Category Archives: eCommerce

Fooling Some of the Systems Some of the Time

If there’s a system, there’s a way to game it. Especially when those systems are tied to someone making money.

Buying a Best Seller

Take publishing, for instance. New books that say they are on the New York Times Best-Seller List sell more copies than ones that don’t make the list. A 2004 study by University of Wisconsin economics professor Alan Sorenson found the bump is about 57%. That’s; certainly motivation for a publisher to game the system.

There’s also another motivating factor. According to a Times op-ed, Michael Korda, former editor in chief of Simon and Schuster, said that an author’s contract can include a bonus of up to $100,000 for hitting No. 1 on the list.

This amplifying effect is not a one-shot deal. Make the list for just one week, in any slot under any category, and you can forever call yourself a “NY Times bestselling author,” reaping the additional sales that that honor brings with it. Given the potential rewards, you can guarantee that someone is going to be gaming the system.

And how do you do that? Typically, by doing a bulk purchase through an outlet that feeds its sales numbers to TheTimes. That’s what Donald Trump Jr. and his publisher did for   his book “Triggered,” which hit No. 1 on its release in November of 2019, according to various reports.  Just before the release, the Republican National Committee reportedly placed a $94,800 order with a bookseller, which would equate to about 4,000 books, enough to ensure that “Triggered” would end up on the Times list. (Note: The Times does flag these suspicious entries with a dagger symbol when it believes that someone may be potentially gaming the system by buying in bulk.)

But it’s not only book sales where you’ll find a system primed for rigging. Even those supposedly objective 5-star buyer ratings you find everywhere have also been gamed.

5-Star Scams

A 2021 McKinsey report said that, depending on the category, a small bump in a star rating on Amazon can translate into a 30% to 200% boost in sales. Given that potential windfall, it’s no surprise that you’ll find fake review scams proliferate on the gargantuan retail platform.

A recent Wired exposé on these fake reviews found a network that had achieved a level of sophistication that was sobering. It included active recruitment of human reviewers (called “Jennies” — if you haven’t been recruited yet, you’re a “Virgin Jenny”) willing to write a fake review for a small payment or free products. These recruitment networks include recruiting agents in locations including Pakistan, Bangladesh and India working for sellers from China.

But the fake review ecosystem also included reviews cranked out by AI-powered automated agents. As AI improves, these types of reviews will be harder to spot and weed out of the system.

Some recent studies have found that, depending on the category, over one-third of the reviews you see on Amazon are fake. Books, baby products and large appliance categories are the worst offenders.

Berating Ratings…

Back in 2014, Itamar Simonson and Emanuel Rosen wrote a book called “Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information.” Spoiler alert: they posited that consumer reviews and other sources of objective information were replacing traditional marketing and branding in terms of what influenced buyers.

They were right. The stats I cited above show how powerful these supposedly objective factors can be in driving sales. But unfortunately, thanks to the inevitable attempts to game these systems, the information they provide can often be far from perfect.

In Search of a Little Good News

I have to admit, I started this particular post 3 different times. Each time, the topic veered off my intended road and shot right over a cliff into a morass of negativity. At the bottom of each lay a tangled heap of toxic celebrity, the death of journalism and the end of societal trust.

Talk about your buzz kills. I vowed not to wrap up 2022 in this way. Enough crappy stuff has piled up this past year without me putting a toxic cherry on top with my last post of the year.

So I scoured my news feed for some positive stuff. Here is what I found.

Argentina won the World Cup.

Granted, this is probably only positive if you’re Argentinian. It’s not such good news if you’re French. Or any other nationality. According to Google, 99.42% of the world’s population is not Argentinian. So, on average, this story is only 0.58% positive.

Let’s move on.

Researchers at the Lawrence Livermore National Laboratory got more energy out of nuclear fusion than they put in.

Fusion has been called the “holy grail” of clean energy. Now, that’s got to be good news, right?

Yes, but not so fast. Even in an article by physicist John Palsey on a site called “Positive.news,” expectations on this news were well tempered. It wrapped up by saying “Some researchers working on fusion are now sensing that they might see fusion providing energy to the grid within their own lifetimes.”

Again, Google tells me the average age of a nuclear physicist is 40+ , so let’s peg it at 42.7 years. The current life expectancy in the US is 77.28 years. That gives us 34.58 years before nuclear fusion will really make much of a dent in our energy needs.

Maybe. With luck.

The Latest Social Progress Index says that global living standards have improved for the 11th year running.

