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However, even the consumer enriched brand-advertising model will not be enough for tomorrow’s markets. Sites like Epinions, Flyertalk, and Angie's List are augmenting customer feedback and comparison shopping, and even replace the official brand marketers’ messages with reality – “this one didn’t get my whites white”. The convergence of Social Commerce, the Semantic Web, and Cloud Computing is creating a new generation of consumer-facing applications that we know as Social Shopping.
To succeed in e-commerce, retailers and aggregators will need to develop their capabilities to sell to tomorrow’s customers. These are individuals who’ve grown up with rich information at their fingertips, who can see every product available, compare every price and feature across every vendor, then swap notes on those products with people they have never met. And they can make their purchases with a single tap or mouse click from anywhere in the world at any time of day or night.
How do tomorrow’s shoppers, the Digital Natives, think and behave? How have aggregators emerged to fill the information need and how they are maturing to help consumers make better decisions. How will they evolve into marketspaces -- the virtual markets with minimal friction between consumer and vendors?
Digital Natives were born into the social aspects of the web. Sites like Yahoo, eBay, YouTube and Craigslist, were destinations created to fulfill a need, but once that need is fulfilled, the user drops off. Digital Natives already spend far more time interacting and socializing on TurntableFM, Facebook and Twitter. The difference is the ability to “hang out” and remain on the site -- TurntableFM, Facebook and Twitter provide the virtual stage for their lives – there is no ‘drop-off’, it's a choice to step off-stage in between acts in the virtual performance.
There is a trust model between a site and its consumers. Amazon could not be Facebook despite its purchase of PlanetAll. Microsoft could not offer Twitter Connect, despite its attempt with Passport. Consumers will trust a service to do something well and will struggle to accept it doing something else. Who the players are in this future we have yet to find out, but that future is taking shape with the technology of today.
Super Sad True Love Story, a novel by Gary Shteyngart, offers a believably prescient satire of the use of personal technology in a future just around the corner. In this world of instant gratification, success is measured by instant credit ratings; attractiveness is calculated by personal informatics; and books are digitized not to be read, but to be scanned for information. The novel adds color to the behavioral shifts of new technology, and is well worth reading to begin to understand the emerging market of Digital Natives. The fundamental rules of the real world are changed in the virtual world and the rules are being rewritten in real time.
Over the last decade, a number of aggregators have emerged as infomediaries between the retailers and the consumers. Sites in the retail space such as Nextag, Shopzilla, Buy.com and Kelkoo, and sites in the financial services space such as Money Supermarket and Confused.com, have taken on the basic role of providing a single point where the consumer can “shop around”.
These aggregators built their businesses on the commission model; the products they promote are essentially pay-per-click advertisements from the retailers. Their technology platforms are tuned to maximize traffic and conversion, and therefore revenues. Their successes are undisputed; most major retailers participate in affiliate programs and provide direct product catalog feeds to these publishers.
But what comes next? How will one aggregator find competitive advantage over the next? What differentiates an aggregator from a marketplace? Approximate SKU counts have Amazon’s marketplace at 25 million, Ebay at 16 million, and Sears at 20 million. Trends point to deeper consumer functionality and highly-available merchant technology that may remove any advantage among the aggregators.
An opportunity is emerging for a new type of aggregator that offers a better value proposition to consumers: helping them to make more intelligent buying decisions. Some of the initial new aggregators will flourish in niche markets -- for example, Match.com, Elance and Monster help consumers match their needs intelligently. Others will attack the problem indirectly, such as Zaarly, which lets customers make requests for things; TaskRabbit, which lets consumers place requests for assistance; and Siri, which helps consumers refine results using information available from multiple sources. The new aggregators will need to take on the role of conduits or agents -- adding value to the simple comparison model offered by their predecessors.
Intelligent reduction can even help consumers with needs that have no solutions yet. If enough requests come in for a uniquely customized dress that people saw in a movie or game, the Value Added Aggregator can aggregate these requests as an inventory of demand, and then prove the demand to vendors who can manufacture it. Tomorrow’s market will be different because it will be a pure market where needs and products are matched -- no matter which came first.
The technology employed by Value Added Aggregators will allow a complex consumer request to be split into bundles of requests that can be optimized. For example, many travel intermediaries let me book a return flight, plus a hotel and car. But even if the return flight suggests that the trip will take a week, today’s travel aggregators can’t accommodate my need for a hotel for two nights in one place, and then a car and a hotel in a different place for the next five nights. A complex request should be intelligently broken down into smaller requests that can be more easily satisfied and recombined into a solution.
Value Added Aggregators will also recognize that some consumers won’t want all of their requests to be serviced electronically, and will create routing processes that work with people or machines depending on the request. A continuum of responders would range from Only Friends and Trusted Networks through Expert Agents and finally Merchants -- depending on the customers’ request, response, and privacy requirements. Not just a merchant, but another consumer would equally service a consumer’s request. And that when a request is created, a solution for it may not exist today, but might exist tomorrow -- or a solution may even be created in response to a volume of similar requests.
The ClueTrain Manifesto reminded us that markets are places where buyers and sellers meet to converse and transact.
In bricks and mortar retailing, the retailer controlled the marketplace by bringing goods from various suppliers together, breaking bulk and setting prices, and then attracting consumers to the location. Today's online model is essentially an electronic version of the same model -- even Amazon and Ebay are working that model.
However, social media offers consumers interactive online environments where they can interact and transact on a personal level. Why go anywhere else to satisfy product needs? Social media sites like Facebook, Google+, Twitter -- and even in SecondLife and MMPORG -- can be more than venues for product placement and advertising. They can evolve into Marketspaces -- places where all manner of interactions can take place simultaneously.
An interesting use case is buying a car: When looking for a new car, I need to my friends and their friends to help me decide by offering their stories and recommendations. I then want to state my needs to potential dealerships and have them solicit my business -- under my control and on my timescale, disclosing only the information I want to disclose to help me make a purchase. I want to see all available alternatives in a form that easy for me to compare them, and to bundle in service contracts, insurance, and accessories. I want to compare prices and financing options, and then obtain advice from experts in online communities. I want all of the data to be delivered electronically, or routed to human representatives when it makes sense to do so.
The grand idea of the Marketspace is that the information is accessible to all of the actors on stage and can be marshaled and presented appropriately at every stage of the consumers’ decision process. To succeed in tomorrow’s Marketspaces, retailers and aggregators need to use new technologies that really help consumers make better decisions.
These technologies will allow them to build a more useful online market:
First Retail is building a highly scalable semantic technology platform upon which such Marketspaces can be created by retailers, merchants and aggregators brave enough to rise to the challenge
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