The 80/20 Rule and Long-Tail in the Online Auction Market: A Case Study on YAHOO Auction, Taiwan

Abstract

The online auction market has been growing rapidly, but what are the significant effects on Taiwan? Based upon the 80/20 rule and the Long Tail, the paper started its observation by taking Yahoo Auction platform as a case study and found a negative co-variance existing between performance and the number of online sellers. A further analysis showed that these 20% sellers promoted more items of goods online than numerous online sellers with less efficient performance. The former ones were found to have attracted more patronage than 80% of the sellers do, and they were capable of promoting both popular and rare goods, which led to sustained revenues in E-commerce. The paper concluded that 80% of economies of scale in the online auction market are characterized by higher performance sellers that constitute 20% of the whole participants, a sign that proves supportive of the 80/20 rule. These 20% sellers display more items of goods online and create more revenues than those of the lower performance sellers do, a sign that reflects the Long Tail. The co-existence of the 80/20 rule and the Long Tail, may serve as a preliminary study for further academic research.

Keywords

• Long Tail Theory
• 80/20 Rule
• Pareto Principle
• Online Auction