The Death of E-Commerce?

November 18, 2013

I just sat down at my desk and took a few moments to read Antonio Regalado’s fascinating column on E-Commerce from MIT Technology Review. I recommend it to anyone who runs a business, or really anyone who plans to buy something in the next month or two — you know, during the Holiday Shopping Season.

It’s That Time of Year Again

With that holiday shopping season right around the corner the media spotlight on E-Commerce is about to get dialed up a few notches. The standard media grind of finding a new story to keep things fresh, yet rehashing the same old topics over and over again, is really quite fond of the E-Commerce tale since it basically hits every mark needed in a story this time of year. It’s well trod ground (retail sales figures during the time of year when people flock to shop retail), it’s fresh and flashy (buying with a smartphone is the new “it” thing) and it’s easy to write about (everyone’s got a smartphone and in between texts can probably offer an opinion about the story).

So there’s going to be a flood of “E-Commerce, it’s not just for kids anymore!” style pieces written, along with chart after chart of how many billions of dollars are being spent on products through the whiz bang-up new gimmicks of smartypants phones and interwebs tubes (it’s not a truck, but it powers a fleet of delivery trucks!)

It’s this pending recycle of the news cycle that Regalado’s piece really underscores. It’s starts with the subhead of the article, “E-commerce is an idea whose time has come and gone. Here’s why.” A bold statement when placed up against the pending flood of stories that are going to tell us that E-Commerce is (still) the next big thing.

But that’s the hook of Regelado’s article. And it certainly worked its magic on me and got me to read it.

More Than Meets the Eye

Regalado’s point isn’t that E-Commerce is done. It’s more that it’s becoming part of the everyday fabric of retail business. So he’s saying that E-Commerce has been merged into a total shopping experience and is no longer a new gimmick.

The article really slams this point home when it quotes Chris Fletcher, a research director at Gartner (who we here at HMS have used data and graphics from on this very topic). Fletcher told the MIT Technology Review’s Business Report, “we should stop calling it E-Commerce and call it just commerce,” and suggested that it’s really just a part of the shopping experience now.

This quote called up more than a few variants of the corny joke, “In China, they just call it food.” But the point is very well taken this year, and is something we’ve been alluding to for two years now at Host Merchant Services: The whole shopping experience has blending together with Online and Brick and Mortar since the very beginning.

Days of Future Past

This has really obvious but powerful ramifications for our company. As more and more people just accept online shopping as much a part of the process as window shopping or catalog shopping, the amount of credit and debit card transactions continues to increase. Those are the two most common methods of payment in this online environment. And so as the business evolves to the point where popping into a Macy’s ends up auto-texting you a free discount code on your next Macy’s purchase, payment card transactions become the norm.

Keeping an Eye on Heat Mapping

Oh and Regelado’s article really dives into that bit with your location spawning discounts:

” Threatened by the growth of low-cost online merchants, traditional retailers are reacting by following customers onto the Internet. Macy’s does it as well as any. On its website, it installs 24 different tracking cookies on a visitor’s browser. On TV, it runs ads with Justin Bieber that urge millennials to download its mobile app, which tells them which of the chain’s stores is closest to their location. Once inside, they can use the app to scan QR codes on a pillowcase or a pair of shoes. Online orders now ship from the backrooms of 500 Macy’s stores that this year began acting as mini distribution centers.”

Omnichannel marketing is the buzzword associated with this. But it’s something we’ve been discussing at HMS for awhile now. Our partnership with Barclay’s Mobile app opened this slick marketing tactic up to us ages ago. It’s really quite clever. The business uses its connection to your phone (and thus your own transaction history, your GPS location, as well as data that it can find in various places like social media) to track your buying habits.

I remember the first time the heat mapping aspect of Omnichannel Marketing was explained to me by HMS Tech expert Ken Hemmel.

He described a system where I’d be walking along on Main Street in Newark, which was where the Barclays app was being targeted, and I’d pop into a restaurant. I’d buy a meal and have a glass of a particular wine with that meal. The information would then prompt my phone the next time I walked past a wine and spirits store that was participating in the program. And I’d be given a coupon code to save money on a bottle of that kind of wine I had with my meal. This would combine transaction history, with GPS location and turn into an aggressive marketing tactic to get my business.

A Whole Store in Your Pocket

Another salient point Regelado’s article made really resonated with me personally. The article cites US Census economic data and states that only 5.2 percent of US retail purchases were made online in 2012. But then the article cites the effect of online research, noting that 80 percent of BestBuy customers said in a survey that they already searched for price information online before making a purchase in person. And that a third of them do so on a phone while inside the store.

So the last two purchases I made at BestBuy were an HD TV, which I searched for information on while in store, and a computer which I was shopping for online before I went there. I fell right into those statistics. I wanted to comparison shop and read reviews before making the purchase and had the device right there in my hand that let me do exactly that.

The only thing that held me back from ordering either  of these items completely online was impatience. I wanted the item that day. Which is exactly what Relegado’s article also gets into:

“But now [Amazon] and other Internet companies, including eBay and Google, are investing in same-day delivery—getting goods to people just hours after they order them. With their drop boxes and fleets of delivery cars, they’re bidding to eliminate one of physical retailers’ main advantages: immediate gratification.”

The suggestion is that technology is pushing retailers to evolve. They embrace social media, and online power, and create a shopping experience once again tailored to meet the needs and convenience of their customers.

Been There, Done That?

It reminds me of Warren Ellis and Darrick Robertson’s groundbreaking comic book, Transmetropolitan. Set in a Bladerunner-on-acid style future and revolving around a pastiche Hunter S. Thompson-inspired Gonzo journalist named Spider Jerusalem, the comic had a very humorous but also telling take on marketing and advertising in our near future. It suggested neural advertising bombs delivered directly to our brains, tracked by our own viewing habits, to offer us the products we’d be most interested in. As deft and powerful as that future marketing blitz was shown to be in the imaginary world of Transmet comics, the reality is we’re about to be in on the beta test of that entire concept with the way retail is evolving through E-Commerce.

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