Too good to be true?

The pros and cons of internet trading, a brief guide by Ed Baker.

A new market has emerged.

It is now commonly known that the last five years has seen an unprecedented rise in internet shopping, both in terms of commercial sales and private transactions. The online retail giant Amazon, who began life selling books, reported a 20% hike in sales in the first quarter of this year, to the tune of $2.28 billion. On average in the UK, 2.5% of household spending is now online, and this figure is rising.

The phenomenon of search – the internets’ ability to deliver potential answers to our infinite questions – has been the key benefit to the online trader. Search engines bring the market to the marketplace. Increasingly, they are being paid to do it. Google’s AdWords program accounted for over 30% of its income last year, as it promises to deliver targeted “traffic” to online business. One cannot perform a search nowadays, it seems, without happening upon a sponsored result near the top of that little green column to the right of your screen that says, “get cheap ‘*******’ on ebay, buy it now for ‘£***!’”

A new market brings new challenges.

So it is that ebay has become the prominent location for people to buy and sell their wares online. Implicitly transferring Harrods’ “anything from a pin to an elephant” claim to the ether, the buyer is assured that he will be able to find literally anything for sale in the auction sites’ vast virtual stockroom. It is this very vastness however that has begun to spell trouble for the company, and its consumers.

The lack of human interaction, guarantees, a bricks-and-mortar existence, and the absence of strict and comprehensive regulations have allowed unscrupulous dealers to flourish online, particularly on the larger auction sites. People create an identity, advertise a product they may not even have, collect the money and simply vanish. More disturbingly, sophisticated criminals are now able to use sensitive credit card information from other online consumers to assume identities and buy goods. Witness the recent case of Terrill D Johnson of Ilyssa Way Ohio, who used credit card receipts to obtain $18000 worth of merchandise through Amazon.

The global nature of ebay has brought its own pitfalls. Many buyers and sellers are not aware of the cultural or legal differences governing trade outside the borders, with the result that buyers foot huge premiums for the processing of foreign orders and often end up empty-handed if they unwittingly attempt to purchase something prohibited in their country.

One of the common misconceptions about ebay is that if the seller has lots of feedback, the majority of it positive, they are a safer prospect. Recent studies have shown this is simply not true. Satisfied buyers on the whole don’t bother to leave feedback, they just get on with enjoying whatever they bought, hence the presence of a dialogue between buyer and seller can often indicate some problem or lack of clarity somewhere in the transaction.

In April of this year I attended a market research evening for ebay, run by the company Saros, who source everyday consumers to give detailed information and constructive criticism about a particular product or service. The three hour session focused entirely on buyer security, indicating that ebay has recognised the widely-held view that its’ site favours the seller and affords inadequate protection to the prospective buyer.

A new marketing model emerges

The experience shed light on an interesting concept that I believe some businesses are already developing, and more and more will need to devote time to – that of the “user journey”. While the existing benefits of the internet were identified and appreciated at the session; the ability to browse, compare, search and research, and the lack of overheads driving down prices, one thing became clear: people want an end-to-end experience. This means they want satisfaction from the first – confirmation emails, detailed tracking of delivery, fast shipping, reliable handling, guarantees, human and helpful customer service, a check-back and continuing support from the business. These comments applied not just to ebay of course, but to the thousands of other online businesses that provide goods and services to shoppers everyday.

The issue of shopper security has become so important that the Office of Fair Trading commissioned a study in 2004, scheduled to mature in 2007, which will examine awareness amongst shoppers and traders. It will look closely at whether businesses are aware of regulations, and whether individuals are aware of their rights. Did you know, for example, that as consumers we are entitled to a “cooling off period” of 7 days, within which we can expect a refund if we are not satisfied? Try telling that to the bloke you just bought a dodgy Ford Sierra from over ebay last week.

The advice is simple – do your homework. The internet is the single greatest resource for an individual to research a given topic. Spend some time comparing prices, services and market value. You can use www.BizRate.com to check ratings of vendors posted by their customers, and you can read independent reviews of products before you buy at www.cnet.com. Examine the companies carefully – are there any hidden costs? How do they make their money? Honest businesses will be upfront about commission and delivery charges. They should also have an address or at least phone number, preferably toll-free, where you can talk to a customer service representative for your own peace of mind. A money back guarantee is a must if you can get it, and if buying from an individual, find out as much as you can – do they have a number or email address? Strike up a dialogue and don’t buy blind!

Trust – the key to success.

As a seller, all of the above must be taken into account, with one concept at the front of your mind – trust. Businesses especially must strive to build trust into their reputation. They must meet the needs of the consumer in providing a real physical identity to back up their online presence –the website is not enough. Be open, be honest, keep it simple. It is better to specialise in one type of product or service than to have a free-for-all; imagine how impossible it must be to police ebay and how confusing it is to a first-time buyer.

For variety and value, not to mention freedom from the old-fashioned “hard-sell”, the internet is becoming the number one choice for today’s consumer, and it is beginning to produce its own code of business practice. For companies in particular, the goal must be to set new standards of service with a simple, clear, guaranteed and reliable service, underwritten by an accountable, human presence offline.