Search in the grocery store?
I ran to the grocery tonight and spent about 30 minutes looking for something (OK, if you must know it was a Dryel kit since I finally realized I am never going to find time to go to the dry cleaner’s).
So I got to thinking about it - why can’t grocery stores use search? I mean, when I walk into a store why isn’t there a kiosk where I can look stuff up and figure out where I need to go in the store to get it?
Initially I thought maybe they wouldn’t want people to be able to navigate more easily since so much of retail is based on cross-sells and upsells. Most cross-sells and upsells, however, are made in the same aisle as whatever you are looking for or near the checkout register - two places you would still have to go.
Despite any small disadvantage to potentially losing a few “walkaround upsells,” there is a clear advantage to Albertson’s giving me a more Google-like experience: whenever somebody searches for something they don’t have they can log the query in a database. This database could be mined to determine what products they should be stocking.
The cost of the system could probably be completely offset (and then some) by letting advertisers bid on keywords. Looking for root beer? How about a 25 cent off coupon from ibc printed right there at the kiosk?
Maybe somebody somewhere is doing this. If not, somebody needs to. Confused men walking around in grocery stores everybody would thank you.
What comparison search engines are doing wrong
In college I studied economics. To be honest I thought that most of the stuff I learned would never be applicable in the real world. BYU focuses a lot on microeconomic theory and how transactions take place in an imaginary world with a bunch of assumptions that may or may not be true. In the past week, however, I have realized that some of the lessons I learned about artificial price floors do apply to the real world.With Google I am welcome to bid on tail-terms with essentially no minimum bid. Anybody who uses Adwords a lot knows that this is not always the case, but in general the minimums are either very low or do not exist. This is because Google understands the economics of the situation and they know that if advertisers come in at a $0.05 bid and are successful, eventually somebody else is going to catch on and bid $0.06. Looking at the big picture, eventually advertisers will bid the price of keywords up to an equilibrium which, according to economics, should be pretty close to their margin on the product.Comparison engines, on the other hand, don’t quite seem to get it. They impose minimum bids on their advertisers - in our industry, the minimum bid is usually $0.40 or higher. For this reason, most advertisers are only going to advertise high margin products because they will lose money on low margin products. For example, if I have a $3 USB cable and my cost is $1, I have a $2 gross margin (of course the net margin is much lower when I account for overhead). Let’s assume I don’t have any overhead costs so I actually have a $2 net margin. At a $0.40 cost-per-click, I will need to have a 20% conversion rate just to break even. In my industry 20% is unheard of. When all costs are accounted for my conversion rate must actually be much higher.At this point I really have two choices:1) I can raise the price of the USB cable to protect the margin for comparison engines despite the fact that I can stay right-side-up at my current cost on Google and Overture and I may risk losing sales on these proven channels.2) I can list only my high-margin products with the comparison search engines.Both of these approaches are detrimental to the consumer for obvious reasons. Option #1 results in higher prices and option #2 results in the inability to find low-margin products using comparison shopping engines. As I have met and spoken with various internet retailers I have found that most stick with option #2.At the ChannelAdvisor Summit, Trent Scoffield of Shopping.com points out that merchants earn nearly $18 on every dollar spent on Shopping.com compared to $4 with Google. I am naturally skeptical of these numbers (I could not verify them with Netplus), but let’s assume that they are accurate. This actually makes sense because merchants aren’t likely to advertise small products on Shopping.com even though they may have high profit margins in terms of a percentage of their material cost.From a consumer’s perspective this tells me that comparison engines are the place to go for high-consideration products, like a new DVD player or a top-of-the-line mp3 player. For smaller purchases, however, it would stand to reason that Google (or froogle) will have a broader selection of merchants at different price points.I think there is a real business opportunity for a comparison shopping engine that uses a Google-like approach. By bringing down the minimum bid the site would give access to companies that specialize more in low-consideration, low-margin products and would give consumers an alternative to froogle, which does have its own problems based on the fact that there are absolutely no barriers to entry. Over time an engine that does not impose minimum bids would reach an equilibrium where the company with the lowest costs would win - the epitome of a capitalistic market. The site would have more integrity with consumers because it would have a broader range of products ranging from smaller-margin to high-margin products and the company would reap the benefits of offering an advertising outlet for a broader range of merchants.
