In a recent Internet Retailer article published, Gene Alvarez, vice president and retail analyst at research and advisory firm Gartner Inc. was quoted as saying “Over the next three years, we’ll see 25 to 30% of the top-tier retailers with API practices.” He also added that he’s advising several consumer-oriented and business-to-business clients on API strategy options.
Like the ‘Glasnost’ period of openness and transparency introduced to Russia by Mikhail Gorbachev in the 1980s, some retailers are throwing back their e-commerce covers and exposing traditionally proprietary information in an effort to broaden their reach.
Many organizations are trying to make sense of how to harness this new era of openness. While no one has seemingly stumbled upon the magic formula, candid quotes by high profile execs such as Sony CEO Howard Stringer on the music business, speak of missed opportunities, "If we had gone with open technology from the start, I think we probably would have beaten Apple."
Perhaps the best known example of a major retailer embracing this new model is Best Buy and its Remix initiative. The Best Buy Remix initiative launched in beta last September as a means of opening the doors to information that could help develop new channels of branding and sales.Web developers can now draw on any information from the Best Buy Web site – product specs, prices, photos, user reviews – and port it over to their own sites (Internet Retailer, Feb 4, 2009).
The result will be synergistic mash ups whereby the sum is greater than the individual parts. MIT professor Eric von Hippel says that when users are given the tools to create their own solutions, innovation is sure to follow (http://web.mit.edu/evhippel/www/books.htm). Users have a ‘sticky’ knowledge of their own problems and/or requirements that is hard to convey to others who create solutions for them. It stands to reason then that open APIs and mash ups just might lead to the next great feature or widget for retailers’ e-commerce sites.
Opening up APIs to development partners may not only increase retailers reach and impact innovation, but may in fact ultimately create ‘long-tail e-commerce’ or micro-commerce. As the progression of online mash ups could also lead to up shopping carts as well, so that independent sites become not only a place to view retailer product information but also a place to buy products. (This type of offline mash up is happening today. Think of your local pharmacy where you can choose from a staggering number of non-proprietary gift cards next to the greeting card aisle). The potential for such micro-commerce or small, bite-sized transactions spread across a network of independent e-commerce sites is enticing and yet another way for retailers to expand their reach and increase market share.