Page 350 - Introduction to Electronic Commerce and Social Commerce

11.1 Changing Retail Landscape 337

Figure 11.1 Percent of Total
Country Online EC Spend by
Device. Source: Keith, M. Global
eCommerce Sales, Trends and
Statistics 2015. September 2,
2015. remarkety.com/
global- ecommerce- sales-
trends-and-statistics-2015
(accessed May 2016)

mobile devices. A second reason is found in the demograph- fying, or replacing some aspect of electronic payments
ics of the buyers. Adoption of mobile devices is strongest number in the thousands. Many of these are coming from
among younger cohorts. Yet, the purchasing power of older new players and start-ups in the financial technology (fin-
cohorts is much larger than it is for younger cohorts. Glob- tech) industry.
ally, the median networth of those over 65 is close to 50 While there are no industry standard categories for clas-
times larger than those under 35! Older consumers still use sifying these efforts and, thus, no official data for estimating
PCs. What this is likely to mean in the longer run is that the associated volume and value, Capgemini Financial Services
percent of purchases by smartphones will begin to climb rap- Analysis (2016) has attempted to address these deficiencies.
idly. However, the dollar value purchased with PCs will be They coined the term “hidden digital payments” to describe
larger than it is for smartphones for the foreseeable future. this overall collection of activities and divided the payments
into four main types including:

Implications for EC Payments • Closed-loop cards and mobile apps, enabling online and
off-line payments and aimed at promoting loyalty.
Since its inception in 1995, B2C EC has been dominated by a • Digital wallets (non-banks), supporting a variety of EC
relatively simple set of business models, transactions, and transactions.
payment types. Crudely put, at the beginning of the twenty- • Mobile money, enabling mobile financial transactions for
first century it was enough for the average merchant to offer a the “unbanked” and “underbanked.”
catalog of products and prices via a browser, to enable pay- • Virtual currencies, supporting the instantaneous trans-
ment by card (credit and debit) or some third-party payment fer of “value” without the aid of traditional financial
processor (e.g., PayPal), to provide systems for shipping the institutions.
product and handling returns, and to provide customer sup-
port. Those merchants with both a physical and digital pres- For 2015, they estimated the total volume of hidden pay-
ence tended to run their online business as a simple, albeit ments between 25 and 40 billion, a small percent of all non-
separate, extension of their off-line world. Basically, it was as cash transactions (between 6 and 10%).
if a catalog business had gone digital. Like most catalog busi-
nesses, the primary focus has been on (non-perishable) prod-
ucts, not customers, and on domestic markets, not international Critical Mass
buyers. Even today a large portion of EC sites still operate
this way with a number of bells and whistles thrown in. Before credit cards became the standard in EC, many compa-
For the last 10 years the underlying tenets and practices of nies tried to introduce nontraditional payment systems. With
this model have been under assault by the operational, tech- the exception of PayPal, they all died an early death. Today,
nical, and demographic changes briefly described in this sec- the number of new systems far exceeds the number from
tion. In the last 4–5 years these changes have picked up a full those early years. A handful will probably gain widespread
head of steam. Nowhere is this more apparent than in the acceptance, another handful will gain regional acceptance,
area of payments both from the buyers’ and sellers’ side. The and the overwhelming majority of these will suffer the same
size of the assault in this area has been described as a tsu- fate as their predecessors. Even notoriety and a faithful group
nami. Literally, innovations aimed at supplementing, modi- of followers is not any guarantee of success.