VRM, Fourth Party and the Empowered Consumer

VRM, Fourth Party and the Empowered Consumer

What happens when you reverse the marketing funnel and you allow a consumer to specify exactly what they want? So a merchant or manufacturer would be able to go to the market and ask 'who is looking for this item at this price at this location?' and will obtain a list of qualified buyers. A number of ideologies and start-ups are taking advantage of web-technology to allow consumers to publish their needs and wants - will the end-result be a new breed of electronically enabled 'middle-men'? (April 2011)

Markets Are Conversations - a Re-Evolution

Over time we have moved from the Bazaar to the Store to the Superstore and each step has dimished the Consumer's voice and given the Vendor more power and control in the purchasing process. Today we buy from the Vendor's catalog at the price the vendor specifies, but taking my cues from the ClueTrain Manifesto I believe that this is about to change.

The read-write-web that we have today is allowing individual consumers to capture their lifestream via services like Twitter, Foursquare and Facebook state their opinions via their personal blogs, review products (e.g. Amazon Reviews) and businesses (e.g. Yelp). So surely only a natural evolution of this before they are able to publish their requests for products and services.

The traditional 'Wanted' ad's in the Classifieds section of the local rag allowed the consumer to publish their wants and needs to all those who bother to read it. This along with the paper migrated online (e.g. SF Bay Guardian Classifieds) but traditionally the For Sale ad's highly outnumbered the Wanted ad's.

Craigslist and Ebay have had services allowing buyers to post their wants and needs, but again, the numbers published are dwarfed by ad's offering things.

Priceline and Kayak in the travel space allowed consumers to specify their wants, but in both cases, those requests are fulfilled from an existing inventory of vendor offers.

A handful of sites are emerging that allow the consumer to specify their requests that they are inventorying and making seachable. Like a government department or large organization issues an RFP (Request for Proposal) sites are allowing consumers to publish their requirements. These sites are just emerging: Wantlet, Zaarly, Jig and Ubokia are four that I have recently encountered that allow the consumer to post and invite responses from others within a network - so a peer-to-peer request and response mechanism.

What appears to be missing is a service where vendors (manufacturers and retailers) are able to locate individuals looking for products that they might supply. Service Magic and Elance allow seekers to find providers in the Service space, yet nothing really exists yet in the consumer-product space.

VRM and the Fourth Party

The Fourth Party is a concept that has emerged from the VRM movement - it proposes a fourth party that acts on behalf of the Customer in the same way that a Third Party acts on behalf of the Vendor. If the Vendors are the hotel chains, airlines and car rental companies, then the third parties are Expedia, Orbitz and Travelocity and a fourth party might be the "agent" that negotiates with the travel aggregators to find the best deal.

The advantages to the customer of a four party system are huge and easily understandable. Booking my recent trip to Las Vegas involved a large number of parameters (flight times, airline options, hotel locations and star ratings, car rental companies and car sizes and above all the price parameters) - booking the trip took 3 hours and ended up with a deal for flight and hotel from Expedia and car from Hotwire. If there had been a service to whom I could have sent all the parameters and have them take care of it, then I would have paid for that and they would have probably got me a better deal if they do it all the time.

But wait… I remember a service like that from when I was a child, I think we called it a 'Travel Agent'. But didn't they become extinct a few years ago? Perhaps it's time for them to re-emerge, but not only booking travel, but also handling all sorts of complex requirements, particularly bundles of goods and services. If enough people were able to publish their requests for things and there was a fee involved in finding a solution, a human outsource agent model is likely to emerge - something like the Dedicated Assistant service.

The fourth party also gets around the problem faced by Aggregators (such as Kelkoo and Nextag) - to ensure that the consumer is presented with all the offers available. With a fourth party, their value will be to ensure this.

The Future State

Once this starts to scale and requests are in millions and billions, then eventually the dedicated assistants will need to be augmented with more automated service that respond faster and are perhaps able to bid at auctions or take advantage of limited time / quantity deals, then my belief is that we will see Agent Technology doing our bidding online. I'll be watching this space closely for many reasons.

Things I Read to Get Here