Chris Anderson, executive editor of Wired magazine, coined the phrase The Long Tail in 2004 to describe the key principle behind niche marketing that companies like Amazon.com use to create a market niche and build sales on the Internet. One Amazon employee described Amazon's long tail marketing strategy like this:

"We sold more books today that didn't sell at all yesterday than we sold today of all the books that did sell yesterday."

Yesterday's marketing strategy was to focus on selling a narrow range of bestsellers. Today's strategy is to sell a much wider range of books to a much larger number of specialized niche markets, each with a smaller potential market than the bestseller lists. But, taken together, the niche markets sell more books overall than the total sales of bestsellers.

While Amazon leads the way when it comes to selling books to a wide range of market niches, anybody can build a successful business focusing on just one or two niche markets on the Internet. You can create a market niche for yourself by choosing just one section, or sub-section, of the tail and then "dominate your niche" by focusing all your marketing effort on it.

By focusing on creating a single market niche you will also quickly build up a reputation for yourself as an expert in your chosen field.

So, what must you do to create a market niche and dominate it?

First of all, find something you know a lot about, something that interests you and that you would enjoy talking to others about. Remember, if you are looking to build a successful niche business you need to work with something your feel passionate about. Belief in the product is not only good for you, it conveys a strong message to potential customers as well and will help you to relate to your market base and communicate more easily and effectively.

Once you have found an area of interest it is time to drill down to specifics. Being specific is one of the keys to niche marketing. The long tail is long precisely because it extends over a huge range of specific interests. Your aim should be to find a specific niche that is small enough for you to dominate, but large enough for you to establish yourself as an expert and make a good living in.

Let's say you are interested in games. "Games" is a huge category so you opt for the niche you are most familiar with, "board games," but you are still faced with a huge amount of choice, so you could narrow it down further to something more specific such as "German board games". This would be your main market niche and it would be a good idea to include it in your URL when you set up your website i.e., German-Board-Games.com or germanboardgames.com.

You now have the exciting choice of deciding whether to buy and sell physical games, or whether to make your own product such as an ebook about the German gaming scene, or a series of ebooks each dealing with a particular German board game.

Selling physical products to your niche market is a viable approach to building your business provided you can handle the logistics of supply and demand and don't mind the extra hassles involved in packing and shipping goods. If you sell physical goods you can take advantage of auction sites such as eBay to get your goods seen by a wider audience.

However, there are only so many units of product that a single person can turn around, so if you go down this route you will either have to stay small or begin hiring staff at a certain stage as your business develops.

Making your own information product will require a lot of research and writing for no immediate return. However, once you have your information product up on your site you can sell it again and again without having to worry about handling stock. This gives your business more scope to expand without your having to employ any more staff.

In addition to these two options, you may want to find some niche-relevant affiliate programs to promote in order to generate extra revenue. If you sell an ebook, having a related affiliate product to sell on the back end is an excellent profit-boosting strategy.

Your aim is now to make your site the top destination for people looking for online information and about "German board games" or whatever your chosen niche happens to be. As a niche marketer you don't have to compete with the marketing giants and sell to the whole world. All you want is to attract a few hundred people to your site each week and work on turning those visitors into customers and those customers into fans.

By setting up a website that pitches to a well defined market niche somewhere on Chris Anderson's "Long Tail" you stand a much better chance of succeeding online and dominating your chosen market.