Group Commerce in the Post-Internet Economy
The latest buzz phrase among those who discuss such things is “O2O” or “Offline to Online Commerce.” The most commonly referenced company in this category is undoubtedly Groupon.com. Their recent investment round values this relatively brand new company at more than one billion dollars. Some argue that this valuation is outrageously high while others insist that their investors actually got off cheap.
It is way too early to tell but one thing is clear to me: The success of Groupon and it’s closest rival, Living Social is indicative of a much more fundamental shift in the way people participate in their own experiences and add value to the exchange of goods and services.
Passive participation creating productive and profitable models.
Critics of the “Group Sale Industry” site mass deflation and the diminishing of brand around the emerging consumer mentality towards the “fire sale”. This is a valid argument and while I do not think that the vertical will sustain on discount alone over the long term, I equally feel these critics and most everyone else is missing the bigger picture. Mass discount is the lowest hanging fruit for first-movers like Groupon and their hundreds of clones. When CEO Andrew Mason figured out he could use his group action platform, called “The Point” to instead drive people in the doors of fledgling small businesses and take his cut from the exchange of commerce as opposed to chasing small business owners for a check, discount was simply the easiest motivator. The easiest but not the only - not by a mile.
I would argue that this shift to an experience based or creator economy is in it’s infancy and the incentives or motivators that will be leveraged to drive offline business using the Internet are still to be determined. Technology plays a role clearly. The sheer mobility of network technologies is driving all kinds of interesting models but I see this as sociology over technology. The ingredients are at least partially as follows:
Passive Participation
People are adverse to committing a purchase the first go round for obvious reasons. They land on your website. They don’t know you. Are you trustworthy, authentic. Asking someone to opt-in to an email or login with their social media account(s) is a relatively passive exchange and therefore much easier to convert.
Uncertainty
Not risk - surprise. People see the same things everyday. The same people doing the same old tasks, wearing the same thing, eating the same old lunch at the same old place. They like the idea of someone curating an opportunity for them to break out of the mundane if for however brief a time.
Opportunity
You don’t need to hard sell people. Just give them the opportunity to participate past an opt-in should they see fit and add layers of value to their own experience. The value we get from something is entirely perceived. Stoke that perception with an interesting, nuanced environment and people will thank you for it.
Social Integration
The rise of the social gesture is the best thing to ever happen to a marketing budget. As human beings we are wired to share things about ourselves. Particularly those things we think make us more interesting or increase our worth in the eyes of others. Look no further than the badges of the quickly growing location based platform, Four Square. There are dozens of examples of social gestures working as a form of viral marketing and the open application interfaces of sites like Facebook and Twitter are opening the flood gates on the types of gestures you will see and the exposure they will garner for their host platforms.
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