AI and marketplaces
Maciej Szczerba
Executive Search ?? Working across ???????????? Podcast host at "Past, Present & Future"" on YT???Besides:"I'm Winston Wolf , I solve problems"
Since the beginning of online business, people have been talking about marketplaces. These are those online businesses that allow sellers and buyers to transact. A marketplace is therefore both eBay as well as Amazon, or a classifieds service such as Craigslist.?
But we can also consider a job board or even a dating portal to be a marketplace. Be that as it may, this is also where the exchange between parties takes place, although not in monetary form.
Therefore, it is better to define a marketplace as an enterprise that connects two other parties and where the match of these parties takes place. For various purposes - both commercial and non-commercial.
A marketplace, on the other hand, does not sell its own services or products.
Marketplaces have, of course, always existed (since time immemorial) and still exist in 'analogue form'. Your shopping centre, for example, is an example. Or even your local cinema, which connects between the film distributor and the viewer.
During the dotcom boom in the early days and then after the explosion of social networks 10 years later, the so-called 'network effect' was much talked about. By building as large a network of both buyers and sellers as possible, we arrive at a situation where our marketplace reaches a 'winner takes it all' or 'winner takes most' situation. Therefore, you need to focus on as many users as possible and the monetisation and profits will come on their own.
Why does the example of the local cinema give the lie to this theory?
This is perfectly demonstrated in the excellent book 'Platform Delusion' by Jonathan Knee (link in book recommendations section). To put it in the language of an economist, we make money from network effect if we don't generate more and more variable costs (such as commissions, transaction handling cost) and more and more share the initial fixed costs (such as maintaining our application). Very many online businesses have failed to do this.
So what's the solution, and what's finally the point about the cinema?
Every marketplace business needs to find a competitive advantage other than just expanding its network. A local cinema, for example, can build this advantage in that its offer is perfectly tailored to the community that visits it. In today's digital business-speak, the cinema uses hyperlocalisation.
And what does this look like from the point of view of applying AI? Can AI algorithms create a unique competitive advantage for the marketplace?
I asked ChatGPT about the application of AI to marketplaces and here's what he replied:
AI can have various applications in marketplace applications. Here are a few examples:
It is difficult to disagree with it here. However, the greatest scope for AI is at the interface between supply chain optimisation and price optimisation (so-called dynamic pricing).
Imagine a situation from the future. A food supplier from a ride hailing company arrives at a pizzeria and picks up 2 Hawaiian pizzas and 3 pepperoni. Neither he nor the pizzeria, let alone the marketplace app, know at the time of collection to whom and where these pizzas should be delivered. The delivery man gets on his scooter and gets successive notifications from the application as to whom and to which address to deliver the pizzas. More-the app suggests that at this particular address the customer is not in the habit of opening the entrance to the building with the intercom and the caretaker has to be asked for help.
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If the cinema bases its market success on hyperlocalisation, this hypothetical story shows us hyperlocalisation squared.
Does this sound like science fiction? 5 years ago it probably would have sounded like it.
And what is the supplier story about? About the fact that we may be about to reach a point where vendors estimate their sales and their distribution in time and place based solely on algorithms. I know the opinions of eminent experts who are active in this area both academically and in business and they have different opinions. I invite you to my podcasts on this topic soon.
And what does ChatGPT have to do with all this? Big language models may be able, by recognising the context of a consumer’s expression, to predict demand much more accurately.
Are we facing an era of an economy based on radical price dynamics and hyper targeting?
Or will the development of large language models lead to us living in an economy of ever less diversity? A kind of giant discount store?
One of my podcast guests also uses supply chain forecasting in his charity work. Including food supply forecasting. Significant that, at a time when we are discussing AGI or hyper-automatisation, the problem of global food shortages still exists.
Book recommendations this week:
https://www.amazon.com/Platform-Delusion-Wins-Loses-Titans-ebook/dp/B08VSB5P9Y/ref=sr_1_1?crid=1W4ED0WAU6908&keywords=platform+delusion&qid=1681305829&sprefix=platform+de%2Caps%2C268&sr=8-1
https://www.amazon.com/Quantum-Care-Health-Delivery-Research-ebook/dp/B0BV3BK9WD/ref=sr_1_2?crid=3T0ZH2IV25WE1&keywords=quantum+care&qid=1681305874&sprefix=quantum+car%2Caps%2C370&sr=8-2
Video recommendations this week:
Next Trend Realty LLC./wwwHar.com/Chester-Swanson/agent_cbswan
1 年Thanks for Posting.