Drone Delivery is Coming To Your House, Eventually

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The emergence of new technology creates new solutions. Many believe we’re on the cusp of a second wave of an automation revolution. This line of thinking is lead by the emergence of driverless vehicles and drone technology. Both are proving safer and faster solutions to current delivery systems. As part of our yearly future looking survey, we asked members of the e-commerce world to speculate on the impact of these technologies. Within a five year scope, people are generally optimistic both drone and driverless vehicles will have an impact on how we receive our goods.

  • Only 8% of survey takers believe driverless vehicles will account for less than ten percent of all deliveries.

  • Over half of all respondents believe driverless vehicles will account for at least 30% of the handling of all packages.

  • Drone prevalence is a bit more pessimistic among survey takers, but over a third still believe drones will account for 10 - 30% of all deliveries.

Percentage of Packages Delivered by Drone or Driveless Vehicle in the Next 5 Years

It’s not hard to see why unmanned vehicles and drones can provide a better experience for customers. I believe it’s all but a forgone conclusion these solutions are going to replace our current ones. However, five years maybe too optimistic for full adoption and rollout everywhere. For example, Tesla’s semi-trucks aren’t meant to hit production until 2019. Even though they’ve received orders from large companies reliant on fleet transport like Walmart, FedEx and Anheuser-Busch, these orders in no way are full compliments to the current fleets. This is partially due to the trucks being electric, making them bound to refueling limits in the infrastructure and distances they can travel.

Drone delivery may have a bit of a leg up on driverless vehicles though, because they can bypass the limitations of current infrastructure. It’s likely we’ll see a rise in drone deliveries within the next 3-5 years in the US, but developing countries with weaker infrastructures are likely to focus on drone deliveries and implement it sooner. Consider the needs for medicine, food and other urgent delivery items. Companies aren’t going to wait for the best paths to be built for them when they can just fly over it all. Zipline, an organization out of Rwanda, is already delivery life-saving blood and medicine by drone at significantly faster rates than traditional delivery. As these fleets or squadrons of aircraft are built out, they’ll find usage in more commonplace delivery as well.

In America, there’s a need to find a “sweet spot” for roll out. It’s predicted suburban areas outside of cities are likely to be the first adopters and test sites for drone delivery. A lot of it comes to cost effectiveness. In dense urban areas, there’s a lot of choices and delivery times are general already low within 20 minutes. It’s not cost effective to use expensive aircraft to make a delivery in the same time. Suburban areas would benefit from the quicker delivery times and increased choice, though. Rural areas would as well, however, the demand and number of deliveries made would have to justify the wider area of operation and larger fleet needed to satisfy the same number of households.

Drones are subject to scrutiny by the FAA and require their routes to be designed and approved. This is important to remember when considering the rural vs suburban vs urban rollout. Again, suburban and rural areas are optimal for their lower density. Less risk of damage and injury in case of malfunction. Routes and acceptable fly zones will be easier to plot out. Low density also means less general congestion; one drone to a home, rather than five or more to the same apartment building. There’s also issue of noise pollution, as well. Cities like New York and Los Angeles may find themselves opposed to the sound of buzzing squadrons of drones at all hours. The FAA may have to implement acceptable fly times for certain areas, no matter the density.

While giants like Amazon and Alphabet have their plans for drone delivery, they’re ultimately going to be limited on widespread rollout as it will take time to approve the paths and times of operation the drones can operate in. It will ultimately be a current tech giant, though, “paving the way” so to speak as they have the capital to build the aircraft and work out these delivery routes.

I believe we’re definitely going to see a rise in these technologies, but nothing near as optimistic as respondents believe. We’re going to be a largely mixed traffic society, especially in America. Regulations on autonomous vehicles, when and where they’re allowed to travel is going to be their biggest hindrance. This will be especially true for dense cities until logistics and cost effectiveness are in their favor. This shouldn’t discourage vendors though. As the opportunities for new technology and delivery systems arise, they should be willing to explore these new, faster, and more efficient solutions.

New Laws Taxing E-Commerce More Ways Than One

National Internet Sales Tax

Back in June, the Supreme Court came to a decision on the sales tax case of South Dakota vs Wayfair. The state of South Dakota had been arguing the boom in e-commerce was costing their state tax revenue. Until June, the law did not force retailers to collect sales tax if they did not have a physical presence in the state. The Supreme Court ruled in favor of South Dakota, though, allowing for them to continue to collect on e-commerce sales. It was determined their tax laws weren’t a burden on interstate commerce. This is In part, due to the safe harbor provisions for smaller businesses who don’t conduct many transactions.

