Will Buy.com's Video Comments Change E-Commerce?

Think of it as a marriage between Amazon's consumer review comments and Youtube's homemade videos. But will anyone turn little movies into big money?

Buy.com is trying to merge two of the Web's most powerful sales tools?consumer-written reviews and homemade video?into a salestool that will both tap a younger demographic and theoretically add more credibility to heretofore anonymous content.

From one perspective, neither of these Web capabilities are especially new. Consumer-written reviews were part of the original launch of Amazon.com and have been a prominent part of many E-Commerce sites for years and multimedia has been a core of the Web ever since graphical browsers were launched a dozen years ago.

But both features have taken on a life of their own in the last two years, with consumer-driven content pushing sites like NetFlix to replace professional reviews with consumer reviews, a trend that is likely to continue, according to a recent Jupiter Research report. (Click here to listen to a recent discussion with Jupiter and other analysts about this trend on StorefrontBacktalk's Week In Review.

Even small businesses?especially restaurants?are starting to feel the consumer-review pinch, according to this interesting story in today's San Francisco Chronicle.

Video sites such as YouTube, MySpace and GoogleVideo have soared in popularity in the last 18 months or so, even impacting political campaigns with people shooting speech and interview excerpts immediately.

This brings us to the core question behind Buy.com's move: Can these two trends be combined and will it work to boost sales?

Analysts watching the E-Commerce sector pretty much agree that the combination has tremendous potential, but that this is merely a small experiment and that much has to improve before it has the potential for having a true impact on E-Commerce sales. Please click here to listen to the StorefrontBacktalk Week In Review panel discuss Buy.com's video efforts.

Among the initial roadblocks are that a relatively small number of people will likely take the time to record and transmit a video review (which is a lot more troublesome than typing out a few sentences of comments) and the essential review-and-approval today must be done manually (which, if the technique becomes popular, could quickly translate into a huge labor and cost challenge).

"This is a really interesting approach. I saw some of the [initial] videos on Buy.com and they have the potential to be really quite effective," said Forrester Research analyst Sucharita Mulpuru, who then added that "the ones I saw were mediocre, but I could certainly see some clever person creating a mini-commercial that ends up being entertainment unto itself."

Mulpuru stressed that, when viewed in the context of a very early work in progress, this effort is intriguing. "I think this Buy.com rendition is definitely version one of a process that will take many years and better technology to perfect," she said. "It's a germ of a great idea, but as with many interesting concepts, it may be a bit ahead of its time."

Another problem is supporting the vast amount of diskspace and bandwidth consumed by an infinite number of videos being posted by consumers. "Another concern that I would have for retailers is: Would they have the bandwidth?either from an IT or human resources standpoint?to manage this?" Mulpuru asked. "Most retailers can barely manage written customer reviews. This could be pushing things a bit beyond the scope of their capabilities."

Michael J. Liard, a director with ABI Research, said the ability to see the product review was a major advance in Web reviews: "I think providing a three-dimensional view of a product is compelling in and of itself."

That value is undeniable, to the extent that most reviews leverage the power of video. If a reviewer sits next to the product and talks about it, it's not providing any great value beyond typing a text review. But if the reviewer thinks that the product spins too fast and or is wobbly or is difficult to clean, the video can demonstrate those issues in such a way that a viewers can decide for themselves whether that spinning or wobbling is too much for their tastes.

Greg Buzek, president of the retail technology analysis firm IHL, said that Buy.com's efforts must be seen as merely a new entry in a vastly unknown territory.

"It's really the Wild Wild West right now when it comes to video on the Web," Buzek said. "In the E-Commerce space, I think the ability to see a review that is visual is a good thing, but I think you?re going to run into two different groups that will bother to do this. Somebody that is deliriously happy with the product and somebody who absolutely hates it. So you're going to get the extremes. That's just standard human behavior."

One problem with traditional text consumer reviews is the anonymity of the review?even if a name is given?can make it difficult to judge credibility. Is the writer truly a rank-and-file consumer or perhaps an employee of the vendor. Although a video certainly doesn't prevent that kind of fraud, it is likely to make such an attempt more difficult. After all, a person can make up 50 fake names but it's a lot more difficult make up 50 fake faces.

Steve Rowen, a senior editor with the Extended Retail Industry Journal with the Retail Systems Alert Group, noted that the consumers who are more likely to post video content tend to be young, which has the potential to skew review data.

"I'm just looking at the Buy.com's (video reviews) that are on the site right now and there's not a person on here who is older than 25," Rowen said. "I'm not certain that that will actually mitigate the value of this, though. Perhaps this will actually lend a certain legitimacy if viewers can actually see the person offering the reviews, which is perhaps someone that either dresses like them or shares their lifestyle image."

Buy.com is working with Grouper Networks?which is part of Sony Pictures Entertainment--on the video technology being used for this launch.

Dave Samuel, a co-president of Grouper, said there are two ways consumers can create content for Buy.com: using a PC-connected webcam; and recording it on some other device (video camera, digital still camera with video capabilities, cell phone with video capabilities, etc.) and transferring the files to Buy.com.

The webcam approach is a lot easier, Samuel said, because it's already connected with the PC/laptop and the video is quickly ready for upload. Once received, the file is turned into a Flash file.

The quality of the initial videos is questionable. Will many users take the time to do sophisticated edits to their videos, perhaps cutting in product closeups at appropriate points? Even if users did, Buy.com has set an initial limit of 110-Mbytes and 10 minutes for each video, which will effectively prohibit high-resolution video. To put that into context, 10 minutes of a typical Hollywood motion picture takes up about 167-GBytes, which is more than 1,000 times more than the maximum set by Buy.com and Grouper.

Samuel defends such a low limit for video on two grounds. First, it's higher than other video sites: "Most of our Internet competitors have a cap of 100-Mbytes." More importantly, the limitation involves file-transfer logistics in the way consumer content is being accepted. "If we were to allow half-a-Gig files, often times (the download) wouldn't work" because it would time out.

Another issue with Buy.com's video reviews is search. If a consumer is looking at a toaster on, let's say, Amazon.com, some 48 consumer-submitted reviews might be presented. Perhaps this consumer might want to know if the toast pops up high enough to be easily accessed but not so high that it tends to fly out of the machine. He could quickly search to see if those issues are discussed in any of the reviews.

With video reviews today, that consumer would have to watch all reviews in their entirety to find out if any of them even address his issue. Unless, of course, the reviewer happened to mention it in a brief one-sentence description.

Grouper's Samuel said he expects technology to deal with that issue in the years ahead, as voice-to-text becomes more accurate.

Forrester's Mulpuru asks if the lack of search capability today will slow the acceptance of Buy.com's video review approach. "Who has time to watch these? It's not quick like skimming/reading a written customer review and that will certainly be an impediment," she said.

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