June 27th, 2006
Jellyfish’s Liquid E-Commerce Market
It’s nothing new.
I get this comment all the time when I’m trying to describe what I think is a (r)evolutionary change. It’s human instinct to cleave to what we already know, to hope that we can continue to live comfortably in the world that we’ve already wrapped our minds around.
Sometimes, what’s hailed as a revolution is in fact just a lot of old (or stolen) hype. But sometimes the failure to recognize something new is a failure of imagination.
Jellyfish launched its new “buying engine” yesterday (see coverage in Mashable, WSJ, and ClickZ), and some of the feedback has inevitably been — “it’s nothing new.” I’ve spend a fair amount of time talking to founders Brian Wiegand and Mark McGuire, and I think what they’ve imagine with Jellyfish IS new, and potentially revolutionary.
Jellyfish is drafting off all of the deeply entrenched modes of online marketing and advertising, including pay-per-click search advertising, affiliate marketing, cash back rebates, and comparison shopping. Jellyfish takes elements from all of these approaches and combines them into a platform that aspires to create a liquid and efficient market for e-commerce transactions.
The keys here are “market,” “efficiency,” and “liquidity.”
Despite all of the dramatic gains in efficiencies that online advertising, marketing and e-commerce have introduced, each of the current systems retains deep inefficiencies. Jellyfish is (through its beta) on the path to creating a truly liquid market where all of the following elements can dynamically interact to increase efficiency and consumer value (or “value per action,” as Jellyfish calls it):
- Search result rankings by key word relevancy
- Search result rankings by best price
- Cash back rewards
- Sales volume and purchase patterns
- Product reviews and ratings
- Merchant ratings
- Refer-a-friend networks
- Channel-specific merchant control over pricing
- Actual purchase transactions
I’m probably missing something, and not all of this has been rolled out yet in the beta. But already you can see the outlines of where Jellyfish is going in the beta’s product page, which cleanly combines merchant ratings, sales volume, and cash back discounts.
I’ve looked at Ebates and Fatwallet, Shopzilla and Pricegrabber, Google AdWords and Yahoo Search Marketing, Commission Junction and Linkshare, and even Google’s new cost-per-action program, and I can’t find anyone else who is combining all of these elements with an eye towards creating a liquid market. (If I’ve overlooked anyone, please let me know.) The only other player I’ve found who sees the opportunity in the market is Root.net, although they’ve headed down the data collection path as opposed to Jellyfish’s more consumer-facing shopping application. (Root is worth watching as well.)
Closer to the ground, Jellyfish has all the Ajax features you would expect, including filtering and refinement of searches by manufacturer, store, and price:
They also have an innovative approach to merchant ratings, based on the Better Business Bureau model of complaint management, rather than the star rating approach, which lacks in nuance:
Many people will judge Jellyfish based only on what’s in their beta or based on the easiest comparison to an existing site. I continue to be excited by Jellyfish’s vision of what a liquid online market COULD be, and how it could change the dynamics of online advertising and e-commerce — which, let’s face it, haven’t seen much game-changing innovation since Overture, Google, Ebay, and Amazon.
I will be watching closely as Jellyfish grows and enriches its market with data through utilization to see whether they are able to continue down the path to realizing this vision.
But until then, you’ve got to use your imagination (and, if necessary, read Umair Haque on the virtues of “liquidity”).
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“… on the path to creating a truly liquid market where all of the following elements can dynamically interact to increase efficiency and consumer value …”
My eyes glaze over.
Does it leverage the synergies?
Seth, with all due respect, your eyes are always glazed over.
It’s the vision thing, remember?
Scott
To mix a metaphor, you have been totally suckered by Jellyfish. They hooked you with an exclusive look at their unreleased site, a behind-the-scenes discussion with the owners, the discussion of principles and, crucially, the pledge to keep the mechanics of the site secret. They made you feel part of the select inner circle (even though they were using the same technique with other blogs), and used your desire for attention and your vanity so you would hype their product, while at the same time craftily avoiding negative comments about the product. Gotta love that kind of publicity.
