Paul Wallbank – Brilliant Communications

Tag: e-commerce

  • Taxing the internet

    Taxing the internet

    On Friday the US Senate passed a motion supporting the rights of states to collect sales taxes on internet sales.

    While not a binding vote or a law, this is the latest blow in the fight to control, and tax, online commerce.

    The stakes are high, companies like Amazon have built their business models on basing themselves in low tax jurisdictions while many bricks-and-mortar retailers have complained they are at a disadvantage compared to out-of-state or international suppliers.

    For consumers a few dollars in avoided tax isn’t the main reason they shop online, most internet shoppers cite a better range, convenience and, in many cases, superior service as the reasons they buy over the web.

    But it is clear the online retailers do get an advantage over local stores.

    While provincial governments cite protecting employment in their regions as part of the motivation for trying to tax online sales, the bigger issue is the desperate search for sources of revenue to balance cash strapped state and local budgets.

    Those budget requirements aren’t going to ease – the global economy is restructuring in a way that doesn’t favour 19th Century levies like sales tax or stamp duty, while aging populations and declining incomes are increasing demands on government services.

    With governments caught in a pincer of rising costs and falling revenues, it’s not surprising they are trying to find ways to get more money.

    It’s not clear though they’ll win this battle though, the Senate vote is a symbolic gesture and the difficulties of being able to tax all forms of internet commerce can’t be underestimated.

    The struggle ahead for local governments also can’t be understated, the public demands more services while administrators have to deal with rising infrastructure costs and the pension liabilities of retired public servants, teachers, firefighters and police.

    Even the bravest politician struggles to find the political capital needed to deal with that challenge.

    How we tax the internet is going to be a task that will define our governments and society in the first half of this century. We’re going to have to think very carefully about the choices we have ahead.

    Tax image courtesy of ctoocheck through sxc.hu

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  • Fiddling the prices

    Fiddling the prices

    Discriminatory pricing is nothing new, a good salesperson or market stallholder can quickly sum up a punter’s ability or willingness to pay and offer the price which will get a sale.

    Anybody who’s travelled in countries like Thailand or China is used to Gwailos and Farang prices being substantially higher even for official charges like entrance fees to national parks and museums.

    The Internet takes the opportunity for discriminatory pricing even further arming online stores armed with a huge amount of customer information which allows them to set prices according to what the algorithm thinks will be the best deal for the seller.

    Recently researchers found that the Orbitz website would offer cheaper deals for people searching for fares on mobile phones and prices would vary depending of which brand of smartphone people would use.

    Writers for the Wall Street Journal did an experiment with buying staplers and found the same thing.

    Interestingly, one of the factors Staples’ seems to take into account is the distance customers live from a competitors’s store – the closer you live to the competition, the lower the price offered.

    There’s also other factors at play; sometimes you don’t want a customer, or you don’t want to sell a particular product and it’s easy to guess the formulas used by Staples and other big retailers do the same thing.

    One of the great promises of the internet was that customers’ access to information would usher in a new era of transparency. In this case it seems the opposite is happening.

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  • Amazon and the Soviet customer service model

    Amazon and the Soviet customer service model

    We all value our collections of CDs, books and photos, but what happens when we completely lose the digital equivalents?

    The story of Linn, a Norwegian lady who had her account terminated by Amazon, demonstrates the dangers of being locked into one Internet company’s empire. Get cut off and you lose everything related to them.

    A little understood part of the cloud computing and app world is that you, the customer or user – which isn’t necessarily the same thing – don’t really own anything. The money you spend on ebooks, mobile apps or web storage are for licenses to use the services, not the products themselves.

    Should the supplier decide they no longer want to provide you with their service, then you lose your account and everything with it.

    This is what happened to Linn when Amazon’s algorithm decided her account was in some way breaching their terms and conditions.

    We have found your account is directly related to another which has been previously closed for abuse of our policies. As such, your Amazon.co.uk account has been closed and any open orders have been cancelled.

    Per our Conditions of Use which state in part: Amazon.co.uk and its affiliates reserve the right to refuse service, terminate accounts, remove or edit content, or cancel orders at their sole discretion.

    “At their sole discretion” is the key point here. This is a standard term in most online contracts and reflects the legal realities of the physical world where a shopping mall manager or bar owner can ask you to leave their property without having to tell you why.

