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In one of the articles of the week, /Consumer Informedness and Information Strategy/ (Li et al. 2017) it was suggested that firms should adopt an information strategy that selectively provides more or withhold different types of information about their products, in order to attract a desired segment of customers. While this makes intuitive sense, I cannot help but think about what the Pieter Zwart – Founder of Coolblue said during his guest lecture.

First, a short summary: In the article, Li et al (2017) are examining how different segments of consumers respond to to being more information about products and prices.

They distinguish two different types of consumer segments and behaviors: Consumers in differentiated segment are value-sensitive and choose product based on how well those products fit their needs, whereas consumers in the commodity segment are more price-sensitive.

When provided with more information about the prices of products, both segments exhibit trading down behavior (i.e. preferred cheaper products), however the commodity segment shows stronger trading down behavior. Similarly, when provided with more product information both segments experience more trading out behavior (i.e. preferred products that meet their needs), with the differentiated segment increasing their trading out behavior.

On a strategy level, this implies that e-commerce businesses are facing a trade-off when displaying commodity segment consumers. On the one hand more comprehensive and transparent pricing information, allowing them to compare prices may increase sales but also diminishes their willingness to pay.

During his guest lecture, Pieter Zwart explained that Coolblue does not want to compete on price and thus is not aiming at the commodity segment, but the differentiated segment instead. Based on the paper, Coolblue should target and these customers by displaying more product information (or more attributes) to them, as this would increase their trading out behavior. But what if consumers in the differentiated become overwhelmed by all this information do not understand how their needs translate into product attributes? One of the examples Pieter brought up was laptopshop.nl, which addresses this by only displaying a few core attributes of each laptop and instead focusing on better explaining what specific customer needs a laptop satisfies (e.g. if can handle video editing). Interestingly, Coolblue even seems to be trying to make the decision for customers by asking customers about their needs and then suggesting laptops.

So what does this mean? Does displaying more attributes still work to encourage trading out behavior, when consumers are overwhelmed or their level of understanding of their own needs and how it translates into product attributes? Or does it maybe moderate the effect of product informedness on their trading out behavior? I don’t know.

Either way.. Coolblue seems to have figured it out.

References:

Li, T., Kauffman, R.J., van Heck, E., Vervest, P., and Dellaert, B. 2014. Consumer Informedness and Firm Information Strategy. Information Systems Research 25(2) 345-363.

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Voice-enabled digital assistants like Alexa, Siri, Cortana and Google Assistant are often described as the future of interaction [(Foremski, 2017)](http://www.zdnet.com/article/the-future-will-be-voice-operated-but-digital-assistants-need-to-learn-apps/). While their potential on smartphones and wearables is somewhat limited by people not feeling comfortable talking to them in public [(Liberatore, 2016)](http://www.dailymail.co.uk/sciencetech/article-3628362/Are-smart-personal-assistants-doomed-Researchers-say-people-embarrassed-talk-machine-especially-public.html), they are now starting to conquer the home inside and have been integrated in appliances and smart speakers.

The business model behind smart speakers is a familiar one: Like smartphones and smartwatches before, they are designed to be a platform for developers that add value to it by developing software, integrating with other services and by collecting valuable consumer data in the process [(Simonite, 2016)](https://www.technologyreview.com/s/601583/how-alexa-siri-and-google-assistant-will-make-money-off-you/).

But as it turns out, current smart speakers are not actually being used for anything particularly smart: According to a recent report, most people only use their speakers for basic tasks, like playing music and setting timers but rarely ever use or even install any of the thousands of available skills ([Hao, 2017](https://qz.com/1105740/the-majority-of-smart-speaker-owners-use-their-devices-for-a-small-set-of-functions/); [Crist, 2017](https://www.cnet.com/news/alexa-just-hit-10000-skills-but-does-anyone-care/)). Owning a smart speaker myself, I can can confirm that their novelty wears off quickly. And now mine is mostly just being used as nothing more than a light switch that you do not need to walk to.

It almost seems as if smart speakers are going to face similar issues as smartwatches – initial popularity among enthusiast with mainstream adoption falling short of expectations [(Kovach, 2017)](https://www.businessinsider.nl/what-happened-to-smartwatches-2017-8/?international=true&r=US). Similarly to the smart speaker, smartwatches ended up being used for only a few basic features, such as health tracking and receiving phone notifications [(Cakebread, 2017)](https://www.businessinsider.nl/most-used-smartwatch-features-chart-2017-8/?international=true&r=US). Manufacturers seem to have given up on waiting for developers to come up with so-called “killer-apps” to set the platform apart from fitness trackers and smartphones. As a result, smartwatches have become less of a platform and more of a niche product focused on fashion, health tracking and convenience [(Levy, 2016)](https://www.wired.com/2016/12/the-inside-story-behind-pebbles-demise/).

