Gamified ecommerce is a relatively new concept in internet retailing, but is set to come to the fore in 2015.
The use of gaming techniques and mechanics to make the online shopping experience more entertaining also adds hidden motivators to encourage customers to return. The burgeoning ‘gamification’ market owes much to the popularity of so-called penny auctions, which allow consumers to purchase goods online significantly below their market price. Eighty per cent off retail prices for brand new products is commonplace. The catch is that most penny auction sites require everyone to pay in order to participate, but only one person will actually get the product. Although the amounts lost are usually small, the participants are still taking the risk of losing their money.
But penny auctions are enticing, so a new breed of website is emerging that combines the thrill of the penny auction with the functionality of ecommerce and, significantly, a mechanism that ensures participants don’t lose money – through earned discount. If a bid for a product is made, but unsuccessfully, the investment can immediately be put towards buying anything from our website’s ecommerce shop at an attractive ecommerce price within one month.
This type of website is disrupting both traditional online penny auctions and the broader online shopping sector, most notably by injecting elements of excitement, fun and strategic bidding. The auction element adds an additional layer to the purchasing process and the ability to ‘bank’ the investment encourages users to revisit the site and removes the risk of losing their money. We carried out some research after launching our own bidding website and found that whilst curiosity was the strongest reason for registering, the possibility of bargains and having fun came a close second.
Enabling users to ‘have fun’ is possible because of gamification. Features such as the re-setting of an auction timer, make bidding more like playing a game and less like a traditional online auction. Users start to use gaming strategies, such as understanding their competition, working out the best times of day to bid or even timing their bids to coincide with a major event, such as the World Cup, for example. They learn how to be on top of competing bidders’ winning limits and adopt specific styles that they have learned are most effective in order to win.
Innovative bidding sites understand that they have to use as many gamification tactics as possible to keep participants interested. After we launched our ‘earned discount’ feature we found that users were 800% more likely to use it than the simple ‘buy now’ option, which suggests that the process of bidding with the possibility of achieving a major discount on a much-desired product is very attractive. Other gamification tactics being used include offering users non-personal information about other competing users, such as when they bid, what they bid on and what they win; or details of the bidding history on a specific auction. Of course users can also opt to bid in stealth mode and keep their profiles completely protected. These features help bidders to hone their strategic approach so that the process of purchasing a product becomes exciting and a challenge, something a user wouldn’t expect from any other ecommerce website.
Gamification, however, is not a substitute for offering an attractive range of products at a fair price. To be successful long-term requires a keen understanding of what consumers are looking for, so it is important to stay on top of product trends and offer goods that are going to sell. The best auction sites will also ensure that if users do decide to ‘buy now’, they are getting the product at a competitive price. This is the best way to ensure customer-satisfaction and will help to sustain the business model.
As this new type of ecommerce offer becomes more popular, we can anticipate the demise of penny or pay-to-bid auction sites which actually result in more losers than winners. Customers may well like the excitement of bidding, but they are also looking for value for money, and they won’t return to a site if they lose consistently. Harnessing the power of gamification will transform the ecommerce landscape, delivering an edge to purchasing that consumers have not experienced before, but to ensure longevity, auction sites must adopt a non-negotiable principle: ‘win or buy, but never lose’.
Juha Koski is founder and managing director of MadBid.com