The future of ecommerce will be fought out on 'intelligent systems' .
In business, rational companies would make choices based on what makes them the most profit. In ecommerce, this would mean making choices that generate the greatest returns.
Essentially, the rational choice would be to choose the ecommerce system, Service Providers and actions that deliver the most ... PROFIT. But rational choices can be difficult if there is no clear information to base them on.
Ecommerce however is an unusual industry. SME Companies selling online almost never work efficiently in their own self-interest. They can often make decisions in the interests and profitability of other companies other than their own.
The reason for this situation is down to one factor: companies do not have the clear information that they need to make rational choices.
Information gaps in ecommerce
Where are these information gaps that make ecommerce a very inefficient industry? The key gaps result from:
- How companies track and attribute sales from services.
- How they decide what actions to take.
- How they pick companies to provide services.
Let's take a real world example …
If an ecommerce company is going to pick a Google PPC provider, the rational choice would be to pick one that generates maximum sales growth at an acceptable CPA% (the most profits).
If the company had access to league tables that presented the historical performances of PPC service providers based on these metrics, they could use it as a basis for making a rational choice. Additional qualitative information about each provider would augment the quantitative data.
Such a performance league table, when updated over time, would indicate which provider was providing the best service at any given point. It would also act as a comparison benchmark. And as with all performance evaluations, the leaders in the league table would shift as the competition drives excellence.
Amazingly, 15 years into PPC, such a league table containing this data that everyone needs, does not exist. And so a company looking for a PPC provider generally picks one based on a subjective set of criteria unrelated to the profit the decision will return.
In addition, the Service Providers themselves believe they are doing a good job – without knowing how they stack up against their own competition. Bad providers benefit from never being measured on performance and good ones suffer by not being able to differentiate. And any attempt to bring rationality to such a clearly flawed market is then met with resistance.
The same problem goes for ecommerce systems. The ideal ecommerce system would be one that can pinpoint the action that will lead to the highest returns and conversions. Companies acting rationally would then pick an ecommerce system that is going to deliver the most profit. Again, because no quantitative league tables exist on sales performance, companies select systems based on factors that are largely irrelevant where profits are concerned.
If Gartner were to rank ecommerce systems based on ecommerce net profit, it would be highly relevant research.
The solution
The IRP Trading Terminal (ITT) provides a solution to the problem of ecommerce inefficiency.
The ITT is an extremely effective ecommerce system as it can pinpoint the actions that lead to the greatest sales. It also bases decisions on statistics, machine learning and performance monitoring in real time to work in the owners' interests to generate profits. This, whilst obviously beneficial and rational, is unique in the ecommerce industry.
The initial results from the ITT have been groundbreaking. By correctly assembling and using information to increase profits, huge inroads have been made to create efficiency in ecommerce. From these results, I predict that the future of ecommerce will be rational – and the winners will use the most intelligent systems such as the ITT to out-perform their competition.
