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Priceline.com’s Jay Walker: the “Wow” factor will define the future of e-Commerce
Walker, speaking to students at Harvard Business School on March 2, equated the buzz of new Internet business to the sensation created by a new movie or a great restaurant or the transformational effect of the automobile, the telephone, and television had on the U.S. economy and culture.
According to Walker, online stock trading and online auctions are the few places in e-commerce that deliver “wow” today. Citing that 30 percent of all securities trading is done by individual investors online, Walker said that the Web has turned the securities business upside down by providing online convenience, information, and savings. “An entire industry imploded,” he said. “Now the industry is driven by the retail marketplace. And [online traders] are having fun.” Indeed the “fun,” or entertainment value, of e-commerce cannot be underestimated. “Even the front page of The Wall Street Journal has to be entertaining,” Walker said.
In the New York area, Walker’s Priceline.com, a consumer-to-business Web site launched in 1998, sells groceries using the same “name your price” scheme it uses to sell surplus airline tickets and hotel rooms to travelers. Online shoppers are treated to a computer-generated slot machine that virtually determines whether or not they get the items in their market basket for the price they are willing to pay.
The e-commerce companies that consistently deliver savings to their users will be the biggest leaders. “If it works, you have a Wal-Mart,” Walker said.
Although not the most convenient place to shop (“7-Eleven is more convenient, but it doesn’t have the retail share Wal-Mart has”), the discount retailer ascended to market supremacy by proclaiming, and delivering, “always the lowest price” -- typically by wringing out every possible cost factor in the supply chain.
“If consumers can save money, and suppliers can make money, then you have the future of e-commerce,” he said.
Walker is chairman and founder of Walker Digital, an e-business incubator that has been described as a digital version of Thomas Edison’s Menlo Park, N. J., laboratory. Its venture capital comes from the profits of Priceline.com, Walker Digital’s first big success.
Walker was a guest of Harvard Business School’s High Tech and New Media Club, which promotes news of the converging worlds of information technology and the communications and media industries, creates career opportunities for members and alumni/ae, helps educate the HBS community on the new digital economy, and builds a community of high-tech MBAs worldwide.