Rationality & eCommerce
Some events yesterday brought a very interesting case to light, did you think are you selling products, no, you are learning behavioral science. Someone decided to take offense to the fact that pointed out many small platforms require time for a business to grow, they were only able to see numbers not time value, it means you need to hire employees if you want to grow but small business have cash flow issues and only themselves as resource, catch-22.
The issue came about as many small business do not understand one simple fact, many people in society can either see time and not numbers or numbers and not time. Rational people can see both and value them equally. This leads to the simple problem, if you are a small business that wants to grow, do you hire employees giving the personal touch to customers as niche or do you take the other route and provide arms length sales like the department stores using technology.
Just saw Tusk, a $400/bottle customized wine to members only, Snapchat valued at $19bn, Rob Ford's crack confession tie selling for $16k on eBay. As a retailer if you try and sell time valued products/services or balanced time/money you are going to fail. It's all about the numbers now, the more the better, the more irrational the better. It comes down to the fact that people want to hide the truth, so if you have someone who values numbers over time, they are going to spend all their wealth keeping the illusion alive. You need an edge, this is it.
You spend the next 1-2yrs building up trust with customers, but what you don't factor in, the irrational customers don't value time, they have inconsistent lifetime customer value as it's the numbers. The cheapest products to give them more (Amazon repricing) or the most exclusive to obfuscate the real underlying problem ($400 custom wine).
Here is the critical point, an irrational customer (or service provider) can cause more damage with less effort than a rational retailer has the time to manage or mitigate. Even if you get it back to neutral the irrational customer will not leave it alone, they can't as that would be balanced. The person taking offense, even after everything was deleted on both sides back to neutral, decided to follow to our Twitter account, had to get Twitter under harassment rules to neutralize them.
It's why fraud prevention, customization, exclusivity, low pricing, are all becoming more important by the day. Technology can help, but they will always find a way around it from 'not receiving the goods' to 'fraud check avoidance'. That's where you go to the top companies, Sift Science for example, ex Google engineers and you receive 10,000 free transactions per month, if their business processes don't stop them nothing will.
Never ever underestimate the power of the irrational be it customers or service providers who value only one of time or money (causing a catch-22 aka double-bind), they will destroy your business or worse, send you down the wrong path wasting years of your time, or all your capital, sometimes both. eCommerce is no longer about selling products, it's about mitigating the effects of a double-bind on your business while providing the customer what they believe they want.
The issue came about as many small business do not understand one simple fact, many people in society can either see time and not numbers or numbers and not time. Rational people can see both and value them equally. This leads to the simple problem, if you are a small business that wants to grow, do you hire employees giving the personal touch to customers as niche or do you take the other route and provide arms length sales like the department stores using technology.
Just saw Tusk, a $400/bottle customized wine to members only, Snapchat valued at $19bn, Rob Ford's crack confession tie selling for $16k on eBay. As a retailer if you try and sell time valued products/services or balanced time/money you are going to fail. It's all about the numbers now, the more the better, the more irrational the better. It comes down to the fact that people want to hide the truth, so if you have someone who values numbers over time, they are going to spend all their wealth keeping the illusion alive. You need an edge, this is it.
You spend the next 1-2yrs building up trust with customers, but what you don't factor in, the irrational customers don't value time, they have inconsistent lifetime customer value as it's the numbers. The cheapest products to give them more (Amazon repricing) or the most exclusive to obfuscate the real underlying problem ($400 custom wine).
Here is the critical point, an irrational customer (or service provider) can cause more damage with less effort than a rational retailer has the time to manage or mitigate. Even if you get it back to neutral the irrational customer will not leave it alone, they can't as that would be balanced. The person taking offense, even after everything was deleted on both sides back to neutral, decided to follow to our Twitter account, had to get Twitter under harassment rules to neutralize them.
It's why fraud prevention, customization, exclusivity, low pricing, are all becoming more important by the day. Technology can help, but they will always find a way around it from 'not receiving the goods' to 'fraud check avoidance'. That's where you go to the top companies, Sift Science for example, ex Google engineers and you receive 10,000 free transactions per month, if their business processes don't stop them nothing will.
Never ever underestimate the power of the irrational be it customers or service providers who value only one of time or money (causing a catch-22 aka double-bind), they will destroy your business or worse, send you down the wrong path wasting years of your time, or all your capital, sometimes both. eCommerce is no longer about selling products, it's about mitigating the effects of a double-bind on your business while providing the customer what they believe they want.