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Copyright 1996-2006 1 A Major Impediment to B2C Success is... the Concept 'B2C' Roger Clarke Xamax Consultancy Pty Ltd, Canberra Visiting Professor in.

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Presentation on theme: "Copyright 1996-2006 1 A Major Impediment to B2C Success is... the Concept 'B2C' Roger Clarke Xamax Consultancy Pty Ltd, Canberra Visiting Professor in."— Presentation transcript:

1 Copyright A Major Impediment to B2C Success is... the Concept 'B2C' Roger Clarke Xamax Consultancy Pty Ltd, Canberra Visiting Professor in eCommerce, Uni. of Hong Kong; Cyberspace Law & Policy, U.N.S.W.; and Computer Science, ANU ICEC06 {.html,.ppt} ICEC06 – Fredericton NB – 15 August 2006

2 Copyright The Problem is the Concept B2C Themes Growth Metrics in B2C Research Method Terms of Contract Privacy Policy Statements Change is Long Overdue

3 Copyright Growth Metrics in Internet Usage are Steep Origins and Nature of the Internet in Australia January 2004, at /II/OzI04.html User count in leading nations reached saturation-point c. 2002

4 Copyright Growth Metrics in B2C eCommerce 1.Are Hard to Get Lots of pseudo-statistics from consultancies (blue-sky projections from minimal data) Little authoritative empirical research (but its very difficult and expensive to do) Considerable inconsistency over time Fairly apparent massaging of the data (e.g. conflating Internet Banking, shopping for a house, searching for information on products)

5 Copyright Growth Metrics in B2C eCommerce 2.Are Flat Australians who have tried online shopping % of 0.75 million0.15 m % of 1.00 million0.21 m % of 1.27 million0.90 m? % of 2.25 million? in last yr1.13 m? % of 3.50 million? in last 6 mths 0.63 m % of 5.00 million? (or 33%?)0.50 m %? of 8.00 million??1.60 m?

6 Copyright Growth Metrics in B2C eCommerce 3.Are Thin Few committed online purchasers Few success stories, and many arise from stick rather than carrot (discount air tickets) Low transaction-values Low conversion rates: Prospects / Visitors ==>> Customers Other Site-Customers ==>> Ours (i.e. low confidence transitivity) Info Searchers ==>> Customers Still the same old reasons are given viz. security, trust, privacy

7 Copyright Use of B2C eCommerce is Fragile Even in Internet Banking, security scares Viruses Worms Spyware, esp. keystroke-loggers Phishing have been associated with pauses in growth and even negative adoption

8 Copyright Forrester: Phishing Concerns Impact Consumer Online Financial Behavior

9 Copyright The Research Undertaken Aim: To test consumer marketer performance in a couple of important areas Compare Against Normative Templates: Terms of Contract Privacy Policy Statements A Sample of 6 Consumer Marketing Organisations with varying characteristics No Consumer Sampling No Interactions with the Marketers

10 Copyright Segmentation & Sample Some Pure Internet, Some Clicks and Mortar Leaders :Amazon Google Aggressive Marketers :Sears, Roebuck & Co. Sensitive Products :Adultshop.com Regional Marketers :Autoteile-Meile.de Ethical / Not-For-Profit :National Geographic

11 Copyright The Normative Template for Terms of Contract for Consumer Transactions Information Terms Security Choice Consent Recourse Redress

12 Copyright The Normative Template for Marketer-Consumer Communications Information Terms Security Choice Consent Recourse Redress Recourse Enquiry and Complaints Process accessibility prompt acknowledgement copy into the consumer's -archive responsiveness to enquiry or complaint acknowledgement resolution Restitution product quality shortfalls own products and services third-party products and services fulfilment quality shortfalls payment errors External Complaints Mechanisms information provided about them prompt and appropriate communications with regulators

13 Copyright B2C Web-Site Features Generally There are Positives User-Interface Basic User Assistance Features designed to allay consumers fears about security, and about privacy Clarity about the point of contract Order checking Delivery Tracking Policy re return/exchange/credit/refund

14 Copyright But the Overall Verdict: Pretty Appalling Terms of Contract No consolidated document Clarity of Terms Split Personality between chummy sales documents and the actual lawyer-written Terms. Inconsistencies have probable legal implications Prior Versions of Terms No access Changes to Terms Unilateral, without notice, let alone consent; and even with retrospective applicability Warranties and Liabilities Emphatic denials of all forms of warranty and liability, generally way in excess of the legal position, even asserting no responsibility for merchantable quality or errors in product descriptions Complaint Mechanisms Very poor accessibility (even no Acknowledgement!), and no information about complaints processes Redress No information at all

15 Copyright

16 Copyright Shopping Online: ACCC survey of top 1000 Australian consumer websites – Rights and obligations when trading over the internet, June 2004 The clauses found in online contracts do appear to raise significant trade practices issues. Of the websites which contain a written contract: 54.3 per cent have a clause attempting to disclaim responsibility for the accuracy of information posted on the site 50.9 per cent have a clause which attempts to disclaim warranties 66 per cent have a clause which limits liabilities 43.8 per cent have both a disclaimer of warranties clause and a limitation of liability clause