A truly independent auto diagnosis
One thing I love about the internet is that it solves a lot of conflicts of interest that might arise while I’m shopping for a certain product. For instance, 20 years ago if I were looking for a nice tennis racquet I would probably have gone to a few sporting goods stores and taken the advice that I got from each different shop owner. However, there is an inherent conflict of interest - if a shop sells Prince racquets but not Wilson’s, most likely the salesman is going to tell me that Prince is superior. If a shop sells Wilson racquets but not Prince’s, the salesman is going to tout the advantages of going with a Wilson - definitely a conflict of interest.The internet has changed all of that. Now we are faced not with a lack of information when considering a purchase, but rather an overload of information. I would venture to say that I spend at least 15 minutes researching every purchase I make that exceeds $100. Now I don’t have to rely on information from salesmen that have a vested interest in me buying their products - I can read reviews from people like me who have already bought a product.Unfortunately, I don’t have the luxury of getting an independent opinion when I go to get my car fixed. I don’t think it’s enough just to get a referral from a friend - my experience with auto service is that it is too inconsistent to be able to gauge accurately based on anecdotal evidence. I thought of this idea when my wife was getting her oil changed at a local lube shop and the mechanic told her that she needed new shocks - the shocks had been replaced less than a month ago! (And yes, we did verify that the shocks had actually been changed).This is where the opportunity lies - when I am having car problems I would happily pay $100 or so just to have a diagnosis done by a mechanic with no vested interest in me spending as much money to fix my car as possible. I understand that there are situations where some parts need to be disassembled and it may cost more than $100, but the idea is that there is a fixed cost for a diagnosis from somebody whose interests are more aligned with my own - to diagnose the problem with my car. This $100 expenditure could potentially save me thousands of dollars over the life of my car if I could identify what really needs to be fixed. It would be really nice to get a printout showing what is wrong with my car and what the severity is.So that’s it - that’s my idea. A truly independent diagnosis done by a “mechanic” who doesn’t even offer services to fix my car. It’s a simple idea, but it addresses an extremely inefficient market. Let me know what you think.
Healthy fast food?
I’m just going to throw this business idea out there because I think somebody should do it.
Background
I am having a contest with a couple of my coworkers to see who can lose 10 pounds first. My problem is that I love fast food. A lot. My wife explained to me yesterday that I can eat fast food if I’m smart about what I get (meaning I count the calories, fat, etc.).
The problem
I’m lazy. That’s really what it comes down to. I know myself too well to think that I will actually check the nutritional guide every time I go to a fast food place. I actually doubt that I’ll take the time to even learn what an acceptable amount of calories, fat, sodium, etc. I should be eating to lose weight.
The opportunity
I want a site that I can go to and (after registering) input my height, weight and desired weight. I want the site to be smart enough to make a recommendation if I don’t know how much I should weigh based on my height and my frame. Then the magic would happen.
I want to input my zip code and have the site use google maps (or some other program) to find all of the restaurants within X miles of my location (where I can choose X). Then I want to go through an interview where the program determines where I like to eat and where I don’t (like my Tivo decides what new shows to try out).
Then, when I’m ready to go to lunch, I want the program to tell me what I should order. I want to be able to give feedback on what I like and what I don’t like and have the program build me new menus as needed. Then I can print out my order (or better yet put it on my treo) and go off to the restaurant.
I like this approach because while I am lazy, I would be willing to spend 15 minutes or so getting my preferences setup with the idea that I will spend maybe a minute in the future to have a healthy order put together for me.
A few problems
I know there are a few problems that I haven’t addressed. For example, how would the program calculate your ideal lunch when it doesn’t know how many calories you have for breakfast and dinner? As a first cut, you could probably just put in what you normally eat for breakfast and allocate 800-1000 calories for dinner - something like that.
Anyway, if there’s already something like this out there, please let me know! If not, let me know when there is! I think this is a great idea because it would be easy to find people (fast food restaurants) ready and willing to advertise their healthy menus on it.