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Posts Tagged ‘Retail Industry’

Top Internet Trends of 2000-2009: E-commerce

Over the past decade, Amazon.com and eBay have continued to dominate the online retail market in the United States. However, there have been signs that more social and distributed forms of online shopping are gaining traction. eBay, in particular, is beginning to lose ground.

In this post, we review the past decade of e-commerce and the key trends. Advances in recommendations technology, together with the emergence of social media and mobile commerce, have combined to change the way e-commerce is transacted.

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This is the third in a ReadWriteWeb series looking back at some of the key trends of the past 10 years. We previously covered the online music industry and the democratization of news media.

Recommendations Technology Advances

Over the past decade the online retail industry has seen great strides in the use of recommendations technology. Amazon has consistently led the field in this, with its sophisticated blend of personalized, social and item recommendations.

Many of the retail recommendations in use today rely on implicit user data. These systems typically track user data, which is then analyzed with a set of usually proprietary algorithms. The end result: recommendations for users. Earlier this year we looked into Baynote’s recommendation system:

"Baynote observes real-time user behavior on a site and looks for implicit, emergent patterns. It uses collective intelligence and an affinity engine to analyze the data. Common behaviors which it tracks include page refers, queries, mouse movement, time spent on a page, peer behavior."

Other similar recommendation technologies we’ve profiled include MyBuys, ATG and richrelevance.

Social Media Takes Retail to Blogs, Social Networks

As with nearly every other industry, shopping sites have increasingly used social media to promote their wares.

According to Shop.org’s recent eHoliday Study, 47.1% of retailers surveyed will be increasing their use of social media this holiday season. Specifically, more than half of retailers have "added or improved their Facebook page (60.3%) and Twitter pages (58.7%)" this year. Nearly two-thirds (65.6%) have "added or enhanced blogs and RSS feeds" over the same time period.

One result of this has been a big increase in implicit social recommendations data across social networks and blogs.

Another trend with ecommerce sites is distributed sales. Anyone can embed an Amazon store into their blog or social network these days. As Kurt Collins of social commerce vendor Cartfly told us in December, this won’t replace "end destination e-commerce" – but it will "augment sales tremendously" at the edge of the network.

Mobile Commerce Arrives, Albeit Slowly…

The growth of mobile phones has been a big trend this decade. However, as Sarah Perez wrote in September, mobile commerce in the U.S. market has struggled for momentum.

According to data from eMarketer, more than 70 million U.S. mobile phone users will access the internet from their devices this year. Despite this, the m-commerce market remains immature. In an April 2009 survey by RIS News, privacy and security concerns are still at the forefront of both shoppers’ and retailers’ minds.

There is some promise that mobile commerce will finally gain traction in the coming decade. Mobile payments firm Billing Revolution found that on-the-go consumers are happy to purchase small ticket items like pizza and movie tickets, for example.

One market that has shown strong signs of mobile commerce growth is Japan, according to Morgan Stanley.

See also our analysis of mobile payments.

Conclusion

New recommendations technologies make it easier every year for consumers to find what they want, social media has driven a lot of retail activity to small websites and social networks, and mobile commerce has slowly but surely gained a foothold in e-commerce.

These are just some of the trends in e-commerce over the past 10 years. While Amazon.com and eBay continue to be the giants of online retail, the Social Web and advances in web technology have both had a big impact this decade.

See also:

• Top Internet Trends of 2000-2009: Online Music
• Top Internet Trends of 2000-2009: Democratization of News Media

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Web 2.0 Panel: Humans as Sensors

This post is sponsored by IBM’s A Smarter Planet blog.

Today at the Web 2.0 Summit, Brady Forrest of O’Reilly Media ran a panel called Humans As Sensors. With him were four organizations doing innovative applications using sensors: Markus Tripp (Mobilizy), Deborah Estrin (Computer Science Department, UCLA), Sharon Biggar (Path Intelligence), Di-Ann Eisnor (Waze).

Each of the speakers started by explaining what they do.

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Waze is a real-time crowd sourcing and live mapping application. It works on iPhone, Windows Mobile, Symbian and Android. Di-Ann Eisnor explained that their service does "transactional cartography." It was initially launched in Israel, then launched in the U.S. just a few months ago.

Eisnor said that Waze aimes to take sensor data from "entertainment to action." It started out being used to map objects, then people, now processes.

Path Intelligence is bringing online innovation to the real world, according to co-founder and the Chief Operating Officer Sharon Biggar. They are targeting the retail market – specifically shops in malls. She said that the online world is good at collecting data on user experience, but the local mall doesn’t have that data.

What Path Intelligence is doing is analogous to Google Analytics, said Biggar. It works by collecting sensor datas and anonymous pings from cellphones – it doesn’t require downloads.

Biggar said that what they are measuring is real-time behavior, "right now." One of their current aims is to help the offline retail industry cope with recession. At mall sites they respond directly to the way shoppers are behaving. They do this by installing sensors and accurately locating mobile phones indoors. They use that data to help businesses improve in the real world and in real time.

Mobilizy makes the AR browser Wikitude, which we have covered extensively here on ReadWriteWeb. It works on mobile phones that have GPS and a compass. As we’ve explained before, Wikitude is overlaid information on the real world.