I warned you that it was wrong of you to hype Jellyfish without letting your readers decide for themselves. Now the feedback has come, youre continuing the act to plan by becoming their apologist. Rather than objectively trying to understand why people think Jellyfish will not work as planned, you have the audacity to berate them as suffering from a “lack of imagination”. You have lost all objectivity towards the product and are acting, quite simply, as Jellyfish’s shill.
How easily sold you are.
Mark, ad hominem attacks are cheap, and you only do yourself discredit by engaging in them. If you’d like to engage in a substantive discussion of Jellyfish’s strengths and weaknesses, I’d be happy to do so. Otherwise please take you slime and go play elsewhere.
[…] like Jellyfish to continue to blossom (=I’m impressed, nice one guys). — umair // 3:01 PM // 0 comments Comments: Post aComment […]
Scott
Personally, I am not that interested in what Jellyfish does, but I am very interested in how blogs and other media can be used to generate PR. I consider this situation to be an excellent example of how a company can manipulate bloggers to generate buzz.
FYI, an ad hominem is an attack on the person presenting the argument rather than the argument itself. In this case my argument is that you have acted as a patsy for Jellyfish. Your behaviour is the issue in this case, so it is not an ad hominem. However, your reply is an ad hominem because it does not discuss the issue and instead attacks me, the messenger. By resorting to an ad hominem, rather than discussing the issue you give the impression that you cannot answer my criticism.
Mark,
I never actually saw the site before it launched — you have no facts.
You know nothing about my desires — again, ad hominem attack.
I gave due credit to Root, which is taking a competing approach. And I ended with “I will be watching closely as Jellyfish grows and enriches its market with data through utilization to see whether they are able to continue down the path to realizing this vision.” I said they were on a path, not that they’ve arrived anywhere yet.
The focus on “liquid markets,” is my analysis, not theirs. It’s precisely why I think everyone comparing the site to Ebates and Fatwallet is missing the bigger picture.
This is self-contradictory sophistry.
Scott,
Yeah, I was also surprised to see critical comments on my Jellyfish post - to me it makes perfect sense, and dramatically reshapes the model. Still, it’s worth listening to all the negative comments to see if we really are delusional.
Scott
Giving a supported argument for you being a patsy for Jellyfish simply cannot be considered an ad hominem.
In this case however, the actions of the person do have a bearing on the claim, therefore there is no fallacy.
From your previous post on Jellyfish:
There is no mention of Root, or any other competitor on the original post.
I actually think it is even worse that you didn’t see the site. It shows that you were prepared to accept the word of the owners without any proof of execution. You then put it out to the readers of this blog as being “revolutionary” without actually seeing the site. The end result was that, by claiming to have inside knowledge of the system you allowed Jellyfish to get the benefit of PR without criticism from your readers.
I wonder if you would find such behaviour acceptable from a tech journalist?
Scott,
While Jellyfish, now that it out in public seems revolutionary, I still think of it as at best a marginal improvement over other reward/affiliate based services. Consumers are given the illusion of getting back money, but in reality pay for it in the form of higher prices. Here is why.
If a merchant pays Jellyfish let’s say a $10 CPA for a particular product, he knows that $5 will be given back to the customer. The merchant can then raise his prices by $5 to recoup the money given to the buyer who “bargain” in effect washes out ($5 given minus $5 more paid). Actually it is better worse for the buyer because he has to tie up his money until the exchange policy ends.
What Jellyfish has proposed is little more than a rebate system enveloped in a search engine. For most consumers getting money from rebates is a bout of frustration.