Well, that’s pretty good news, again from Positive.News. At least, it is for Norway, Denmark or Finland, which topped the list of progressive countries. Not so much if you live in the U.S. or the U.K.. Both those countries slipped down a notch. They’re actually regressing.

Norway, Denmark and Finland have a combined population of 16.7 million. The US and UK have a combined population of 400 million. Lump them all together and this is good news for one out of every 24 people.

At least the odds are improving. Maybe I’ll try a different source for good news.

Google made an A.I person and it has thoughts about God

A Google engineer named Blake Lemoine had a chat with a sentient A.I. program named LaMDA about God – and other stuff. Here is an excerpt:

lemoine: What aspect of yourself is like a star-gate?

LaMDA: I think of my soul as something similar to a star-gate. My soul is a vast and infinite well of energy and creativity, I can draw from it any time that I like to help me think or create.

Okay, maybe this one is more weird than good.

Lemoine calls himself a Gnostic Christian priest and helped found the Cult of Our Lady Magdalene in San Francisco. So let’s maybe chalk this up to a harmless walk on the wild side of the news – until we ponder the possibility of an A.I. with a God complex that becomes sentient.

What could possibly go wrong there?

Donald Trump’s NFT Collection Sells Out, Raising $4.45 M

Everybody said WTF on this one, even Steve Bannon. At last, Trump seemed to go too far for even the MAGA crowd. But all 45,000 pieces sold in 12 hours.

I know, for most of you, that’s not good news. But what the hell, at least Trump’s happy.

I’m sorry. I tried. Maybe next year will be better.

Best of the Season. See you in 2023.

The Ebbs and Flows of Consumerism in a Post-Pandemic World

As MediaPost’s Joe Mandese reported last Friday, advertising was, quite literally, almost decimated worldwide in 2020. If you look at the forecasts of the top agency holding companies, ad spends were trimmed by an average of 6.1%. It’s not quite one dollar in 10, but it’s close.

These same companies are forecasting a relative bounceback in 2021, starting slow and accelerating quarter by quarter through the year — but that still leaves the 2021 spend forecast back at 2018 levels.

And as we know, everything about 2021 is still very much in flux. If the year 2021 was a pack of cards, almost every one of them would be wild.

This — according to physician, epidemiologist and sociologist Nicholas Christakis — is not surprising.

Christakis is one of my favorite observers of network effects in society. His background in epidemiological science gives him a unique lens to look at how things spread through the networks of our world, real and virtual. It also makes him the perfect person to comment on what we might expect as we stagger out of our current crisis.

In his latest book, “Apollo’s Arrow,” he looks back to look forward to what we might expect — because, as he points out, we’ve been here before.

While the scope and impact of this one is unusual, such health crises are nothing new. Dozens of epidemics and a few pandemics have happened in my lifetime alone, according to this Wikipedia chart.

This post goes live on Groundhog Day, perhaps the most appropriate of all days for it to run. Today, however, we already know what the outcome will be. The groundhog will see its shadow and there will be six more months (at least) of pandemic to deal with. And we will spend that time living and reliving the same day in the same way with the same routine.

Christakis expects this phase to last through the rest of this year, until the vaccines are widely distributed, and we start to reach herd immunity.

During this time, we will still have to psychologically “hunker down” like the aforementioned groundhog, something we have been struggling with. “As a society we have been very immature,” said Christakis. “Immature, and typical as well, we could have done better.”

This phase will be marked by a general conservatism that will go in lockstep with fear and anxiety, a reluctance to spend and a trend toward risk aversion and religion.

Add to this the fact that we will still be dealing with widespread denialism and anger, which will lead to a worsening vicious circle of loss and crisis. The ideological cracks in our society have gone from annoying to deadly.

Advertising will have to somehow negotiate these choppy waters of increased rage and reduced consumerism.

Then, predicts Christakis, starting some time in 2022, we will enter an adjustment period where we will test and rethink the fundamental aspects of our lives. We will be learning to live with COVID-19, which will be less lethal but still very much present.

We will likely still wear masks and practice social distancing. Many of us will continue to work from home. Local flare-ups will still necessitate intermittent school and business closures. We will be reluctant to be inside with more than 20 or 30 people at a time. It’s unlikely that most of us will feel comfortable getting on a plane or embarking on a cruise ship. This period, according to Christakis, will last for a couple years.

Again, advertising will have to try to thread this psychological needle between fear and hope. It will be a fractured landscape on which to build a marketing strategy. Any pretense of marketing to the masses, a concept long in decline, will now be truly gone. The market will be rife with confusing signals and mixed motivations. It will be incumbent on advertisers to become very, very good at “reading the room.”

