Velocity and its relevance to a Business Proposition

One way to evaluate a business proposition is to see how well it increases the velocity of funds-movement between buyers and sellers.

For instance, look at Amazon. Related items, things others have bought, "buy all these items for $100 and save," product reviews, a great search, etc. -- all increase velocity.

Same with eBay, and Amazon's marketplace -- in this case, more buyers and sellers on the same system increases the selection, among other things.

A credit card increases the velocity of a sale by reducing/removing several barriers. Not only does it take the risk away from the seller, it also makes it psychologically less painful for the buyer to fork out the money. Somehow, it feels more painful when you actually pay by cash -- although we all know that we must ultimately pay.

Promotions: same idea.

Google Adwords increases velocity by connecting the right buyers with the sellers.

Behavioral ADs increase velocity.

I was listening to the radio in the car, and an AD was being played. It was totally not relevant to this listener. I started thinking, this must have a very low yield, velocity wise. On the other hand, if people truly had internet radios in their cars, the ADs could be personalized (e.g., with behavioral ads), and made much more relevant to the listener, increasing velocity.

When people move around with smart-phones, if you can show them exactly the right store for a product or service that they are looking for, you help increase velocity. If you show them other relevant products (similar to Amazon), give them coupons/incentives to buy, the velocity goes up further.

Velocity -- a simple concept really; yet it took me a long time to look at it this way.