2026: Google and the future of B2C E-commerce

17

October

2016

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“Google’s mission is to organize the world’s information and make it universally accessible and useful” (Google, 2016).

In 2006, at the time Facebook and Twitter were still start-ups, the iPhone was not released yet, this was an ambitious mission statement. Can you remember how Google worked back then? After a search Google opened a lot of links to other websites. But there was more. There were separate pages for images, shopping, local and for news. That was in 2006. Now, ten years later, things have changed and coming closer towards their mission. Over the past ten years they integrated all those separate pages into one powerful search engine. Moreover, a search engine what know what you are looking for.

For example, if you google for “funny cats” you do not see any website links anymore, but images and videos. That is because Google understands and knows what I am looking for. Hence, Google provides its users with useful results. Let us try another example and google “computer”. There is a big difference with the “funny cats” example. There are no images and videos displayed anymore. Why? Because google knows where you are looking for. Instead they offer you possibilities where you can buy a computer, both online and offline. Another thing you should notice is that the first links will let you stay (longer) within Google, which results in more advertising revenue. Can you remember how it was 10 years ago, back in 2006? Every click got you out of Google. Try a last example and google for “Cristiano Ronaldo”. Now you can observe many interesting things. Google shows several personal information, where he come from, which football clubs he played for, how much he is worth, even his length and weight are displayed. Additionally Google provides you with the latest news, links to his personal website, Facebook, Instagram and Twitter and even with related linkages, such as his ex-girlfriend. Moreover, Google provides you with everything you need. Google is really getting good at making information accessible and useful. But that is not all, because Google provides you with everything you like to know about Cristiano Ronaldo, it is displayed within Google. Therefore you do not have to go to Wikipedia anymore. You do not have to visit his personal website anymore. You do not have to leave Google anymore.

These examples show you that Google is being successful in mixing and matching information in order to provide its users with what they ask for, so they do not have to go anywhere else anymore. If Google is possible to achieve this is in only ten years, imagine what it can achieve in another ten years. Together with the trend of mixing different types of information and presenting them right away on the search result page. It is expected that Google will have a huge influence in the online customer journey. Imagine it is 2026 and you search for “running shoes”. Google knows that it is a year ago since you bought new shoes, and therefore immediately show you a button which says, help me to choose new ones. Google is going to ask you questions, such as: “on what kind of terrain are you going to run? What kind of arch support you prefer? Are you going to use it for competition? And how much do you like to spend on your new shoes?”  Thereafter Google shows you several brands to select. After you have made your decision, Google shows you a red pair of Nikes. Why is that? Because Google knows you like the colour red. You decide to buy them and Google shows you that Zalando has the best offer. Ten years from now, Google wallet will be fully integrated, which mean that you can order and pay your new running shoes directly in the search results. The next day, or even in a few hours, you receive your running shoes from Zalando. Remarkable is that you have walked the entire customer journey without leaving google for a second. Zalando has been reduced from a service integrated-service company to a supplier, shipping boxes from A to B.

This is a strange shift with enormous implications for B2C internet retailers. Nowadays, in 2016, online retailers try to make people come to their website and buy things. You analyse the data you have about your customer and improve your website in order to let them buy more stuff. In the future this will be different. Who controls the searches, who shows you a certain product, who knows your customer better before they even bought something and who is the payment service provider? That is Google. Google has it all, knows it all and does it all. What implications does that hold for managers of the future? You can either work for or with Google. And the only place where online retailers can make a difference is in the last part of the customer journey. Logistics and after sales and it might be the only thing that Google does not control in 2026.

These are only future predictions, but imagine what they achieved in ten years, from 2006 until 2016. They are getting pretty good at “Organizing the world’s information and make it universally accessible and useful.”

References:

This blog is based on a Google conference (2016, 24 Augustus 2016), by Daan and Jochem, at Depth Festival in Amsterdam the Netherlands, available online from https://vimeo.com/184322613 [17 October 2016].

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The Past and Future of Snapchat: The Strenght of a Platform

12

October

2016

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After its introduction in September 2011 (Spiegel, 2012), Snapchat has grown to the third most popular social application platform (Mwpartners, 2014) behind Instagram and Facebook. In the Netherlands 72 percent of the Dutch teenagers (12-19 years) had installed the application on its smartphone and is capturing more popularity among other age groups (NU.nl, 2016). Snapchat is a application for smartphones, that allows users to share messages, photos and videos with friends that will be deleted after a few seconds. But what makes Snapchat so popular and how do they differentiate from other photo applications and social network platforms?

