Porn + Food = Ecommerce

Porn + Food = Ecommerce

I ran across an interesting article on the BBC “Worklife” page titled: “The curious origins of online shopping.”

If you were an early adapter, you might remember the thrill of upgrading from a 14.4K modem to 28.8K. Was that speed even possible back then? Soon, a mind-blowing 56K would be available and that was pure, straight-up science fiction at that point.

 

Right then, the first group of large-scale online services began to take shape. These were almost entirely social-based experiments. Prodigy, AOL, Compuserve, these were attempting to figure out not only the “how” but the “why.” What did they provide besides a way to chat and email and lookup phone numbers? One company, Amazon, had the foresight to begin the very first models of e-commerce. The market matured and slowly, this weird concept of buying products via computer started to put down some roots.

Online bookstore and IPO

After reading a report about the future of the Internet that projected annual web commerce growth at 2,300%, Bezos created a list of 20 products that could be marketed online. He narrowed the list to what he felt were the five most promising products, which included: compact discs, computer hardware, computer software, videos, and books. Bezos finally decided that his new business would sell books online, because of the large worldwide demand for literature, the low unit price for books, and the huge number of titles available in print.[9] Amazon was founded in the garage of Bezos’ rented home in Bellevue, Washington.[7][10][11] Bezos’ parents invested almost $250,000 in the start-up.[12]

SOURCE: Wikipedia

The Porn Paradigm

I firmly believe that the impetus for users to go online was porn. It was the perfect match between content and delivery. It was prurient but discrete; enticing and easy. Likewise, Amazon chose a similarly (if not less carnal) product to marry to this new form distribution: books. They were easy to ship, they were easily identified and sorted digitally since they were already assigned an ISBN # and, perhaps most importantly, they did not need to be personally inspected like, say, a pair of pants.

It often takes a tectonic social shift to see if a trend becomes a more permanent feature of any large, diverse community. And we are at that moment right now. One could not create a more telling stress test for e-commerce than COVID-19. And the preliminary statistics show it:

Between March 2020 and April 2020 in the US, ecommerce sales jumped 49%, led by online grocery with a 110% boost in daily sales. Kahn says that ecommerce has finally reached the kind of high penetration (the kind that makes more sense relative to its age) because people have turned to the internet to buy food.

— Source: BBC

These numbers are astonishing in any environment. The rate of acceptance of previously brink-and-mortar-only retail drives an entirely new type of ecommerce. We are now shopping for survival, not for fun.

“A real inflection point for online shopping as we know it today could be traced to around 2017. By the end of the prior year, many Americans were “starting to shop online as often as [they] take out the trash”; according to the Pew Research Center, eight in 10 Americans used a computer or phone to buy something online that year – as opposed to the just 22% who did so in 2000.”

— Source: BBC

EARLY, BUT DEAD, PIONEERS in ECOMMERCE

(my hat’s off to them)

Warehoused

Warehoused

There’s something deeply disturbing whenever one uses the word “warehouse” as a verb. Especially when the objects are human.

This John Oliver piece makes me think twice when reveling in the fact that my order arrives almost before I placed it. Why yes, how did you know, Amazon, that I needed coconut coir planting material and a squishy baby head that is surprisingly creepy?

“Brushing” Amazon Accounts and the Loss of Innocence

“Brushing” Amazon Accounts and the Loss of Innocence

Online reviews are a lot like bad relationships:

It’s either over-the-moon fantastic with rainbows and sparkly teeth. It’s also seeing someone’s complete rage in their eyes. Yeah, so it’s either great or terrible. No middle ground. Yeah, reviews on ecommerce sites are like that.

I think it was a genius PR ploy to have people just write glowing testimonials for free. I mean, crap, you just got copywriters for free, dude. Humans, being humans, found a way to game the system so completely that the main objective of having real people give feedback has been “Monetized” (not a word and I’m sticking to it). Neatly packaged in a simple — insanely simple — a rating of 1 – 5 stars.

