Google and Online Reputation - Yawn or Genius?

Ok, yesterday I mentioned I had some thoughts on this Google payment/reputation system and I had a good solid 8hr flight from RTP to SFO so lots of time to compose my thoughts.  This will be breaking with blogger tradition and comes over as feeling like a thesis presentation vs. a casual blog post, but I think it’s an important topic that bears some more thinking.

Buying anything online can be a risky proposition – there are literally hundreds of thousands of merchants out there and you don’t know which are reputable. Will you receive the item? Will it be as described?  Will it come on time?  Will they sell your identity/CC?  There are tons of ways these transactions can go wrong and we’ve all heard the horror stories.  Thus with the explosion of ecommerce online reputations have become an important topic.  Sure you don’t worry about the walmart/target/amazon/sears of the world, but what about the merchants out on the tail?  What about the folks with that have that unique widget that you can only find from 3 small merchants?  How do you navigate that?  Online reputation is THE key to everyone in the industry getting more businesses online and also getting consumer adoption of ecommerce to increase.

So let’s dig into online reputation systems as I think Google could be on to something pretty big here.  But first, let’s take a brief trip through the last 10 years and what we’ve seen as it relates to payment systems and reputation systems.  Given the blog you’re reading this on the journey has to start with our friends at eBay. 

The eBay feedback system

The eBay feedback system is nothing short of genius and nothing has come close to it since

Pierre

invented it 10+yrs ago.  Over the years eBay has made it better in many ways as well.  For example, it used to be anyone could rate anyone else regardless of a business transaction/trade.  This was tweaked to be tied to a single transaction with buyer and seller being given a feedback score (positive/neg/neutral) they could leave.  A seller’s reputation is expressed in several ways: graphically with a star system, a number that represents their feedback ‘score’ (UNIQUE positives minus negatives and no impact from neutrals) and also ebay publishes (well you have to dig for it) the feedback from all users as well (non-unique positives minus negs).  Finally eBay presents a 0-100% percentage of feedback that weighs the positive against the negs.

Ok, so eBay has one of the best reputation systems going.  There are some holes in it and ebay is always working to improve those.  I won’t go into an exhaustive list, but there are things like feedback extortion, neg bombing, feedback padding, not enough room for feedback, the fact that ASP doesn’t play a roll, etc.

To be honest these are all minor.  However the eBay feedback system has one singular MAJOR flaw that I won’t reveal yet because it’s the crux of Google’s opportunity.

CSEs and Reviews

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Another area of ecommerce we all know and love that deals with reputation is comparison shopping engines.  The early guys all had some kind of rating, but in my opinion Bizrate really started this with their post checkout surveys and then all of the engines added it in some form of another (checks/smileys/stars are common metaphors).  But the CSE’s rating system is terribly flawed for many reasons:

• Since the CSE is not really a party in any way other than the click to a transaction there is no check to see if this is valid feedback or not.  Example, guy goes to walmart, is upset his can opener doesn’t work, goes to shopping.com and rips walmart.com a big mean red frowny face.  For good measure he gets 20 other people to do this and walmart.com’s rating can drop considerably.  Go read some CSE reviews and you will see that overwhelmingly they are negative.  Compare this to ebay where the system typically shows feedbacks in the 98% positive rating zone.

• There are 10+ CSEs out there so all these ratings are dispersed in all kinds of places

There are tons of other reasons, but suffice it to say, CSEs haven’t solved this and I don’t think have a shot at it.  Where CSEs do accel is product reviews.  Again, it would be nice to have them all in one place, but if you hit shopping/shopzilla you can get some really good product reviews there.

Remember that eBay owns shopping.com so they have two disparate reputation systems which is an interesting situation that’s worth pontificating and I’m sure the source of about 900hrs worth of integration meetings J

 

Arbitration, Insurance and Bonding

In the last couple of years several companies have surfaced (SquareTrade, BuySafe, BBBOnline) that provide some form of protection to online buyers that they will stand behind a seller.  I won’t get into the specifics as that’s yet again a whole other topic worth some pontification.  However these folks are in many ways a party to the transaction and they see what happens with all of them.  However to my knowledge none of them has ever taken on this concept of reputation.  Once you see where I think google is going, I do think this will change in an interesting way.

Froogle – something new – Meta-ratings

Back in the late 90’s there were some interesting startups (openratings?) that tried to combine your feedback or become a central repository, etc.  However feedback/reputation as a business model, is well pretty thin and sadly (yet appropriately) none of these guys are with us any more.

Enter Froogle, a new CSE from Google.  Without much fanfare they released an interesting approach that I’ll coin meta-ratings.  Since all these ratings are spread out, why not just index them like you would anything on the web and present them to the user as specialized search results?

That’s what froogle does.  Here’s an example:

Ratings 2.0 – Google’s GBuy Ratings – Yawn?

Ok and here we are in good old 2006.  With all the great products (search, gmail, maps) Google sets the bar very high for themselves.  They also have the benefit of a) a clean slate and b) being able to see all of what has past (this is called second system advantage – why do you think excel was better than previous spreadsheets?) And now we all know that Google has a payment system with an online reputation system (star ratings).  The google reputation system is currently available as a way to rate GBase sellers.

So given all that is known about reputation systems and all of this build up this seem to be, well, er, kind of a yawn moment for Google.

I have an engineering background and this frequently helps shed a good bit of light on what Google’s up to.  Here’s why I think this is potentially Genius and to my knowledge nobody else has caught on to this.  While eBay’s feedback system is great, it suffers from one self-inflected and heavily enforced problem.  It is available ONLY on eBay.  Ten years ago and even today you could argue this makes sense.  You want to LOCK sellers into eBay so squirrel away their feedback into the ebay.com warchest and well if they leave the poor guy with 100k feedback starts at zero.  Talk about a strong deterrent to leaving!