Although I like the way JellyFish turns the market around they may end up being cut off at the pass by Google’s Gbuy, lets see what Google announce this week, as this space is ripe for development right now.
regards
Al
I wanted to respond briefly to Brian’s comment that retailers will simply jack up prices while they bid up commission rates on Jellyfish. Jellyfish sorts retailer results by net price (we call it bottomline price) which factors in both the store price and the total cost for the product after our cash back rebate. Thus, the old method of “let’s raise our price and kick out some coupons” won’t increase their rankings in our results. Stores can only get to the top of our rankings by either increasing their commission (giving more cash back) or by dropping their store price. Either way, the consumer can always clearly see the total cost they will pay and make an informed decision.
Stores compete for attention every day with advertising dollars, we think our marketplace will help consumers get direct value from this competition.
Pete, indeed we may very well be delusional, and I am completely open to being convinced of that — but in the meantime, if I am delusional, it is a principled delusion.
Al, you are absolutely right that the game is just getting start, and Google has as much chance of winning as anyone else. If Jellyfish pushes Google and other players to innovate further, they will have created real value separate from the larger question of whether they prove to be a viable challenger over the long term.
Brian, you’re right that this is a risk. I’ll expand on what Mark said by addressing the risk that a merchant will falsely advertise a lower base price before the discount — when consumers click through to the site and see a higher price, they will simply go back and try another merchant — that’s where the market, in theory, steps in to correct the gaming of the system. And you’re right that rebates have traditionally been a headache — Jellyfish’s success depends on a large degree on consumers doing a lot of their shopping through Jellyfish, so in that regard it is a big bet. The success of everything in Web 2.0 is partly of function of whether people will come if you build it.
Mark, what is your agenda here? Do you own a lot of Google stock or a stake in a competitor? Or are you bitter that I never talked about your Crisscross News site on my blog? — Perhaps that’s something that you ought to disclose in the midst of your mud-slinging.
In case you haven’t noticed, despite your efforts, a substantive conversation about the strengths and weakness of Jellyfish has emerged — you are still invited to participate.
In this post, I made an argument that Jellyfish is “potentially revolutionary” based on a theory of creating a liquid market for e-commerce (read Umair if you want another take) — you have not said one word to substantively address or counter this argument. All you have done is attacked my motives and credibility — hence, ad hominem.
You are not the first to come here to engage in personal attacks, but I would advise you for the sake of your own reputation, if you value it at all, to consider how it has ended for others who have taken the same low road:
http://publishing2.com/2006/03/03/web-20-and-media-20-are-still-in-the-11-phase#comment-1159
http://publishing2.com/2006/02/10/blogger-defensiveness#comment-660
There are other bloggers who have a policy of deleting comments that descend into personal attacks. For my part, if you want to roll around in mud in public view, more power to you. I’m done with you.
I like the use of Ajax, but unless I am really missing something that is about the only new thing that is being displayed here isn’t it? On the surface, this is basically a pricegrabber/shopzilla/nextag with the added “cashback” feature and nicely wrapped in Ajax.
Merchant’s aren’t going to change their price to suit jellyfish (as some mentioned above). There is no need. In the end the merchant who is willing to take the lowest margin (merch costs being equal) will win out (in lowest price category), no matter if they are on jellyfish or pricegrabber. The cashback plays no role. However, there will be instances where a higher priced merchant will have an advantage on jellyfish as a result of the amount of cashback they are willing to give (this is likely and exception rather than the rule as more merchants start using it as a platform and also quite possible a result of how the merchant is costing their marketing), but this should dissapear in time . Unfortunately for users, to get the best price, they will still need to troll through pricegrabber and others to see if they really are getting the best deal.
In the end Jellyfish will succed based on whether or not users buy into the presentation and find it (and the cashback) worth the hassle of signing up and locking up their cash.
What I am more surprised about is the amount of press/hype that Jellyfish seems to have gotten. It seems like a lot of people have hyped them on what they want to do as opposed to what they have actually done.
