Where’s the Joy? Exploring the Hidden Taxes of E-Commerce
The rise of digital commerce has created abundant opportunities for consumers, adding ease and optionality to the way they shop. Along the way, however, opportunity costs have accumulated, including a hefty tax on consumers’ time and a burden on their lifestyles, arguably creating more challenges than solutions.
Has e-commerce gone too far?
Born and raised in Midtown Manhattan, I remember the joy of roaming in the local department stores. Absorbing the latest styles, people watching, and just getting a change of scenery – it was a pleasant break from the day-to-day. By contrast, when you fast-forward to today’s commerce experience, it often feels overwhelming and much more like a chore than a pleasure.
What has chipped away at the enjoyment of shopping? How can businesses create space for consumers to discover with delight amidst today’s digital deluge? Importantly, how can we refine the focus of e-commerce to make shopping less taxing and more rewarding?
Problems represent opportunities for entrepreneurs, so let’s dive into the hidden taxes that underlie the day-to-day e-commerce experience, with an eye toward crafting optimal solutions for today’s busy consumer.
What has chipped away at the enjoyment of shopping? How can businesses create space for consumers to discover with delight amidst today’s digital deluge?
PROBLEM 1: The Neverending To-Do List
Consumers are more time-starved than ever. Yet, the ability to order anything and everything on-demand has – in an ironic way – increased the mental burden of a running to-do list.
First, we no longer consolidate our shopping into a weekly “run.” Instead, we’re perpetually tasked with managing a mental to-do list. What seems like an efficient ability to one-click order can easily become a time-consuming exercise in price comparison and product research.
And, the ever-amazing experience of getting items delivered very quickly can also distract us from enjoying our day-to-day lives by making us less mentally present as we await various boxes landing on the doorstep.
I studied this to-do list phenomenon when starting Jetblack for Walmart. The product we launched enabled consumers to order anything over text message. Consumers consistently ranked their favorite aspect of Jetblack as giving them the ability to “mind dump” their to-do lists over text message – a fast way to get something off their over-crowded brains and into our system.
Problem 2: Shopping has become transactional
Vanishing are the days where a simple trip to a local hardware store, supermarket, or specialty retailer represents a chance to connect with people. There is a community in going out and shopping, whether you interact with a salesperson, someone you run into, or other shoppers you see at the store. There is conversation as well as chances to discover products.
I treasure my childhood memories of the Saturday morning trips my family would take to the supermarket and mass retailers. I remember the French bread pizza we got, the zebra cakes we begged our parents for, the time my sister and I ate raw hamburger meat from the cart when my mom wasn’t looking, and the special stop in the toy aisle where just looking at all the options was even better than getting to bring a toy home.
Together as a family, we talked about the items we needed, piled into the car, and were naturally exposed to real-life lessons on budgeting, cost comparison, meal prep, product discovery, and social interactions. For me, this time also sparked my fascination with retail, which shaped my career from co-founding Rent the Runway to driving digital innovation for Walmart.
In contrast to these traditional experiences, the online shopping experience has become more and more transactional. Amazon (and comparable sites) are basically glorified search bars that drive conformity of product selection. Then comes the chore of reading, comparing, and choosing – a faint shadow of those bright Saturday family shopping trips.
One trend might bring back some joy, however. Video commerce will continue to increase, offering the chance for some sense of community and experiential brand experience. Instagram, Shop Shops, and Supergreat have begun building businesses in the US with this experience and based on the successes we’ve seen with this approach in Asia, there seems to be enormous potential for this category to be a significant contributor to digital growth.
Problem 3: THE PARADOX OF CHOICE
A transactional shopping experience diminishes human interaction and, with it, customer trust. It is far different to get purchase guidance from an algorithm than from a salesclerk who looks you in the eye, possibly knows you and your preferences, and is highly familiar with the store’s available products.
In an e-commerce store, the customer must toil to triangulate toward the best product for themselves, because the sheer breadth of products available can be overwhelming. As a consequence, consumers may not trust their ability to navigate these options themselves, which can lead to intense exploration, comparing endless options, scouring reviews, and finally making decisions – which can feel like a roll of the dice anyway.
The bottom line: More choice is not always better.
How can entrepreneurs build trust with consumers and make the online selection process less taxing?
#1 Engage with your customer like a friend
Using text message is a great way to achieve this connection. When executed correctly, a text message immediately feels friendly, because it’s a modality we use with close acquaintances or for more personal service businesses. A bonus: Text message forces interactions to be concise and to the point.
