Why Epinions Might Be the Next Amazon

Amazon must be shaking in their boots.

The much-heralded e-commerce king, the giant of dot-coms, the company that some say has forever redefined retail channels must clearly be worried about a little start-up company that is doing exactly what the web was designed for: not electronic commerce as most stock analysts would have you believe, but the communication of information.

Epinions.com is a clean, elegant, and fast-loading site that collects consumer-written opinions about hundreds and thousands of products. Well-written opinions filter up to the top of a category list, depending on how well they are rated by site visitors and Epinion users. This encourages people to write well-meaning and useful reviews of products that they own, places they have traveled, or books they have read. Also, Epinions pays you a nominal fee (one to three cents) for every time one of your reviews is read.

The concept isn’t necessarily unique, since Amazon has been posting customer-written reviews for years, but the quality of Amazon’s reader reviews have been appalling at best, and sometimes ridiculously juvenile. Epinions has put into practice a system that filters out the lame and boring reviews and favors the positive and well-written ones. This is exactly what the consumer wants and has been clamoring for ever since the web went mainstream. There’s something to be said for providing a clear path to good information without the overhead of paying professional writers.

The Epinions revenue model is a tough one, though. They hope to make their money by partnering with large e-commerce stores and directing the review traffic to the stores who can do the fulfillment. What’s really great about this is that the consumer can choose which e-commerce store they want to buy from. If reading a good review of Stephen King’s new book “Hearts in Atlantis” convinces you to buy it, you have your choice of whether to buy it at Amazon.com, Borders.com, BarnesandNoble.com, or any of the other e-commerce stores that make deals with Epinions.

If Amazon or any of the other e-commerce giants had their way, they’d like to control all of the e-commerce traffic currently on the web. This is why we’ve seen Amazon go from being a bookseller exclusively, to a books and music seller, to a books/music/video, electronics, and auction reseller. Controlling traffic is what many of the dot-com players of today are striving for. This after all, is the only reason portals exist. Portals have outlived their usefulness and are dying a slow death. They learned the hard way that you can only fit just so many links on the front page of your site without overwhelming the user. Epinions stands to become the biggest traffic aggregater for a large majority of e-commerce traffic. Consumers don’t like to buy uninformed, so they naturally hit the web for reviews, information, and opinions about the product or service they are contemplating a purchase. For many, Epinions.com may be their first stop.

The threat to Amazon is the amount of traffic that Epinions might steer away from them. Consumers upset about customer service, shipping charges, or unresponsive communication can just as easily make their purchases elsewhere instead of first going to Amazon. What Amazon probably won’t like is the fact that consumers have that freedom of choice. Sure, Amazon will still get a large percentage of e-commerce purchases, but would that percentage be as high if Epinions weren’t also directing traffic to Amazon’s competition?

E-commerce aside, Epinions is providing a much-needed service for beleaguered consumers everywhere. By creating an easy-to-use site with lots of high-quality, unbiased, consumer-generated reviews, Epinions stands the chance to become the portal for all of e-commerce. I know that sounds a little hard to believe, but it may just happen. Keep in mind that Epinions is a third-party in the e-commerce transaction which, in the consumer’s mind, separates them from the bias that may or may not exist with the company they’re purchasing from? Earlier this year Amazon got into hot water when it was disclosed that they were accepting co-op advertising funds from publishers to feature certain books and authors more prominently than others which led to a sense of mis-trust among their consumers. Epinions needs to be careful about falling into the same trap.

Lastly, Epinions has hit upon the golden apple of the web. I’ve said for years now that everyone has opinions, and that everyone should be allowed to express them. If you buy a crappy TV from an electronics store and they refuse to refund your money, about the only thing you can do is stand out front and warn other consumers not to buy such-and-such brand. Obviously, not many people are willing to do this. On the web, however the situation is different. With Epinions, the consumer can stay relatively anonymous and is given a place where they can freely express their opinion about a product, company or service. Not only is Epinions providing a valuable service to consumers, it will likely become the first place companies and manufacturers will go when attempting to gauge consumer opinion about their products and services.

Epinions is currently in a public preview mode, and is growing at a rapid pace. It is one of the most exciting web sites to come along in quite some time and I firmly believe it will be the company to watch in the year 2000. While the over-hyped and over-valued dot-com companies watch their stocks sink I expect Epinions stock (they are not publicly traded yet) to rise. By providing a much-needed service to millions of e-commerce consumers, they are successfully filling the gaps between consumer and e-commerce fulfillment. That ought to be worth a couple of billion, at least.

Posted by Cameron Barrett at October 12, 1999 11:59 PM

Leave a Reply

Your email address will not be published. Required fields are marked *