Ecommerce is commerce, just faster and bigger.
When I was a child growing up in Australia, there was a paper that came out every Thursday called the Trading Post. This was the old fashioned world of classified advertising – where newspapers used to generate a large proportion of their revenue. People selling to people, consumers selling to consumers (C2C) is nothing new.
What is new is the speed, reach and immediacy of the internet has turned classifieds on its head. From Ebay and its subsidiaries including Gumtree and Craigslist to Dubizzle – peer to peer (P2P) Ecommerce is big business.
P2P Ecommerce sites have spawned new types of businesses – leveraging expertise in collectibles, antiques and making the most of the Long Tail customer. Some of these companies have even become household names through cable television stations.
Perhaps one of the most well-known and disruptive P2P platforms of recent years has been AirBnB. They created an inventory of rooms and beds that provided home-owners a revenue stream that they never knew existed.
Empowering the Buyer
While P2P sites have made it easier to advertise to a wide variety of consumers, it has also enabled the customer to get a more transparent view of prices and quality.
The Trading post was constrained by geography. Your choice was limited to the area that you were willing to drive and what was on offer that week. Pricing was determined by whatever the seller could get away with (See Note Below), depending on the buyers knowledge. Trust in the seller was also hard to establish – the ‘Buyer Beware’ principle in operation.
Social reputation gives the buyer new power to compare prices across a wide variety of markets, but also assign trust to a seller. A seller may get away with overcharging or providing an inferior product once, but buyer reviews provide a mechanism to keep the market honest.
Note: For those of you who are interested in economic theory – there has been a lot of work done about the effect of asymmetric information in the market for used goods. Also known as ‘The Market for Lemons’ it describes how the quality of goods available could be affected by buyers and sellers having different information.
No Comments