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The Realities of E-Commerce

The Realities of E-Commerce
Report of the symposium
11th November 1999
Goring Hotel, Beeston Place, London

 

In order to appreciate the potential of and barriers to e-commerce, it is important to understand the phenomenon in broad terms. E-commerce is not just point to point transactions on the Internet, commercial trading through electronic signals. It is also a finely-tuned, flexible and locally-managed global exchange of data, ideas, talent, silent partners and noisy stock market offerings. It involves real people, money, relations and opportunities in a rapidly shifting and growing exchange of risk as well as capital; humdrum ideas as well as cutting edge concepts. E-commerce depends upon security and trust. But since these are about new social relations, it is crucial that consideration be given in terms much broader than merely technical concerns.

 

Programme

5.00 Arrival: tea and coffee

5.15 Welcome
Professor Steve Woolgar (Director, Virtual Society? Programme)

5.30 Presentations
Dr Geoff Robinson CBE FREng
Chair

Professor Charles Raab (Edinburgh University)
Regulatory barriers to E-commerce
Dr Sarah Green (Manchester University)
Cultural barriers to E-commerce
Dr Peter Lunt (UCL)
Social psychological barriers to E-commerce

6.00 Open discussion

7.15 Comment
Professor Jim Norton (Institute of Directors, formerly Cabinet Office and co-author of e-commerce@its.best.uk)

7.30 Drinks

8.00 Dinner and continuing discussion

9.15 Closing remarks
Dr Geoff Robinson (Chair)

 

Brief overview of the initial presentations and discussion

Professor Charles Raab (Edinburgh University)

The current development of e-commerce policy in the UK (also including e-government) opens up a promising chapter in the information economy, society and polity, affecting producers and consumers/citizens alike. But rules of the road are needed for what used to be called the 'information superhighway'. These are best seen not necessarily as barriers or obstacles to development, competitiveness, but as opportunities to create order amongst the transactions, and to ensure their future. The true 'barrier', if any, may be the difficulty of creating a sound regulatory system for an inherently dynamic, complex and diverse set of processes and relationships in a global context. Only part of the regulatory agenda is dealt with here - that which is closest to the question of trust, and particularly privacy protection. On the matter of electronic commerce and how it should be regulated the urgent question is: what should be the role of government and other participants in the development of e-commerce, and what initiatives are there towards creating an integrated regulatory approach in which the various players act in concert? Government's role can be anything from legislator, to enforcer, to driving force, to enabler, to responder, to nothing. In the UK, recent developments indicate that government can be an exemplar in the promotion of trust and confidence - steering others by example, and also raising the level of trust that the public might have in the government as the transacting party for electronic delivery of public services. A crucial area in co-regulation is the relationship between what government does by way of statutory regulation and the self-regulation of organisations involved in e-commerce. In terms of securing public trust, government may not only set an example and provide the legal infrastructure for e-commerce in regard to digital signatures and other aspects of verification and authentication, but also enjoin the private sector to police itself through voluntary mechanisms. On the other hand, thinking globally, approaches to trust via self-regulation, including 'seals of good housekeeping' or 'trust marks' on websites and other devices, present a very mixed picture. Rather than seeing the provision of trust as a cost and a burden, whether through law or through adherence to industry codes and standards, it should arguably be seen as an investment and an opportunity to foster a cultural infrastructure; and government can help create the conditions for achieving this. If the market is therefore to play a big part in establishing major parts of the e-commerce infrastructure, government can - and does - usefully ‘rig’ the market in the direction of creating trust and confidence. This is an important role for public policy, including financial policy, as additional levers for data protection. Recent government thinking and the detailed proposals that have emerged give some evidence that possibilities are being grasped. We will see how it all works out as major pieces of the British and European e-commerce infrastructure are put in place.

