The Mobile Marketplace

The Internet is becoming a more mobile and more personalized technology, as well as a social phenomenon. As people continue to familiarize themselves with the Internet, and companies keep making portable devices that allow them to use the electronic medium freely, users in virtually any location will be able to research, discuss, and purchase products. These changes are making large retailers scramble to learn how to reach this growing group of online consumers.

Esther Dyson, an author and editor who also invests in emerging technologies, spends most of her time examining those technologies and their impact on users’ personal lives. Dyson, the editor of Release 1.0 (a quarterly report of the global information technology business) and editor-at-large of CNET Networks, says some of the concepts piquing her interest are the portability of the medium and how people share information on it.

For example, consumers can design their own clothes and accessories (including jewelry) online. Soon, Dyson says, they’ll be able to “virtually” try on clothes or rings and e-mail the images to family, friends, and strangers for feedback before deciding whether to buy.

This kind of online usage is creating a new social dynamic, Dyson says. “One thing about the Internet, it’s not mass media. In the end, it’s a clustering medium,” she explained to an audience of Internet retailers and multichannel retail professionals at the Shop.org annual summit in September.

An example of how clustering has taken hold in the jewelry industry is the emergence of the Web site Pricescope.com. Founder Leonid Tcharnyi, who spoke privately with JCK during The JCK Show ~ Las Vegas 2005, describes his site as a portal and a community.

The site has raised the ire of many retail jewelers because it provides a platform that allows diamond wholesalers to sell their products directly to consumers at a cost far less than what they would pay at a store. But Tcharnyi says the reason the site attracts from 5,000 to 6,000 unique visitors per day has more to do with sharing information, which has helped it earn the trust of consumers.

In addition to providing a platform to sell diamonds, Pricescope provides a great deal of information on buying diamonds and jewelry and keeps its users up-to-date on industry news—including trade news. But Tcharnyi says the most powerful part of the medium is the Web forums, where professionals and consumers discuss and share information on diamonds and jewelry.

INTERNET ANTHROPOLOGIST

Tcharnyi, who has a doctorate in physics and math, has no background in the diamond and jewelry business. Like Dyson, he is interested in how people use the Internet. He believes the medium is changing the way consumer goods are marketed and sold.

“I don’t care about diamonds, per se,” Tcharnyi told JCK. “I’m interested in how information and knowledge on the Internet changes and improves markets and social relationships.”

He cites what he believes is a key discovery: “Message boards are extremely powerful.” He said that in the past, retailers and manufacturers were in control of the merchandising pipeline, but the Internet has put consumers in charge.

“Mass media sends one-way messages,” Tcharnyi told retailers during a presentation at The JCK Show. “On the Internet we can ignore ads. We can speak back. The Internet is all about sharing information. On Amazon.com, you can write reviews about anything. I trust those reviews. Why? Because they are written in human voices. We don’t trust corporate messages anymore. We trust our friends who have experiences with products rather than corporate messages.” With the Internet, he added, “Consumers won’t get less educated.”

Pricescope is a platform that links buyers with sellers. Buyers and sellers negotiate their own terms. However, when someone buys a diamond on Pricescope, the Web site encourages him or her to have it sent to an independent appraiser before receiving it. Many appraisers are among the professionals involved in the forums, sharing their expertise with consumers for free, which helps establish both their trustworthiness and the trustworthiness of the site.

“Appraisers have become part of the community,” Tcharnyi says. “Appraisers answer consumers’ questions. They’ve become real people with a real voice.”

‘PROSUMERS’ OPEN COMMUNICATION

Tcharnyi calls these new online consumers proactive consumers, or “prosumers.” “They demand as much information as possible,” he says. “They don’t pay attention to advertisements.”

He says prosumers search for genuine voices to discuss their purchases and their experiences. They are active in searching for information. And they want to share this information and their opinions with others.

“They exist in any small community,” he says. “They are passionate about certain things, and they are people who share their joy of knowing something.”

“Prosumer” is a term that’s been around since the early 1980s and has gained currency in recent years. Tcharnyi says he first learned about the term in a 2004 article in The Economist. One of the sources cited in the article was a global marketing agency, Euro RSCG, which was completing a nine-person study of prosumers.

It is believed that many proactive consumers are reading—and sometimes starting—Web logs, commonly known as blogs. A blog is a Web journal presented in reverse chronological order with text, videos, photographs, and a place for reader comments for each item posted. They are easy to create and update.

There is very little information on the number of blogs in cyberspace, but estimates place the number at 20 million—and growing by about 75,000 per day. There are blogs on every subject imaginable, and they’ve received a great deal of attention in the media. “They’ve received far too much press,” Dyson says.

Dyson isn’t the only one questioning the effectiveness of blogs. The notion that blogs may be influencing consumers’ opinions of products is a hot topic among the Internet retail community. Barry Diller, chairman and chief executive officer of IAC/InterActiveCorp, which owns several e-commerce companies, questioned whether more than a handful are run by people who can sway public opinion. “Is the voice any good?” he asks. “The truth is there’s less talent than the mass of people who have blogs. There are very few people who are particularly effective at publishing.”

JOIN THE CONVERSATION

Dyson recommends that retailers get involved in the online conversation, perhaps by hosting a blog, but she says they should be careful.

“You have to be comfortable with criticism,” she says. “If somebody says something bad about you, you need to resist your instincts to shut them up. That never works. Instead, try to listen and respond. Maybe the products aren’t really good.” She adds, “You want to reach the ones who want your product.”

A retailer who decides to host a blog should make sure it’s managed by someone who has effective communication skills and wants to do it, she says. “A blog is really a set of words, sometimes with links. If you have someone who is good with words and has a good sense of humor, put it up there. If there are no volunteers, do not assign it.”

Tcharnyi believes retailers should be very active in the conversation. In the past, retailers and manufacturers were able to reveal as little information as possible to consumers. The Internet has turned this model upside down, and if retailers want to attract online consumers, they have to be more open to them. “They don’t want press releases from companies,” he says. “They want to talk to the company.”

He says customers still want to buy from their local jeweler. His proof: Less than 2 percent of the 6,000 or so unique visitors to his site buy there. “People learn on the Internet; learn what they want and how much to pay for it. Then they go to the store,” he says.

“It’s so simple to me. The entire independents’ world would benefit if they become more open to consumers,” he says. “Instead of trying to be so secretive, it’s better to be as open as possible. You have to set new levels of trust.”