Wednesday, July 18, 2007

Distributed Commerce - A Glimpse at Web 3.0

"Distributed Commerce," is a term that is gaining steam these days in discussions of the future of ecommerce. It is a concept that will certainly be fleshed out over the next several years and in my view will usher in Web 3.0.

I may define "Distributed Commerce" differently than most, to me it is simply taking the successful business development methods used in the physical B&M world and applying them to the web. In simple terms "Taking the product to the customer rather than trying to get the customer to the product". It is much easier to get a customer to buy your product, if it is available where they spend most of their time. Banks have started to recognize this by placing branches in Grocery Stores.

Retailers have been very successful over the years in taking the product to the customer by opening up multiple store locations. WalMart started as a small chain in Arkansas and became the #1 retailer in the world by taking the product to the customer.

With today's online retail, the opposite is the case. Online retailers try to bring the customer to the product through Google AdWords, Affiliate Programs, etc. rather than develop systems and tools to bring the product to the customer. This is where Web 3.0 comes into focus. The "widget" has become the cool app of Web 2.0 but is still mostly geared towards bringing the customer to the product. What happens when the Widget becomes a full-blown store that a content site can integrate with the rest of their content. What happens when E! Online is able to sell DVD's, CD's, Celebrity Memorabilia from eBay or Amazon directly on their site rather than sending their users away through an affiliate link. Or what if Best Buy created a Store that could be integrated into Facebook or MySpace rather than rely on links from those sites, which is the current mode of operation.

Amazon, is the first marketplace to venture into distributed commerce with their A-Store, though it really is just a souped up affiliate program, it is at least an attempt to get the product to the customer. eBay is dancing around the idea as well by launching San Dimas but the execution is clumsy.

Small sellers are already beginning to recognize the need to get their product in front of the customer by developing multi-channel selling opportunities, but they are largely dependent on today's online marketplaces like eBay, Amazon, Overstock, etc. They realize that the majority of eBay customers prefer to purchase their items on eBay and the same goes for Amazon, so in order to get their product in front of those customers they need to be on each site.

eBay's auction business is struggling. Most people who want to try eBay have already tried it (at least in the US, UK and Germany) but what would happen if eBay were to integrate their auctions into a content or social networking site therefore introducing auctions to a completely new market. That same auction that struggles to get enough bidders on eBay currently would now be introduced to a complete different customer base therefore increasing the likely hood that a bidding war might ensue and the fun would return.

There are a number of content sites out there, that get a steady stream of user activity and most are not equipped to create their own ecommerce solutions. I mentioned E! Online. Their online store is, in a word, pitiful. They are publishers not retailers, they need to partner with the retailers or marketplaces to create solutions for them that will help them monetize their sites.

Who will it be? What happens if a large retailer like Best Buy decides to take this approach before eBay or Amazon, then Best Buy can grab a foothold on that site before others and negotiate a deal that keeps Amazon and eBay on the sidelines. Soon there is a land rush to stake your claim on an Online Publishers site or a Social Network. Imagine the possibilities!


Trevor Ginn said...

take a look at - this is a great application for posting eBay items onto social media sites e.g. facebook and myspace as well as classifed sites

I am sure that stage two for these will be to add a checkout so that purchases can be made directly from the social media site

Anonymous said...

I know it will never happen but wouldn't it be great if forward thinking people like Scot Wingo at Channel Advisor decided to start a new site to compete with ebay? The brain trusts at Google and Channel Advisor could merge their muscle and do it!

Randy Smythe said...

Scot, understands what is needed. He new early on that sellers needed to develop multi-channel strategies but alas he is not in the marketplace business.

I don't think Google want to be in the Marketplace business either.