One of the distinct advantages of running an online business is the absence of brick and mortar. It's the advantage of location independence. Other significant advantages include the ability to outsource (brick and mortars can too) and crowdsource. Crowdsourcing is the use of the massive community spending hours of their lives on the Interwebs to perform some specific task. Instead of paying one employee to perform a task an anonymous "crowd" does it for you.
As we know, Wikipedia is the most famous example of crowdsourcing and how it works. The objective is to write "articles" on Wikipedia and the crowd will fill in the details and take care of the editing.
Another innovative use of crowdsourcing is the phenomenon of group discounts/coupons that are available to individuals of a certain number of consumers sign on to use that group deal. This model has marketing built into it: In order for the individual consumer to utilize the deep discount the group coupon offers, he/she needs to get other people to use it as well. Hence, close to free marketing for the ones offering the group coupon. The company responsible for this idea is Groupon.
Groupon works by negotiating a deep discount with a local firm in your city and offering that deep discount to individual consumers if there are enough consumers taking advantage of that deal. The firm trades lower prices for higher volume. Groupon takes a share of the discount revenue, and the consumer exchanges word of mouth marketing for lower prices.
Crowdsourcing and group coupons are two great examples of decentralization that are very successful on the internet.
In our next post, we will discuss how to apply the rules of decentralization to outsource your life, free up time, and cultivate location independence.
In the meantime, keep an eye out for great looking markets.
After reading your post for this week about crowdsourcing this idea comes to me about how many things are possible in the internet due to the huge community of people navigating the web. So, this crowdsourcing phenomenon takes advantage of this huge crowd, and bright ideas such as Wikipedia and GroupOn comes to life. I think it will be even more interesting how Google will incorporate Social Commerce into its web products and what it will turn into if it acquires GroupOn. For sure, it will benefit from a huge data of consumers, businesses, buying transactions and trends. The $5 to $6 billion dollar deal that could take place if Google acquires GroupOn (1) reflects what Social Commerce is worth for a giant like Google. However, Amazon has gone ahead in Social Commerce sites acquisition, after taking on LivingSocial yesterday in a $175 million deal. (2)
ReplyDeleteReferences
(1)http://www.bizjournals.com/sanjose/morning_call/2010/12/groupon-google-may-not-be-a-great-deal.html)
(2)
http://finance.fortune.cnn.com/2010/12/03/deal-of-the-day-amazon-pumps-up-livingsocial/
I'm having a hard time finding anything truly significant that Groupon does and that it's competitors (LivingSocial inc., Bloomspot Inc. etc..) don't do. With the exception of a ridiculous head-start in the market, whats the difference?. What do you think sets Groupon apart? Judging by the size of Google's unsuccessful bids there must be something there that sets it apart.
ReplyDeleteWhat bothers me is that I find their use of "crowdsourcing" to be absolutely genius but such a broad strategy can be applied by anyone to almost any outlet. So why does Google want to spend billions on acquiring group-on instead of branding "g-save" or "wikishop.com" ?