 

Dr Sarah Green (Manchester University)

Culture cannot be standardised, for all definitions of this vague term imply that if nothing else, it makes people distinctive from one another. That makes culture appear to be a barrier to the development of e-commerce, but research in Manchester has shown that it is a positive resource in developing creative solutions to overcome problems. In small companies, collective and group use of information and communication technologies (ICTs) is very important and tends to be ignored in imagining the 'user' to be an individual in front of a computer screen (i.e. sharing info/cultural knowledge/ getting together is a major way in which ICTs are used, both by small business colleagues and potential customers). Small companies can use this collective experience to get ahead in the market. On the other hand, geographical location continues to be vitally important. Companies have found a number of barriers, including the strong London focus to e-commerce; a general belief that web design should be free of charge, and; confusion in existing data protection regulation. Culture involves interactions between people, and the unpredictability of the interactions indeed makes culture impossible to standardise. However, companies should harness this diversity in finding solutions for e-commerce, and be aware of the cultural resources they have, rather than regard this diversity as a barrier to be overcome.

 

Dr Peter Lunt (UCL)

Focus groups were conducted to access the range of issues and high level perceptions that emerge in people's spontaneous responses to e-commerce. User trials were also conducted in the context of people's own homes, allowing families to play with e-commerce websites and give their reactions. A national survey examining individual attitudes towards e-commerce has been carried out. In each case, sampling included groups, families and individuals from different age cohorts, social grades and with varying levels of technological experience.

A number of issues emerge:

The analysis suggests that, in the face of these gaps in the public understanding of e-commerce, people are relying on their understanding of 'real' consumption and presuming that 'real' firms will act the same online as they do already. In general, people had a narrow view of the implications of e-commerce. Larger well established companies (e.g. high street brands) are worried about the binding in of customers and also about their image, since consumer trust has been managed through guarantees of quality, price or continuity of supply. Now the shift is changing from public to private and firms are required to guarantee privacy and data protection. Many firms are not sure about how to make the technology work, but are still taking the plunge into e-commerce.

 

General discussion

There is a social aspect to e-commerce with regard to the perceptions of control underlying retail with the transfer of cost from companies to the customer, however, this is applauded by the customer (e.g. in banking). It seems that consumers do not perceive that they are being used but see this development as an extension of self service. Commercial practises and IT practises are separate, but e-commerce is linking them. In one way e-commerce could be compared to a 'shopping mall', a major US cultural phenomenon, should this make it popular? An Internet shopping mall was run for the Christmas of 97/98, but it failed completely, as the concept of a shopping mall is based upon the necessity of having to physically go to shops, so the shopping mall was developed as a 'one-stop-shop' idea, for convenience. That's not necessary on the Internet, and it appears that most people prefer Internet shopping that specialises in products they are particularly after.

Learning in groups appears to be important, are there any specific lessons to facilitate group learning that could be transferred from small to large organisations? And, to what extent do people want to get involved in customisation and tailoring of products? Market research focussed towards learning about different approaches leading to decisions to experiment with or use the technology differently can be advocated. In terms of increasingly individual shopping, especially online, it is likely that people will still exchange opinions on different e-commerce sites and that this will affect the success of failure of the company behind the site. There needs to be a recognition, especially in the workplace but also at home that group interaction - in both the use and shared understandings of the technology - is important. Hybrid technology companies (such as the one studied in Manchester) have working communities, how much of this is due to the need for them to bring together their disparate expertise in order to complete a task quickly? Is this different to people who are using the technologies in a learning environment? Some companies have deliberate models, i.e. with private spaces and open plan working environments, which work well to train non-experts (e.g. school leavers) and give them a range of experiences. Technology lends itself to interweaving of expertise.

In analysing some of the research, was what people meant by 'trust' identified. The dimensions of trust have been unpacked (research by Perri 6 at DEMOS), and the overriding sense is that people worry who does what with their data, but they respond in different ways depending on who they are and who is processing their data. In policy terms the specific elements of trust are important since they can act as barriers to e-commerce, e.g. in terms of payment systems, most people trust the telephone not the Internet. In response to the survey carried out at UCL, all elements of trust are. There is an inherent trust in other people rather than in systems. Certain organisations have a brand based on trust (e.g. the Consumers Association). How readily will consumers embrace brokers acting on behalf of them, and without soiling corporate brands? There is a particular demography of Consumers Association members, exhibiting a non-standard age-profile as younger people are not as interested. Loss of trust occurs with the shift into e-commerce because organisations become less hierarchically of clearly structured and more diffuse, so consumers become unsure about where to go with queries or complaints.