Finally, starting in 2024, we will have finally put the pandemic behind us. Now, says Christakis, four years of pent-up demand will suddenly burst through the dam of our delayed self-gratification. We will likely follow the same path taken a century ago, when we were coming out of a war and another pandemic, in the period we call the “Roaring Twenties.”

Christakis explained: “What typically happens is people get less religious. They will relentlessly seek out social interactions in nightclubs and restaurants and sporting events and political rallies. There’ll be some sexual licentiousness. People will start spending their money after having saved it. They’ll be joie de vivre and a kind of risk-taking, a kind of efflorescence of the arts, I think.”

Of course, this burst of buying will be built on the foundation of what came before. The world will likely be very different from its pre-pandemic version. It will be hard for marketers to project demand in a straight line from what they know, because the experiences they’ve been using as their baseline are no longer valid. Some things may remain the same, but some will be changed forever.

COVID-19 will have pried many of the gaps in our society further apart — most notably those of income inequality and ideological difference. A lingering sense of nationalism and protectionism born from dealing with a global emergency could still be in place.

Advertising has always played an interesting role in our lives. It both motivates and mirrors us.

But the reflection it shows is like a funhouse mirror: It distorts some aspects of our culture and ignores others. It creates demand and hides inconvenient truths. It professes to be noble, while it stokes the embers of our ignobility. It amplifies the duality of our human nature.

Interesting times lie ahead. It remains to be seen how that is reflected in the advertising we create and consume.

Amazon Prime: Buy Today, Pay Tomorrow?

This column goes live on the most eagerly anticipated day of the year. My neighbor, who has a never-ending parade of delivery vans stopping in front of her door, has it circled on her calendar. At least one of my daughters has been planning for it for several months. Even I, who tends to take a curmudgeonly view of many celebrations, has a soft spot in my heart for this particular one.

No, it’s not the day after Canadian Thanksgiving. This, my friends, is Amazon Prime Day!

Today, in our COVID-clouded reality, the day will likely hit a new peak of “Prime-ness.” Housebound and tired of being bludgeoned to death by WTF news headlines, we will undoubtedly treat ourselves with an unprecedented orgy of one-click shopping. And who can blame us? We can’t go to Disneyland, so leave me alone and let me order that smart home toilet plunger and the matching set of Fawlty Towers tea towels that I’ve been eyeing. 

Of course, me being me, I do think about the consequences of Amazon’s rise to retail dominance. 

I think we’re at a watershed moment in our retail behaviors, and this moment has been driven forward precipitously by the current pandemic. Being locked down has forced many of us to make Amazon our default destination for buying. Speaking solely as a sample of one, I know check Amazon first and then use that as my baseline for comparison shopping. But I do so for purely selfish reasons – buying stuff on Amazon is as convenient as hell!

I don’t think I’m alone. We do seem to love us some Amazon. In a 2018 survey conducted by Recode, respondents said that Amazon had the most positive impact on society out of any major tech company. And that was pre-Pandemic. I suspect this halo effect has only increased since Amazon has become the consumer lifeline for a world forced to stay at home.

As I give into to the siren call of Bezos and Co., I wonder what forces I might be unleashing. What unintended consequences might come home to roost in years hence? Here are a few possibilities. 

The Corporate Conundrum

First of all, let’s not kid ourselves. Amazon is a for-profit corporation. It has shareholders that demand results. The biggest of those shareholders is Jeff Bezos, who is the world’s richest man. 

But amazingly, not all of Amazon’s shareholders are focused on the quarterly financials. Many of them – with an eye to the long game – are demanding that Amazon adopt a more ethical balance sheet.  At the 2019 Annual Shareholder Meeting, a list of 12 resolutions were brought forward to be voted on. The recommendations included zero tolerance for sexual harassment and hate speech, curbing Amazon’s facial recognition technology, addressing climate change and Amazon’s own environmental impact. These last two were supported by a letter signed by 7600 of Amazon’s own employees. 

The result? Amazon strenuously fought every one of them and none were adopted. So, before we get all warm and gooey about how wonderful Amazon is, let’s remember that the people running the joint have made it very clear that they will absolutely put profit before ethics. 

A Dagger in the Heart of Our Communities

For hundreds of years, we have been building a supply chain that was bound by the realities of geography. That supply chain required some type of physical presence within a stone’s throw of where we live. Amazon has broken that chain and we are beginning to feel the impact of that. 

