The eMarket for Lemons at The Wharton School

I had the opportunity to speak at The Wharton School, University of Pennsylvania last week about an article that Dr. Eric Clemons recently authored for the Journal of Management Information Systems, "An Empirical Investigation of Third-Party Seller Rating Systems in E-Commerce: The Case of buySAFE".  My presentation was focused on marketplace economics and specifically about information asymmetry, signaling, the "Market for Lemons" concept, and buySAFE.  In addition, I was able to share a few thoughts about my entrepreneurial experience with buySAFE.

As always, I had a great time as the guest of Dr. Eric Clemons, and I enjoyed hearing the passionate questions, insights and feedback from the students.  One of the students posted an article about my visit on his blog, The Un-Wharton

Continue reading “The eMarket for Lemons at The Wharton School”

The eMarket for Lemons and The University of Maryland

Umd Last week, I had the opportunity to speak to a few hundred business school students at the Robert H. Smith School of Business, University of Maryland.  Michael Beveridge, buySAFE’s VP of Business Intelligence, joined me in speaking at the invitation of Professors Guodong (Gordon) Gao, Peter Weiss, and Mingfeng Lin.  The students had previously read "buySAFE – Creating and Profiting From the Bonded Seller Advantage", a case study on buySAFE authored by Wharton professor, Dr. Eric Clemons.  Here is the presentation that Michael and I shared with the students… "eMarket for Lemons – The Economics of an Evolving eCommerce Marketplace".

As always, it was a terrific experience for me.  The students were extremely prepared, and they had definitely done their homework on buySAFE, information asymmetry, and the ecommerce marketplace in general.  If you ever want to get an excellent sense of how well your marketing efforts are working or how well you are educating the market about your solution, I highly recommend inviting a couple hundred college students to study your product or service and let them give you feedback.  I loved it!

Read more about Dr. Guodong (Gordon) Gao >>

A Few Interesting, Recent eCommerce and Entrepreneurship Articles

Good morning everyone!  If you know me well, you know that I am a voracious reader of anything and everything that I believe is interesting or useful either personally or professionally.  My colleagues will attest to the fact that their Inbox usually has at least one article that I have recent found that might be useful for them or buySAFE. šŸ™‚

Today, I have been catching-up on my reading list, and I thought I would share with you a few articles that I found interesting.  Hopefully, you will some of the info interesting as well.

Steve

eBay Merchant Economics

I recently asked Michael Beveridge, buySAFE’s Sr. Director of Business Intelligence, to share with us some of the interesting eCommerce data that buySAFE has developed over the last eighteen months.  We consider data and analytics to be critical to buySAFE and our merchant customers’ businesses, and obviously, every merchant is interested in having solid, reliable data on the ROI associated with buySAFE.  At the request of hundreds of our merchant customers, buySAFE has invested heavily into developing an amazing data and analytics platform that can deliver incredible insights beneficial to buySAFE Merchants.  We will be sharing some of our new insights with you over the coming months, and I hope you enjoy the content. With that intro, here is Michael Beveridge’s first contribution to this blog…

Important eCommerce Trust and Safety Statistics

At the PESA Summit this past week, there was a lot of talk about how to improve e-commerce conversion rates. I believe there are three critical drivers for conversion: product selection, price, and trust. Each of these issues would provide substantial content for an article, but I thought I would dedicate today’s post to a number of very important trust-related statistics.

If you have any doubt about the role of trust and buyer confidence in your e-commerce business success, please take a quick look at these stats.

  • 55% of online shoppers say trustworthiness of the merchant is most important (vs. price, convenience, pleasure, other)
    (Source: Online Shopper Research Report, 959 respondents, August 2006)
  • 65% of online shoppers buy only from sites they know and trust
    (Source: VeriSign Secured Seal Research Review 08/06)
  • 72% of online shoppers are becoming more cautious when buying online
    (Source: Gartner Research, 5000 respondents, May 2005 survey)
  • 73% of online shoppers are concerned about the item being misrepresented (inaccurately described, counterfeit)
    (Source: Online Shopper Research Report, 959 respondents, 08/06)
  • 76% of online shoppers are worried about never getting their purchase
    (Source: Online Shopper Research Report, 959 respondents, 08/06)
  • 81% of online shoppers are concerned about merchant return/refund policies not being honored
    (Source: Online Shopper Research Report, 959 respondents, 08/06)
  • 84% of online shoppers are concerned about merchants not treating them fairly
    (Source: Online Shopper Research Report, 959 respondents, 08/06)
  • 85% of online shoppers are concerned about identity theft
    (Source: TNS Research, 08/06) 
  • And, amazingly, over 50% of all U.S. internet users still donā€™t buy online (even from Amazon.com!).
    (Source: Bear Stearns, September 2006)

With respect to this last statistic, "trust" issues are the primary
driver of e-commerce non-participation. Amazingly, more than 50% of
your potential customers will not buy online because they are nervous!
Are you kidding me? That is a huge number, and obviously, the time has
come for the e-commerce industry to take this issue seriously.

eMarket for Lemons at Baruch College

I was recently invited by Dr. Karl Lang to be a guest lecturer at Baruch College on the subject of buySAFE and my experience starting an e-commerce business.  I always love speaking to folks about buySAFE and its important value proposition (Making sure that buyers get what they pay for, and that merchants get paid what they deserve.), but I especially enjoy speaking with college students (in this case they were MBAs) about what I believe is happening with e-commerce today.

As many of you know, I believe there is a fundamental problem emerging with e-commerce.  Specifically, the problem is that buyers have a very difficult time reliably telling the difference between good sellers/product and bad sellers/product.  In economic terms, this is called "information asymmetry".  Sure, if you are large, recognizable brand, buyers know they can trust you.  However, if a merchant is unknown to a buyer, how in the world can that buyer reliably figure out if everything is going to be 100% okay?  The answer is that it is very difficult for them to do so confidently.

When a marketplace suffers from information asymmetry, it inevitably develops into a "Market for Lemons".  You can read my previous blog post on the subject at "What is a Market for Lemons?"

Obviously, buySAFE solves this major e-commerce problem, and as of Q2 2007, there are thousands of online merchants that have signed-up for the buySAFE service in order to help mitigate this issue for shoppers.

I thought you might like to see the presentation I gave the MBA students at Baruch.  You can download the "eMarket for Lemons" presentation here, or you can view the presentation below.

I want to thank give a special thanks to Dr. Lang for inviting me to speak at Baruch College, and I especially want to thank the MBA students for their fascinating questions and additional insights.

Stop Worrying! How to Solve the eCommerce Trust Problem.

Jeff Grass, buySAFE’s CEO, recently posted a comprehensive article on the eCommerce Trust problem, and how buySAFE is specifically designed to tackle this big issue.  Jeff does a great job of laying out the requirements for effective online trust and safety solutions, and I thought you might enjoy the read.

"Stop Worrying! How to Solve the eCommerce Trust Problem. (A must read if you sell or buy online!)" by Jeff Grass on buySAFE’s blog

If you have any thoughts, insights, or comments on Jeff’s article, I would be very interested in hearing from you.