The data vision
What the future might bring for marketplaces
When technology is fundamentally changing our world, one thing is sure: Only those who are bold enough to question the status quo will survive. Ovidiu Solomonov, dives into what the future might bring for digital marketplaces.
The amount of data collected every year increases exponentially – in 2015 we collected more data than in the history of mankind up to 2014. The ability to store and process this data increases exponentially – Moore’s law is (still) at work driving ever faster, smaller and cheaper hardware. Algorithms now exist that can crunch these vast amounts of data and learn on their own how to optimize for specific targets.
Step by step
This is why we are bombarded with news about smart cars, humanoid robots, and artificial intelligence. While it’s impossible to predict exactly what the future holds, one thing we know: the future will be discovered, step by step, by those who have the courage to experiment and disrupt the status quo.
Let’s think about what the future might bring for digital marketplaces where millions of people buy and sell goods every day. It’s not difficult to see how an image recognition algorithm could simplify ad insertion on marketplaces, but are there deeper implications on the very structure for these sites? Could this be not just a change of degree, but a change in nature?
Historically, marketplaces have been predicated on liquidity: you bring all buyers and sellers to one place and get them to trade with one another. The path to building such liquidity always starts with the supply side: you attract the sellers in a given segment, bring them buyers, attract more sellers interested in those buyers and yet more buyers interested in what the new sellers bring. This virtuous cycle makes perfect sense as sellers have an economic incentive that motivates them to incur the “cost” of listing their content in exchange for the promise of potential prospective buyers.
This is now changing with people increasingly spending their lives online and having more content than ever competing for their attention. They are no longer willing to invest the effort to search through generic content – they are increasingly expecting full personalization – what I need, when I need it.
Matching goods to people
Let’s try a mental experiment on what this exponential growth of data and processing power can mean for digital marketplaces: imagine a world where all goods are identified and their ownership is known, where people’s preferences, needs and desires can be predicted and where algorithms exist that can optimally match existing goods to people’s needs.
In such a world we would all be passive sellers: you would receive a message telling you that you might want to sell your current bike to someone else and buy the new one that you have always dreamt of in exchange of a small difference; swipe right and within 24 hours you have a new bike.
In such a world even the notion of ownership will change – as long as you can sell any goods at any given time for the “right” price, you are de facto “leasing” it for as long as you need it.
Is this a viable future? If, when the Iphone was launched in 2007, someone told you that within ten years, with one swipe, you could summon a car that drives itself to take you from point A to point B, would you have believed it? This is the power of exponential growth.
Let’s try to make a testable prediction: Within the next ten years marketplaces will have morphed from places where an “infinite” number of fungible buyers search through unique content, to algorithms/bots that push an “infinite” number of goods to the right person, at the right time. Demand side personalization will replace supply side scarcity.