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.