The ruling presented concerns among retailers, though. Does this open the door for other states to retool their tax laws, some of which are already over complicated? Is this going to impact the small business sales in their ability to remain competitive, especially those with limited physical presence? Many are looking to Congress to settle the issue with a national internet sales tax.

Will we have a national Internet sales tax in 5 years?

In our 2022 Futures of Technology survey, about half of the respondents believed we would have such a sales tax in the next 5 years. However, the survey was taken before the June ruling, so it seems almost inevitable now a federal solution is on the horizon. One such incarnation of this is the Marketplace Fairness Act.

Introduced in September, the Protecting Small Business from Burdensome Compliance Costs Act of 2018 seeks to offer some protection and simplicity for retailers while a federal solution is created. It seeks to force states to pick one uniform rate not exceeding the combined state and highest local tax rate. Meaning states can’t force retailers to collect based on the zip code of purchasers, and they can’t collect more tax than if the good or service was bought in state.

This is a good step for competitive pricing, but what about small businesses not looking to raise prices at all? Again, half of respondents to our survey believe a national sales tax will hurt their business.

Will a national Internet sales tax hurt your business?

The Wayfair decision highlighted a safe harbor threshold for $100,000 in sales or 200 transactions in-state. It was suggested this be the standard states follow. But by looking at the thresholds from states enforcing laws in October, this uniformity was not upheld. The MFA held a provision for small businesses to be exempt as long as their remote sales total under $1 Million dollars. While easy to understand and uniform throughout, this threshold is actually lower than current state by state laws. Each participating state is essentially giving an allowance for businesses. $100K allowances spread out begins to add up in the end.

From a consumer perspective, a national internet sales tax could solve issues with the complexity of their own taxes. Many states currently rely on self-reported use taxes in which purchasers are meant to report their own online purchases and remit payment. All federal solutions for this take the responsibility out of the hands of the consumer. Amazon began collecting sales tax and remain generally unaffected. Their size and convenience of service obviously still trumps the traveling to multiple stores (and still paying tax).

However with the responsibility of tax reporting taken out of the consumers’ hands, it’s being forced into business owners’. Many have called the deadlines to fall into compliance unfair. After the Supreme Court ruling, 11 states set an October 1st deadline for online sellers to be compliant with their new tax laws. Today four more states’ online taxes laws go into effect including North and South Carolina, New Jersey and South Dakota.

Less than a year’s time to bring a company in line with each states’ laws is not easy, as every state is different. Some tax shipping. Some don’t tax certain goods. Others tax similar products differently. Companies like Alavara, Vertex and Sovos are providing guidance and solutions for integration. But this doesn’t stem the overwhelming minutia involved with taxes. The majority of man hours and resources are spent on the odd cases, not the common customer. Customers who are tax exempt, for example, will present issues.

This rush to compliance has also given rise to a new fear for business owners, the audit. It’s not hard to imagine some ‘t’s may go uncrossed and some ‘i’s undotted. The lack of time, aid, and general complexity of every states’ needs can be a pitfall to anyone in the e-commerce world. Sellers solely on the Amazon marketplace can have Amazon collect the tax for them. However, the same issues with special case customers still arise and getting collection reports can be difficult. If you deal both on Amazon and your own shop, then it simply doubling up on the headaches to become compliant.

In the end, bringing a business into compliance is going to be a lot like swallowing medicine you don’t want to or ripping off a band-aid. Once it’s done, it’s done. There are still six more states slated to have collection laws go in effect by January 1, 2019. They include Connecticut, Georgia, Iowa, Louisiana, Nebraska, and Utah. Other states have yet to formalize their laws, while a few are in litigation. If nothing else, online sellers can be thankful for the handful of states who don’t sales tax.

Q&A with Rand Fishkin SEO & Beyond

If you saw the first video (6 SEO E-commerce Marketing Insights) in this two-part sitdown with Rand Fishkin, you’ll have walked away with some really valuable strategic and tactical advice for your e-commerce operation. In this video, Rand talks about the future of Sparktoro, his next project, as well as his hopes for the future in general. Rand also gives us a more personal insight to his book Lost & Founder and what he’s learned from baring his soul. I hope this video gives you just a small glimpse of the person I’ve come to admire over the years.