Another explanation for the poor adoption of skills is that without a screen, digital assistants do not a good way to discover new skills or even keep track of the ones that have been installed, which results in underutilization and poor retention [(Del Rey, 2017)](https://www.recode.net/2017/1/23/14340966/voicelabs-report-alexa-google-assistant-echo-apps-discovery-problem). Moreover, from a developer perspective there aren’t many ways to monetize applications within the apps as advertisements are less feasible [(Perez, 2017)](https://techcrunch.com/2017/06/15/the-first-ad-network-for-alexa-skills-shuts-down-following-amazons-policy-changes/). And aside from Amazon subsidizing Alexa developers by paying a small amount of skill royalties to the most popular skills, platforms do not yet allow developers to charge users through the platform [(Amazon, 2017)](https://developer.amazon.com/alexa-skills-kit/rewards). This might explain how the vast majority of available skills are of low quality [(Kinsella, 2017)](https://www.voicebot.ai/2017/09/13/62-percent-alexa-skills-no-ratings-4-1000/), as it forces developers must find must find other ways to make money outside the platform (such as from IoT devices), which limits the appeal of the platform to developers. In conclusion, whichever is the right explanation it remains to be seen whether smart speakers will manage to live up to their hype or if they will just stay nice speakers.

References:

Amazon. (2017). Earn Money for Developing Alexa Skills that Customers Love. Amazon Developer. Retrieved 16 October 2017, from https://developer.amazon.com/alexa-skills-kit/rewards

Cakebread, C. (2017). Here’s how people are using their smartwatches. Business Insider. Retrieved 16 October 2017, from https://www.businessinsider.nl/most-used-smartwatch-features-chart-2017-8/?international=true&r=US

Crist, R. (2017). Alexa just hit 10,000 ‘skills,’ but does anyone care?. CNET. Retrieved 16 October 2017, from https://www.cnet.com/news/alexa-just-hit-10000-skills-but-does-anyone-care/

Del Rey, J. (2017). Alexa and Google Assistant have a problem: People aren’t sticking with voice apps they try. Recode. Retrieved 16 October 2017, from https://www.recode.net/2017/1/23/14340966/voicelabs-report-alexa-google-assistant-echo-apps-discovery-problem

Foremski, T. (2017). The future will be voice-operated but digital assistants need to learn apps. ZDNet. Retrieved 16 October 2017, from http://www.zdnet.com/article/the-future-will-be-voice-operated-but-digital-assistants-need-to-learn-apps/

Hao, K. (2017). People aren’t using smart speakers to do anything particularly smart. Quartz. Retrieved 16 October 2017, from https://qz.com/1105740/the-majority-of-smart-speaker-owners-use-their-devices-for-a-small-set-of-functions/

Kinsella, B. (2017). 62 Percent of Alexa Skills Have No Ratings, But 4 Have Over 1,000. Voicebot. Retrieved 16 October 2017, from https://www.voicebot.ai/2017/09/13/62-percent-alexa-skills-no-ratings-4-1000/

Kovach, S. (2017). Smartwatches are still going nowhere. Business Insider. Retrieved 16 October 2017, from https://www.businessinsider.nl/what-happened-to-smartwatches-2017-8/?international=true&r=US

Levy, S. (2017). The Inside Story Behind Pebble’s Demise. WIRED. Retrieved 16 October 2017, from https://www.wired.com/2016/12/the-inside-story-behind-pebbles-demise/

Liberatore, S. (2017). Study finds we are still not comfortable talking to our technology. Mail Online. Retrieved 16 October 2017, from http://www.dailymail.co.uk/sciencetech/article-3628362/Are-smart-personal-assistants-doomed-Researchers-say-people-embarrassed-talk-machine-especially-public.html

Perez, S. (2017). The first ad network for Alexa Skills shuts down following Amazon’s policy changes. TechCrunch. Retrieved 16 October 2017, from https://techcrunch.com/2017/06/15/the-first-ad-network-for-alexa-skills-shuts-down-following-amazons-policy-changes/

Simonite, T. (2017). Virtual assistants like Alexa and Google Assistant will feed tech giants valuable new data about us. MIT Technology Review. Retrieved 16 October 2017, from https://www.technologyreview.com/s/601583/how-alexa-siri-and-google-assistant-will-make-money-off-you/