#2 Lean into word-of-mouth marketing and referrals
Leverage referrals and relevant influencers. Businesses such as Burst do a great job of tapping into relevant brand ambassadors, in their case oral hygienists, who are well-positioned to recommend their oral care products to consumers. SuperGreat and others use video to harness buyers’ genuine enthusiasm for various beauty products. At a time when digital marketing is more expensive than ever, word-of-mouth continues to prove its value as the most cost-effective, authentic, and sticky form of marketing.
When we co-founded Rent the Runway, we knew that if we could harness the power of word-of-mouth, growing our business would take care of itself. The typical conversation starter for women at an event is “You look great!” or “Where is that dress from?!” We built our brand around inclusivity, aspirational fashion, confidence, and sustainability – topics that women wanted to talk about – and we enabled our customers themselves to help answer new users’ questions about our clothing rental service. Social media and influencer platforms enable interactions like these to multiply.
Brands that tie into naturally experiential moments (like special occasions) and those that relate to naturally emotional categories (high-consideration items, babies, pets, nutrition) are fertile ground for naturally viral marketing.
#3 Drive simplicity by focusing on specific, trusted products
There is something refreshing about businesses that do one thing really well, whether a service or product. Inherently building brand loyalty with customers, these brands are often reliable and trustworthy and optimized for efficiency. The retailer Outer.com offers a compatible collection of thoughtful outdoor furniture; part of its attraction is its simplicity.
Shop at Bombas and you are going there for the “most comfortable” socks and to connect with their mission of donating socks to others when you make a purchase. Go to Allbirds for casual, comfortable footwear made of sustainable materials. It is much harder to go down a rabbit hole of distraction and indecision when the perplexing universe of options is already carefully refined and connected to a trusted brand.
But there's more...
Regardless of the business you create, harnessing the customer feedback loop is essential – ignore it at your peril.
Many additional factors chip away at the enjoyment of shopping, among them re-entering address and password information, dealing with returns due to less initial product visibility, carrying bulky boxes and breaking them down to recycle (the waste that comes along with that), navigating pop ups and ads, concerns about information privacy, and the missed opportunity of customer feedback.
Innovation to reduce these persistent taxes on our time has largely come from businesses like Paypal, Dashlane, and Honey, which save information and help with easy price optimization. But, there’s still plenty of room for optimization before we start bringing back the joy of shopping.
We’ll continue to see operators developing solutions to centralize post-discovery logistics like payment, shipping, and more. There will be a steady rise in platforms that unify the shopping experience.
For example, nate is leading the trend as the first artificial intelligence online shopping tool that centralizes purchasing onto a single platform; users can buy a product from any e-commerce site with the click of a button. Going beyond payments, Olive consolidates multiple orders into efficient deliveries with reusable packaging, kicking cumbersome and wasteful cardboard boxes to the curb; they also manage customer returns with a few clicks of the app.
Regardless of the business you create, harnessing the customer feedback loop is essential – ignore it at your peril. Amidst the robust data on conversion funnels, ad performance, repeat rates, and more, it is tempting to forsake qualitative customer feedback.
Companies can be too quick to view customer service as a cost center and not eager enough to leverage the insights gained from observing customers in the wild or listening to their ideas. Perhaps the greatest risk of businesses that transact solely digitally is missing out on real-life observations from customers – which can highlight product gaps, expansion opportunities, the texture of those abandoning cart, and weighing of price considerations.
The Path Forward
In mid-2021, the National Retail Federation (NRF) revised its annual 2021 forecast upward, now expecting total retail sales of between $4.44 trillion and $4.56 trillion. Within that figure, non-store and online sales are anticipated to rise between 18 percent and 23 percent to a range of $1.09 trillion to $1.13 trillion as consumers continue to shop online.
In theory, shopping online saves time in transit to a store and waiting in line (sometimes with kids in tow), offers a broader selection of products and prices, empowers us with reviews to evaluate our choices, speeds deliveries to the door. But, as we have discussed, each of these benefits comes with a hidden tax – and the joy of shopping is eroded.
As entrepreneurs look for ways to evolve and improve today’s digital shopping experience, targeting the pain points I highlighted should lead us to prioritize:
- Emotive brands that harness word-of-mouth referral, and
- The customer feedback loop – our ultimate guide to sure-footed innovation.
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