I discovered that Amazon provides access (via an API) to historic price and sales data going back to 2002. The data appears to only cover sales by third-party sellers via Amazon (i.e. not Amazon’s own sales). It could be interesting nevertheless. Unfortunately, access to the data costs $249 per month, and the terms of use are pretty restrictive.

Via Joe Wikert’s blog I learned about Amazon’s new TextBuyIt service. Basically, in the US, you can buy stuff from Amazon by sending them a text message from your phone. They search for what you texted and send you back results, then you send another text to choose which item to buy, and finally Amazon gives you a call to confirm the purchase.

The idea seems to be that when you’re in a regular store you can check if Amazon has an item that you want at a cheaper price. It might be handy but the whole process seems a bit clumsy, especially compared to just walking to the checkout counter and buying something. However, in Japan my cellphone has a barcode reader (via the phone’s camera). It only works for special QR codes but I don’t see why it couldn’t work for regular barcodes as well. This could streamline the process quite a lot — just scan the barcode with your phone, enter a PIN number for security, and the ordering from Amazon could possibly be done without the extra two steps in Amazon’s process.

Obviously, retailers wouldn’t like this very much. They could retaliate by deploying cellphone jammers, but that would annoy their customers. More likely, they could drop barcodes and switch to encrypted RFID tags that can only be read by the store’s scanners.

Actually I’m not exactly sure how successful phone-based substitution of online for offline shopping would be. Given that people are already in a store, they’ve already incurred the cost of getting to the store, so that cost is sunk and irrelevant to their decision about whether to buy from the store or buy from Amazon. This nullifies part of the advantage of online shopping (saving you the cost of going to a store). Also given that you are at a store, the store offers truly instant gratification, whereas Amazon involves a delay of at least a day, or more if you don’t want to pay expensive shipping fees. Thus there are some factors stacked in the store’s favour, and Amazon would have to offer a low enough price to offset those. The key question is whether the economics of online versus offline retailing allow it to do that — is Amazon’s technology sufficiently efficient relative to a retail store that it can offer a low enough price that gets consumers who are already in a store to buy from it? It will be interesting to see how this plays out.

As content-based businesses like the music industry are finding out, it’s getting harder to make money by selling content when free (albeit illegal) copies of your content can be easily found online. Trying to stamp out piracy by suing your customers and the like is one way to try to protect the revenue from selling content. Another way is to think of some more creative ways that you can still make money from content, even though it’s available for free. These basically boil down to providing some sort of customisation, or complementary goods and services that you can sell. Kevin Kelly has an excellent blog post detailing eight possible strategies. Here’s a brief summary:

1. Immediacy: Maybe people will pay for a subscription service that automatically delivers to them the latest new content as soon as it’s released.
2. Personalisation: Give away the generic version, but sell a version customised to the user’s tastes. One of the examples I like is a custom-edited movie according to the rating you want.
3. Interpretation: Give away the product, but sell the support, manuals, and hand-holding. Companies like MySQL and Red Hat already do this.
4. Authenticity: Sell guaranteed authentic versions of the content. I read recently about some musicians who had edited (hacked) other people’s music and released it on peer-to-peer networks without revealing what they’d done. The free song you download may not be the original version.
5. Accessibility: Sell subscription services that provide instant anywhere access to your content, and take care of the backup process for you. I believe this business model has a big future — I spent quite a lot of time on backups.
6. Embodiment: Give away digital content for free, but sell content embodied in other media that can’t be copied. Musicians already do this with concerts. Another possibility is to give away free eBooks, but also sell a paper version. Sometimes, people just like paper.
7. Patronage: Some people want to pay content creators even if the content is available for free. Make it easy and simple to do so, and give some sense of security that the payment actually goes to the artist.
8. Findability: There may be money to be made in sorting out good content from bad, and providing easy access to the better stuff.

(HT: Seth Godin)

Bill Me Later is apparently getting popular. This is an alternative online payment system that doesn’t need a credit card. Instead of entering your credit card number, you enter your birthday and part of your social security number (so I guess it only works in the US). Bill Me Later then accesses credit databases and instantly assesses whether you are credit-worthy. If you pass the test, goods are shipped and you’re sent a bill that you can pay later, or pay over time with interest.

I must admit I haven’t really checked it out, but I’m having trouble understanding why this is popular, as to me it only sounds like extra hassle. As well as entering some details to a website, I have to write a check or something to pay a bill later, and I have to remember to pay it. Where’s the value in that? Bits says:

It is aimed at high-income, credit-worthy customers who are shy about entering credit card numbers online, a surprisingly large group.

But I don’t really get this either. If they’re shy about entering credit card numbers, why are they not shy about entering their social security number and birthday? Given that bill me later exists (and is accepted by Amazon, among others), if someone gets these details about you, they’ve as good as got your credit card number. I wonder how Bill Me Later makes anything less risky?

That said, in Japan, almost every online retailer has a “bill me later” type option. For a small extra fee (300 - 500 yen), they send you a bill after you’ve received the goods which you then go and pay in cash at a convenience store. As far as I know, they don’t even do credit checks — I guess the extra fee covers the expected rate of fraud, plus the cost of sending the bill and a commission for the convenience store. However, Japanese people have a cultural preference for paying by cash, and people seldom use credit cards even when buying something in person at a store. So I’m not sure how well this model will transplant to other countries.

The US Census Bureau has been publishing quarterly statistics on e-commerce retail sales in the US since late 1999. There’s enough data now that some robust trends are emerging. I’ve taken the latest US Census Bureau data and stripped the effect of inflation out of it, so we can see the ‘real’ trends. First, this graph shows total e-commerce sales per quarter in billions of 2007 US dollars (ie today’s money). There’s been strong growth over time and total e-commerce sales in the most recent 12 month period were almost 120 billion US dollars. The real growth in e-commerce sales has averaged a bit under 900 million US dollars per quarter.

This next graph shows e-commerce sales as a percentage of all retail sales in the US. The growth in e-commerce has been strong, but it’s still only around 3% of total retail sales. However, e-commerce has been steadily displacing other sales channels in the US, and looks likely to continue to do so for the foreseeable future.

Next up is the annual growth rates of real e-commerce sales (in blue) and total retail sales (black). These are calculate as the percentage growth of sales in each quarter versus the same quarter in the previous year. So it’s growth over a 12 month period. On this basis, real total retail sales average 1.8% growth in any 12 month period, while real e-commerce sales have averaged about 25%. After a rapid start and then a decline caused by the dot-com crash, e-commerce growth has stabilised, and growth in the past two years has averaged 18.3% per year.

This last graph is an attempt at answering the question: To what extent is growth in e-commerce sales associated with growth in total retail sales? I’ve taken the quarterly growth rates of total sales and e-commerce sales and plotted them against each other. These are not the annual growth rates above, but the growth rate of each quarter compared to the previous quarter. This shows a positive but weak correlation between the two growth rates. There’s some positive relationship between growth in e-commerce sales and growth in total retail sales, but not a very strong one. This is some evidence in support of the idea that e-commerce growth is somewhat driven by total retail growth, but to a large extent represents sales shifting from traditional ‘offline’ channels to ‘online’ channels.