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.

Getty Images.
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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.