March 27 2013

How Technology Spreads and the Future of Ecommerce

Ecommerce has been around for quite some time, so it’s only natural to continue with what works. If it ain’t broke, don’t fix it, right? Wrong. I bet my metaphorical hat that Ecommerce is getting ready for a next step that will shift it from a silo of “selling” into one that’s embedded into all parts of our social lives. Businesses that can innovate ahead of the wave will be the eventual winners.

Thinking about when, how and why will such a shift manifest left me with some questions:

  1. Why isn’t Ecommerce fun if shopping is so much fun? Why don’t people sit around at the hair salon and talk about how much fun they had shopping online yesterday? Why isn’t it glamorized by Carrie Bradshaw and…well…the other 3? We can talk about TV shows for days. Social media has augmented our communication, and the Web has revolutionized every aspect of our lives from education, to work, to entertainment. Yet, Ecommerce remains at a commodity stage. We only go to an Ecommerce site if we need to buy something and don’t go back until we need something else—that is, unless we instead muster the energy to take off our fuzzy slippers and drag ourselves to the mall.
  2. Why am I not addicted to Ecommerce? I honestly can do without it. Some people probably like to shop online more than I do so there is an element of personal preference involved, but it’s also generally true that online shopping is not a part of everyday life as much as the Web and social media, in general, have become. It’s nice for certain things and it’s definitely convenient, but take online shopping away and I wouldn’t really suffer. Of course, when I say “shopping” that doesn’t include my Netflix and PluralSight subscriptions. Hmmm, maybe I need Ecommerce after all.  

And if we look closely and draw some parallels with past technological revolutions, the answer to these questions might turn out to be…it’s just not the right time yet.

The past doesn’t repeat itself, but it does rhyme
Ecommerce has been around for quite some time, so there is great debate over every aspect of it. I’m sure somewhere people have come to blows over button placement at checkout, but let’s see how this all fits into the entire Web landscape.

I want to rewind things a bit by drawing a comparison with other technologies that have ignited their own revolution and evolved afterwards. Remember that infamous 1996 Bill Gates article headlined “Content is King”? While you may have heard this phrase a lot of times before, you may not know its origins. It was essentially a prediction for the Web based on observations to what happened with the previous big thing – broadcast television.

Television was invented at the turn of the century (no, the other century), but broadcasting started to pick up around the end of the1920s and the beginning of the 1930s. That was the pivot point when companies like the BBC really saw an opportunity in broadcasting TV signals, and thus the revolution began. TV’s chief rival at the time was radio, which had wider adoption and was a key source of news and entertainment throughout the WWII era, just as TV, newspapers and magazines were at the end of the 1990s.

After World War II, people started to need television as an inseparable part of every household and a go-to source of entertainment and information. This was mostly because of the baby boom. Children liked good shows and the broadcasting companies provided good shows. Eventually this turned to a lot of radio shows being transferred to a TV format and the nightly news becoming an inseparable part of family life.

In fact, if you look at the adoption patterns, there are interesting parallels to draw between the history of broadcast television and the Web. These seem to reflect on the evolution of Ecommerce. When we evaluate the three evolutionary phases— when a technology was invented, when companies figured out they could make money out of it (the Nice-To-Have moment), and when it became massively embedded in everyday life (the Must-Have moment)—there are several key observations we can make. 

history image

The Must-Have moments are actually part of broader evolutionary steps, but we can still determine an approximate point in time when the adoption in society reached critical mass. Even if we give or take a few years, this doesn’t change the picture that much.

The symmetry in all this is beyond incredible and leads to three interesting conclusions.

