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Sunday, December 20, 2009

Google Buying Yelp "The Intersection of E-commerce And Social Networking"

The announcement by Google that they intend to buy Yelp has instantly legitimized the Social Networking E-commerce space. Several weeks ago I wrote a blog item pondering the slow migration of E-commerce into the web 2.0 fold. It appears that the pace of activity in this space is about to change.

E-commerce is one of the last frontiers for social networking and web 2.0 adoption. For the most part the traditional online retailers such as Amazon and E-bay have missed out on the benefits of social interaction to increase sales volume and provide visibility for their products. Certainly, E-bay has some organic social networking built into their platform. However, this has never been fully cultivated from a product/services perspective.

Google's recent push into online product sales with their Google store front is certainly underwhelming and an obvious throwback to the web 1.0 days. Clearly, this is only a first toe in the water teaser if Google is buying Yelp. To give Google credit they obviously understand how forgotten and in need of an overhaul E-commerce is. From an E-bay and Amazon perspective I wonder what they are thinking right now.

Yelp is a great invention because it adds user created content to the traditional Yellow Pages model. The review system offers consumers the opportunity to speak-up for what they like and merchants get the benefit of having their product/services featured. The real winner is Yelp because the content is user created requiring little overhead and expense. The consumers also feels "invested" and respected encouraging them to provide more information while driving viral adoption of the service. The missing element for Yelp is actual revenue from product sales. Thus, the Google Store Front Yelp match-up.

The real value of the Google/Yelp move is to illustrate how far e-commerce has to go before it catches up with the current state of online interaction.

1.) What role will Google search capability play in the e-commerce game?
2.) The Facebook/Tweeter virality engines have not been used in an organized way to spread the word on what and want not to buy.
3.) Do not forget the Craigslist bulletin boards of the e-commerce world. They have the user created content and the products for sale. The are just missing the power of social networking.

2010 is going to be the year for innovation, new business models and some very juicy investments and M&A in the E-commerce/Social Networking space. Social Networking E-commerce will become the new buzz term for 2010.

1 comment:

Kevin Flood said...

Yelp Walks Away From Google Deal, And Half A Billion Dollars.


Look's like Yelp has some other opportunities greater than the Google deal. this says a lot about the projected opportunity in the Social Networking E-Commerce space.