The BBC has published an in-depth article (portions quoted below). What caught my interest is that the practice is so common that everyone admits it. We are, after all, simply “data points” that can be manipulated by “influencers.” Fuck. Where is my copy of Aldous Huxley’s Brave New World when I need evidence?

From the BBC:

“You can’t win”

One company, in Bingley, West Yorkshire has decided not to use review websites such as TrustPilot or Feefo because of the risk of competing with fake reviews.

Helena Gerwitz, head of marketing at Feature Radiators, says: “We work in a really niche industry.

“When new websites pop up, they might suddenly have 200 or so reviews. That’s a lot of reviews since we know they have only been going since last month.”

Helena Gerwitz, front second from left, with the team at Feature Radiators in West YorkshireImage copyright FEATURERADIATORS
Helena Gerwitz, front second from left, says her company gets “lovely” feedback which it posts on its website

She believes the volume of the high-rated reviews that some competitors have cannot be legitimate.

Ms. Gerwitz adds: “We have had chats about it – do we need to go down this route? – but my boss is very much ‘we don’t want to do that’. It’s unethical, it’s not true.

“We could set up a review account and know that we would do it legitimately but it would look bad as we wouldn’t pay people to put out reviews, so relative to the other sites we would look terrible.

“So we have decided not to do them but then people think there is something to hide. You can’t win. It’s really frustrating.”

‘Lose faith in online shopping’

Even verified reviews might not be all they seem. Some consumers fear their personal data might have been used by sellers to gather fake “verified reviews”.

Known as “brushing”, the scam sees sellers obtain people’s name and address to send the goods which they did not purchase.

On Amazon, this leaves a paper trail showing the goods had been bought on the site and had been delivered.

The seller then uses the individual’s details to set up a new account which it uses to post glowing reviews of its products.

Amazon says it is “investigating” complaints of “unsolicited packages” which would breach the company’s policy.

Architect Paul Bailey, from Billericay, in Essex believes he may have been targeted. Last month he received a number of unexpected “gifts”, including a key-ring, a phone case, a tattoo removal kit and a charcoal toothpaste set.

Some of the parcels which were sent to Mr Bailey included a USB mobile fan and a tattoo removal kit.Image copyright PAUL BAILEY
Some of the parcels which were sent to Mr. Bailey included a USB mobile fan and a tattoo removal kit

“I think when the first parcel arrived it was a case of bemusement, then I checked with my wife if she’d used my account to buy something.

“When the second item arrived later that day I thought it was perplexing but amusing. Then it became quite chilling.”

Mr. Bailey says he cannot be sure where online sellers have obtained his data but says it has “made me lose faith in online shopping.”

He added: “We all know there are laws in place over how data is handled but it’s made me very, very nervous to the point I’m going shopping back on the High Street – even though it tends to be more expensive.”

A spokesman for Amazon added: “We have confirmed the sellers involved did not receive names or shipping addresses from Amazon.

“We remove sellers in violation of our policies, withhold payments, and work with law enforcement to take appropriate action.”

The psychology of online reviews

Nathalie Nahai, the author of Webs of Influence: The Psychology of Online Persuasion, says online reviews work because people try to take an “effortless route” when they have to make decisions.

“When it comes to purchasing, especially for items which are easy to buy, we expect this level of convenience and ease,” she says.

“Part of that expectation is met by peer reviews… we can outsource our decision-making.”

“Above a certain threshold, people will go for a slightly lower rating,” Ms. Nahai explains, citing a study where a product with more reviews but a 4.3 rating was more popular than the same product with fewer reviews and a 4.4.

Interestingly, she says there is “certain leniency we give to bad reviews”.

“We tend to distrust perfect ratings because it looks too good to be true,” she says. “A five-star rating is less worthy than a 4.8 or 4.7.”

It could also be the order of the reviews that matter.

Consumer psychologist Cathrine Jansson says some sellers might be aware of what is known as the primacy and recency effects. These theories state that people tend to remember the first and last items in a series better than those in the middle.

“It’s the first five or six reviews that people tend to read and then if they’re really interested they’ll scroll to the last one.