The difficulty with the research is that it is predicated on perceptions. Surely we are asking many of these questions very early on in the development of the technology, since although some people have difficulty using computers, digital TV will be more user friendly and accessible to many more people. It is likely that when the technology actually offers something to consumers they will take it on, i.e. services may be more relevant than products. It appears that there is inertia in existing brands for take up of e-commerce routes to purchase, where as the turn-over in new brands is colossal. It appears that there are many shades of grey to the use of the technology and we are trying to discuss the issue in black and white. The identity required to enter into certain transactions is much greater than that required for others (e.g. buying a house as opposed to buying a book), so it is important to avoid generalisations. Many much older and much younger people are embracing the technology, contrary to expectations.

 

Summing up by presenters

Charles Raab (University of Edinburgh) The first ATMs were outside banks - it is unlikely that the public would have had the same trust in them if they had been placed in stores, although that is now commonplace. The issue of self-regulation of e-commerce is not a black and white issue, and when looking at co-regulation as between state legislation or policy and self-regulation there are many models that can be constructed across the spectrum, which take into account different roles and relationships between government (and its official regulators) and the organisations which regulate themselves. The models differ in terms of such thins as: who initiates and responds? is there consensus or conflict? is it a single business or the trade association which does the self-regulation? It is also important to consider accountability - who does what? when? how? - and to look into who operates the auspices - my place/your place? It is likely that it will be necessary to define a range of models for different industries products and services.

Peter Lunt (UCL) There is a gap between the intentions and purposes of the software and the perceptions of consumers, raising an issue of transparency. Key developments in e-commerce are likely to come from considering this and issues of pricing. However, it also needs to be placed in the public domain and policy developers should stop looking backward at the e-commerce of the past.

Sarah Green (University of Manchester) Can we let the demand for ICTs take its course without intervention, without encouraging certain developments and discouraging others? Thus far of course, e-commerce has not developed in that way at all, but from a whole series of interventions, both political and commercial, that have intensely promoted the idea, and have spent large sums of money to build the necessary infrastructure to make it possible (ISDN, ATM, dark fibre networks etc). Two years ago people still didn't know whether or when large-scale public demand would take off, at least in Britain. So the question is really whether governments and other policy-making bodies should cease to intervene and allow the commercial sector alone to take the lead, not whether intervention should be introduced. Further, e-commerce developments in Europe are different to those in the US, which is only to be expected if one accepts that 'globalisation' is more a reconfiguration of global relations, rather than an erasure of the importance of geographical location, as such. So care should be taken over comparisons. It is useful to look at the US example, but then Europeans should be wary of applying the knowledge directly, especially in legislation. It is also important that the developers of e-commerce learn from their teething problems within their own context in making the technology available to the widest number of people, and not simply attempt to follow the lead of those in the USA.

Geoff Robinson (Chair) We are in the midst of a commerce revolution. There are typically three phases of thoughts involved in any revolution:

With E-commerce we are currently in the second phase.

Jim Norton (Institute of Directors) Business to business was, is and will remain the dominant force in e-commerce. It would be interesting to discuss the themes of evening through some specific questions.

 

Rapporteurs reports of group discussion over dinner

Geoff Robinson (Chair) A huge proportion of what happens is determined by the market. Market failure can be predicted, but does not necessarily happen. We should be dynamic in the way we affect the regulatory environment as it arises. If connectivity is enabled then markets should take over from there. It is important to take care in generalising for a number of reasons, including:

We should also stay aware of counter intuitive views, i.e. evidence of young people not using IT, growth of use of other languages other than English on the Internet. Most of all we need to keep an open mind.

