5 reasons that web 2.0 isn’t being adopted by etailers

Last week Read/WriteWeb had a great post on what amazon.com have done so far with Web 2.0. Amazon.com really are the exception to the rule and the big e-tailers seem to be avoiding Web 2.0 like the plague – especially here in the UK (the article above points out that only amazon.com has any Web 2.0 initiatives, its british sibling still lagging way behind). Why aren’t more UK etailers making use of web 2.0 technologies and principles?

1. Return On Investment

   e-commerce businesses (particularly pure play companies) tend to operate on very tight margins. Internet shopping is still perceived primarily as a way of saving money (vs. high street shopping) and as a consequence, purse strings tend to be held that bit more tightly on internet retail sites. The nature of Web 2.0 (and particularly AJAX) is such that it usually requires additional development time, first you build a page that works with javascript and css disabled (the no frills version) and then you bolt on the web 2.0 bits afterwards. Its very difficult to predict what sort of return on investment this additional effort will bring. What percent increase will a business see in sales if rss feeds are implemented on its product range? Or if the product catalogue suddenly becomes AJAX driven? There are no (or few) real test cases out there (in retail at least) and nobody wants to be the first to waste thousands of development hours. Notice the stock chart in the Read/WriteWeb article mentioned above that clearly shows no interest from wall street in amazon.com’s attempts to ‘pimp’ its site up with web 2.0. Compare this to a Web 2.0 startup like SmugMug who are building (or have built) their business from the ground up and where web 2.0 functionality is essential to stay ahead of the game.

2. Competitor Intelligence and walled garden syndrome

   Many etailers are still very protective over their intellectual property whether this be pricing info or content and will often go to great lengths to stop scrapers and other CI tools from operating on their sites. The whole web 2.0 paradigm of social interaction and the free flow of information is often in direct opposition to the core beliefs of the business. Adding rss feeds that contain lists of the latest products with pricing info or customer reviews, gives that information to competitors on a plate – no elaborate scraping tools required.

3. Time lag

   etailers rarely have the flexibility and (spare) resource required to respond quickly to new principals and technologies. Many are fairly bureaucratic, making the pace of change a lot slower than it would be for a startup company with < 20 employees.

4. Fear of a passing fad

   Many internet retailers have famously been burnt in the past by throwing large amounts of money at projects involving DHTML, Flash or other proprietary technologies (think Boo.com, habitats current site etc.) – a lot of these projects don’t even see the light of day and the ones that do, tend to be axed within months as the fad turns out to be a false dawn. Whether you think web 2.0 is a passing fad or not is irrelevant – it is still eyed with an air of suspicion by most online retail businesses who will be waiting for hard evidence before proceeding. Again, see the stock chart in the Read/WriteWeb article that seems to show Wall Streets lack of interest in Web 2.0.

5. The minimum to get the job done.

   E-commerce businesses have always been about getting the customer to convert with a minimum of fuss. Anything you put in the customers way is another reason for them to give up and go elsewhere. In the late 90′s when DHTML was rife, amazon kept it real by using nothing more than cold hard html markup that worked on any browser. I think this “bare minimum” philosophy is still at the heart of a lot of etail businesses and prevents them from venturing in to the worlds of web 2.0 and AJAX.

In summary, I think that a lot of e-commerce businesses will slowly start to integrate web 2.0 elements into their sites but its going to be a long slow process and it will take a big player (probably amazon) to take all the risks before anyone else jumps in with both feet.

Technorati Tags: Web 2.0, UK etailers, e-commerce, Internet shopping, AJAX, rss

This entry was posted on Monday, January 29th, 2007 at 1:49 pm and is filed under Web 2.0, e-commerce. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.