“So some sellers will make sure it’s really good reviews at the top and that people see a really good one last.”

There are, however, many reasons why people will also post genuine online reviews, says Nisa Bayindir, director of global insights at market research company GlobalWebIndex.

“There are other key motivations at play. For example, we know that consumers buy products and brands that preserve, enhance or extend their self-image.

“This dynamic comes alive with online reviews. People may leave genuine and positive reviews online to show appreciation and commitment to the brands that are in tune with their personalities and values.

“This, of course, includes the basics such as product quality, attentive customer services, and good value for money. ”

She says that brands should focus on “building credibility” but acknowledges that fake reviews may be around for cheaper goods for the foreseeable future.

She adds: “Sometimes people are just happy to pay a smaller amount of money for a mediocre experience.”

Source: BBC

SkyNet is Hilarious!

SkyNet is Hilarious!

AI can often produce inconceivable results.

Google’s own facial recognition AI identified black people as gorillas:

When Brooklyn-native Jacky Alcine logged onto Google Photos on Sunday evening, he was shocked to find an album titled “Gorillas,” in which the facial recognition software categorized him and his friend as primates. Immediately, Alcine posted on Twitter: “Google Photos, y’all f***ed up. My friend’s not a gorilla.” This comment prompted over 1,000 re-tweets and an online discussion about how shocking the situation was. One user replied, “That is completely unacceptable and very low. I’m so sorry you had to come across such hurtful ignorance.” (Forbes)

While that’s socially and culturally disturbing, AI can also produce some amazingly funny things. Like, really funny.

Seems our little computer buddies have a sick sense of humor:

Amazon sellers have been experimenting with AI for a number of years now, but the company clearly wasn’t keeping an eye on the mischievous bot that recently had its way with their ‘phone accessories’ section.

My Handy Design, whose creator is still unknown, was a bot programmed to fetch frequently searched images, turn them into iPhone 6 cases, and put them up for sale. The bot’s algorithm somehow went rogue, however, and began scouring images so bizarre that we can only assume they came from the darkest, most depraved corners of the Internet. Whoever set this thing loose is either nursing a giant migraine right now, or rolling on the floor laughing.

Before long, My Handy Design had created thousands of phone cases displaying everything from marinated herring rolls to cocaine, and customers were having a field day in the reviews. Though most of them have now been flagged as ‘adult products,’ we’re sure they’re still going to be outselling OtterBoxes any day now. Check out some of our favourites below, and vote for the ones you’re dying to have. (Source)

Amazon Drops Their No-Compete Pricing Policy

Amazon Drops Their No-Compete Pricing Policy

from CNN Business:

Amazon sellers just got a little more freedom. The e-commerce company will no longer prohibit its third-party sellers from listing their products on other sites for less than they do on Amazon’s US site. The change comes amid concern that the stipulation, called price parity, could be in violation of US antitrust law.

Amazon (AMZN) confirmed the policy change, which took effect Monday, but would not comment on it. Senator Richard Blumenthal had called previously on the Department of Justice and the Federal Trade Commission for an investigation into antitrust violations and how they could affect the prices that consumers pay for goods.”Amazon’s price parity provisions may raise prices for consumers both in the short term and in the long run,” he wrote in letters to the DOJ and FTC in December. “Relatedly, Amazon’s price parity provisions may work to block the emergence of more efficient online marketplaces that might offer consumers lower prices on their favorite goods.”In a statement to CNN Business, Blumenthal said he welcomed Amazon’s decision, but that he is “deeply troubled that federal regulators responsible for cracking down on anti-competitive practices seem asleep at the wheel, at great cost to American innovation and consumers.”Amazon still faces scrutiny from legislators who want more regulation of large tech companies.

Senator Elizabeth Warren has called for tech companies to be broken up because they have too much power. She’s singled out several companies, including Amazon, and has proposed a law that would mean, among other things, that Amazon wouldn’t be able to sell its own branded products like AmazonBasics on its platform, which would mean lost revenue.