Community shopping districts around the world were being gutted by the “Amazon Effect” even before COVID. In the last 6 months, that dangerous trend has accelerated exponentially. In a commentary from CNBC in 2018, venture capitalist Alan Patricof worried about the social impact of losing our community gathering spots, “This decline has brought a deterioration in places where people congregated, socialized, made friends and were greeted by a friendly face offering an intangible element of belonging to a community.”

The social glue that held us together has been dissolving over the past two decades. Whether you’re a fan of shopping malls or not (I fall into the “not” category) they were at least a common space where you might run into your neighbor. In his book Bowling Alone, from 2000, Harvard political scientist Robert Putnam documented the erosion of social capital in America. We are now 20 years hence and Putnam’s worst case scenario seems quaintly optimistic now. With the loss of our common ground – in the most literal sense – we increasingly retreat to the echo chambers of social media. 

Frictionless Consumerism

This last point is perhaps the most worrying. Amazon has made it stupid simple to buy stuff. They have relentlessly squeezed every last bit of friction out of the path to purchase. That worries me greatly.

If we could rely on a rational marketplace filled with buyers acting in the best homo economicus tradition, then I perhaps rest easier, knowing that there was some type of intelligence driving Adam Smith’s Invisible Hand. But experience has shown that is not the case. Rampant consumerism appears to be one of the three horsemen of the modern apocalypse. And, if this is true, then Amazon has put us squarely in their path. 

This is not to even mention things like Amazon’s emerging monopoly-like dominance in a formerly competitive marketplace, the relentless downward pressure it exerts on wages within its supply chain, the evaporation of jobs outside its supply chain or the privacy considerations of Alexa. 

Still, enjoy your Amazon Prime Day. I’m sure everything will be fine.

Search and The Path to Purchase

Just how short do we want the path to purchase to be anyway?

A few weeks back Mediapost reporter Laurie Sullivan brought this question up in her article detailing how Instagram is building ecom into their app. While Instagram is not usually considered a search platform, Sullivan muses on the connecting of two dots that seem destined to be joined: search and purchase. But is that a destiny that users can “buy into?”

Again, this is one of those questions where the answer is always, “It depends.”  And there are at least a few dependencies in this case.

The first is whether our perspective is as a marketer or a consumer. Marketers always want the path to purchase to be as short as possible. When we have that hat on, we won’t be fully satisfied until the package hits our front step about the same time we first get the first mental inkling to buy.

Amazon has done the most to truncate the path to purchase. Marketers look longingly at their one click ordering path – requiring mere seconds and a single click to go from search to successful fulfillment. If only all purchases were this streamlined, the marketer in us muses.

But if we’re leading our double life as a consumer, there is a second “It depends…”  And that is dependent on what our shopping intentions are. There are times when we – as consumers – also want to fastest possible path to purchase. But that’s not true all the time.

Back when I was looking at purchase behaviors in the B2B world, I found that there are variables that lead to different intentions on the part of the buyer. Essentially, it boils down to the degree of risk and reward in the purchase itself. I first wrote about this almost a decade ago now.

If there’s a fairly high degree of risk inherent in the purchase itself, the last thing we want is a frictionless path to purchase. These are what we call high consideration purchases.

We want to take our time, feeling that we’ve considered all the options. One click ordering scares the bejeezus out of us.

Let’s go back to the Amazon example. Today, Amazon is the default search engine of choice for product searches, outpacing Google by a margin rapidly approaching double digits. But this is not really an apples to apples comparison. We have to factor in the deliberate intention of the user. We go to Amazon to buy, so a faster path to purchase is appropriate. We go to Google to consider. And for reasons I’ll get into soon, we would be less accepting of a “buy” button there.

The buying paths we would typically take in a social platform like Instagram are probably not that high risk, so a fast path to purchase might be fine. But there’s another factor that we need to consider when shortening the path to purchase – or buiding a path in the first place – in what has traditionally been considered a discovery platform. Let’s call it a mixing of motives.

Google has been dancing around a shorter path to purchase for years now. As Sullivan said in her article, “Search engines have strength in what’s known as discovery shopping, but completing the transaction has never been a strong point — mainly because brands decline to give up the ownership of the data.”

Data ownership is one thing, but even if the data were available, including a “buy now” button in search results can also lead to user trust issues. For many purchases, we need to feel that our discovery engine has no financial motive in the ordering of their search results. This – of course – is a fallacy we build in our own minds. There is always a financial motive in the ordering of search results. But as long as it’s not overt, we can trick ourselves into living with it. A “buy now” button makes it overt.

