide their customers with an individualized buying experience, a wide selection of products, and substantial information to help them research and evaluate these products. However, it is easy for customers to visit another website at any time with the click of a button. For this reason, digital marketers aim to not only attract customers, but to encourage them to stay on their websites, explore, and buy from them. A website's stickiness—the amount of time that a potential customer spends on the site—can be used as an evaluative measure (Marshall & Johnston, 2011).
Anderson (2006) states that innovations in e-commerce and search engine technologies enhance the efficiency of online retail by encouraging the entry of even more innovative products. This process creates a long tail of niches while simultaneously decreasing the market share of blockbuster products. Anderson argues that internet innovations reduce the marginal cost of products by allowing online retailers to focus on previously ignored long-tail products. According to Anderson, in a world of scarcity, the "curse of the traditional retail" is the obligation to find local customers (p. 17). Traditional retailers typically carry only products that generate profitable demand. They are constrained by their space and retail areas and thus prioritize their stocked products according to demand. By contrast, online retailers exist in a world of abundance, with infinite shelf space and cheap distribution costs. This advantage allows them to carry a substantial number of niches, which collectively represent a large share of their business and may rival their blockbuster products.
As examples, Anderson (2006) refers to the online book and music sales of Amazon and other online retailers, where selection is virtually unlimited and delivery is cheap. He adds that the market share of niches is increasing, and the cost to customers is decreasing. These shifts are influenced by technological innovations in search engines as well as recommendation and ranking tools, which effectively drive "demand down the tail" (p. 53). Anderson also argues that three forces underlie long-tail economics: democratization of production tools, democratization of distribution tools, and connecting supply and demand.
Anderson, C. (2006). The long tail: Why the future of business is selling less of more. New York, NY: Hyperion.
Gaikwad, J. M., & Kate, P. (2016, September). eMarketing: A modern approach of business at the door of consumer. International Journal of Research in Commerce & Management, 7(9), 56–61.
Kotler, P., & Keller, K. L. (2015). Marketing management (15th ed.). Upper Saddle River, NJ: Pearson.
Marshall, G. W., & Johnston, M. W. (2011). Essentials of marketing management. New York, NY: McGraw-Hill.