But this is 2006, the web (dare I say web 2.0?) is becoming an amorphous thing – it’s on your desktop (itunes, weatherbug, google desktop, yahoo widgets), it’s on your phone, it’s in your car, it’s on your TV, etc.)  So in 5 more years eBay’s closed wall world could and probably will look like AOL looks like us today – what you had to dial into this thing and you couldn’t really leave and it yelled “YOU HAVE MAIL” at you?  Your important data (like ratings) shouldn’t have to live at somewhere.com – why should it?  You really don’t even want that do you?

GORP – Google Online Reputation Portability – BOOYOW!

So here’s the genius in a nutshell.  By putting the online reputation system IN the payment system and not locking it into the marketplace or making it separate – Google gives the Merchant/Seller what I call “online reputation portability”.  If you accept this new Google payment system on your website (if they intend to do this) as well as via your google base listings, all of your feedback goes into one bucket that you TAKE WITH YOU wherever you sell online.  This is a no-brainer to me as a small merchant trying to get my reputation built in today’s online world.

To use the eBay analogy this would be like moving the feedback on eBay to PayPal.  This seems odd and crazy given where we are with ebay+paypal and the history there, but it really makes much more sense when you look at it and try to ‘fix’ what’s broken with the ebay reputation system.  1. It’s good for eBay+paypal because it forces people to use paypal.  If a seller opens a prostore, they take paypal and get their feedback there.  If they push inventory to shopping.com – boom there it is again.  Heck you don’t care where they sell – you want to encourage them to use PayPal.

The Beauty of GORP

To recap, Google has the benefit of a) 10yrs of history b) second/tertiary system advantage c) some really crazy smart people and d) virtually unlimited resources.  Imagine this 2-3yr future.  I am an online merchant – MerchantX and I have a 5 star rating with Google over 100k transactions.  That rating shows up in my adwords advertising, in google natural search results (maybe via base), in my radio ads, mobile ads and print ads.  It shows up in Froogle.  It shows up in Google desktop when I push offers out to people, it shows up in gtalk when I chat with someone.  It goes out with every gmail.  It’s available in my orkut/social network.  Online reputations are searchable – search for “fast shipment digital camera”.  Whenever I sell something and they pay via the google payment system, I build up my portable reputation.     Heck, why wouldn’t I take it on ebay?  I’d want those eBay feedbacks to go into my portable system vs. locked into eBay.com – they are much more valuable to me in a multi-channel – “sell everywhere and everywhere” world.

You may argue, ok Scot I get it, but now I’ve still got the issue that one company has my online reputation – kind of like the eBay problem.  But at least now you are able to put it all in one place vs. it being in 10 so you can build it up and nurture it like you need to AND you can publish it where you accept the google payment system.  I’m sure google will have APis that will let you tie it into whatever you want.  It’s a classic Open system vs. Closed system mentality and it will be very interesting to watch this unfold.

I may be on the wrong trail here and I want to hear your comments, but devoted ebay strategy readers (thanks for sticking with this – phew!) I think Google could be onto something very very big here.

Comments

[JOhn]

Your thoughts are what I have been working on for 4 months.
iKarma has made a mistake, I see where your thinking is coming from re the payment 'linl' to reputation, but I think thats to complex and to late in the selling pocess. However your thinking is right...

[Paul]

Scot: we are a small online shop seeking to replace a real marketing budget with hard work. As such, we have stores on line, eBay, eCrater, and we are now part of the G Base beta. A few thoughts on recent postings:

1. I think that the idea of linking reputation to the payment system and making it portable is brilliant. However, extortion is real, and broadening the base outside of eBay may make it worse. Remember that eBay has internal controls in the sense that if a member engages in systematic feedback blackmail, it is pretty easy for eBay to find out. However, if the system becomes more open, policing would become more difficult. I don't see PayPal as being able to do a good job at this level.

2. G Base has a long way to go to get close to an eBay Express (I'm sure that Base is not keeping Bill Cobb awake at night at this point). Most of all, it has to decide whether to be a Craiglist or a e sq. Of course, I want to see competition for eBay, so the e square model is it for us. However, I disagree with the idea that the key to Google's opportunity is in the rating systems. I think that the key is integration with Adwords. Adwords has become a fantastic tool that improves daily (i.e. new demographics tool). However, manual keyword selection is still a pain, and I have the nagging feeling that, no matter how hard I work; I'm nowhere close to optimizing my keywords. Let's assume that I were to turn control of my G Base product keywords to Google, which I would be more than happy to do. I think that it would be trivial for the Google folks to write an algorithm that integrates overall web hits with Froogle and G Base hits and conversions through Google Payments. Google would automatically change my G Base keywords to maximize the ratio of hits to conversions. I would simply do what we do best: focus on quality of products, fast shipping, and superb customer service.

3. Taking this one step further, Google could use its linguistic tools plus the hits/conversions stats to suggest changes to the copy on Base and on our online store. I would be happy to pay for this. There is a hint of this on Google Sitemaps, but is too geeky to be truly useful.

4. Which brings us to the eBay-Google interaction field. As an entrepreneur, I am quite used to placing my tail firmly between my legs and going to a competitor with proposals that would benefit both. eBay already has some sort of wholesale deal with Adwords, but it’s too generic to be truly useful. So, how about Google running keywords and categories for eBay stores? Frankly, eBay should get out of the pcp business, because the least you call it is horrible.

Just some thoughts, after spending my Friday night formatting our Base entries, after realizing that the most useful attributes are not enabled on the rss feeds…

Bye all from Chapel Hill.