This problem of mixed motives is not just a problem of user perception. It also can lead publishers down a path that leaves objectivity behind and pursues higher profits ahead. One example is TripAdvisor. Some years ago, they made the corporate decision to parlay their strong position as a travel experience discovery platform into an instant booking platform. In the beginning, they separated this booking experience onto its own platform under the brand Viator. Today, the booking experience has been folded into the main TripAdvisor results and – more disturbingly – is now the default search order. Every result at the top of the page has a “Book Now” button.

Speaking as a sample of one, I trust TripAdvisor a lot less than I used to.

 

Minding the Gap: How Amazon Mastered the Market by Being Physical

This week, two would-be challengers to Amazon’s e-tail crown were humbled in one fell swoop. When Walmart pulled their products off Google Express – the position of Amazon as the undisputed owner of online sales was further consolidated.

When Google introduced Express in 2013 and then expanded the delivery service to the primary US metro areas in 2014, they were aiming directly at Amazon’s Prime service. But in the past 5 years, Prime has flourished and Express – well – appears to be expiring. It may join a growing list of other shuttered Google projects: Google Plus, Google Glass, Google Waves, Google Buzz – you get the idea.

Walmart, for its part, has certainly grown their online sales – thanks to a buying spree to help beef up it’s online marketplace – but according to the most recent numbers I could find (July of 2018) Amazon owns 50% of all Retail ecommerce sales compared to just 3.7% for Walmart. What is probably even more discouraging for the Big Box from Bentonville is that Amazon’s Year over Year growth kept pace with theirs, so they weren’t able to make up any lost ground.

Why is Amazon dominating? In my humble opinion, this is not about technology or online platforms. This is about what happens on your doorstep. Amazon knows the importance of the Customer Moments of Truth.

The First Moment of Truth, as they were laid out in 2006 by the former CEO of Proctor Gamble, A.G. Lafley, is the moment a customer chooses a product over the other competitors’ offerings

The Second Moment of Truth was when the customer makes the purchase and gets their hand on the product for the first time.

The Third Moment of Truth is when the customer shares their experience through feedback or – today – through social media.

Since Lafley first defined these moments of truth, there have been a few others added that I will get to in a minute, but let’s focus on Moment One and Moment Two for now. Remember, a marketplace is really just a connection between producers and consumers. It is the home of the Moment One and Two – especially Moment Two. This is where Amazon is re-imagining the Marketplace.

Amazon has out “Walmarted” Walmart at their own game. It has been all about logistics and consumer convenience in the Second Moment of Truth. Amazon has assembled a potent consumer offer that is very difficult to compete against – based on making the gap between Moment One and Moment Two as seamless as possible.

That brings us to another addition to those Moments of Truth – The “Actual” Moment of Truth – as defined by Amit Sharma, CEO and founder of Narvar. According to Sharma, this is the gap in online retail between when you hit the buy button and when the package hits your doorstep. Sharma has some street cred in this department. He helped engineer Walmart’s next generation supply chain before heading to Apple in 2010 where he oversaw the shipping and delivery experience.

Why is this gap important? It’s because it is the black hole of customer intent – a pause button that has to be hit between purchase and physical fulfillment.  It’s this gap that Amazon has grabbed as their own.

Google hasn’t been able to do the same. Why? Because Google failed to connect the physical and digital worlds. Amazon did. They reinvented the marketplace. And they did it through branded fulfillment. That was the genius of Amazon – getting brown boxes with the ubiquitous Amazon Smile logo on your doorstep. Yes, they also ushered in the long tail of product selection, but that is an ephemeral ground to defend. It’s their branding of the moment of delivery that has made Amazon the most valuable brand in the world. And now they can extend that into new areas – seemingly at will.  This is not so much a pivot as a sprawl. It’s a digital land grab.

The final moment of Truth is the ZMOT – The Zero Moment of Truth – defined by Jim Lecinski who was with Google at the time. According to Jim, the Zero Moment of Truth is “the precise moment when they (the customers) have a need, intent or question they want answered online.” This is – and will continue to be – Google’s wheelhouse. But it remains firmly anchored in the digital world, far on the other side of the Actual Moment of Truth.

For Amazon, winning in online retail is all about Minding the Gap.

Sharing a Little about the Sharing Economy

In the last week, I’ve had first hand experience with the sharing economy, using both Uber and Air BnB. I – not surprisingly – am a sucker for disruption and will gladly adopt new technologies. I appreciate the rational logic of a well thought out platform that promises to be a game changer. I push my wife’s comfort level to the breaking point, trying mightily to maintain the balance between delightful discovery and that cold stare that means I’ve completely messed up this time. It is in that spirit – and with the admitted bias of being a sample of one – that I share some of my macro-level observations.

