Online Marketplaces

Microsoft had to adapt its online service and Internet access business to Google as the new force on the web. MSN with its content channels and services such as Hotmail and messenger has been a popular destination but its display and paid placement-advertising model were under attack.

The company just started to understand Google and its ad-funded business model and renewed its effort to compete by investing into MSN content channels and incubating a search engine.

I joined MSN Shopping – a shopping comparison engine – being responsible for the engineering effort. Shopping was one of MSN’s most profitable channels but with declining selection, traffic and user engagement caused by a paid placement business model and explicit volume traffic guarantees.

Microsoft decided to do a major investment into the underlying shopping technology to create a marketplaces platform that could serve Windows Marketplace and other product-specific online stores as well as the general MSN Shopping destination.

The team in a heroic effort revamped the complete system of catalog processing and deployment as well as web front-end generation, addressed all the different requirements from partner teams, and enjoyed the attention of top-level management.

Technical challenge for the shopping channel was to move the infrastructure to handle the 50 million and growing product selection up from the previous 5 million. But the true challenge was the change of the business model from a paid placement model that was entrenched in the internal business processes to a pay-per-click model. The new site once deployed showed a 3 times improvement in customer satisfaction and was ranked 1st in a comparison by Jupiter Research.

Shopping comparison engines were becoming acquisition targets with astronomical valuations (eBay bought Shopping.com for $620 million and Scripps paid $525 million for Shopzilla.com) for businesses that basically have an arbitrage model in decline: acquire traffic cheap and sell more directed traffic to merchants for a higher price.

In this highly competitive space we started to look for product differentiators and started to invest in ratings/reviews and opinion extraction. The goal was to introduce a new ranking signal derived form reviews rather than product popularity. The rating and review service was ultimately deployed by 15 channels in the MSN Network and the opinion extraction technology found its way into several other search products.

As part of the Windows Live branding effort and the resulting investment rush a completely new shopping front-end was developed which introduced many features that make up social shopping sites today. Ultimately the branding effort evolved by splitting the MSN Network into content channels named MSN and services named Windows Live services. Our new Windows Live-branded shopping experience however became a casualty of this transition.