The dark side of Web services

I have been writing and talking about the potential of Web services for a couple of years now, in this forum as well as in Webinars, public appearances, and even at parties (you can probably guess just how exciting those conversations are!). Today, I am here to discuss the “dark side” of Web Services, based on first-hand experience.

As you may know, Amazon became an early advocate of the Web services model when it released a set of services to the market in mid-2002. The idea was really a stroke of genius: promote Amazon as “partner friendly” by allowing third parties to become Amazon “associates,” providing them with tools to allow them to easily access the Amazon store. These tools, which are actually a set of free Web services embedded in a tool kit, allow partners to integrate Amazon’s major functionality (such as searching for products, managing a shopping cart, checking out, and billing) into their own Web sites with a minimal amount of development. In exchange, Amazon pays referral fees to its partners for each sale placed through the partner Web site.

The results have been impressive – Amazon has signed up literally thousands of associates over the past couple of years. It has been a real win for Amazon, as it promotes the brand and generates a lot of business without a lot of cost.

That brings me to the dark side. Last Christmas, my daughter decided she wanted a certain “My Little Pony” play set that was unavailable anywhere in town. I leapt to my computer, checking Amazon first, which was out of stock. “Not to worry!” I thought gleefully. “I’ll just Google the item and see if another e-tailer has it in stock!” A quick Google search yielded dozens of hits, the first of which was, of course, Amazon itself, followed by ToysRUs, which is an Amazon partner (and it was naturally also out of stock).

I then checked the third match, which was a small e-tailer named something like “Toys4Tykes” (not the real name). I noticed immediately after navigating to the site that it proudly displayed a “powered by Amazon” icon. After negotiating a couple of links, I quickly realized that it too was out of the item. “But of course!” I exclaimed, as the realization hit me that if Amazon is out of stock on the item, so are its associate sites.

In hit after hit after hit, I got so good at recognizing the Amazon partner sites that I could tell from the URL even before hitting the Google match that they would be out of stock (because, of course, they were all using the same Amazon Web services). After spending more than an hour fruitlessly searching for the item, I finally hit upon the idea of checking eBay, and lo and behold, I found the item for sale there.

The moral of this Web services story is fairly obvious: too much of a good thing, implemented by too few 800-pound gorillas, actually stifles competition by making it too easy for the little guys to simply hand over their business to the big guys. I don’t blame them – if you can make an easy buck by registering a domain name, putting up a simple Web page, and getting yourself listed in the search engines, why not?

I also cannot blame Amazon – it was a stroke of genius that has most likely paid great dividends. The capitalist in me says that hopefully this trend is not permanent – perhaps, by making it too easy to do business, the noise in the market generated by all of the thousands of Amazon associates will cause some entrepreneurs to realize that, by George, doing business the “old fashioned way” – actually carrying inventory and transacting business themselves – will be more profitable than just funneling leads through Amazon. I have a feeling that the next holiday shopping season will tell.

I would be interested in hearing your opinions on this. Feel free to e-mail me at mailto:mehr@enterprisemanagement.com, and thanks for reading – I feel so much better now.