The trouble with the internet: people still too different

E-commerce utopia remains out of reach.

The internet knows no borders. That’s the way most people tend to view it, at least. But as online commerce comes of age, this utopian view seems increasingly naive.

As an increasing number of businesses look to take advantage of the web as a medium for commerce, not just communication, many of them are finding themselves frustrated by the fact that… well, people are different.

The recent Globalocity eCommerce conference saw several hundred retailers, Silicon Valley whizz-kids, and finance experts gather to discuss all things online shopping.

At the event I spent some considerable talking to people from a number of successful US retailers – department stores, fashion brands, even travel agencies - many of whom are very well-established global brands. It was clear that many of them were struggling with the fact that launching a globally-accessible eCommerce portal has not opened the flood gates for hoardes of overseas consumers, desperate to buy US consumer goods.

What is stopping them? Surely given the opportunity everyone would prefer to shop at US department stores, right? Perhaps... But they a good reason, and more to the point, they need to be able to pay for their goods in a way that suits them. The newsflash? Not everyone in the world has a credit card.

So, it begins to become apparent, that rolling out an eCommerce strategy is not really all that different to setting up a physical presence in new markets - minus the some substantial property and staffing costs, of course.

Businesses still need to invest in the market - understanding their consumers, not just in terms of what they wish to buy, but how they wish to buy it.

For those US retailers at Globalocity, the markets really getting the saliva flowing were Latin America (Brazil in particular), Russia and continental Europe. But frustrations abound when it comes to actually getting people to pay for things.

Anyone who has spent any time looking at the Brazilian retail sector will know that consumer spending habits can only be described as unique.

Having the ability to pay for goods in installments is essential in Brazil - people  expect to be able to spread their payment for everything (even basic goods like groceries) over a long periods of time. And a payment system - the Boleto Bancario - has been developed specifically to meet this requirement. The challenge now, though, is replicating that online.

And, of course, it is not just Brazil that requires a bespoke solution. Cash looms large in Europe and arguably more so in Russia. And of course, cash has no place in the e-commerce ecosystem. And yet again, retailers who think that offering customers the ability to pay by credit card is sufficient,  come a cropper, and quickly find out that alternatives have to be found.

The obvious alternative - cash on delivery - creates problems for the retailer, who has to ship the goods before receipt of payment, but new companies are developing neater systems, most notably the Qiwi terminals that enable Russian consumers to change cash into electronic money.

In short, every market has its quirks, and even in e-commerce, national borders are still very much in place.

James Ratcliff is Group Editor of  Cards and Payments at VRL Financial News.

Photograph: Getty Images

James Ratcliff is Group Editor of  Cards and Payments at VRL Financial News.

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The Tories are the zombie party: with an ageing, falling membership, still they stagger on to victory

One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.”

All football clubs have “ultras” – and, increasingly, political parties do, too: although, in the case of political parties, their loudest and angriest supporters are mostly found on the internet. The SNP got there first: in the early days of email, journalists at the Scotsman used to receive bilious missives complaining about its coverage – or, on occasion, lack of coverage – of what the Scottish National Party was up to. The rest soon followed, with Ukip, the Labour Party and even the crushed Liberal Democrats now boasting a furious electronic horde.

The exception is the Conservative Party. Britain’s table-topping team might have its first majority in 18 years and is widely expected in Westminster to remain in power for another decade. But it doesn’t have any fans. The party’s conference in Manchester, like Labour’s in Brighton, will be full to bursting. But where the Labour shindig is chock-full of members, trade unionists and hangers-on from the charitable sector, the Conservative gathering is a more corporate affair: at the fringes I attended last year, lobbyists outnumbered members by four to one. At one, the journalist Peter Oborne demanded to know how many people in the room were party members. It was standing room only – but just four people put their hands up.

During Grant Shapps’s stint at Conservative headquarters, serious attempts were made to revive membership. Shapps, a figure who is underrated because of his online blunders, and his co-chair Andrew Feldman were able to reverse some of the decline, but they were running just to stand still. Some of the biggest increases in membership came in urban centres where the Tories are not in contention to win a seat.

All this made the 2015 election win the triumph of a husk. A party with a membership in long-term and perhaps irreversible decline, which in many seats had no activists at all, delivered crushing defeats to its opponents across England and Wales.

Like José Mourinho’s sides, which, he once boasted, won “without the ball”, the Conservatives won without members. In Cumbria the party had no ground campaign and two paper candidates. But letters written by the Defence Secretary, Michael Fallon, were posted to every household where someone was employed making Trident submarines, warning that their jobs would be under threat under a Labour government. This helped the Tories come close to taking out both Labour MPs, John Woodcock in Barrow and Furness and Jamie Reed in Copeland. It was no small feat: Labour has held Barrow since 1992 and has won Copeland at every election it has fought.

The Tories have become the zombies of British politics: still moving though dead from the neck down. And not only moving, but thriving. One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.” His Conservative counterparts also believe that their rivals are out of power for at least a decade.

Yet there are more threats to the zombie Tories than commonly believed. The European referendum will cause endless trouble for their whips over the coming years. And for all there’s a spring in the Conservative step at the moment, the party has a majority of only 12 in the Commons. Parliamentary defeats could easily become commonplace. But now that Labour has elected Jeremy Corbyn – either a more consensual or a more chaotic leader than his predecessors, depending on your perspective – division within parties will become a feature, rather than a quirk, at Westminster. There will be “splits” aplenty on both sides of the House.

The bigger threat to Tory hegemony is the spending cuts to come, and the still vulnerable state of the British economy. In the last parliament, George Osborne’s cuts fell predominantly on the poorest and those working in the public sector. They were accompanied by an extravagant outlay to affluent retirees. As my colleague Helen Lewis wrote last week, over the next five years, cuts will fall on the sharp-elbowed middle classes, not just the vulnerable. Reductions in tax credits, so popular among voters in the abstract, may prove just as toxic as the poll tax and the abolition of the 10p bottom income-tax rate – both of which were popular until they were actually implemented.

Added to that, the British economy has what the economist Stephen King calls “the Titanic problem”: a surplus of icebergs, a deficit of lifeboats. Many of the levers used by Gordon Brown and Mervyn King in the last recession are not available to David Cameron and the chief of the Bank of England, Mark Carney: debt-funded fiscal stimulus is off the table because the public finances are already in the red. Interest rates are already at rock bottom.

Yet against that grim backdrop, the Conservatives retain the two trump cards that allowed them to win in May: questions about Labour’s economic competence, and the personal allure of David Cameron. The public is still convinced that the cuts are the result of “the mess” left by Labour, however unfair that charge may be. If a second crisis strikes, it could still be the Tories who feel the benefit, if they can convince voters that the poor state of the finances is still the result of New Labour excess rather than Cameroon failure.

As for Cameron, in 2015 it was his lead over Ed Miliband as Britons’ preferred prime minister that helped the Conservatives over the line. This time, it is his withdrawal from politics which could hand the Tories a victory even if the economy tanks or cuts become widely unpopular. He could absorb the hatred for the failures and the U-turns, and then hand over to a fresher face. Nicky Morgan or a Sajid Javid, say, could yet repeat John Major’s trick in 1992, breathing life into a seemingly doomed Conservative project. For Labour, the Tory zombie remains frustratingly lively. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.

This article first appeared in the 01 October 2015 issue of the New Statesman, The Tory tide