Rapleaf, Portable Reputation & Portable Trust
I had a very interesting conversation last week with a smart entrepreneur named Auren Hoffman in San Francisco. His company, RapLeaf, aims to enable portable reputation signals for people and merchants. I like almost everything I heard about what RapLeaf is trying to do, and I plan to keep close tabs on and cheer for their success. I just signed up for Rapleaf, and you can see my Rapleaf reputation here…
I love the idea of portable trust and reputation signals. These two things are obviously related, but it is important to note that they are different.
We consider buySAFE a portable trust signal for online merchants. Our objective is to become the world’s leading eCommerce Trust & Safety company by making every online transaction trusted, reliable and risk-free. So far, so good. Today, you can find the buySAFE Seal on millions of Internet and eBay listings each and every day. At buySAFE, we enable merchants to leverage our powerful trust signal and bond guarantees across all of their eCommerce sales channels including eBay, Overstock.com Auctions, TIAS, and most recently, their web storefronts.
buySAFE’s trust signal is very black and white. You are either bonded or not. As a buyer, you are either going to enter into a risk-free transaction with a Bonded Seller, or you are going to enter into an uncertain transaction with a non-bonded seller. Regardless of your feedback rating, the equation is still the same…risk-free or uncertainty! It is really that simple. Please check out these two stories on some of eBay’s former top feedback rating sellers to understand my point…GlacierBayDVD & Sell2All.
buySAFE believes that "no risk" is the only viable, future option for eCommerce. Buyers don’t want "a little bit less risk" or "substantially less risk"….. As the eCommerce markets mature, "no risk" is the only real option that merchants will be able to offer consumers if they want to attract and convert sales. buySAFE obviously believes that certainty is a powerful concept in signaling and that it is the missing piece in ecommerce transactions with unknown entities (I will be posting a lot in the future on the economic concepts that folks must understand in order to optimize their sales online).
Having said all of that, it is not an easy feat to become a Bonded Seller. You have to be a professional seller with a good reputation, previous sales experience, minimum sales volumes, and adequate financial stability in order to be a Bonded Seller.
What I like about RapLeaf is that it signals to buyers that the individual/merchant has a history of transacting fairly. It is essentially a portable reputation signal that individuals/merchants can leverage on all of their online sales channels. Rapleaf doesn’t ensure that you won’t have a bad experience, but it is a nice reputation signal for those individuals/merchants that cannot qualify to be Bonded Sellers. That really is a huge benefit for online shoppers. Frankly, I believe there will be lots of Bonded Sellers that will enjoy the extra benefit of a portable reputation whether that comes from RapLeaf or eBay or whoever.
Obviously, buySAFE doesn’t enable individuals to rate each other, and buySAFE has chosen to not to do this for a number of reasons. First, we started buySAFE on eBay, and eBay is very protective of its turf including its feedback rating system. Obviously, the feedback system is critical to eBay’s success thus far, but that doesn’t mean it is the optimal system. I don’t believe it is, and I will be talking more about this in future posts.
One last thought… Scot Wingo did a very nice job touching on portable reputation signals back in March. He is a very smart guy, and his post is very insightful on this subject. I do not agree with all of his thoughts, but his insights are very important nevertheless. Most specifically, I disagree with Scot’s thesis that Google might be in the ideal position to provide a portable trust or reputation signal. I believe buySAFE is in a far better position to provide the ideal portable trust signal for shoppers and merchants, and I hope to prove that to you over the coming weeks and months.
Google is an unbelievable company (I own its stock), but it is not an objective third party. Payment providers and marketplaces, by definition, have to be buyer biased in order to create adequate buyer demand. It is impossible for these firms to be effective "trust brokers" if they have any bias towards either party. Google is now both a payments company (Google Checkout) and a marketplace (Google Base, AdSense, etc..). By law, buySAFE has to be a discerning, objective mediator because we are regulated by the state insurance regulators in all 50 states. We are required to protect buyers, but we are also required to protect the interests of sellers from bad buyers. Google cannot and will not do that for merchants, and so, it can’t provide the optimal portable trust or reputation signal. eBay and PayPal are obviously hampered by the same challenges.
Of course, they could always use a simple merchant rating system, but again, merchant rating systems are extremely imperfect signals, and the merchant ratings are not backed up by foolproof guarantees of seller performance. Coincindentally, Ina Steiner of AuctionBytes wrote on the subject of Google’s Rating System this morning.
We will be talking a lot about eBay, Google, the economic concepts of signaling, and online trust & safety over the coming months, and I hope this is helpful for you. Again, I am excited about Rapleaf, and I am cheering for their success. I am not sure what they will be able to do with their business model, but I definitely see the value they can provide online shoppers. Good luck Auren!