Gartner: Googazon Could Dominate Web Retail

 
 
By Stan Gibson  |  Posted 2006-10-10
 
 
 
ORLANDO, Fla.—As the World Wide Web evolves into a collection of Web services, one or two huge players could come to dominate retail search. Gartner analyst Hung LeHong laid out that scenario at the annual Gartner Symposium/ITxpo here.

"Its a scary scenario. A few major players could take over Web 2.0," said LeHong, suggesting that a merged entity such as Google and Amazon—call it Googazon—could mediate half of all online transactions.

LeHong termed such a role "pretailing," or serving as the place where consumers would search for a vendor and compare prices and special offers before buying.

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"Googazon will sit between your customers and your company. It will be able to provide access to all retailers. It will close 30 percent of transactions and guide 50 percent of purchases in any channel. It will force full retail transparency, and will dictate how we compete," LeHong said.

By 2016, he said, "You will need to work with Googazon."

A Googazon could help consumers by finding deals and matching them to the buyers financial profile.

Read more here about analysts predictions at the Gartner Symposium/ITxpo, including a firm warning to cut infrastructure costs.

Although Google might evolve in this direction on its own, LeHong said, the company does not yet have the retail credibility of Amazon.com, which would be needed to generate trust among both buyers and sellers—hence, his suggestion that the two companies could combine.

The danger, however, is that Googazon could become a dominant market force not unlike Wal-Mart in conventional retailing today. The marketing muscle that such a company could exert on buyers and sellers could limit consumer and vendor choices, he suggested.

In order to counteract the retail transparency that Googazon might bring about, he said retailers might try dynamic pricing, or changing prices from time to time depending on demand, and they might also try to create complexity by putting together bundles of products and services that might defeat easy comparison. Another alternative would be to create customer loyalty programs as airlines do.

LeHong said other entities could emerge, such as "service-jackers," who could invoke others Web services for profit.

LeHongs predictions were part of the so-called "Maverick Track" of presentations at Gartners Symposium, those that feature more speculative, visionary and imaginative views of the future.

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