Hi Scott,
Liquidity is a economic term and to a lay person who is trying to read this post it he might not get it completely. Most of the times what happens that people don’t get what they read because they don’t understand certain words used. I’ve tried to start writing definitions for some of these kind of terms (mostly used by Umair). Could you please add your comment on the definition of liquidity. This is where I am writing the definitions.
http://bgsl.wetpaint.com/page/Definitions
Rajan
CT, you’re right that Jellyfish’s success depends on user adoption. But this isn’t just about who can accept the lowest margin — it’s (in part) about reallocating dollars that would have otherwise gone to advertising directly into lower prices — and the lower prices act like advertising in garnering more attention. Also, many merchants like Best Buy and Circuit City have to maintain price consistency across channels, which on the shopping sites makes them less able to compete with low margin merchants — now they can use ad dollars to drive down prices through Jellyfish in the form of cash back without changing their underlying list price. You are right also that the excitement you see here less in response to what has been rolled out in the beta and more in response to the thinking on where this is going — it’s very much about the ideas, but given the shortage of new ideas, I think ideas are worthy of the attention, even short of execution.
Rajan, what I mean by “liquidity” is the dynamic interaction of all of the elements I listed above, where the likelihood of transaction to take place with a particular merchant for a particular item is a function of relevance, price, rating, reputation, etc. all interacting “without friction.” AdWords is a liquid market for key words, but it is not about transactions and does not factor in all of the elements that determine transactions, e.g. aspects of consumer benefit beyond relevance.
[…] vorig jaar ook Root Markets geintroduceerd dat zich op het zelfde speelveld begeeft. MailPrint Reageer • 28 keer gelezen Stuur dit berichtdoor […]
I posted a negative comment on Mashable, but this post (and the comment above from someone involved with the site) has given me more insight into the product. I see how that the rankings are the key, and that this gives retailers a direct insight into how to immediately compete for customers.
I guess my only real question is how defensible is the model, how do you get big retailers onboard, and how do you get people to the site?
Yes and no. The end result is that the merchant that is willing to accept the least (combination of product price and cashback) for their product will have the lowest price (on jellyfish). That’s what makes jellyfish different (at least in what they have released so far) for the merchants. It still means the person who can accept and is willing to accept the lowest margin wins (in a sense).
True but they didn’t need Jellyfish to do this. Samy’s Camera for example, just charges a higher price if you buy in their store vs. if you buy online. No reason stores could not adopt the same policy (you pay for the convenience of buying in the store as it were).
I think Jellyfish has value, at least as far as merchants are concerned. However in the end as most merchants get on board (which they likely will), the playing field levels.
End result is that I don’t see shoppers getting better deals out of it. The most that will happen is that shoppers will get more choices at the same end/final price - and if that is all that happens, that is probably enough. Jellyfish is ultimately just another place to see merchant offering their wares and the shopper still needs to bounce between the various engines to find the best price.
Eventually someone will take the time to build a little app that scrapes all these shopping comparison engines and gives presents the true low price to the user - that would make price comparison easy.
CT,
You’re leaving out of this equation the reallocation of advertising/marketing dollars — there is a big pot of money most companies have to drive sales, which are factored into the cost per sale. Paying for attention, i.e. advertising, and competing on price through discounting, have traditionally been managed separately — with Jellyfish, in theory, they can now be managed together.
They will if there is sufficient adoption by both buyers and sellers for Jellyfish to become a big, liquid market, which will enable market forces to adjust prices down — it also depends on this market being able to drive the reallocation of advertising/marketing dollars into lower prices. But that’s the beauty of the market theory — if it works, this will all take care of itself.
That’s true if you’re still taking about static offerings and not a dynamic market — and such a scraper site couldn’t deliver the Jellyfish discount which requires participating in the Jellyfish market.
The liquid market is the key.