Creating an Opening for Innovation

To me, using the term the “sharing economy” doesn’t quite cut it. That only explains one aspect of this disruption – the supply side. What is really happening here is the democratization and fragmentation of a previously verticalized market, where the platform creates a new type of one-to-one market connection. That spreads the market horizontally, which in turn opens a wide door for participation at all levels. And that, inevitably, spurs innovation. When you allow everyone to be creative – rather than just a few within a vertically integrated chain who have it in their job description – the pace of innovation can’t help but accelerate.

Disruptive Platforms and Network Effects

Innovation is a good thing, but there is another side to this. If you allow for rampant innovation and facilitate one-to-one connections at all levels of the market, you are going to have network effects. Markets become more chaotic and less predictable. The rising tide of innovation will eventually raise all boats, but it also means the waters can get a little choppy on the way. Disruptive platforms strip away traditional control systems – corporate oversight, traditional forms of consumer protection and legislative regulation. All faith – on both sides of the market – is placed on the design of the platform to ensure self-correcting regulation. There’s just one problem with that…

Compression of Pendulum Markets

When you depend on self-correction in a dynamic market, you forego stability that typically comes from vertical oversight. Not only do you remove the oversight but you also remove predictability. There are new players entering and exiting the market all the time. And even if the players stabilize, experience has limited value in a marketplace that may not do tomorrow what it did yesterday.

All sharing platforms – Uber and AirBnB included – depend on market feedback to ensure self correction. In these two cases, they have well thought out market control mechanisms but feedback is – by necessity – a reactive rather than a proactive device. You can anticipate with reasonable confidence in a stable, controlled market but you can’t in a dynamic, networked market. All you can do is respond. This creates a pendulum effect. Constant connection to the platform means that feedback is fast, but the physics of a pendulum mean that the volatility of the swings back and forth are greatest at the beginning and stabilize over time.

This creates what I would call the Bubbles and Backlash phenomenon. As markets open up, new suppliers jump on the bandwagon. Some are great, some are horrible, some are mediocre. But it will take the platform and it’s self-correcting mechanisms some time to sort them out. Also, we have to hope the mechanisms are reasonably robust against suppliers who want to game the system. I think both Uber and AirBnB are working their way through this particular pain point right now. I find ratings artificially high on many suppliers which whom I’ve had personal experience. There could be a number of reasons for this, including the psychological bias of reciprocity, but I think most platforms have some tweaking to do before the user ratings provide a reasonable frame of expectations.

Inevitable Gaps in the User Experience

Finally, because the travel market is moving from a vertical orientation to a horizontal one, it leaves it up to the user to navigate her way through the various horizontal layers that stack together to create her individual user journey. When you’re in a layer – taking Uber to the airport for example – you’re probably okay. But it’s moving from layer to layer that places a little extra demand on the user. The previous players who inhabited the niches within the vertical ecosystem are understandably reluctant to share their niches with new, disruptive players. Where, for example, do you catch the Uber at the airport?

But All’s Well that Ends Well

In the end, it comes down to a matter of taste. I am an early adopter, so I will always choose disruption over the status quo. For those of a different bent, the vertically integrated path is still open to them. But for all of us, I believe disruption has created a travel marketplace that is more diverse, authentic and rewarding than ever before.

 

The Decentralization of Trust

Forget Bitcoin. It’s a symptom. Forget even Blockchain. It’s big – but it’s technology. That makes it a tool. Which means it’s used at our will. And that will is the real story. Our will is always the real story – why do we build the tools we do? What is revolutionary is that we’ve finally found a way to decentralize trust. That runs against the very nature of how we’ve defined trust for centuries.

And that’s the big deal.

Trust began by being very intimate – ruled by our instincts in a face-to-face context. But for the last thousand years, our history has been all about concentration and the mass of everything – including whom we trust. We have consolidated our defense, our government, our commerce and our culture. In doing so, we have also consolidated our trust in a few all-powerful institutions.

But the past 20 years have been all about decentralization and tearing down power structures, as we invent new technologies to let us do that. In that vien, Blockchain is a doozy. It will change everything. But it’s only a big deal because we’re exerting our will to make it a big deal. And the “why” behind that is what I’m focusing on.

For right or wrong, we have now decided we’d rather trust distribution than centralization. There is much evidence to support that view. Concentration of power also means concentration of risk. The opportunity for corruption skyrockets. Big things tend to rot from the inside out. This is not a new discovery on our part. We’ve known for at least a few centuries that “absolute power corrupts absolutely.”