  1. Neither the Nice-to-Have moment nor the Must-Have moment was based on the so-called “technological determinism,” or on the theory that the mere presence of technology accounts for its spread. Television was around long before it became a part of everyday life.  The internet was around long before Tim Berners Lee gave us the World Wide Web, and the Web was around for some time before it became a necessity and a go-to medium spreading far beyond its original intent. With less than 6% of total retail sales coming from Ecommerce, it is safe to assume that we haven’t reached that must-have moment yet, but when people move from doing 6% of their shopping online to doing half of their shopping online, we will find ourselves in a technologically advanced and evolved Ecommerce world that is shaped by interactions that bring value. And the value that they will bring will negate the conventional inconveniences around doing things online.
  2. If you look deeply in the reasons why the internet and television became so embedded in culture, you will see another trend. In broadcasting, it was the shows’ entertainment value that led families with children to purchase TV sets. The attraction was what was on TV rather than the technological benefit of having a TV set on its own merits. The same was true of the internet and the Web. The mere technology behind having TCP/IP protocols to exchange interlinked documents was completely genius and a nice-to-have, but it didn’t alter life for our society. Even now this technology has yet to reach more than half the world’s population. In 1994, or even in 2004, we could have gone a week without going online; the Web wasn’t something we needed to have in our pocket at all time. In fact, we spent most of our time on the computer either playing games or within somewhat connected mostly desktop-based software. Minesweeper was popular back then, too, remember? It boomed with the .COMs back in the 1990s, but it became a part of everyday life and culture when the technology and business models actually matured enough to allow us to interact with each other and share content, which gave way to a whole ecosystem.  All those moments where a technology became embedded in people’s lives were not driven by a technological boom but rather by a content boom. 
  3. If we look at a comparison between Ecommerce and the Web in general, out of the top websites today only 3 existed 10 years ago – Google, Yahoo and Amazon. But if you look at the top 15 Ecommerce sites in 2010 ALL of them existed 10 years ago. In 2011 and 2012, we added a few different business models that reshuffled the rankings a bit (Groupon, LivingSocial, Multiply and even Facebook). But in essence, nobody has massively turned around the model for Ecommerce the way the social media ecosystem did for the Web in general. Not yet, anyway. But if and when this evolution from a Nice-to-Have to a Must-Have starts to render new requirements and trends in Ecommerce, there are going to be companies that shift the model and the picture a lot, just as it did in the end of the last decade for the Web.

Ecommerce started off as a revolution because of what it offered - convenience and bargain hunting at your fingertips. But this itself is not enough to overcome some of the drawbacks of the online world, and as a result the numbers we see related to use aren’t even in their teens:  only 5.5% of shopping is being done online; the median conversion rate is only 3.5-4%, even for organic search; and only 4% of conversations around brand and products link to actual brand and product websites.  You will definitely agree with me that these numbers are “kind of” low. If you have a good product with a good price but your actual sales department had 3-4% success rates, this would mean that you are not having the right conversation with your customer, and you are not giving him the right information at the right time. But the great news is that all historic, economic and technological trends are leading Ecommerce to more competition and more innovation that is inevitably going to bring these numbers up for some businesses.

How does technology help?
There is one traditional technological trait that I see hindering that process but could help you get ahead. The traditional models of Ecommerce created a vertical so widely concerned with the complexity of online processing, and the ecosystem of services around it, that it neglected the complexity around managing content. But here is how we see things: Your business needs both content and Ecommerce. Whether or not you sell things online, as a business presented online, you play by the exact same rulebook dictated by the content-centric Web and the ecosystem around it. Users, and also social media and search engines, love good content and good content needs convenient tools, great governance and a strategy. Wrap this in a powerful platform and mix in fresh approaches to email, social media, personalization and a compelling mobile story and you get the toolset to create experiences that will drive your Ecommerce business forward exactly in the direction that the Web evolution is leading us to acknowledge.

Don’t be afraid to think big. There are great interactive agencies that can execute your ideas and there are platforms that can handle it. And if you do look to the history of the Web and even television as the bellwethers for Ecommerce, then this is the logical conclusion:

history image 2

Learn more about Sitefinity and Ecommerce.

Svetla Yankova is a Sitefinity Sales Engineer focusing on providing end-to-end solutions for client-specific business and technical needs. Consulting with large organizations in the initial stages of adoption, Svetla works closely with customers, partners and the Sitefinity Product Team on projects involving both CMS and Ecommerce requirements.

ZAG Interactive is a full-service digital agency in Glastonbury, CT, offering website design, development, marketing and digital strategy to clients nationwide. See current job openings.