If you have been following the evolution of eCommerce recently you will have identified two key issues that all giant companies trying to dominate the space (Google, Amazon, Apple and Facebook) are grappling with. First, the increasing role that governments want to play in online business, particularly the imposition of taxes and regulation of online trades by local and national authorities. Second, the potential (or not) of local advertising driven eCommerce.
Both of these issues can lead to dramatic changes to end users perceptions of the benefits of buying and selling online. In the first instance, governments are starting to play the clown as they try to trap the eCommerce companies into playing by the same rules they have long imposed on bricks and mortar businesses in their respective jurisdictions. In the case of local advertising, eCommerce strategists could easily be seen by both investors and end users alike as acting like buffoons if they roll out platforms that are too intrusive and kill off the potential for this area of growth for eCommerce at its start.
The increasing role that governments want to play in this space may turn out to be the more serious threat to the future of 'free enterprise eCommerce' (where buyers and sellers meet unhindered in cyberspace). Following on from the recent battles over Network Neutrality (which are not over but on hold pending the outcome of the US elections), two specific fiscal initiatives by governments are worth noting here. First, it is rumoured that Google has been on the receiving end of a tax demand from the French Government for 1 billion Euros on the advertising revenue that it supposedly gets for sending users to French media websites. Second, Amazon has capitulated to levying states' sales tax in the US. Now eCommerce companies cannot pass onto end users ALL the savings from having efficient warehousing and shipping operations out of state.
On the potential for local advertising on mobile devices, some pundits see this as the next ‘big frontier in eCommerce’. Here the argument is that helping smart device users purchase close to them and shifting local advertising spend online (presumably to the detriment of local papers) is a huge opportunity which global online retailers, like Amazon, can’t ignore. The suggestion is that Amazon, for example, should take over Groupon (which even Google tried to buy before the Groupon IPO) and make a killer APP for Amazon Smartphone devices (a ‘Kindle smartphone’?).
To me this low-price driven strategy is fraught with danger. Anyone who has a Kindle supported by advertising knows that Amazon’s 'push' ads do not interfere with the purpose of the device's reading or book ordering experience. Since users are settled and ready and receptive to read the odd Advert, this is not too bothersome on existing Kindle devices. However, can you imagine how irritating it is to have ads popping up just as you are about to make a call prompting you with an offer 100 meters away? Limited screen size is a real problem for this service and even if you are interested in such content as an end user it is a distraction that you can likely live without. The sheer number of ads that need to be pushed locally to make this profitable is also challenge. To even have a chance of permission based regular use they need to be in the 'interest sweet spots’ of end users close to 100% of the time (the assumption is you can turn them off, but can you on a low-priced smartphone subsidised by the ‘Kindle ecosystem’?). Even the the most ferocious proponents of the advantageous of 'Big Data' can't promise this. ‘Digital Local marketing’ maybe the next big thing from the point of view of creative agencies but it is without doubt one tough nut to crack from the point of view of end-user experience as its perceived benefits may not always exceed its perceived cost in terms of time and intrusion.
What is clear is that both of these developments will impact how eCommerce is practiced globally in the months and years to come. Some serious thinking about the future of global eCommerce is afoot...
Both of these issues can lead to dramatic changes to end users perceptions of the benefits of buying and selling online. In the first instance, governments are starting to play the clown as they try to trap the eCommerce companies into playing by the same rules they have long imposed on bricks and mortar businesses in their respective jurisdictions. In the case of local advertising, eCommerce strategists could easily be seen by both investors and end users alike as acting like buffoons if they roll out platforms that are too intrusive and kill off the potential for this area of growth for eCommerce at its start.
The increasing role that governments want to play in this space may turn out to be the more serious threat to the future of 'free enterprise eCommerce' (where buyers and sellers meet unhindered in cyberspace). Following on from the recent battles over Network Neutrality (which are not over but on hold pending the outcome of the US elections), two specific fiscal initiatives by governments are worth noting here. First, it is rumoured that Google has been on the receiving end of a tax demand from the French Government for 1 billion Euros on the advertising revenue that it supposedly gets for sending users to French media websites. Second, Amazon has capitulated to levying states' sales tax in the US. Now eCommerce companies cannot pass onto end users ALL the savings from having efficient warehousing and shipping operations out of state.
On the potential for local advertising on mobile devices, some pundits see this as the next ‘big frontier in eCommerce’. Here the argument is that helping smart device users purchase close to them and shifting local advertising spend online (presumably to the detriment of local papers) is a huge opportunity which global online retailers, like Amazon, can’t ignore. The suggestion is that Amazon, for example, should take over Groupon (which even Google tried to buy before the Groupon IPO) and make a killer APP for Amazon Smartphone devices (a ‘Kindle smartphone’?).
To me this low-price driven strategy is fraught with danger. Anyone who has a Kindle supported by advertising knows that Amazon’s 'push' ads do not interfere with the purpose of the device's reading or book ordering experience. Since users are settled and ready and receptive to read the odd Advert, this is not too bothersome on existing Kindle devices. However, can you imagine how irritating it is to have ads popping up just as you are about to make a call prompting you with an offer 100 meters away? Limited screen size is a real problem for this service and even if you are interested in such content as an end user it is a distraction that you can likely live without. The sheer number of ads that need to be pushed locally to make this profitable is also challenge. To even have a chance of permission based regular use they need to be in the 'interest sweet spots’ of end users close to 100% of the time (the assumption is you can turn them off, but can you on a low-priced smartphone subsidised by the ‘Kindle ecosystem’?). Even the the most ferocious proponents of the advantageous of 'Big Data' can't promise this. ‘Digital Local marketing’ maybe the next big thing from the point of view of creative agencies but it is without doubt one tough nut to crack from the point of view of end-user experience as its perceived benefits may not always exceed its perceived cost in terms of time and intrusion.
What is clear is that both of these developments will impact how eCommerce is practiced globally in the months and years to come. Some serious thinking about the future of global eCommerce is afoot...
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