metAmazon

Perusing the market caps of the four pillars of the Internet economy, I see...

eBay is worth $70 billion.
Google is worth $52 billion.
Yahoo is worth $49 billion.
Amazon is worth $17 billion.

Amazon is worth a lot less than the others; it's a third the size of Google and Yahoo, and a quarter the size of eBay. The reason, I assume, is that because Amazon has to carry some inventory, its margins are much lower.

eBay helps sellers of stuff sell to their customers. Google helps sellers of stuff advertise to their customers. Yahoo is a hybrid of both models. Amazon is different in that it sells directly to customers -- however, it also helps sellers of stuff sell to customers. Now it would seem to me that owning the relationship with a customer is really important -- but the market seems to be saying otherwise.

To catch up, how can Amazon let millions of merchants bloom like eBay, Google, and Yahoo have done? Put another way, how can Amazon turn its business inside-out?

What if Amazon makes available the pieces of infrastructure they have built (to run Amazon), to any merchant who wants to use them -- not just the web services interfaces to product information and comments and the user interface but also full business processes like billing management, inventory management, supply chain vendor relationship management, shipping management, and so on? Would we see the emergence of evermore one-person-stores in which, unlike with the eBay and Google models, I don't have to sell my stuff, but rather I can resell other peoples' stuff to people who trust me?

I like the part of Paul Ford's story where I can put up on the Internet a list of things I want to get rid of and people can search for those things and find me and then we can negotiate. But I also like taking it a step further:

the vision of putting up on the Internet a list of things I like and recommend to people who trust me, and the people who trust me can search for those things and/or things I recommend, and buy them from me.

Amazon already takes me part of the way there today: by being an affiliate I can recommend books and music and get a cut of anything that Amazon the merchant sells through my referrals. But taken to the extreme, what if Amazon ceased to be a merchant and instead enabled me to be the merchant using their infrastructure? The benefit to me is that I can choose only "Rifkin-recommended" products, pricing, policies, catablogs, etc. -- and not just me.

Every person could become an Amazon.

The benefit to Amazon is that they effectively transform from a seller to a meta-seller ("metAmazon"). Instead of Multi-level Marketing, which seems to be more about recruiting new sellers than about the actual products, this is Single-level Marketing, where Amazon provides all the tools and services to let many million microvendors bloom.

metAmazon could take this to the next level by allowing sellers to carry items not in the Amazon product catalog -- they get to decentralize the work of creating a universal product catalog that carries information and comments about every product anyone would want to sell, because the microvendors would be doing their own listings. Ross Stapleton-Gray has talked about the vision of leveraging product codes for Internet Commerce; in a recent email he talked of a "Wiki of product information/commentary, supporting web services" that could be used by any vendor, big or small.

John Battelle's transparent (shopping) society is on its way. I believe Amazon has a lot of the infrastructure pieces needed to enable not just existing not-yet-online vendors but a new generation of online not-yet-existing microvendors.

The New York Times said in October that

An estimated half-million people make a full- or part-time living by auctioning everything from macramé to Maseratis on the Internet. In the online auction world, they are called power sellers, and they have succeeded by researching consumer trends, finding reliable sources for goods and not sparing the bubble wrap.

eBay has 114 million users according to that article, but the worldwide Internet population is 934 million users. As a half-million microvendors become a million and then several million -- and as the potential customer base passes a billion on the way to many more -- the long tail of ecommerce will become ever-more-a-factor in matching buyers and sellers for commerce transactions done on the Internet. The race to be the Internet's biggest metastore has only just begun, and the winners will be not just the metastores and the microvendors but the customers who will have ever-more-selection not just of what to buy but also how to buy.

Comments

[MikeD]

There are already some components of this at Amazon.

"... allowing sellers to carry items not in the Amazon product catalog..." - if you sign up as a Merchant then you get SOAP services to submit product data, set prices, receive orders and update inventory. You also get a Web site ("Seller Central") to manage these things activities via flat-file uploads (if you don't do SOAP) or directly in the browser if you have a small catalog. Also, there are third party software vendors creating catalog management applications that use these SOAP services to allow sellers to manage their inventory.

[jeff]

I think Amazon is facing fierce competition from th e shopping comparison engines such as shopping.com, nextag, pricegrabber, pricescan, dulance, froogle, etc...

[Adam]

Jeff, if Amazon transforms itself into metAmazon, then competition from comparison engines will be less significant; a universal product catalog with links to the microvendors who recommend them has the potential to trump the best scraper-bots out there.

Mike, thanks for the update on how far along this movement Amazon already is. I'm very impressed the company has the capacity to follow through on this vision.

[pb]

Yes, Amazon already has a lot of what you are talking about including creating new SKUs (which incidentally can also be done RESTfully which Amazon reports accounts for upwards of 85% of traffic over SOAP) and affiliates. Why does Amazon's affiliate program not conform to your vision? Do you think the affiliates should be able to set the product price?

Amazon's biggest problem now is that it's search is so horrendously bad. I'm surprised they didn't have the a9 people first improve amazon.com search. And the "Search inside the book" tag makes every book cover look far too similar.

[jeff]

From my research, Walmart won't do business with merchants with smaller than $100 million revenue/year. Assuming, Amazon's barrier is 1/10 of that then naturally the sub-$10 million would use the shopping comparison engines. The smaller markets are highly fragmented and most likely bigger than the larger conglomerates, so I still think Amazon is slowly losing sales to the price comparison engines.

[jeff]

Personally, speaking of myself. I have not bought anything from Amazon for over 4 years.

I've bought:

a) a video card from newegg via pricegrabber enginer

b) an ipod, sunglasses, automotive related accessories, numerous tech gadgets from ebay the past 6 years.

c) my techie books from bookpool.com

I've sold:

a) almost everything on ebay nowaday. I've tried craigslist a couplet times, but the people on there are cheapskates and only want to "barter".

[Chris]

It's an interesting idea, the biggest question I see is how far could Amazon go with it? They could just allow people to put their logo at the top of their sellers page, and some more sellers info. But, frankly, the Amazon interface sucks in my opinion, and I wouldn't want that to be my "shop window". Alternatively they could go the whole hog and offer the system as a standalone, installable product similar to Actinic.

I did a site a year or so back that did the whole sub-selling thing. Organisations could set up their own portfolio of goods, manage their own customers, even handle delivery and order management through their admin interface. We just ran the website and left them to it. The problem was ... very few people wanted to put the time in to create a decent online shop. Perhaps that's a common problem, people see the ease with which a website can be used, so they think that setting the website up in the first place should be as easy. And, as we all know, it's not easy. Writing a website could be done by a trained monkey. Writing a dynamic web application that works is a whole other matter.

[Adam]

I would imagine that now that Werner is CTO, Amazon will move decidedly in the direction of turning their business inside out.

P.S. -- He's hiring.

[jeff]

Amazon is definately hiring...but you have to re-locate to Seattle of course. :)

[danny]

Personally, speaking of myself. I have not bought anything from Amazon for over 10 years