Mr. Markets

If Google Checkout succeeds, then Amazon's competitive edge will be diminished

I have an idea on how Google can utilize Google Checkout to provide even greater benefits to its merchants. If Google Checkout gets millions of users, Google could utilize the purchase history data to make personalized product recommendations to users of Google Checkout based on the product catalog of each merchant.

Amazon's big advantage is its ability to utilize millions of customers purchase histories to provide recommendations specific to an individual user. So what happens when Google is able to aggregate purchase history for millions of users across thousands of different merchants? At that point, Google's data is just as rich if not more rich than Amazon's.

Product recommendations could of course be displayed anywhere on the merchants' websites, just as Amazon does. But most immediately obvious and trackable is the ability to up-sell someone after users have added something to their shopping cart. Just as adding an item to your amazon cart causes an up-sell page with product recommendations to appear, the same could occur for merchants using Google Checkout.

This method would be great for Google because the merchants could easily track order size as a result of displaying product recommendations using the Google Checkout engine as compared to their internal personalization engine or whatever other methods they utilize for up-selling. The results would probably show a huge advantage for using Google Checkout's up-sell recommendations.

Smaller merchants in particular would see average order sizes rise because they are most likely to lack the purchase history data or the technical resources to make good recommendations. In turn, merchants would spend more money advertising on Google because the return on investment as measured by average amount per order per visitor from Google would go up.

If successful, Google Checkout could become a great equalizer of commerce to enable smaller shops to compete. A whole new question becomes this: if Google Checkout succeeds, what is the permanent impact on Amazon's business? Will we see more niche merchants flourish and Amazon become less of a destination for all things shopping?

Do you think my idea would be good for Google to implement as part of Google Checkout? Would it make a difference? Please post your comments!

For more information on Google Checkout, be sure to read posts by John Battelle, TechCrunch, Charlene Li,  Steve Rubel, PaidContent and Search Engine Watch.

If Farecast serves millions of people, it is designed to fail

Farecast could absolutely change the way people think about buying airline tickets online. It is only available in Seattle and Boston right now, but once it rolls out to all cities, you will be able to see historical pricing for routes at any given time of the year. This is great because airlines are quite predictable in the pricing moves they make. Observe the pricing graph, and you can easily tell if it is a good time to buy a given ticket, or best to wait a few days.

The problem here is that Farecast is designed to be a victim of its success. That is, if everyone uses Farecast, then the airlines have a serious problem because their pricing schemes will no longer work. The result? Airlines will change how they price, which will cause Farecast to become a whole lot less good at predicting prices.

What can Farecast do to avoid this? If they have meaningful patents, they can prevent competitors like Flyspy from making the same information available to everyone. If that is the case, then Farecast could sell subscriptions. By limiting it to people most willing to pay, the impact of Farecast on revenues would likely not be great enough to force the airlines to change their pricing policies.

However, as Mike Arrington points out, it may be in the best interests of consumers that websites like Farecast exist. Why? Because if airlines are pushed, they may come up with a simpler pricing structure.

Funniest of all is that Southwest is not on Farecast, often has the best rates, has the simplest pricing of all and has been profitable for years while other airlines have declared bankruptcy multiple times.

Go figure.

Thanks to Brian Smith at Search Engine Watch for the link to this post. Read his article for more information on the "New Players in Travel Search."

THE NEW SEARCH GENERATION: Google, AskJeeves, NewHoo, MiningCo

(Note: I put the below post on mrmarkets.com on November 16, 1998 with the text just as you see it below. The Internet Archive maintains a record of this fact. At the time, I was 14 years old and a freshman in high school, so please forgive some grammatical mistakes.)

Hello, and welcome to the new generation of search. We are Google, Askjeeves, NewHoo, and MiningCo, here to make your trip to a website as quick and efficient as possible! We pride ourselves with revolutionary and untested technology and ideas, hoping you'll like our service.

My name is Doug Sherrets and I am your guide through this search engine mess. These four companies want to change the way you search, whether by new technology, real people indexing sites, or almost human-like question-and-answer sessions, they have it all.

These days searching the net means a lot more than just finding a website on the internet. It's a billion dollar business, and we're talking billionairres within 5 years. When people see this amassment of wealth, it causes a gold rush. And that's obviously been unfolding over the 2 years. Some companies have got on the net, offering a search or directory service that really did address a user need, while others stuck themselves out there with no purpose, regardless of whether or not it was useful. Finally those bad search engines are being weeded out. The owners realize there's a lot more to the search engine market than just indexing a bunch of sites. You have to have the drive and vision to make things happen.

A new search engine is Google.com, founded by some kids out of Stanford, the same university where Excite and Yahoo spawned. You might think the search engine market has already developed and today's leaders -- like Yahoo, Lycos, and Excite -- are going to be the search engine leaders for years to come. Guess what? You're wrong. Start-ups like Google will offer better services, and unless the established players react, they'll lose market share.

Whether you like the name or not, Google is going to be a search engine to be reckoned with. The technology is simple: they rank sites based on popularity. The popularity of a site is calculated by seeing how many "links" there are to the site from other sites. (read this story from RedHerring.com for more info.).

While Google won't be #1 overnight, they'll get up there because people will like their search over Yahoo, Lycos, or Excite. Google produces accurate results, and that is what search is all about, right?

How about AskJeeves.com. Instead of typing in key words for a search, you type a question, such as, "Where can I find information about Bill Clinton?" It searches and brings you a site about Bill Clinton. Even though AskJeeves.com isn't perfect searching for ALL your questions, it's opening a new door. A door of interactivity between the search engine and the user. Look for more about AskJeeves.com soon on MrMarkets.com.

Both MiningCo and NewHoo have real people crawling the web for you. MiningCo.com has "guides" that write articles about their topics -- say biology -- regularly. Each MiningCo.com guide also manages their own site including a message board. NewHoo calls them "editors" that aren't paid. The "editors" cover certain topics for the directory, looking at a lot of sites individually to find the best, and they rank them.

While NewHoo will have a tough time getting enough humans to give up their time to crawl the web's 200 million+ web pages, it's a step in the right direction. All four of these companies -- Google, AskJeeves, MiningCo, and NewHoo -- have problems they have to solve. It's just a fact of life for companies getting ahead of an industry.

The search engine business is highly competitive and where it is headed is uncertain. Can just a search engine company support a $1+ billion market value? Bhose billion dollar companies have more services like personalization, chat, and message boards other than search. You're right, but if you take search away, you take away the basis of the whole site. Users don't go to a portal to get stock news, they go to a portal to get to where they want to go. They might stop for a couple minutes on the portal using the extra services, but internet investors have to remember the epicenter of the whole business is the search engine. Instead of portals putting search on the backburner and letting their indexes get outdated, they should be buying out companies like AskJeeves and Google. They are the future.

While it's important for portals to develop their other businesses with better prospects, the search engine must not be neglected because it still has tremendous value. It's easy to look away from the tried and true search engine giving a portal a steady growth in page views and advertising revenue and trying to find hidden value in emerging businesses like online shopping guides, auctions and stores, and web calendars. So the question is do the portals believe still believe in the search engine. It's that simple.

It will be interesting to see how the portals react to Google, MiningCo, NewHoo, and AskJeeves. Consolidation? Or ignorance? I guess we'll have to wait to see what happens.

Another chapter of search engine mystery is closed.... or is it?