As the use of social media has grown, so has the visibility to people’s activities and intentions. From knowing where someone is physically (because they’ve ‘checked in’) to what they’re buying, eating, and scoring in the game they playing in, everything about them – at least to the extent they’re willing to share – is becoming exceedingly transparent. Individual transparency has been growing since we first began leaving digital ‘trails’ of our online activities (even before social media was a ‘thing’). What has continued to evolve, though, is the extent to which companies seek to take advantage of transparency… or to try to limit it.
One of the first efforts to create transparency as a means of delivering business value was Gas Buddy. As the tag line says, the company is all about, “Consumers working together to save on gas.” In reality, what the company, GasBuddy/OpenStore LLC, has created is a network of local websites, where consumers provide updated gas prices at literally hundreds or thousands of stations. The resulting transparency enables consumers who use the company’s application and locations services to find the best prices near them at any time.
In late summer 2013, eBay took such a strong interest in what Decide.com was doing that they acquired it (the site is no longer active since the acquisition was completed). When it launched, the intent of Decide.com was to provide consumers with the ability to make informed decisions on what prices to pay for a variety of products. With the eBay acquisition, however, the focus shifted to providing transparency to sellers instead, helping them price products more competitively and/or deciding whether it would make more sense to offer products via a different model, e.g., eBay’s auction format.
The trend toward transparency, and the forces that oppose it, continue to play out in travel, as well. Nowhere is this more apparent than in the use of opaque models like Priceline’s ‘Name Your Own Price’ and Hotwire’s ‘Secret Hot Rate’ Hotels. By withholding actual names and locations of hotels, sellers of hotel rooms are able to realize higher margins, i.e., the difference between their cost to the hotel and what they charge the buyer’s credit card. The advantages to hotels, obviously, are that 1) consumers are prevented from comparison shopping the best deals prior to purchase and 2) hotel brand dilution is largely avoided.
The limited transparency described above, however, will always have its opponents — in this case, the buyers who will go to great lengths to save even a few dollars. They will seek transparency wherever they can find it. Forums like those on BetterBidding.com attempt to allow consumers to share information on what they’ve paid through the opaque models. While it’s doubtful that this type of hotel bid ‘insider information’ will ever be as robust as Gas Buddy’s data, it can, nonetheless, provide some additional guidance prior to purchase.
The hotel example reminds me a little bit of Newton’s Third Law of Motion. The simple version is that, “For every action there is an equal and opposite reaction.” The opposite part certainly is true given the attempts by forums to try to help shoppers ‘beat’ the bidding models. Judging by the tremendous success of Priceline, Hotwire, and others, though, there’s a long way to go to equalize the game with the transparency consumers desire. That won’t, however, stop innovative entrepreneurs from trying.