    When you use a virtual service, which includes e-books and cloud computing software, you are on someone’s virtual property and they can ask you to leave any time they feel.

    Of course those rights are subject to any contract you might have with that e-book seller, cloud computing service or shopping centre but you have to be in a position to enforce them – not an easy task when you’re in Norway and their lawyers are in Connecticut.

    Even if you want to enforce the agreement you believe these services have entered into, the grossly biased contracts attempt to put all obligations on users or customers while freeing the vendor of the distraction of being responsible for anything.

    The real problem though is the lack of notice and fairness – this blog’s previously looked at how PayPal, Facebook and Google will shut down business sites without any warning or due process.

    It’s one thing to get thrown out of a shopping mall but it’s another matter when your car and week’s groceries are still in there.

    Even more worrying in Linn’s case is how ebooks and music purchased with Digital Rights Management (DRM) controls can be erased by companies like Amazon. Which is like walking home from the shopping mall you’ve been banned from to find the manager has called by to confiscate the toaster and TV you bought last week.

    What’s particularly notable in all of these stories though is the Soviet customer service model, the Amazon”Executive Customer Relations” representative Linn dealt with refused to tell her what she’d done wrong or what rules she broke.

    The only thing “Michael Murphy” would tell her was she was effectively banned for being linked to a blocked account and stated;

    “Please know that any attempt to open a new account will meet with the same action.”

    No notice, no appeal, no rights. The computer says no and the bureaucrat cannot help you further.

    Trust lies at the core of all business and this is even more true when buying services like e-books and cloud computing products. If you can’t trust a vendor to provide a service, or to act openly and honest with you when a problem occurs, then it’s unlikely you’ll use that service.

    A lack of trust is what web 2.0 companies like Amazon and eBay risk with hostile, Soviet style customer service. This is the weak point of the entire online business model.

    For individuals and businesses it’s important to understand that those e-book, cloud storage or social media services may appear to be a bargain, but there are risks lurking in the fine print.

    The new Soviets might be doing well at the moment, but their days are numbered just as the USSR’s were.

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  • Google tries to drive American business online

    Google tries to drive American business online

    Google’s quest to sign the world’s businesses up to websites stepped into the big time this week with the launch of America, Get Your Business Online.

    The US program is based upon the Getting British Business Online program which was followed up with similar projects in Australia and then Texas prior to being launched nationally across the States.

    An interesting aspect with the rollout of the various programs has been Google’s choice of partners — in Britain the key supporter was the incumbent telecommunication company BT.

    For some reason the subsequent programs have chosen to partner with accounting software companies and small business groups. The US program is no exception.

    These partnerships are interesting as the software companies involved are threatened by online cloud services — both Intuit and MYOB have their business models of selling boxed software to small businesses under siege.

    While Google regularly cite the Boston Consulting Group’s survey on the importance of websites to business, it seems most small operators don’t care as about half of small businesses don’t care about an online presence most developed countries.

    In Australia, the Getting Aussie Business Online fell short of its 50,000 sign up target which indicates smaller enterprises still don’t see the point.

    They may be right — for the local locksmith or lawn mowing service a Google Places account may be all they need rather than a relatively high maintenance website.

    Part of the problem is that small business proprietors are probably the most time poor people on the planet, so  filling in another set of forms is one of the last things they will do.

    Were Google to link Google + for Business to their other services so information wasn’t being duplicated there would be a far quicker and greater take up of their services.

    America, Get Your Business Online should be a useful service for some local enterprises but the real challenge for Google is to integrate their services to make it easier for smaller operations to use.

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  • Security and convenience

    Security and convenience

    “Your security advice is too difficult, I don’t want to log in when I start my computer or have to mess around when I have to install new software,” a lady told me on the weekend.

    Security is always inconvenient. It would be far more convenient if car doors weren’t locked and starting them was a matter of flicking a switch.

    Of course we know if that was the case, most cars would be stolen within hours of buying them.

    We accept the inconvenience of car keys because we know the cost of having a vehicle stolen is way higher than the occasional frantic search for lost car keys.

    Right now we don’t value our data, computers or smartphones the same way.

    This is changing and as we start using our phones as electronic wallets we’ll start valuing our passwords and online security more than our car keys.

     

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