Facebook opens Marketplace to challenge Ebay and Craigslist

22

October

2016

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With more than 1,71 billion monthly active users and 1,13 billion daily active users in July 2016, Facebook has solidified its position as the world’s number one social networking site and now they are jumping into e-commerce. Aiming to seize the opportunity of over 450 million people accessing various buy and sell groups on the site each month, Facebook launched the Marketplace first in the US, UK, Australia and New Zealand a few weeks ago.

What is the Marketplace and how does it work?

Prominently displayed on the main navigation row at the bottom middle of the Facebook Mobile App, users can efficiently discover, buy and sell items with other people in their local area. When you find something worthwhile in categories ranging from furniture to cars, or even to buying a house, you can haggle in real-time with the seller using the messenger feature. Currently it is completely free to use, and Facebook does not take any service fees, as there is no possibility to pay through the platform (yet), so users instead need to decide together on how the payments will be handled.

What are the main advantages of Marketplace?

As the social media site already boasts a massive number of users, there are significant positive network effects. You are more likely to find potential buyers and sellers of specific products when more people start using the feature. By having a marketplace where people already spend a lot of time, users can conveniently scroll through options and get recommendations based on previous searches right on their Facebook feed. Since the Marketplace is integrated with the messenger, buyers and sellers can negotiate in real-time on the price and ask for more photos or information if needed, making the overall process more streamlined. Additionally, there is a layer of trust since users can see each other’s profiles and decide if the person seems trustworthy based on for example profile pictures and number of friends. Finally, as mentioned previously, the Marketplace is free to use, which is a significant advantage over competitors like Ebay and Etsy.

How about the disadvantages?

However, there are some clear issues with Marketplace that Facebook needs to figure out. Firstly, after it was launched there was a technical problem with the monitoring system, which identifies and removes products that are illegal to sell, and thus people tried to sell everything from drugs to guns and adult services through the app. The problem has been fixed, but there is still a risk that people learn to circumvent the system and use the marketplace for illegal activities. Secondly, there is no review system to rate buyers and sellers, which means that you can’t know whether the other person is reliable apart from researching their profile data, and of course there are additional risks for privacy and safety when meeting face to face with a stranger for the sale. Thirdly, without a safe and secure payment feature, users might not be willing to make spontaneous shopping decisions, since it requires quite an effort to exchange cash for products.

In conclusion, I think that if Facebook can tackle the above-mentioned issues, the Marketplace is poised to compete with established peer-to-peer e-commerce sites as the go-to destination for buying and selling products locally. It will be interesting to see how Marketplace develops, and how Facebook aims to capitalize on the feature in the end. They might for example start offering shipping services or allow users to buy advertising space on the site.

What do you think of Facebook Marketplace? Would you use it yourself?

 

Sources:

Introducing Marketplace: Buy and Sell with Your Local Community

https://techcrunch.com/2016/07/27/facebook-earnings-q2-2016/

https://www.businessinsider.nl/facebook-marketplace-drugs-animals-adult-services-2016-10/?international=true&r=US

 

 

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Technology of the week – Online Labor Marketplaces

10

October

2016

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Video Link: https://www.youtube.com/watch?v=Ub5xCzEuG6U

Have you ever dreamed of being your own boss? Well, this dream might be closer than you realize, and to some extent out of your own hands. A fundamental shift is happening in the worldwide workforce of today. Hiring contingent workers known as freelancers and contractors is becoming an ever increasing trend. In the US 43% of the working population is estimated to be contingent workers by 2020. To find the right jobs for all these workers, companies like Taskrabbit and Upwork are providing innovative solutions.

TaskRabbit is an online and mobile marketplace that matches freelance labor with local demand. Consumers can get help with everyday chores, such as cleaning, delivery, and handyman services. The buyer posts a job, and TaskRabbit suggests three contractors, of which the buyer can then choose according to hourly rates and experience level. A contractor can accept or decline the job on depending on convenience and availability. When the job is completed, payment is handled through the platform. TaskRabbit makes revenue by charging a 30% service fee.

Below we summarize the strengths and weaknesses of Taskrabbit.

Strengths

  • Clean backgrounds (interviews for contractors)
  • Insurance (up to $1,000,000)
  • Secure payment
  • Local jobs, and work at own convenience
  • Easy to use

Weaknesses

  • Prices below minimum wage
  • Time indications not accurate
  • No reviews of buyers
  • Commission is high

Upwork is a global freelancing marketplace where businesses and independent professionals connect and collaborate remotely. Clients post a job project on the Upwork marketplace. Freelancers interested in the job submit a cover letter and profile link, covering skills, experience, and previous client feedback. Freelancers bid on the job, and the client can choose the strongest candidate based on not only price, but also expertise. To be sure of the choice, clients can use Upwork chat tool to interview before hiring their favorite. Upwork handles all payments from client to freelancer securely. Freelancers are charged a sliding fee based on lifetime billings with each client (20% first $500 billed, 10% between $501-10,000 and 5% exceeding $10,000). Clients are charged a payment processing fee of 2.75%.

Below are the strengths and weaknesses of Upwork.

