“Buy buttons”, online intermediaries and the marketplace tradeoffs

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A perspective of New  York City from Google's NYC headquarters
A perspective of New York City from Google’s NYC headquarters

Brian Javeline has made some strong points about the problems with website review/rating/contractor selection services such as Houzz.com and Porch.com, as well as other services such as Angies List, where the review/rating site acts both as a lead generator and intermediary. The challenge, he asserts, is that these services steal the leads from individual contractors and businesses, and then, once they have the control (including search engine rankings) in their hands, use the power to extort fees and take control of the business-building relationship that should be the contractors’ opportunities (and responsibility).

This Forbes.com article puts another spin on the challenge — observing how the possible introduction of “buy buttons” on Google listings may break the direct client/retailer relationship, again creating the intermediary problem and disconnecting valuable relationships.

In the ICI world, these problems have been noted in safety compliance management sites/services, where project owners sub out the compliance verification to third-party web-based services, who require subtrades to pay fees to participate and then require (through automated processes) often excessive and unnecessary paperwork compliance because the individualized nature of the supplier relationship isn’t taken into account. (It is one thing for an electrical contractor to require some sophisticated safety training, but should the company delivering temporary signage to the job site, where workers drop off and leave materials, require the same certifications?)

The other side of the story, of course, is the opportunity-creation these sites/services have created for micro or small businesses. Certainly, my wife and I used booking.com to discover inexpensive but quite suitable accommodations in Croatia last summer, and I doubt these business owners would have even thought it possible to access consumers directly before the services came into being. As well, we use online services to source relatively inexpensive offshore contractors for back-end work on our websites and list management.

So what makes sense — how do you deal with the changing rules of the game?

Obviously, in some regulated industries, such as taxis with Uber, and hotels with Airbnb, the battle has reached the courts and licensing authorities. In other regulated/licensed industries (such as contractors), the sites and services have proven to be more of a hindrance than a help — either inviting unqualified competitors to join the fray, setting auto-bot “regulation” requirements that are not necessary or (most seriously) distorting or removing the personal relationships underlying the business — a big loss, especially when even the smallest consumer-related project costs tens of thousands of dollars, and the business-to-business work can be much more costly.

I would advocate an informed but agnostic attitude to these services. Understand how they work, their trends, their influence, and respect their power (you don’t want to be whapped by a negative review/rating). However, certainly, unless your business truly cannot find customers without them, do your best to ensure you control the relationship dynamic and maintain as much as possible direct channels and connections with your current and potential consumers. And read the fine print before you sign any deal with review/rating agencies or websites.

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