2018 Holiday Paid Search Strategies & Best Practices

Last year was the biggest online retail holiday season in history and growth is only expected to continue. To share in holiday retail success, it is important to prepare in advance and stay up to date with current trends to leverage the holidays to their full earning potential.

This page shares trends in holiday shopping and tips to best execute holiday paid search campaigns from selected research and reports from Google and eMarketer.

Paid Search Holiday Shopping Trends

  • > 50% of shoppers start holiday shopping research in October or earlier

  • Last year 30% of shoppers said their holiday shopping was completed before Thanksgiving

  • Not only is holiday shopping starting earlier, the season has extended into January and 20% of December sales occur after Christmas

  • One third of shoppers said that all of their holiday weekend purchases were driven specifically by promotions

  • Last year continued the trend of expanded mobile traffic and increased mobile conversions, with a 40% increase of retail sales via mobile devices

  • 40% of e-commerce sales are expected to be made on mobile platforms in 2018

  • In the past year, 40% of YouTube users turned to the platform to learn more about a product before they bought it

Paid Search Holiday Planning Tips

Key Holiday Dates for 2018

  • Singles Day - Sunday, November 11, 2018

  • Thanksgiving - Thursday, November 22, 2018

  • Black Friday - Friday, November 23, 2018

  • Small Business Saturday - Saturday November 24, 2018

  • Cyber Monday - Monday, November 26, 2018

  • Hanukkah Begins - Monday, December 3, 2018

  • Green Monday - Monday, December 10, 2018

  • Free Shipping Day - Sunday, December 16, 2018

  • 2 Day Shipping Cutoff - Saturday, December 22, 2018

  • Christmas Eve - Monday, December 24, 2018

  • Christmas Day - Tuesday, December 25, 2018

  • Boxing Day - Wednesday, December 26, 2018

  • New Year’s Eve - Monday, December 31, 2018

  • New Year’s Day - Tuesday, January 1, 2018

Plan Ahead

  • Use historical data around search traffic spikes to inform your marketing plan. Then, choose the best channels to reach customers

  • Look at past conversion rates to set benchmarks for this holiday season, then map bids to the sales calendar to know when to bid aggressively. You can also take the heavy lifting out of setting bids by leveraging automated bidding.

  • Create promotional campaigns with seasonal keywords ahead of time but keep them paused. Pausing holiday-specific ad text and ad extensions will allow you to have more time to focus on adjusting settings without a deadline.

  • Discover missing keywords by running search terms report for the same time period last year, and then filter for conversions > 0 and cross reference these against your current keyword list.

Mobile

  • Prepare for an influx of mobile shoppers by adding mobile-relevant extensions to your ad (such as location, call, price, or app extensions) to showcase your business’s information in detail. Extensions will help shoppers find the details they need directly from your ad.

  • Account for cross-device influence and compare mobile COS to desktop COS. Make sure your device-type bid adjustments reflect their relative value.

  • Speed is one of the often overlooked variables that can have a huge impact on traffic and conversion. Three tools we love for conducting benchmarking and diagnosing performance issues are TestMySite, Page Speed Insights and WebPageTest. TestMySite now estimates traffic loss due to performance and is worth checking out.

Online Video

  • Educate shoppers shoppers as they’re browsing product reviews and looking for recommendations with informative video content. Make your video ads interactive to connect viewers directly to your products and provide information that brings them closer to making a purchase. Utilize TrueView for Shopping.

Campaign Management

  • Keep an eye on your competition. Regularly check on your average position and overlap rate compared with advertisers who participated in the same auctions as you, particularly on your most important campaigns. Use auction insights to check in on your performance.

  • Monitor your budget to properly pace for the holiday season. Actively measure your “burn rate” (dollars spent to date divided by the budget allocated to date) to see if you’re over-pacing. If your budget is limited, view your campaign performance and prioritize ad or product groups to see what’s spending the most.

  • Don’t go dark after Christmas, drive additional post-holiday traffic and re-engage interested shoppers who haven’t completed their purchases using re-marketing lists and customer match.

Will Consumers Choose Cryptocurrency to Shop Online?

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Since late 2017 Cryptocurrency, namely Bitcoin, has been on the lips and touched the ears of a lot mainstream households. It was in November Bitcoin began to rise in value until finally peaking in December at 20,000USD to 1BTC. This was followed a subsequent crash and devaluation of the decentralized currency. As of writing this in September 2018, BTC trades at around 6,500USD. It should be noted, this is still close to double what it was trading at this time last year. This shouldn’t be taken as an indicator of another spike, but rather an illustration of the maintained perceived value.

