

The Ecommerce Scam - alexdmoore
http://alex.posterous.com/the-ecommerce-scam

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apowell
I don't think it is a scam to sell products with different features and
specifications and allow the customer to choose the product that is right for
them. Could search technology improve this process? Sure, but it isn't a scam.

Furthermore, cameras used in the example are quite different -- the more
expensive camera shoots 720p video, has optical image stabilization, and a
larger display.

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SwellJoe
I just went looking to see if the $114 camera did HD video, since I'm planning
to upgrade my Canon five megapixel camera explicitly to get HD video and big
enough storage to make it worth having. So, for me, that's a huge feature
difference. I don't know if I'm an average digital camera consumer, but I'm
definitely not a serious photographer or videographer.

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phatboyslim
I have a couple of concerns with this article, however, I do generally agree
with most of the author's thoughts.

1\. Title is deceptive, it should have been labeled 'Deceptive Pricing Scam'
or 'A need for better product reviews' and not 'E-commerce Scam'. It's a blank
statement with no meaning. Almost every website in the electronic shopping
sphere offers orders of magnitude better than the brick & mortar alternative,
which is zero, with regard to reviews. Additionally, this sort of price
problem exists in both traditional retail and online shopping. How is the
problem specific to online shopping?

2\. Saying that Amazon returns 24,000 hits for Canon Digital Camera as a
problem is like saying Google returns 12,400,000 for the same search (which it
does). Search is evolving in all areas, not just e-commerce.

3\. I'm going to assume that the statement 'no innovation has been made since
the 90s' was in specific reference to product review/consumer option
entitlement. Leaps and bounds of improvement have been made to user interface,
credit card security, guided navigation, payment options, search (believe it
or not), scalability, advanced marketing, etc.

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asher
I agree with Alex. We can say that e-commerce is still in the "pre-google"
phase, by analogy to search.

E-commerce sites could be much more than electronic mail-order catalogs.
Amazon has tapped one dimension with customer reviews, but there's enormous
room for improvement.

As Alex points out, the burden is still on the consumer to perform labor-
intensive research. We need to change this.

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teej
I think jordanf's startup Kallow has been doing a great job hitting this
market, at least for me. Even as a technical consumer, I don't want to do in-
depth review searches, I simply want to optimize for ( value / price ) / time.
I've made four purchases based on Kallow and have been very happy.

Kallow certainly isn't the ultimate answer, but it's a step in the right
direction.

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gojomo
Be careful what you wish for: generating a diversity of ever-better options
for the savvy consumers is at least partially subsidized with the margins
extracted from inattentive 'casual' consumers.

Reduce those margins, and it's possible that the prices paid by savvy shoppers
could go up, and the pace of innovation -- exploring the technology/marketing
solution space -- go down.

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forensic
But the direction/efficiency of innovation would improve.

Better to spend money that encourages companies to research more genuinely
useful products rather than products that simply may be more marketable
because they have a useless extra 2 megapixels.

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gojomo
You can't be sure of that. The market is a giant ever-changing multi-party
game with lots of nonlinear and counterintuitive effects.

I would be more confident of your prediction if there were some
suppliers/retailers that _only_ sold the high-margin items with "overpriced"
bells and whistles. But there aren't: the exact same companies that produce
and retail the "good" "valuable" products also make money from related high-
margin products for naive and price-to-value-oblivious consumers. And these
high-margin products help pay for some of the same shared
research/design/marketing costs as support high-value/low-margin products for
savvy buyers.

If the article author's goals are met -- the casual consumers now "overpaying"
are directed to cheaper products they'll be just as happy with -- the thing
you can be sure of is that industry margins will go down. Lower-margin
industries have fewer upstarts and slower product cycles, so the idea that
"the direction/efficiency of innovation would improve" is dubious at best.