CNN Business

Ecommerce’s Dirty, Little  Environmental Problem

Ecommerce’s Dirty, Little Environmental Problem

The first wave of ecommerce businesses had at their core a utopian belief that they would do no harm, they would save the Earth, they would benefit everyone and they would, accordingly, usher in a new, socially responsible corporate culture.

Didn’t quite work out that way. I don’t doubt that Brin, Bezos, Jobs et. al. had good intentions. The astounding success of their businesses (and the Internet as a whole) has created some problems for the entire planet.

The packaging that your iPhone, Amazon Echo Dot and the like is big business. According to a report by BusinessWire, it will be worth about $148 billion by 2024 with year-over-year growth of 3.0%. Not bad.

Nearly $150Bn worth of packaging means we have a lot of recycling to do. But recycling is not, and has never been, easy. The recent switch to polymer bags by Amazon is to be lauded. But, and it’s a heavy but. The new packaging jams up existing recycling machinery. Further, the simple act of affixing a paper label to an otherwise-recyclable plastic mailer renders it un-recyclable.

Plastic is so cheap and enduring that many companies use it for packaging. But consumers are prone to put plastic sacks into recycling bins. Plastic mailers escape the notice of sorting machines and get into bales of paper bound for recycling, contaminating entire bundles, outweighing the positive effect of reducing bulky cardboard shipments, experts say. Paper bundles used to fetch a high price on international markets and had long sustained profits in the recycling industry. But mixed bales are so hard to sell — because of stricter laws in China, where many are sent for recycling — that many West Coast recycling companies must trash them instead. (Packaging is just one source of plastics contamination of paper bales bound for recycling.)

“As packaging gets more complex and lighter, we have to process more material at slower speeds to produce the same output. Are the margins enough? The answer today is no,” said Pete Keller, vice president of recycling for Republic Services, one of the largest U.S. waste haulers. “It’s labor- and maintenance-intensive and frankly expensive to deal with on a daily basis.”

— Washington Post

The solution? Yeesh. Not an easy answer. Amazon is forced by some countries to pay for its contribution to ecological contamination, such as in Canada. This doesn’t apply to the US and it’s unlikely to happen under the current Trump administration. Perhaps Amazon’s (and other mega-ecommerce retailers) can explore an interesting option:

“They could do a reverse distribution, taking materials back to their distributions system. Those collection points become very important to make it convenient for consumers,” said Scott Cassel, chief executive of the Product Stewardship Institute, a membership-based nonprofit focused on reducing the environmental impact of consumer products. “But it would cost them money.”

Further Reading:

RETURN TO SENDER

RETURN TO SENDER

One of Amazon’s best features is that returns are free and easy.

I know, I do it a lot. It’s a staple in ecommerce, especially when you sell tangible items (clothing, perfume, anything that you need to sense, really). Ecommerce does a lot of things, but tactile is not a feature on any site.

So, this means Amazon has a little problem with returns. Amazon, as always, will not release numbers on anything, but let’s just assume that it’s a large number. There are internal outlets for these items; Amazon Warehouse, Woot!, etc. But what do you do with this:

From The Atlantic:

“With a couple hundred dollars and a few minutes, you could go to a liquidation website right now and buy a pallet full of stuff that people have returned to Amazon. It will have, perhaps, been lightly sorted by product category—home decor, outdoor, apparel—but this is mostly aspirational. For example, in one pallet labeled “home decor,” available for sale on liquidation.com, you could find hiking crampons, shimmer fabric paint, a High Visibility Thermal Winter Trapper Hat, a Mr. Ellie Pooh Natural White Paper List Pad, a St. Patrick’s Pot O’ Gold Cupcake Decorating Kit, a Spoontiques Golf Thermometer, a Feliz Cumpleanos Candle Packaged Balloon, and five Caterpillar Hoodies for Pets.”

Chaos. Not a Theory.

