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Fiches: Essay on the Future of Ecommerce

This is an entry from this year scholarship competition. David Fiches, from University of California Santa Barbara, wrote about Ecommerce.

Paint Swatches are Old Hat: Introducing the Future of Ecommerce

In 2008, two researchers at Carnegie Mellon answered a question that few had thought

about and yet had serious implications for how we conduct business online: how many hours a

year would the average American have to spend in order to read all of the privacy policies to

which they agreed? The researchers, Aleecia McDonald and Lorrie Faith Cranor, concluded that

it would take approximately 201 hours a year, with an opportunity cost of about $3,534.

However, even as this knowledge enables companies to use intentionally complex privacy

policies as well as terms and conditions, knowing full well that they will be skimmed over at

best, the current surge of new users from all age groups heralds the arrival of an increasingly

internet-savvy user base that will demand change.


Ecommerce in particular begs for regulation. For instance, virtually any digital product

purchased comes as a license to a product, not an actual product. What this means is that the

customers never actually own anything; rather, they are given a right to use it. While customers

are not particularly at risk for having all of the music on their iTunes account, for instance,

revoked (this would be fiscal suicide for a company), there is one important area that the

distinction between license and ownership matters: resale.


When customers purchase a product in the United States, under the First-Sale Doctrine,

they then have the right to resell it. However, they will not have this right if they purchase a

license to use a product, whether software, music, a movie, or any other digital good.

Regardless of what holds the onus for this exemption – a congress out of touch with modern

technology, corporate power, or even simply fair trade – consumers are increasingly making

their demands heard for the right to own, and therefore resell, digital goods.


But not all expectations of future ecommerce sites will be based around consumer

rights. The main appeal of ecommerce is convenience: the power to order virtually any product

in a matter of minutes makes a trip to many stores, where it is impossible to say if the desired

item will be in stock, a relic of the past. Of course, improvements rarely come without

disadvantages. Shipping costs and time, for instance, can outweigh the advantage of

convenience for some items. However, as the transportation infrastructure of the country is

improved, enabling both faster and cheaper shipping, this disadvantage will become less

significant. Amazon Prime already provides some insight into this future. Less than $10 a month

covers all shipping costs and guarantees 2 day shipping (at least to most locations). As these

services become more readily available, consumers will begin to expect them.


The future of ecommerce convenience is not limited to improvements in shipping,

however. For example, there are already websites that provide recipes for every meal of the

day each day of the year. Imagine a service that would send a package of fresh food each week

to be used in conjunction with those recipes. If programs such as these became widely used,

economy of scale could mean that they could actually be cheaper than going to the

supermarket to purchase groceries, providing customers with both convenience and savings.

With a search by price function like that of Google Shopping, customers will expect reduced

prices. Creative and innovative production and supply strategies will enable companies to meet

these expectations and remain competitive.


Ironically, the often criticized privacy policies of websites such as Google (which mass-

collects data to uniquely target advertisements towards each user) can not only provide a more

convenient shopping experience for online shoppers, but can also find personalized items. Take

the example of clothes shopping. As it stands now, customers can either order a product online,

risking an ill fit, or they can try items on in a store until they find something that fits well and

looks good on them. In some stores there may be knowledgeable employees who function as

fashion consultants, helping customers find items that match their style and body, but by and

large shoppers must rely on their own skills for finding the clothing that they like best. Using

new technology such as 3D cameras, however, future ecommerce sites could use algorithms

based on the advice of the most respected fashion designers and icons to not only find the best

outfit for each customer and their unique style, but a digital preview could show the shopper

how the outfit would look on them. Clothing could even be custom tailored in a factory to fit

the customer perfectly at a fraction of the cost of traditional tailoring. The ability to preview a

product before ordering it is already expected of any online retailer, but soon ecommerce sites

will be expected to provide previews that show what a product would look like in someone’s

house (imagine a hardware store website that could show what a room would look like in

different colors of paint!).


This is only one out of many ways that customization will inevitably enter ecommerce.

The supermarket found such success when it was first introduced because it provided so many

options to consumers. But as production methods become more and more versatile, there is no

reason everything we order in the future could not feature options for customization. Products

with graphics – T-shirts, birthday cards, and the like – are an obvious candidate for these

options, as are any products that were formerly limited to a set range of colors. But what about

custom shoe treads or custom sized baking pans? As production technology evolves,

ecommerce can evolve with it to provide options that were previously thought impossible and

will soon become the standard.


Advertisements too could become more effective as ecommerce develops. With

smartphones becoming ever more pervasive, it is likely that in the near future all it will take to

purchase something from an ad is a point and click of a phone. Customers could buy something

on their drive to work without even using their hands and have it delivered by the time they got

home. In fact, companies that do not offer this option will quite probably find their

advertisement wasted as consumers begin to expect companies to make purchasing items

easier than ever before.


However, despite all of the expectations about convenience, customization, and low

prices that will be put on ecommerce websites in the future, there will also be expectations

from consumers that websites do not overreach their boundaries. Where these boundaries are

is still a topic of debate: many people are uncomfortable with the mass-collection of data, but

do the advantages, such as seeing more relevant ads, outweigh the security issues of any kind

of data collection? As data collection becomes more powerful these questions will become of

greater importance to the public. For instance, in order for an online clothing fitting room to

work, it may require an image of a user in their underclothes. This would allow clothing

websites to provide a better fit for customers, but even if the images are not stored in a

database as customers would demand, there is always the risk that the data could be

intercepted before it reached the company’s server. Assuming consumers will be accepting of

their data being handled anonymously by machines (which, judging from current trends, they

will), they will still expect very strict privacy measures.


Because the internet is inherently unsafe and cannot offer any guarantee of protection

of data, ecommerce websites will quite possibly find that the competitive path exists between

the online and the offline. Continuing the example of the clothing store, it is possible that

clothing stores will become a series of booths – or perhaps even all be integrated into a single

booth – that contain all of the algorithms and product data needed to find the best clothing for

an individual. This way no data will even be stored in the first place.


Similarly, increased convenience also makes it easier for children, for example, to

accidentally purchase something if a parent leaves a computer or phone unlocked. Innovative

security measures to protect against accidental purchases will likely become a way for websites

to set themselves apart from their competitors.


All in all, we are in the middle of an exciting age for both consumers and producers. Any

website that is able to make a significant innovation in ecommerce will find great success: just

look at such giants as Netflix, Amazon, and Ebay. However, once the innovation in question

becomes commonplace, it will be the websites that understand customer expectations that pull

out in front. Navigating the desires of consumers for trustworthy business practices,

convenience and customization, and privacy will become even more paramount to success as

the number of ecommerce sites increases rapidly, creating an arena of both extreme

competition and reward.

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