ECommerce: a Dire Need of Online Dispute Resolution
The world of eCommerce is in dire need of Online Dispute Resolution (ODR). These are my minutes from the discussions amongst the members of the private Youstice* meeting which took place in Prague on October 18-19, 2014 at the Aria hotel, right in the centre of the Czech capital, and barely a stone’s throw from the house where Franz Kafka used to live. Yet, our discussions were by no way Kafkian. On the opposite, they made it possible for us to link all the issues related to today’s e-commerce customer relationship management. The notions of trust and respect were at the centre of all debates, therefore highlighting the need for trusted third parties, mostly in Europe, even though the approach, as often, is different from country to country.
[*Disclosure: Youstice is my client]
Internet pioneers meeting in Prague highlights a strong need for online dispute resolution in E-commerce
E-commerce: it’s a matter of trust
Doc Searls’ initial title for this discussion was “terms and policies individuals assert”. The discussion started with a consensus around Doc’s introduction to the meeting: “freedom of contract was established a long time ago in order to do business but in 1943, in order to gain scale, the law was changed, which means that one party is issuing the contract and the other is forced to accept or reject it (as when we buy stuff from Websites and are forced to accept terms of conditions which keep changing)” Doc said. Doc Searls, for those who can’t remember, is a co-author of the Cluetrain manifesto, which is still available at http://cluetrain.com; a fundamental piece of Internet marketing literature which was already pinpointing the need to consider Web viewers not as “eyeballs”, but human beings(1).
As is always the case with the Internet, all users are decision makers, whether some merchants like it or not; and from there came the idea of ‘do not track(2)’. “We are right at the beginning of that” Doc went on. A company called the Respect Network(3) have issued a document entitled the “respect trust framework(4)” which spells out principles like “both parties will respect the boundaries of the other party”. These issues of trust and respect are at the heart of the need for Online Dispute Revolution (ODR) as we will find out later on.
Two parties of equal power
Essentially, there is a need to “establish contracts between two parties of equal power” Doc went on. It is very early days but one thing that is happening is that “the system we have is broken and it needs to be fixed”. What was working well for a few large companies in the industrial age isn’t working that well in the Internet age at all. “A lot of people are coming to us from Salesforce.com and other large Internet companies” Doc Searls added, and they understand that they need to deal with customers in a much better way. They used to think we were “communists” but this is over, they are jumping on the bandwagon now.
A new effort is also going on in the UK about what Doc called “consent receipt” for which any time a customer gives consent, they get a receipt. “This is a step forward in the right direction” he added. They are working on the “log in with respect” button with regard to Facebook and other social connect mechanisms. It’s hard to say what Facebook will be up to with your data. “If one comes up with this alternative button, there’s code which one will be able to install on site-side. This ensures that one enforces respect and issues statements you won’t tamper with users’ data” Doc explained. January is the potential release date, currently going through Kickstarter.
B.A. may not need an ODR (Online Dispute Resolution) system, but smaller players do
Esther Dyson, once head of ICANN in the early days of the Internet, joined the conversation mentioning that if there is “an issue with privacy, there is also one with regard to trust”. “British Airways doesn’t really need an ODR system like Youstice because they already have a reputation,” Dyson said; even though there has been some traction with larger merchants and e-merchants which would tend to prove that a trusted third party for dispute resolutions is not only a technical solution; it is also instrumental in reassuring clients who expect neutrality and fairness. “The target for ODR is the sites that customers don’t trust” Dyson went on. Respect isn’t enough. Indeed, consumers want to be able to trust the shops they buy from. This is only natural in an increasingly globalised world where extra European buyersThe B2B purchasing process is the result of a long life cycle often linked to a contract as there are many people to convince. can make online purchases from 3-4 different merchants, not always located in the same country. It is hard to trust someone you cannot see in a country you know nothing about.
The aim of Online Dispute Resolution: reduce the number of disreputable merchants
“The ODR promise is that we’ll give customers the potential to negotiate one to one and resolve issues on an individual basis” Esther Dyson pointed out. The idea is to reduce the number of disreputable merchants. One of the issues with privacy though is “that you never know when it’s been reached; you only know when it’s too late” the former head of ICANN and member of the Youstice board of advisors added. A tower of Babel and the need for a common language Trust and respect aren’t sufficient, and there are more things in that balance of modern e-commerce which is more and more a cross-border issue: “there is a need for an enforcement mechanism and current legal systems can’t help because they are different in all parts of the world” explained Zbynek Loebl, co-founder of Youstice and our host for that weekend in Prague. And it’s very hard to predict that such enforcement mechanisms could be in place any time soon according to the Czech entrepreneur.