Barbara Beckett (BAA plc) Networks of networks create an interesting perspective in terms of self regulation. Enough laws exist, regulation should be of outputs rather than inputs. Intellectual property issues have been regulated appropriately within certain organisations which have been in existence for c.20 years, so self regulation can operate. In terms of culture it is likely that people can give more of an impression of efficiency and power over the Internet than actually exists in real life, where the individuals may be disorganised and weak. People should be aware of the capacity for disillusion.

Bill Macintyre (DTI) People are keen to establish brand names. The role of government in the broadest sense should be to create a clear legal framework in which industry operates, whilst taking account of global, European and national developments in technology and the use of technology. E-commerce appears to be an important competitive driver of change and rapid development. If the government was to focus on the competitive aspects then it should be able to react rather than prescribe, thereby allowing the maximum amount of freedom for the players to operate and govern themselves.

 

List of attendees

Prof Nicholas Alexander M&S Chair of Retail Management, Bournemouth University nalexand@bournemouth.ac.uk

Mr Mike Bazett Consultant, PricewaterhouseCoopers mike.s.bazett@uk.pwcglobal.com

Ms Barbara Beckett Group Retail Marketing Director, BAA plc, c/o Heathrow Airport Ltd Barbara_Beckett@baa.co.uk

Mr Christopher Bell Partner, Taylor Joynson Garrett cbell@tjg.co.uk

Mr Roger Bowen Business Development Manager, Blackwell Retail roger.bowen@blackwellsbookshops.co.uk

Mr Jeremy Crump CITU jcrump@citu.gsi.gov.uk

Ms Tricia Drakes Worshipful Company of Information Technologists tricia.drakes@parvil.demon.co.uk

Mr Christian de Larrinaga founding Chairman The Internet Society of England cdel@firsthand.net

Mr Richard Francis Manches Internet Services Group richard.francis@manches.co.uk

Dr Sarah Green Department of Social Anthropology, University of Manchester sarah.green@man.ac.uk

Dr Caroline Ingram Virtual Society? Programme, Brunel Universitycaroline.ingram@brunel.ac.uk

Ms Jessica James Strategic Adviser, Bank One jessica_james@em.fcnbd.com

Mr Dan Jellinek Freelance Journalistdan@jellinek.com

Mr Ben Jupp DEMOS ben@demos.co.uk

Mr Colin Lloyd Chief Executive, DMA (UK) Ltd alisonk@dma.org.uk

Dr Peter Lunt Department of Psychology, University College London p.lunt@ucl.ac.uk

Mr Bill Macintyre Head, CII, DTI bill.macintyre@ciid.dti.gov.uk

Mr Geoff McMullen Chief Executive, UKERNA g.mcmullen@ukerna.ac.uk

Mr Roger Moore Consumer Intelligence Unit, Consumer's Association moorer@which.co.uk

Prof Jim Norton Institute of Directors j.norton@iod.co.uk

Mr Tony Parish Director General, Federation of the Electronics Industry (FEI) aparish@fei.org.uk

Mr Mark Pragnell Consumers Association pragnellm@which.co.uk

Mr Owen Pringle Commercial Director, New Media, ITN owen.pringle@itn.co.uk

Prof Charles Raab Department of Politics, University of Edinburgh c.d.raab@ed.ac.uk

Mr Noel Rees Director of Distribution Sector, Northern Region, IBM United Kingdom Ltd reesn@uk.ibm.com

Dr Geoff Robinson geoff_robinson@attglobal.net

Mr Patrick Sweeney Trainee Solicitor, Taylor Joynson Garrett psweeney@tjg.co.uk

Mr Duncan Shiell Manager E-business, Ordnance Survey tdshiell@ordsvy.gov.uk

Mr Dave Simpson OFTEL dsimpson@oftel.gov.uk

Ms Barbara Walker Confederation of British Industry barbara.walker@cbi.org.uk

Prof Steve Woolgar Virtual Society? Programme, Brunel University steve.woolgar@brunel.ac.uk

 

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