Snapchat’s users are motivated to create content. This is different with Facebook or Instagram, where users are more motivated to absorb content. Snapchat enables its users to share content that is only temporarily available. Therefore they are motivated to share their daily life, making the platform more personal. Additionally Snapchat’s filters make it more fun to share content in a creative manner. Facebook and Instagram try to adopt this personal aspect by integrating Facebook live and Instagram story. However, over time Snapchat created a large followers base, making it less attractive for its user to switch to another platform. Therefore it is difficult for Facebook and Instagram to compete in this area of social media.

But how did Snapchat capture such a large followers base? Like any other social media platform more value is created for its users, as more users join and enlarge the platform, also called a network effect (Katz and Shapiro, 1994). A platform is a two-side network that brings together two groups of users. To be successful it is important that you set your pricing right and subsidize one side of the platform and charge the other side (Eisenmann et al., 2006). Snapchat did this very well and subsidized the consumers, by making it able for them to use the app for free. By doing so they created positive same-side network effects, meaning that a growing amount of users on one side attracts more users on that side (Eisenmann et al., 2006). For this reason also major celebrities joined the platform, because in this sense they can connect better with their fan base. Because of this, Snapchat attracted many consumers, making it attractive for other parties to join the platform. This allowed Snapchat to create new features developed by third parties, such as goofy stickers, geo filters and fun lenses, making it for consumers more enjoyable to use and attractive to join. These features created positive cross-side network effects: more users on one side make it more valuable for users on the other side (Eisenmann et al., 2006). With its ‘Discover’ feature and large users base Snapchat even attracted major publishers, such as CNN, MTV, Vice, Comedy Central and many other parties. Even though the focus of the application is to share personal content, the discover feature enables consumers to absorb content that is relevant for them.

But what about the future of Snapchat now its popularity is increasing? The application already allows advertisers to send short commercials between “snap-stories”. Can it also change the way of how firms do business? For example Snapchat’s users can already get exclusive deals from Amazon that disappear in seconds (Tam, 2014). Furthermore Snapchat already changed the way of how people use their phone camera (e.g. shooting videos vertically and making “selfies” part of the “new” normal). The question is, can they push the boundaries of how consumers use their camera even more? With the introduce of its Snapchat Spectacle they allow its users to take and share content with sunglasses (Walano, 2016). Is it even possible that they are going to disrupt an entire industry? It is for other companies, maybe not yet a real competitor, important to not underestimate this (technological) developments, because otherwise they can be wept out of the industry just like what happened with Kodak. These are all interesting questions that cannot be answered yet. However Snapchat already build up a strong brand and left its mark in history. Now we have to wait and see what the future will bring.

– Eisenmann, T., Parker, G. and Van Alstyne, M.W. (2006) ‘Strategies for Two-Sided Markets’, Harvard Business Review, 84, 10: pp. 92-101.-
– Katz, L. and Shapiro, C. (1994) ‘System Competition and Network Effects’, The Journal of Economic Perspectives, 8, 2: pp. 93-115.
– Mwpartners (2014) ‘Snapchat is now the third most popular social network among millennials’, available from: http://mwpartners.com/snapchat-is-now-the-third-most-popular-social-network-among-millennials/ [3 October 2016].
– NU.nl (2016) ‘Snapchat steeds populairder onder twintigers en dertigers’, available from: http://www.nu.nl/apps/4327065/snapchat-steeds-populairder-twintigers-en-dertigers.html?redirect=1 [3 October 2016].
– Spiegel, E. (2012) ‘Let’s chat.’, available from: https://snap.com/news/page/7 [3 October 2016].
– Tam, D. (2014) ‘Amazon uses Snapchat to send exclusive deals’, available from: https://www.cnet.com/news/amazon-uses-snapchat-to-send-exclusive-deals/ [3 October 2016].
– Walano, R. (2016) ‘Snapchat Launches Spectacles, Sunglasses You Can Record Videos With: Here’s Everything to Know’, available from: http://www.usmagazine.com/stylish/news/snapchat-spectacles-everything-you-want-to-know-w441966 [3 October 2016].

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