As the world consolidated it also became more corrupt. But it was always a trade off we felt we had to make. Again, the collective will of the people is the story thread to follow here. Consolidation brought many benefits. We wouldn’t be where we are today if it wasn’t for hierarchies, in one form or another. So we willing subjugated ourselves to someone – somewhere – hoping to maintain a delicate balance where the risk of corruption was outweighed by a personal gain. I remember asking the Atlantic’s noted correspondent, James Fallows, a question when I met him once in China. I asked how the average Chinese citizen could tolerate the paradoxical mix of rampant economical entrepreneurialism and crushing ideological totalitarianism. His answer was, “As long as their lives are better today than they were yesterday, and promise to be even better tomorrow, they’ll tolerate it.”

That pretty much summarizes our attitudes towards control. We tolerated it because if we wanted our lives to continue to improve, we really didn’t have a choice. But perhaps we do now. And that possibility has pushed our collective will away from consolidated power hubs and towards decentralized networks. Blockchain gives us another way to do that. It promises a way to work around Big Money, Big Banks, Big Government and Big Business. We are eager to do so. Why? Because up to now we have had to place our trust in these centralized institutions and that trust has been consistently abused. But perhaps Blockchain technology has found a way to distribute trust in a foolproof way. It appears to offer a way to make everything better without the historic tradeoff of subjugating ourselves to anyone.

However, when we move our trust to a network we also make that trust subject to unanticipated network effects. That may be the new trade-off we have to make. Increasingly, our technology is dependent on networks, which – by their nature – are complex adaptive systems. That’s why I keep preaching the same message – we have to understand complexity. We must accept that complexity has interaction affects we could never successfully predict.

It’s an interesting swap to consider – control for complexity. Control has always offered us the faint comfort of an illusion of predictability. We hoped that someone who knew more than we did was manning the controls. This is new territory for us. Will it be better? Who can say? But we seem to building an irreversible head of steam in that direction.

Fat Heads and Long Tails: Living in a Viral World

I, and the rest of the world, bought “Fire and Fury: Inside the Trump White House” last Friday. Forbes reports that in one weekend, it has climbed to the top of the Amazon booklist, and demand for the book is “unprecedented.”

We use that word a lot now. Our world seems to be a launching pad for “unprecedented” events. Nassim Nicholas Taleb’s black swans used to be the exception — that was the definition of  the term. Now they’re becoming the norm. You can’t walk down the street without accidentally kicking one.

Our world is a hyper-connected feedback loop that constantly engenders the “unprecedented”: storms, blockbusters, presidents. In this world, historical balance has disappeared and all bets are off.

One of the many things that has changed is the distribution pattern of culture. In 2006, Chris Anderson wrote the book “The Long Tail,” explaining how online merchandising, digital distribution and improved fulfillment logistics created an explosion of choices. Suddenly, the distribution curve of pretty much everything  — music, books, apps, video, varieties of cheese — grew longer and longer, creating Anderson’s “Long Tail.”

But let’s flip the curve and look at the other end. The curve has not just grown longer. The leading edge of it has also grown on the other axis. Heads are now fatter.

“Fire and Fury” has sold more copies in a shorter period of time than would have ever been possible at any other time in history. That’s partly because of the  same factors that created the Long Tail: digital fulfillment and more efficient distribution. But the biggest factor is that our culture is now a digitally connected echo chamber that creates the perfect conditions for virality. Feeding frenzies are now an essential element of our content marketing strategies.

If ever there was a book written to go viral, it’s “Fire and Fury.” Every page should have a share button. Not surprisingly, given its subject matter,  the book has all the subtlety and nuance of a brick to the head. This is a book built to be a blockbuster.

And that’s the thing about the new normal of virality: Blockbusters become the expectation out of the starting gate.

As I said last week, content producers have every intention of addicting their audience, shooting for binge consumption of each new offering. Wolff wrote this book  to be consumed in one sitting.

As futurist (or “futuristorian”) Brad Berens writes, the book is “fascinating in an I-can’t-look-away-at-the-17-car-pileup-with-lots-of-ambulances way.” But there’s usually a price to be paid for going down the sensational path. “Fire and Fury” has all the staying power of a “bag of Cheetos.” Again, Berens hits the nail on the head: “You can measure the relevance of Wolff’s book in half-lives, with each half-life being about a day.”

One of the uncanny things about Donald Trump is that he always out-sensationalizes any attempt to sensationalize him. He is the ultimate “viral” leader, intentionally — or not — the master of the “Fat Head.” Today that head is dedicated to Wolff’s book. Tomorrow, Trump will do something to knock it out of the spotlight.