What’s next for the product? Mobilizy manager business development Markus Tripp said that they plan to open it for the public, so people can create content for AR. It will be in the same format as Google Earth.

Deborah Estrin from the Computer Science Department at UCLA was on next. She explained that they are doing a lot of research into "participatory sensing." They are taking it from aggregators to personal apps. The use cases include specific civic and citizen data campaigns. She suggested that what they do is "twitter with a purpose," although she admitted that this was a cynical thing to say.

Example apps include whatsinvasive.com – enabling users to provide data on what plants are invasive (weeds etc) – and Biketastic.

Discussion

The panel then had a discussion on where sensor and mobile-generated data is headed on the Web.

Brady asked the panel about how users can trust the data, whether it be implict or explicit.

Estrin from UCLA said that giving people visibility back into the data is key. Let people have legible feedback on the data. She also remarked that they always have "eyes on the process" – in other words, humans in the loop. So what they do is not entirely automated.

Waze has learned from web 2.0 that you need to apply different weighting for different people.

Brady asked next: what type of critical mass of people is needed for these kinds of apps?

Di-Ann Eisnor from Waze said that it really depends on the app and its goals. She noted that for them Israel was an incubator / test bed. So they shot for half a percent of the market.

Sharon Biggar from Path Intelligence agreed that it depends on the app and what you’re trying to achieve. For them their focus is retail, so their comparison point (in terms of data) is what users had before they came along.

Deborah Estrin from UCLA remarked that as you get more data, you get more value.

Brady asked the magical Web 2.0 question: how do you all plan on making money?

Sharon Biggar from Path Intelligence explained that their business model is built into what they do: retail. She said that retailers will pay for the data they provide. However she noted that these companies "need to get the sensors out there, somehow" – which is a cost to those businesses.

Di-Ann Eisnor from Waze said that the "navigable data market" is worth $4B and is dominated by the big map data companies like Navteq. Waze sells their data at low cost, but she noted that Google is trying to disrupt the market. She admitted that this is shaking things up for Waze, but she thinks that location based services are coming into their own (which they are indeed, according to Morgan Stanley).

Markus Tripp from Mobilizy said that they are a very new business, but he said they are generating revenue. He said that the main goal with Wikitude is to get reach and as much content as possible into its system.

Brady asked as a final question: is Twitter the ultimate sensor?

Sharon Biggar from Path Intelligence said that Twitter data is "another indicator of interest" – another piece of data to add to the equation.

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RFID: State of the Market

RFID is an emerging standard for identification and tracking of goods. It’s one of the key underlying technologies for the Internet of Things. Yesterday we looked at the market for Internet fridges. Our conclusion was that until RFID tags become more common place on food items, Internet fridges will continue to be novelty appliances. In this post we look at the current state of RFID (Radio-frequency identification).

Some big names in the retail industry have climbed on board the RFID freight train. Notably Wal-Mart, which has not only adopted RFID big time, but pressured its suppliers to do so too.

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The US retail giant issued a mandate to its top 100 suppliers in late 2004, requiring them to use RFID tags. The suppliers struggled to comply, so more Wal-Mart mandates followed. Finally, after years of slow take-up, Wal-Mart introduced fines for non-compliance in January 2008.

The Practical Problems of RFID

As CRM Buyer wrote recently, "while the expectation was that RFID would revolutionize the supply chain from end to end, achieving that transformation was an overly ambitious goal." CRM Buyer pointed to issues such as the cost of tags, problems with reader accuracy, privacy and data integration.

Currently only a handful of Wal-Mart’s nearly 150 distribution centers are RFID-enabled, according to Bob Novack – an associate professor of supply chain management for Penn State. A big part of the problem is that it’s just too hard for suppliers to implement RFID technology. Even at the most basic level of signal interference between RFID chips and things like metal racks. The cost to implement RFID is also a challenge, particularly in a recession.

The CRM Buyer article goes on to state that while RFID may not be finding much success with front-end retail or distribution, it is finding better take up with back-of-the-store inventory and tracking high-value products (e.g. pharmaceuticals, electronics).

Bokodes: Could Compete With RFID in Some Areas

Perhaps the right technology hasn’t yet been found for item identification and tracking. This week MIT announced a new type of bar code, called a bokode. As the BBC reported, bokodes can hold thousands of times more information than bar codes and can be read by a standard mobile phone camera.

Bokodes could replace RFID systems "in some near-field communication applications," suggested MIT Media Lab’s Ankit Mohan. For example, RFID cannot be used for credit cards, because the data can be read at a distance and so isn’t secure enough. Mohan thinks that the Bokode "could encode just as much information, but require an open line-of-sight to the card to be read, increasing security."

While bokodes currently cost about $5 each in their prototype stage, MIT expects the price to drop to about 5 cents when produced in even relatively small volumes.

Conclusion

RFID is almost certainly here to stay, even if other ‘better’ technologies appear. As this deployment map from the RFID Journal shows, the technology is getting solid take-up, even despite the practical difficulties. Tech companies such as IBM are also using RFID extensively. However, RFID is still a long way off replacing bar codes.

As far as consumer applications for RFID go, don’t hold your breath. Tim Berners-Lee was excited by the possibilities of RFID chips, for example enabling people to check information about individual products on the Web. Before we can do that kind of thing though, retailers and suppliers need to overcome many hurdles to even implement the baseline RFID technology.

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