The Ecommerce Scam
Today's ecommerce market has revenues in the hundreds of billions and grows by ~10% a year compounding. It has settled into this rate from higher rates in the 1990s. To find another comparable market in terms of relentless growth you would have to look at the IT boom in the 1980s and 1990s. The market is quite frankly, HUGE, and growing relentlessly with no end in sight.
However, there is a problem. As everyone gets more comfortable buying things online the demand for real technology to help evaluate products has not been serviced. Point blank: there has been little to no innovation in the space. Amazon has created efficiency around the actual purchasing process and warehouse/packaging/sending services. Their recommendation for "uniquely relevant" suggested products is also good. But technologies used today are derivative of those used in the 1990s. I would argue about 10% of customer needs are getting serviced. Specifically, the consistently finding the lowest price problem has been effectively solved by ecommerce search engines (like theFind, bizrate, Google Products). All these products do is aggregate affiliate market links. They do this very efficiently - almost always finding the best price. However, the 90% personalized product evaluation and individual analysis problem has not been solved. Consumers are left to do their own hacky research on product review sites; reading product reviews and in the pinch literally just asking friends what is good. To add to matters, ecommerce search is broken. If I search for "Canon Digital Camera" on Amazon, I get 24,992 results. ( http://bit.ly/6g9aFR ) Are there really 24,992 Canon digital cameras? The tech sector has not employed enough computer science at this problem. Worst of all, a lot of times people are getting ripped off. Ecommerce Scam Example: Camera companies use a combination of consuming norms and lack of analysis tools to routinely exploit us. All camera companies currently sell a range of "entry-level cameras" all of which are similar in quality. However, these cameras sell for a range of $100-$350. What does the extra $250 give you? The answer is not much - a scammy amount of not much. Here the main difference is literally just the stock sensor. Sony sells one camera for $329 and another nearly identical camera for $114. The more expensive camera has 12 megapixels and the cheaper only 10 megapixels. However, anyone that knows about cameras knows that 10 megapixels is more than enough for 98% of casual users. The scam here is that camera companies are exploiting assumptions. 3-4 years ago it was necessary to spend $300 to get a camera with a usable amount of megapixels. $300 used to buy about 6 megapixels which is sort of the line where having more gives you less per unit. This function decreases rapidly. Therefore a 10 megapixel camera is plenty. The marginal 2 megapixels from 10 to 12 are not worth $200. In fact they are basically worth nothing for a casual user. Amazon does not tell us this. Sony does not tell us this. No ecommerce company on the internet tells us this. This is straight away a market inefficiency. On value terms: this is an outright scam. Both parties assume because you spent $300 last time to get a reasonable camera that you will, out of habit, spend the same amount this time. Really they should inform you $114 will be enough, but they don't. Instead they profit-take. All the players get more money. Amazon can claim they're are agnostic. No one is really taking responsibility for saving your dollars. Overpriced casual use camera: http://bit.ly/5lbvZVAffordable camera casual user should buy: http://bit.ly/8k77ohThis sort of ecommerce scam creates a market opportunity. It's time for the balance of power here to be pushed to the consumers. There is no reason for anyone to getting ripped off. It's not 1999, it's 2009.
----
Follow me on Twitter: http://twitter.com/AlexdMoore