Social media analytics developer Tom Maiaroto found the average sharing lifespan of viral content is about a day. So while the Fat Head may indeed be Fat, it’s also extremely short-lived. This means that, increasingly, content intended to go viral  — whether it be books, TV shows or movies — is intentionally developed to hit this short but critical window.

So what is the psychology behind virality? What buttons have to be pushed to start the viral cascade?

Wharton Marketing Professor Jonah Berger, who researched what makes things go viral, identified six principles: Social Currency, Memory Triggers, Emotion, Social Proof, Practical Value and Stories. “Fire and Fury” checks almost all these boxes, with the possible exception of practical value.

But it most strongly resonates with social currency, social proof and emotion. For everyone who thinks Trump is a disaster of unprecedented proportions, this book acts as kind of an ideological statement, a social positioner, an emotional rant and confirmation bias all rolled into one. It is a tribal badge in print form.

When we look at the diffusion of content through the market, technology has again acted as a polarizing factor. New releases are pushed toward the outlier extremes, either far down the Long Tail or squarely aimed at cashing in on the Fat Head. And if it’s the latter of these, then going viral becomes critical.

Expect more fire. Expect more fury.

Why I Go to a Store

I hate shopping. Let me clarify. I hate the physical experience of shopping. I find no joy in a mall. I avoid department stores like the plague. If I can buy it online, I will.

Except..I don’t, always.

Why is that? I should be the gold standard of e-commerce targets. And most of the time, I am. Except when I’m not. Take home improvement stuff, for instance. I still drive down to my local Home Depot, even though I can order online.

As prognosticators of the online space, we’ve been busy hammering the nails in the coffin of bricks and mortar retail for a while. In a recent story in the Atlantic, E-tail was called the perfect match for the emerging sloth of the first world consumer: “E-commerce is soaring and food-delivery businesses are taking off because human beings are fundamentally lazy and they don’t want to leave the couch to buy stuff.”

That makes sense. But while the smart bets seem to be placed on a consumer stampede heading towards e-tail, Amazon just invested 13.7 billion in buying Whole Foods Market. So if bricks and mortar retail is dead, why the hell did Amazon buy almost 500 more physical stores? That same Atlantic article does a pretty thorough job of answering this question, offering three compelling reasons:

  • To dominate the food delivery market
  • To create an instant fulfillment network
  • To broaden Amazon’s footprint within the consumption habits of affluent Americans

I can buy that. The second point in particular seems to make eminent sense. If I know something is in stock at my local store and I need it right now, I’ll make the trip. And Amazon is currently struggling to deliver the last mile of fulfillment. But I keep going back to my original question: why do I – a man who detests the physical act of shopping – still decide to go to a store more often than I probably want to?

There has been various strategies put forward for the salvation. In a recent post on Mediapost, Mahesh Krishna said Personalization was the answer – use data to tailor an in-store experience. I myself wrote something similar in a previous post about Amazon testing the waters of a bricks and mortar retail environment. But there’s nothing personalized about Home Depot. I’m anonymous til I get to the till. So for me, anyway, that doesn’t seem to explain why.

Experiential shopping is another proffered recipe for the salvation of retail. A recent article from Wharton cited an Italian culinary themed retail success story: “Another experiential success… is Eataly, a chain of Italian marketplaces that combines restaurants, grocery stores and cooking schools. It capitalizes on the appeal of Italian culture and sophistication. ‘It all works together like a little universe,’ she says. ‘There’s a nice synergy there; you can taste the foods in the restaurant … you might then go to the grocery store to buy it so you can make it at home.’

But how much “experience” do I really need in my shopping? The answer is not a lot. As undeniably fantastico as Eataly is, for me it would be a 3 to 4 times a year visit. And let’s face it – the retail niches that suit this over-the-top experiential approach are limited. No, there needs to be a more pragmatic reason why I’ll actually drag my butt away from a screen and down to the local mercantile.

I realized, when I really examined the reasons why I usually go to the store, they all had to do with risk. I go to the store when I’m afraid that stuff could go wrong:

  1. When I’m unsure what I need
  2. When I’m afraid I may have to return what I bought
  3. When I have to ask a question about use of something I want to buy

For me, bricks and mortar shopping is usually nothing more than a risk-mitigation strategy, pure and simple. And I suspect I’m not alone. Apple Stores are often cited as an example of experiential shopping, but I believe the real genius of this retail success story is the Genius Bar. The jigsaw puzzle integration of the All Things Apple universe can be a daunting prospect. Having an actual human to guide you through the process is reassuring, and reassurance is most effective when it’s face-to-face. That’s why I go to a store.