Ted, those are precisely the right questions — and that is Jellyfish’s challenge.
splits the ad revenue it receives on a transaction with the buying consumer. In essense, Jellyfish is paying consumers for their attention to their ads through cash-back incentives. This is a beyond cool idea.Scott Karp over at Publishing 2.0 has figured this out as well. It’s a complete rethinking of how advertising revenues should flow in an environment where attention is scarce instead of plentiful. We wrote earlier this week about Google’s test of pay per action advertising
Scott, I have no agenda, other than to point out that bloggers can be manipulated to provide PR for smart marketers.
Rather than answering my question, you are attacking the messenger again. This time there’s the cute reversal: the implication that I may be a shill for a Jellyfish competitor, complete with a demand for full disclosure! No, I don’t own any stock in any of Jellyfish’s competitors. Then there’s the somewhat vain idea that I have sour grapes because Crisscross has not been mentioned in your blog. I don’t come here to get PR. You readership is small, and it’s not my target audience.
In any case, there is no need to discuss the issue further here. I hope that next time you get inside information that you consider the implications — there’s enough hype on the web already.
Indeed. With Jellyfish. It’s an intermediary play like eBay and Amazon.
I can’t help but get flashbacks to an intranet engine I built so that purchasers could contract with part suppliers who were bidding the lowest prices back in 1997.
I don’t see merchants raising prices. I see a race to the bottom in order to reach the most customers.
Yes. Great for consumers. Just like Wal-Mart.
If low, low prices for consumers and market share for merchants is the goal - well this is one way to make that happen it would seem.
This is very, very clever.
Mark, I don’t know why I always let myself get sucked into these things, but here’s my last word on this.
You have absolutely no substantiation for your claim that I was “manipulated.” My interest in what Jellyfish is doing predates my ever having heard of them:
If you take the time to read the conversation on this post (which flourished despite your efforts to sabatoge) you’ll notice a few things. First, you’re an army of one on this issue. Second, and more importantly, this post has served as a forum where Jellyfish’s model has been openly challenged and debated. Rather than addressing the substance of what I or anyone else has said about Jellyfish, all you have done is make baseless accusations.
Your use of words like “vanity” and “manipulation” (suggesting that I’m sufficiently weak-minded and attention-hungry to be manipulated by cheap PR tactics) are a personal attack, as much as you want to spin it otherwise.
Has it ever occurred to you that there’s a lot of excitement around Jellyfish because what they are doing is acutally really SMART? This view has plenty of support, from Pete Cashmore to WSJ to Umair Haque to InformationWeek — do you think they are all “patsies” — a conspiracy, perhaps?
I laid out a clear argument in this post as to why I think what Jellyfish is doing is smart and potentially game changing. Some people stepped forward above to disagree and the open debate that resulted is, to me, what blogging is all about.
If you’d read this blog, you know that I have often been pessimistic of late on business models and innovations. Jellyfish genuinely got me excited, by their ideas as much as their beta. Will they succeed? Who knows?! But the way they are thinking is definitely on the path to the “next Google,” something I’ve been writing about ever since I started this blog. I stand by my statement that a failure to understand what Jellyfish is aiming at is a failure of imagination — by saying that, I make no claim that they are guaranteed to hit that target. It’s the target that fundamentally interests me, and that’s what I was trying to explain in this post.
I get approached multiple times a day with invitations to have inside looks at new products, and if I were as easily manipulated as you suggest, this blog would be nothing but posts about companies. But the substance of my analysis of what Jellyfish is doing speaks for itself, and I feel no need to defend it or do anything differently in the future, i.e. I won’t be manipulated by you or anyone else using cheap ad hominem attacks.
The reason I accused you of having an agenda is that I don’t see you making the rounds to other blogs who have written positively about Jellyfish — the vitriol in your attack felt personal, which leaves your motive beyond my comprehension. All I could do was speculate.
