Recently, following an online search, I purchased a kettle based on reviews and the best price from a well known e-tailer. I expected the product to be dispatched and delivered from my local e-tailer warehouse just a stones’ throw away. Instead, it was shipped half way around the world from the UAE.
This exercise, whilst it seems a normal thing to do these days, illustrates my point perfectly: Technology and e-commerce has changed everything and things are continuing to change at an ever-increasing pace.
Search costs
When breaking down my transaction a number of interesting observations can be made. Firstly, I searched for the item I wished to purchase. This activity is commonly known as ‘search cost’– which is the ‘time, energy and money expended by a consumer who is researching a product or service for purchase. Search costs include the opportunity cost of the time and energy spent on searching – time and energy that could have been devoted to other activities – and perhaps the money spent to travel between stores examining different options, purchase research data or consult an expert for purchasing advice.’
Search engines such as Google and Bing remove ‘search cost’. This is a fundamental point when attempting to understand how technology and e-commerce is shaping Britain’s economy and the fundamental reason the British High Street is failing. It is my belief that Google and Bing are not search companies per se – they are advertising companies that now control our high street and therefore a large part of our economic prosperity.
To ensure we take back that control of our high street it’s imperative that the British government invest in a true, impartial localised search engine called Brand Britain, similar to the BBC, if not part of the BBC.
Further, it would allow the promotion of our UK products and services globally more effectively and with a degree of control – that’s without all the possible revenue such a service could generate.
Social validation
Once I found the product I was searching for, instead of asking a friend for a recommendation or being influenced by an advertising campaign, I looked for social validation online. In this instance, reviews influenced my purchase.
Social validation represents the new way people buy. They no longer trust advertising or what a website says, instead they seek social validation from their peer group.
Previously, poor service by a company may have been passed on from one to ten individuals before the anger dies down. Today, via the social space within five minutes in excess of a million people can be aware of your company’s poor service. Because of this, the British government should invest in a leadership level education program which focuses on how to socialise your business. At present, most company leadership is clueless and at best have a Facebook page. In high street terms, socialisation is the next industrial revolution.
Location and price
Technology and e-commerce opens up the potential market for the British economy in excess of 500 times its current size or more simply, a potential turnover for every UK business in excess of 500 times its current size. That’s a lot of tax revenue.
However, this market doesn’t all speak English and why would you buy anything from anyone who can’t communicate with you? Currently, less than one per cent of UK websites offer information in a foreign language.
To combat this the British government should incentivise all UK companies to produce their online product and service offerings in different languages – potentially by way of a tax break or similar. In addition, for product orientated services provide advice and assistance on effective worldwide shipping costs and methods.
Finally, nobody really buys on price otherwise everyone would drive cheap cars and drink cheap wine and we don’t. People buy brands – and the only way to ensure the British economy thrives via e-commerce and technology is to ensure British brands are championed and supported in the right way.
Alex Capone is the business development manager of Fivesite
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