Joyce Searls, co-president, with her husband, of Searls Group(5), commented on Zbynek Loebl’s statement: “there are a lot of little things which can create a river of change when all those efforts will be aggregated and it won’t solve the problem just on the legal side but on the company side too.
We have been tracking this area for so long and it seems that something is happening here at last and all these things are coming together. Things have to be solved,” She said. It is no longer possible indeed, to ignore the need for respect and trust on the part of clients, as well as the requirement to solve disputes when they arise. The future of e-commerce hinges on that, the need to fix its principles, both ethically and technically. Online Dispute Resolution is part of that.
Resolving claims is how you build a reputation
Pablo Cortes, our Spanish representative – also a Professor from the Leicester University in the United Kingdom, emphasised the requirement for the marketMarket definition in B2B and B2C - The very notion of "market" is at the heart of any marketing approach. A market can be defined... to evolve beyond current practices: “trustees have been in the market for a long time and they have had their code of conduct,” he said, “but if a customer complains about a breach of privacy they never do anything against large businesses because there is a conflict of interest.
Yet, settling disputes isn’t just a negative thing, as pointed out rightfully by Esther Dyson: “one has to understand”, she commented, “that resolving claims is how you build a reputation”. Zbynek Loebl can however see “that this movement is happening, slowly but surely. The obvious example is BBB(6) in the US and there are similar trust marks in Europe,” he said. “We at Youstice have well established that retailers could see that improved public policies would be seen as positive by customers and retailers alike and it could be a game-changer. And it’s a matter of things catching up with all”.
Katsch(7), who is credited for inventing the field of ODR(8) (Online Dispute Resolution) added that “conflicts of interest become more prominent because of so many entities being in relationship with so many others. You have got to build trust in spite of these conflicts of interest. The old way of building trust was to avoid conflicts of interest,” ODR offers a way to table these issues and solve them. “Is it safe to buy from this retailer?” Asked Zbynek Loebl.
A couple of months ago he just got an email from a VP from a retailer: “we have a request that someone from a country wants to buy from a small e-shop from France, and they want to know whether this e-merchant is safe to buy from; can you help us?” “This,” Zbynek Loebl said, “is a very simple issue, a very simple question and yet, answering that question is almost impossible and the reason for this is globalisation. There are still no simple answers to such simple questions but there are potential solutions.”
A simple complex question
As a matter of fact, this isn’t a simple question, as pointed out by Esther Dyson in response to Zbynek Loebl’s anecdote. Yet, with such complex issues, third party services can help: “If customers were asked to have their problems solved by internal departments or third party, I’m certain they would choose third party” Leah Wing, lecturer at the University of Massachusetts/Amherst(9), commented.
“There is a need for that, but as seen in Germany with ‘Trusted shops10’, traction is only being gained and we are not there yet”. Ivan Debnar from Slovakia added: “if I were a merchant, I would like to show I care about my client and there is a need for first-line support from within the company. This is also instrumental in building trust with one’s customers”. “It is indeed a two-step process,” Ivan Stefanko joined in, “first and foremost, there is customer care”, and next comes to Online Dispute Resolution.
The beginning of a new era: VRM supersedes CRM
There is still a lot of evangelisation to do in order that the term ODR is known and the concept develops. Even some of our meeting attendees declared they had never heard the term before. By and large, however, the future of e-commerce is no longer a matter of CRM but a matter of trust and respect, and the ability to resolve issues that are sometimes, unfortunately, ignored or minimised by merchants according to Pr. Ethan Katsh.
The empowerment of users and the maturation of e-commerce and especially cross-border eCommerce is calling for new standards where consumers will be able to manage their relationship with their vendors, in much the same way that vendors started managing their relationship with their consumers through CRM, twenty years or so ago.
This is the beginning of a new era.
(1) Suffices it to say that I have been a fan of the Cluetrain manifesto from day one, and still am. I hold that text for one of the most significant marketing texts ever written. A lot of what Doc referred to during that meeting in terms of respect and trust has to be seen in the light of the manifesto.
(6) http://www.bbb.org/ Better Business Bureau