Today is Cyber Monday. And so is tomorrow and the next day and the next…

measuring digital economyToday’s post is from Andrew Wyckoff, head of the Directorate for Science, Technology and Innovation (STI) at the OECD. 

Today is Cyber Monday – although the term is less than ten years old, so you may not have even known it. Like its better known cousin ‘Black Friday’, ‘Cyber Monday’ is a marketing term to mark the kick-off of the holiday shopping season, right after Thanksgiving, in the US. Unlike Black Friday though, Cyber Monday is all about e-commerce: the New York Times sanctified the term in 2005, with the observation that “millions of otherwise productive working Americans, fresh off a Thanksgiving weekend of window shopping, were returning to high-speed Internet connections at work Monday and buying what they liked.”

When IBM took a look at Cyber Monday 2013, it found it to be the biggest online shopping day in history. This year’s looks set to be even bigger as more Americans than ever before plan do some of their holiday shopping online.

The OECD has just released a comprehensive mapping of the digital economy around the world. It shows how American consumers aren’t the only ones who are buying more online. Our data shows 90% of internet users in the U.K. and Germany now shop online, with the U.S. closer to the 70% mark – although when data is broken down by age, American seniors rank among the biggest e-shoppers of their peers.

Shopping online has gotten easier. The New York Times pointed to access to broadband internet as a precipitating factor. The explosion in smart phone use is another, which outsold standard phones for the first time in 2013, as we can now also make payments on the go: apps in the Android market are growing by almost 60% a year. Paying online is easier too, with services increasingly provided by firms like Facebook, eBay or PayPal, rather than banks. As a result, we’re witnessing a revolution in how consumers behave – it’s Cyber Monday every day now. Close to 50% of all adults in OECD countries now shop online, up from less than a third in 2007.

But has it all become too easy? As e-commerce grows and consumption patterns change, have measures to protect consumers been able to keep up?

New patterns of consumption are making new consumer grievances emerge. They focus on accessing and understanding payment, product and transaction-related information, which all too often is buried in footnotes or so complex and lengthy that we don’t bother to read it. Concerns around privacy are even more sensitive. Consumers report not understanding what is being done with their data by the many different entities that are involved in an online transaction – why such information is being collected, whether it can be shared with third parties, and for what purposes.

The U.S. provides an illustration of another type of possible tension. The U.S. Federal Trade Commission recently reached million-dollar settlements with both Google and Apple (and a third case against Amazon is ongoing), to compensate parents of children who had run up charges while playing “free” online games. As a result of the FTC’s action, both Google and Apple have agreed to change their advertising practices and introduce authentication tools that would help stop kids from unwittingly spending money online.

What should be done when things go wrong? When, for example, you download or stream a poor-quality song, or your cell phone bill includes unexpected charges, you can end up having either to navigate a maze of legislation that may govern your transaction or enjoy no level of protection at all. When you buy online from a different country – like the two-thirds of Canadians who report buying a U.S. product over the web – it can mean double trouble. So it is hardly surprising that the OECD finds that in some countries, less than half of Internet users feel confident about buying products online from another country.

So what needs to be done? New OECD guidance developed with governments, civil society and leading industry players recommend that businesses and governments implement measures to prevent children from being able to purchase products without parental consent, to ensure advertising is clearly identifiable as such, and that apps be clear about any charges that might be incurred. E-sellers and regulators should also implement measures to enable consumers to know how personal data may be collected, used and shared, and sensitive data such as geo-location, health or financial information should be the object of express consent. The OECD also calls for the development of some level of consumer protection for all types of e-commerce transactions.

Google, like Apple, is starting to bring in changes along these lines. Protecting and empowering consumers, and building their confidence in buying online, is the best way to ensure we benefit from the dynamism of e-commerce, on Cyber Monday or any other day.

Useful links

OECD work on the Internet economy

OECD work on Internet consumer policy

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