Is E-commerce doomed?

E-commerce is the holy-grail of our Internet era. It promises to save trees, lower prices, increase market-share and make every participant a winner. Only it doesn't.

While some commerce flourishes on the net, others spend their money, do everything right and still hit the wall. You could put it down to the idea that 50% of companies fail in the first year. You could say that because we're off fighting SPAM and other bandwidth hogging abominations, such as Worms, Jokes and Sob-Stories, people find this Internet thing just all too hard.

This is not what is causing E-commerce to fail.

Some would suggest that it's difficult for Mum and Dad to find things on-line. If they do find what they're after, it's hard to navigate web-sites with different browser versions. The Internet is not fast enough, it's the World Wide Wait.

While these points might well be valid, this is also not why E-commerce is failing.

The reason that E-commerce is failing is because of a simple concept that we just deal with on a daily basis, but Mum and Dad don't know about - even if you point it out to them. The concept is so obvious, that even while I write this you are likely to think: "What is he on about?"

The concept is TRUST.

You might think I'll talk about fraud and credit-card rip-offs and dodgey suppliers and shipping problems and supply delays.


Maybe you think I'm going to talk about encryption and passwords and refunds and escrow services and all the goodies that come from exchanging keys.


This is about Trust.

How do you shop today?

Imagine moving into a new town. You move into your house and you want to get some Pizza and Beer for your first night. You look in the yellow-pages and call the nearest Pizza-bar. Your Pizza arrives an hour later and if it's nothing short of superb, you're likely to try somewhere else next time. You meet your neighbours who tell you about the place they go to. You drive around and try things. As you become more used to your new town, you'll become more confident in whom you deal with and what you buy where.

During all this time, you're building a relationship with your new town. You start simple, and bit-by-bit you expand your reach. You might never have had a flat tire, so you'll ask your local service station who to go and see.

You are building a relationship between yourself and people who give you advice. You're building a Trust Relationship. Over time it gets stronger if you deal more with a person, or weaker if you only buy once.

For Mum and Dad, E-commerce is nothing like moving into a new town. While you will likely ask your compatriots what they think about a new online store - and if you trust them, you'll investigate it further. You'll start building that online relationship and partake, but Mum and Dad don't have the know how let alone the mechanisms in place to get started.

They're not savvy enough to check-out if the virtual shop windows are thrown-in, the shop is in a bad part of town, or they don't like the age of the stock, because they don't know what they're looking for.

As early adopters, we are responsible for assisting here. We have a part to play in showing the way, but this is still not the largest part of our problem.

There is another more important aspect to Trust. This aspect is taken for granted in the real-world. You live and breathe it every day. It is so ingrained that you act very surprised if you don't have access to it.

It's called Recourse.

In the real world if someone rips you off, you can likely find a legal avenue, either through the legal profession, government regulation or by having Ray Martin stand on their door-step banging on the door.

In the virtual world I suppose you could hire a posse and DOS someone, but really there's not a lot else you can do.

What happens if you buy a T-shirt online and it contains lead-based paint that is illegal where you live, but not where the shirt is made. Who pays? Who deals with consumer protection? What does your estate do if the lead-poisoning in your body kills you?

Until we as a group figure out what to do about recourse, E-commerce is doomed.

Australian credit-card laws allow consumers to get their money back if someone rips them off - you need to fill in a zillion forms, but you can get it done - eventually. Of course the merchant misses out, they loose their product and they loose their income. It's the beginnings of recourse, but it's not really good enough. Both parties need to be protected from abuse of the system.

You could wait for real-world recourse to develop virtual equivalence, but given that it's taken since 1996 to get no-where, I don't think we can afford to wait any longer. It's going to have to be the early adopters, you and I, who come up with a way of figuring out what to do.

One suggestion is to have local user groups build a web of trust. With six degrees of separation, you could cover the world pretty quickly and E-commerce could begin to show some of its promises. How would it be built, how would it work, and how would it scale? The current exchange of keys during key-signing parties is only a very small part of what is required, both in idea and implementation.

The community that has the most to loose and has the best access to information and resources required to crack this nut is our own community of early adopters. This community of web-surfers, open source software developers and Linux users is most likely to find ways of solving this problem, long before legal avenues arrive.

What is needed is that we need to develop the base-line on how we'd like to trust in our future - that way the Mums and Dads of this world can use this fan-dangled Internet Thingy the way it was meant to be.

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