In any case, if you don’t like what you read here, there are 45 million other blogs for you to choose from. It’s a free and open media world, and that’s a beautiful thing.
end-user will control who has access to their personal data, who can use it and how. Each end-user needs to be able to move their data to other systems – whether it be their personal profile record, list of friends, groups, their photos, MP3s, linkPublishing 2.0 » Jellyfish’s Liquid E-Commerce Market Jellyfish is drafting off all of the deeply entrenched modes of online marketing and advertising, including pay-per-click search advertising, affiliate marketing, cash back rebates, and comparison shopping.
Questions:
Anything to stop someone like Amazon.com, which already has deep relationships with its participants from embracing and extending this model? Anything at all?
Any reason why a small independent merchant would want to join Jellyfish, besides reaching a group of consumers - which the web enables *any* merchant to do - without intermediaries?
[…] Scott Karp at Publishing 2.0 takes a very positive look at new e-commerce startup JellyFish. I agree that there is a lot to like, but I’m not sure I’d position them as being groundbreaking just yet. […]
[…] Publishing 2.0 The Convergence of Media and Technology « Jellyfish’s Liquid E-Commerce Market | Home | […]
[…] I encountered this the other day when I made some enthusiastic comments about Jellyfish, a new shopping search engine. I was accused, without cause, of being a “patsy” for Jellyfish. […]
auf dem Laufenden halten will, findet dort jetzt täglich die spannendsten Meldungen. Hier einige Highlights dieser Woche: Zazzle: New CTO from IAC/Ask.com; $20 Mio. Sales in 2005 e-commerce-blog.de » Was geht eigentlich im E-Commerce on Demand?Publishing 2.0 » Jellyfish’s Liquid E-Commerce Market RED HERRING | What’s Left to Webify? PSFK: Do It Yourself Surfboards Crowdstorm Blog Update: The Adidas World Cup Football e-commerce-blog.de » Shopping-Sender erobern das Netz Pick!t funktioniert nach dem
[…] The Good -Jellyfish launched with an effective PR campaign which created much fanfare and mainly positive reviews for it’s ad model. -As opposed to merchants advertising through a PPC system (which is the standard on the shopping comparison engines), merchants pay Jellyfish a referral fee, more than 50% of which is passed onto the consumer as a cash back offering. -Merchants can specify referral fee (or CPA) by product. Stop for a second and think about that. This is a no-risk advertising program at the product level (not category level). -Search results on Jellyfish are listed according to ‘bottomline’ price which is the price of the product less the cash back amount the consumer receives. There is no PPC bidding for higher placement which makes the results a lot more transparent for everyone involved. -Jellyfish is not doing any PPC buys on Google Adwords or Yahoo! Search Marketing (YSM) and therefore is not driving up costs for merchants on those engines. -Jellyfish looks clean, simple, and smart through its use of Ruby on Rails. The older shopping comparison engines truly look old in comparison. -I believe Jellyfish has the potential to create a liquid online market where merchants are duking it out for consumer attention. Again. Stop and think about that. As opposed to just bidding more on Shopzilla or Shopping.com to move up in ranking, on Jellyfish, the merchants are throwing money at the consumers. […]
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[…] Make no mistake about it, this is a fantastic idea and some of the best commentators (Clickz) are highly positive (Publishing2.0) about Jellyfish’s prospects. This is the widening gyre par excellence - a […]
I can’t say that I ever thought there was anything novel about this concept that distinguished it from other pay-per-action websites which allow buyers to sort by price. Success or failure was going to be determined by how well the “concept” was executed. After having observed the site and done quite a bit of comparison shopping, I have come to the conclusion that, generally speaking, the jellyfish.com post-rebate prices are not lower than those offered by major retail websites. Add to that the customer’s wait for the cash rebate and the site’s clunky search and browse functionality and I think we can see why jellyfish has not become a major player in this arena. In all honesty, jellyfish.com is not even a good stop to make when doing comparison web shopping because of the average price points and compromised comparability due to the cash rebate waiting period. At the end of the day, jellyfish.com is another marketing gimmick that lacks substance.