Strengths

  • Extensive job categories
  • Large global network of users
  • Fast hiring process
  • Secure payment processing
  • Mechanisms to foster trust

Weaknesses

  • Large global network of users (competition)
  • The human factor increases risk
  • Poor customer service
  • New pricing model too high for one-off work

Comparing Taskrabbit and Upwork, several key similarities and differences are seen. Both are online labor marketplaces, where buyers can choose freely among alternatives and through recommendations. Sellers work as freelancers and there is an initial testing process involved. To foster trust and reduce uncertainty between participants there are mechanisms, such as reviews in place. TaskRabbit offers low-skill offline tasks mostly to consumers locally, while Upwork offers knowledge-intensive online jobs to businesses globally. Additionally, the pricing models differ.

 

Future outlook of the industry

Firstly, we envision that online labor marketplaces, like Upwork and TaskRabbit, will be a major part of our everyday lives soon. With the development of information technology they become more efficient at matching demand and supply of knowledge, skills and experience. Second, we expect that labor platforms will provide more tools to create collaborative freelancer teams, who are able to work on large projects together. Third, competition on the platforms will be fierce. Outsourcing to developing low-wage countries is already driving down prices at Upwork. To stand out, workers need to develop specialized skillsets and deliver high-quality work consistently.  Finally, we think that regulation will make or break the industry.

 

Sources

Malone, T.W., Yates, J., and Benjamin, R.I. 1987. Electronic Markets and Electronic Hierarchies. Communications of the ACM 30(6) 484-497.

Dimoka, A., Hong, Y., and Pavlou, P.A. 2012. On Product Uncertainty in Online Markets: Theory and Evidence. MIS Quarterly 36(2) 395-426.

Bakos, Yannis. “The emerging role of electronic marketplaces on the Internet.” Communications of the ACM 41.8 (1998): 35-42.

http://investors.intuit.com/press-releases/press-release-details/2015/Intuit-Forecast-76-Million-People-in-On-Demand-Economy-by-2020/default.aspx

JPMorgan Chase Institute, “Paychecks, Paydays and the Online Platform Economy: Big Data on Income Volatility” https://www.jpmorganchase.com/corporate/institute/document/jpmc-institute-volatility-2-report.pdf, (February 2016)

https://www.taskrabbit.com/how-it-works

https://www.upwork.com/about/

https://support.upwork.com/hc/en-us/articles/211062538-Freelancer-Service-Fees

https://www.comparakeet.com/best-freelance-websites/upwork-review/

http://www.forbes.com/sites/elainepofeldt/2016/05/07/freelance-giant-upworks-new-pricing-model-sparks-outcry/2/#71a46be04d83

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Why self-driving cars must be designed to kill

9

October

2016

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Would you buy a car that sacrifices the driver on occasion, or a car that preserves the driver on all occasions?

Researchers in a recent study published in Science (2016) “The social dilemma of autonomous vehicles” asked exactly that, and the results were quite interesting, raising implications for the programming of self-driving vehicles and governmental regulation.

Driverless vehicles may hold the promise of saving millions of lives around the world. In 2015 in the US alone, 38,300 people were killed and around 4.4 million people sustained injuries due to vehicle related accidents. Most of the accidents happen because of human error and by replacing the human with a highly calculated robot, which does not get drunk or distracted and drives within speed limits, automated vehicles could prevent a large number (according to research, up to 90%) of accidents.

A major question arises in the rare occasion of a no-win scenario that a fatal accident can’t be avoided by the autonomous vehicle. For example, you’re riding along in your car, when suddenly a group of pedestrians appear in the way and the car must decide in a split-second whether to drive over the pedestrians or sacrifice the driver by swerving off the road towards a concrete block.

In the study with 2000 respondents, 76% thought that autonomous vehicles should be programmed to be utilitarian, meaning they should be programmed to save the most lives while sacrificing as few lives possible. In the case of the accident, the majority believed it to be moral to sacrifice the driver rather than a group of pedestrians.

However, when asked if they themselves would buy a car that is programmed to be utilitarian, a large majority of the respondents said they wouldn’t buy one and instead prefer to ride in autonomous vehicles that protect the driver and passengers at all costs. This is the dilemma: most people would like others to drive cars that minimize casualties, but everybody wants their own car to protect them at all costs.

Figuring out how to build ethical autonomous vehicles is one of the most difficult challenges in artificial intelligence today for car-manufacturers and governments. Governmental regulation could insist that all cars be programmed to save as many lives as possible, but then people would not be eager to adopt them. Therefore programming the cars to make the “right” moral decision may be one of the biggest impediments to autonomous vehicle adoption. But if manufacturers and buyers are given the choice of self-preservation above everything else, are they liable for the harmful consequences of the programmed decisions? For the time being, there is no clear-cut answer on how the cars should be designed in a no-win scenario like this, but we as a society need to address if we want to hand the responsibility of driving over to a computer.

Try out the http://moralmachine.mit.edu/ to test your responses compared to others on moral decisions made by self-driving cars.

What do you think? Write your opinions in comment section below.

Sources:

Bonnefon, Jean-François, Azim Shariff, and Iyad Rahwan. “The social dilemma of autonomous vehicles.” Science 352.6293 (2016): 1573-1576.

http://europe.newsweek.com/2015-brought-biggest-us-traffic-death-increase-50-years-427759?rm=eu

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