It’s not ideal and there a lot of questions, but when you buy a palette from Amazon that they say is worth $4K for only $200, you definitely feel like you’re an insider getting the bargain of a century. Except they aren’t:

“Every box is a core sample drilled through the digital crust of platform capitalism. On Amazon’s website, sophisticated sorting algorithms relentlessly rank and organize these products before they go out into the world, but once the goods return to the warehouse, they shake free of the database and become random objects thrown together into a box by fate. Most likely, never will this precise box of shit ever exist again in the world. On liquidation.com, each pallet’s manifest comes with suggested prices for each product in a pristine state. If you add them up, the “value” of the box might be $4,000, while the auction price might only come to $200.”

“So, Liquidity Services, the operator of liquidation.com, became a major (though not exclusive) handler of Amazon’s American liquidations. The company calls dealing with returns “the reverse supply chain”—a part of the retail business that has been growing in importance as online shopping becomes more popular. Liquidity Services now has 3,357,000 registered buyers on its various liquidation websites. In the past fiscal year, it sold $626.4 million worth of stuff.

Amazon represents a growing chunk of Liquidity’s business. In its most recent SEC filing, the company disclosed that it spent approximately $33.7 million on Amazon liquidation inventory, which it then turns around and sells for maybe 5 percent of the supposed retail value. And, assuming the company is trying to turn a profit, it must buy the inventory for a fraction of that. Doing the rough math, we’re talking about inventory that once had a collective value reaching into the billions, before it landed in some box on a doorstep.”

Inventory Just Sucks

Any business will tell you that the cost of acquiring, storing, safeguarding and delivering inventory is the #1 thing tugging their bottom line down. It sucks. HARD.

I’m seeing more and more of my clients move to “physical cloud services,” by which I mean that they employ Fulfilled By Amazon, Shipstation and a ton of other fulfillment services. And they are either delighted that the onus of carrying inventory has been lifted off their shoulders. Until they realize that they have lost control of their entire brand due to the whimsical policies that firms like Amazon mandate. Hairspray. OK yesterday. Not OK today.

cgk.ink can help navigate the turbulent evolution of ecommerce. Let’s talk more in depth about your latest project.

FBA Can Bankrupt You

FBA Can Bankrupt You

Fulfilled By Amazon (FBA) is indeed, a brilliant idea.

It’s also an unbelievably huge, complicated mess that has reduced grown men to tears.

The concept is simple enough to anyone who understands drop shipping. You purchase bulk items from a third party — usually one located in a country where wages and expenses are insanely low — then mark them up and sell them online without ever touching a package.

Amazon inserts itself in this cycle and the third party goods get shipped to one of their warehouses where they store, package, ship, deal with all sorts of customer issues and then take a fee. Sounds easy. But it’s not.

You’re playing with Amazon. That Amazon which is currently worth more than the GDP of Kuwait. The process of selling on Amazon is so detailed and delicate that most vendors simply give up. In addition to the fees paid and the set-up headaches, it is an unsaid fact that you will need to pour money into an ever-gaping maw since you are (most likely) competing with several hundred or thousand vendors — who bought the same, identical product. Advertising quickly adds up and somewhat shady practices need to be deployed to get your product noticed. If caught, Amazon can (and does) shut you down in a second with no appeal.

The idea of passively watching your bank account swell while on some tropical island quickly becomes a depressing reality.

In her excellent article in the January The Atlantic, Alana Semuels’ How To Lose Tens of Thousands of Dollars on Amazon, she describes how this scenario has allowed a very special type of “consultant” to thrive. 

 

Amazon depends on both of these players as more than 50% of all 500 million of it’s products come from Marketplace vendors. So it’s in their best interest to address this quickly and effectively… which they’re not doing.

I’ve successfully integrated several clients’ sites and products into the Amazon Marketplace. I have also advised many more clients to avoid it. It’s easy to say that you want to sell on Amazon but the reality is that there are several (very unpleasant) factors to consider.Often, it’s better to take the money you would spend on Amazon (and other sales channels) and reinvest it into your existing operations. Operations over which Amazon has no control

 cgk.ink can help determine if sales channels are right for your online projects. Let’s chat and see what your options are.