BrainTrust Query: Gamification of E-Commerce?
Through a special
arrangement, presented here for discussion is an excerpt from a current article
from Insight-Driven Retailing Blog.
Zynga makes money hand-over-fist producing
simple games that are easy to learn and highly addictive (at least for some).
Other companies such as Foursquare challenge people to earn badges and status.
Even the Amazon Gold Box appeals to a certain type of user. Flash sale sites
Gilt, Hautelook (now owned by Nordstrom), and MyHabit (recently launched by
Amazon) attempt to add excitement and fun to shopping in their own ways. Games,
and more specifically friendly competition, can be used to inject fun while
influencing behavior.
And what could be more fun than an auction? There’s competition
with other bidders, the need for strategy, and a nice payoff if you win the
bid at a discount. An entire industry has grown up around eBay to support this
type of retail business. In both the eBay and flash sale models, the retailer
brings buyers and sellers together for a transaction that benefits all three
parties.
But there’s a new group of retailers that have combined auctions and
gaming (some might even say gambling) into a fun way to shop and possibly go
broke. I recently saw a TV commercial for QuiBids that claimed someone
got an iPad for $24.74. Yeah, right. But after investigating, I believe it
could have happened. And while one lucky person got a great deal, many others
wasted a lot of money.
The way these penny auction sites work — others
go by names like BidRivals, Skoreit and BidCactus — is that you must pay for
each bid you make, typically 60 cents. Items start at one cent and each bid
increments by a penny within a preset time limit. Each bid can potentially
extend the time limit, as well. So using the iPad example, 2474 people submitted
bids netting QuiBids $1484.60, which is well over 100 percent markup. The last
guy got an iPad for $24.74 and everyone else wasted their money.
To its credit,
QuiBids now offers “Buy It Now” so that the money
you spend on bids can be put toward the same item at list price. So if you made
25 bids on the iPad, they credit your account $15 toward the purchase of an iPad
at the list price. It’s that very feature that makes QuiBids look like
an e-commerce site with a gaming front end.
Their homepage reminds me of slot
machines in a casino. It’s very enticing … and profitable.
Discussion Questions
Discussion Questions: How would you rate the growth potential for penny auction websites? What do you think of gaming features mixing with retail selling?
As long as consumers want to get something “on deal” or for a better price than anyone else, these kinds of activities will exist and there will be agencies, organizations, and government departments investigating to see if they are fairly played and represented.
I’m less certain about the future of penny auction sites than I am about the possibilities of merging gaming and retail.
Penny auctions are–or could be seen by many–to be a kind of subtle hustle and online shoppers may quickly tire of the game.
But, speaking of games, people seem addicted to these things and–if you combine the right game with the right deal–why not?
I can see it all now “Farmville Financial Services” or the “Angry Bird Digital Emporium.”
The possibilities (sadly) are probably endless.
I can see how a seemingly small initial investment by the consumer could result in large amounts of money wasted over time. However, as long as the sites clearly state the process involved and the relatively small odds of actually “winning” the product, then let the “bidder” beware.
Gaming is only two letters away from Gambling. Sorry, but I have a real aversion to mixing legitimate purchasing with potentially addictive behavior. There are enough places for the gambler to participate. I see no good reason for retailers to stake a claim in games of chance to capture consumer dollars. Argh!
Gamification uses psychology to motivate participation and deeper involvement in activities. It’s masterful when combined with e-commerce and social media. The examples are numerous:
*Loyalty programs like air miles offer ways for users to “level up” by buying points.
*Games like (Lady) GagaVille reward achievements with promotional music downloads.
*Online sales training adds topical “challenges” to stimulate feelings of accomplishment.
*Social networks like Linkedin use “leaderboards” to show the most influential group members.
Penny bid sites are a relatively narrow form of gamification to build trial and engagement. They will succeed in certain categories like electronics and with certain users willing to sacrifice the cost of bids. This is similar to the way Priceline found a niche in travel and with users willing to sacrifice choice.
At best, the penny auction sites will remain as a small niche. I don’t see them gaining widespread usage. Swoopoo, one of the early pioneers in this space recently folded.
Daily deal sites and the social gamification offerings have more potential.
Daily deals will become part of most retailer offerings although type, emphasis, and impact will vary.
Social gamification related to retail is in its infancy and appeals to a relatively narrow customer segment today. However, future innovations and creativity will expand participation and impact well beyond today’s niche.
I agree, this sounds more like gambling than retailing. The outsize profit margins for the operator are not going to be invested in improving product distribution or servicing returns. If there is any investment being made at all, it is probably to improve the “draw” of the website, hype the site on other venues, and sell any personal data they are able to collect on the players (sorry, I should have said customers). It is right to try and use the Internet as a way to excite or attract customers, but I really think the emphasis should be put on building communities aka social networks. By building communities focused on the retailer’s offerings, or special services in specific areas such as cooking, auto repair, even videos for teaching sports, the retailer can use the Internet to build the buzz around themselves and attract more customers.
Gambling on anything, whether it is TVs or furniture goes back years, and the internet is just making it easier for us to bid on a whole pile of stuff. You can get a good deal if you wait it out long enough. Look at the success of eBay.
I say go for it if you have the time.
eCommerce sites must consider applying gamification aspects within their sites since shopping has become an entertainment for our everyday life and by gamification they can gain a greater user base and returning customers.
Nice article about this…