17 Copyright Life Isnt Good The court found that LG made false or misleading representations about the existence and duration of statutory conditions and warranties implied by the Act and about the rights and remedies that were available to mobile telephone owners/consumers Court orders require LG to : refrain from making representations to similar effect in the future implement an upgraded trade practices compliance program arrange the publication of consumer notices on its website and in all major Australian newspapers provide each of its mobile telephones retailers with a notice explaining the relevant provisions of the Act pay the ACCC's costs ACCC Media Release 149/ July 2006

18 Copyright The Normative Template for Privacy Policy Statements Data Collection Data Security Data Use Data Disclosure Data Retention and Destruction Access to Ones Own Personal Data Information about Data Handling Practices Handling of Enquiries, Concerns, Complaints Enforcement Changes to Privacy Undertakings or Google

19 Copyright Extraordinary Self-Declared Latitude in the Handling of Personal Data Amazon collects personal data from wherever it wants to, uses it however it wants to, and discloses it to whomever it wants to provides minimal information on data security provides none about data retention / destruction provides little information about amendment provides none about deletion of personal data

20 Copyright No Access to Prior Versions Amazon makes no copies of earlier undertakings available gives no indication of changes made has reneged on undertakings has significantly increased its original scope

21 Copyright Google Googles particular use of cookies The vagueness of the statements about the purposes of the data Google collects Googles transfer of personal data across borders The absence of assurances about relevance and quality of personal data An apparent attempt to obfuscate the meaning of 'consent' Failure to take any responsibility for personal data transferred to affiliates or to any other organisation Failure to even address data retention and destruction issues Failure to provide information about data-handling processes, even on request The general unenforceability of the assurances given The complete absence of protections in the event of merger, acquisition, or even sale of assets Hypocrisy, given its Carefully-Nurtured Public Image

22 Copyright National Geographic Arguably far worse even than Sears, Roebuck and Co. Brutally frank about its vast array of data collection, use and disclosure activities Embodies a complete absence of choice: "If you do not agree to this Privacy Policy, please do not use this Web site" No apparent means to communicate complaints to the company FTCs downgraded suggestions are so weak that the PPS could conceivably be compliant (though not with 'Safe Harbor) Imbued with the aggressive ethos of American corporations? National Geographic's ethicality seems to be limited to honesty about the organisation's privacy-hostile stance

23 Copyright Was there any good news?? The Sensitive Goods Supplier Demonstrated a good understanding of consumers privacy needs The Regional Marketer Is subject to the Datenschutzgesetz Has a PPS that is a translation of Google!?

24 Copyright Conclusions from the PPS Study The 4 large marketers have done no more than create a pretence of being privacy-protective The sceptical, privacy-sensitive consumer would be aghast at the level of abuse of their privacy, and would decline to conduct business with any of them The pragmatic consumer is likely to be keeping an eye open for alternatives, and balancing availability and reliability of service against abuses of market power The desirable warm glow of trustworthiness of consumer eCommerce is distinctly lacking

25 Copyright Phases of eMarketer Activity "Billboards along the Information Superhighway" ( ) Closed Electronic 'Communities' (AOL, MSN – ) Widespread adoption of the term 'B2C' (1996-) Push Technologies, 'web-casting' and 'channels' ( ) Info-mediaries ( ) Portals, then Vortals (1998-) Malware, from cookie abuse (1996-), via pop-ups (1999-) and web-bugs (1999-), to adware and spyware (2000-) Data rapaciousness and consumer profile construction Identity management and the consolidation of individual consumers' multiple identities Consumer Location and Tracking

26 Copyright Overall Conclusions Shallow Consumer Assurance Bad Behaviour continues unabated Dependence on Brand Image, Market Power, Weak Regulatory Regimes, Apathetic Disorganised Consumers Maybe consumers will come to accept arrogant impositions by marketers; but it hasn't happened yet Alternatively: growth will remain slow penetration will stagnate adoption will flatten out on a low plateau consumer usage will be fickle and fragile

27 Copyright Snakes and Ladders

28 Copyright Snakes and Ladders in Consumer eCommerce Huge Investment in Image Factors for a reasonably small increase in Trust [or decrease in Untrust], i.e. short ladders Tiny Investment in Consumer-Oriented contract terms and privacy policies (let alone the business processes to implement them) When things go wrong, there is a larger decrease in Trust [or increase in Untrust, or increase in Distrust!], i.e. long snakes

29 Copyright A Major Impediment to B2C Success is... the Concept 'B2C' Roger Clarke Xamax Consultancy Pty Ltd, Canberra Visiting Professor in eCommerce, Uni. of Hong Kong; Cyberspace Law & Policy, U.N.S.W.; and Computer Science, ANU ICEC06 {.html,.ppt} ICEC06 – Fredericton NB – 15 August 2006


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