Papers & Articles

01/02/2007  |  The evolution from E-commerce to E-commerce 2.0 websites

What drives the change? E-commerce has been around for over a decade now. Online retail spending was near £51 million in 2006 with close to 20% Y/Y growth. The Internet influences an increasing portion of total retail sales. JupiterResearch predicts the number to go from 27% in 2005 to over 50% in 2010. E-commerce has become strategic. Businesses need to find differentiation because, as Esther Dyson puts it, "You can no longer tell people about your brand; you have to let them experience it."

Another driver is entropy. Many of the largest etailers are running systems that are 6-8 years old, built by long-gone bubble-time integrators on top of highly customized e-commerce platform infrastructure. Brand managers and merchandisers have to talk to IT to get things done. Everything takes too long because IT is understaffed and they often care more about running a site well than about the site making lots of money. These are some of the factors that make Forrester predict a major re-platforming of e-commerce sites, starting this year.

Online consumer behaviors have also changed. Trust in online shopping and payment mechanisms has increased. Consumers are buying more online and they are buying more complex products as well. On the flip side, they are becoming pickier. A survey by Allurent found that when consumers are faced with a frustrating experience, 82% are less likely to return to the site, 55% form a negative impression of the retailer and 28% are less likely to shop at the retailer's physical store.

Last but not least, broadband penetration has got to a point where etailers can safely start downplaying dial-up traffic and experimenting with richer content and experiences.

In the end, E-commerce 2.0 websites are an evolution of basic E-commerce. They look better, are easier to use but, most importantly, they drive better economics.

All this being done by using the latest Web 2.0 technologies like AJAX and others.