The biggest problem with cryptocurrency, though, is despite the waves it made and attention it grabbed a lot of people still don’t know how it works. Which partially explains why it’s no longer as hot of a topic. The crash did not help either. The apparent volatility of the currency surely scared a lot of people off. There is a lot of unknown still associated with Bitcoin, so it’s yet to grab the full attention of the general public. Digital transactions have become a preferred method for a lot of people on platforms like Paypal, Venmo and Apple Pay. However, they’re by no means the most prevalent payment method either as most people still opt for their debit card.

This is problematic as those alt-pay platforms deal in USD or whatever your country’s currency may be. They’re accepted as transactional solutions by the banks. Bitcoin still doesn’t have full support of many of the major banks in the US. Currently, most US banks allow for BTC to be purchased using traditional checking and savings accounts. They do, however, have bans on purchasing crypto using lines of credit. The other inconvenience lies in transferring back. You’ll have to go through a third party exchanger before you can put your money back into your bank as so few have adopted ways to handle altcoins.

Which brings us to the other side of the coin(pun intended,) what is the adoption rate like for retailers? If banks are resistant and consumers are hesitant, who’s actually accepting Bitcoin? Microsoft allows for small transactions for things like movies and games. Expedia and Dish network take Bitcoin as payment the same as any other. Overstock.com even accepts other cryptos like Ethereum, Litecoin and Monero.

The market seems to be a little more accepting in comparison to banks, but it’s still a pipe dream to expect a bar in rural Montana to accept crypto for a $2 Coors. Where will we be in five years from now, though? The respondents to our 2022 e-Commerce survey were surprisingly optimistic in the face of the current state of things.

Percentage of E-commerce Transactions Made Using Cryptocurrency?

  • About half of the people who took the survey think 10-30% of all transactions in e-Commerce will be done by cryptocurrency.

  • Another quarter see crypto accounting for over 30% of transactions.

This is interesting, because Overstock, accepter of most major cryptos, reported less than 1% of all of their transactions coming from crypto. It’s hard to imagine crypto taking such a large market share of the transactions without significant adoption by online sellers like Amazon, eBay, and Wal-Mart. Further to the point, it doesn’t matter if goods can be bought with crypto unless it’s adopted by the consumers themselves. So the question circles back to how do you get the average shopper to create a crypto wallet, and then spend it?

I reached out to Jared Franklin, Product Manager at Blispay to get his thoughts on the evolving payments landscape.

It takes a very, very long time for anything to change when it comes to the payments space, especially when it comes to payment method adoption by consumers. One simple reason for this is that it’s really hard to change user behavior without a 10x improvement in both user experience and end user value. Cash works, and everyone already knows how to use it. Debit and credit cards work really well, and people know how to use them. They also provide a lot of value to consumers (rewards, protections, security, etc.). For a new payment method to gain adoption, it’s going to need to be 10x easier, safer, and provide significantly more value to the end user, and that’s extremely difficult to do. Think about Apple Pay penetration... amazing user experience, but still not quite dead simple for the masses to figure out. Additionally, there’s always a classic chicken and egg problem when it comes to payments. Like Apple Pay, crypto will have to overcome a chicken and egg problem between merchants and consumers for use cases around payments to gain clarity. Nothing changes fast, and 5 years is categorized as lightning fast in this context.

Crypto is still considered a frontier technology (one that doesn’t have mass adoption, or even value prop clarity). It’s extremely early… promising, but early. The value prop for merchants in the US to accept crypto payments isn’t remotely clear at this point in time, and it’s largely dependent on the value prop and penetration for consumers (hence the chicken and egg problem). This is the crux of the issue. It’s not yet clear what the value prop is for many of the current cryptocurrencies and cryptoassets for consumers. Many theories exist, and there are some benefits, but nothing with certain and obvious clarity at this stage. There won’t be mass adoption without moderate to obvious clarity when it comes to their value creation and use cases. When it comes to Bitcoin in particular, it doesn’t make sense for most people to want to spend it within the next 5 years, as it’s currently designed to satisfy the store of value use case. And this is OK. If it is to have a shot at being used for transactions in the future, it likely needs to be a trustworthy store of value first, and that is going to take many years to work itself out. It doesn’t make sense for the masses to want to give up any of an asset that is being used as a store of value (especially one that is believed to grow significantly in value). Aside from that angle, there are all of the obvious holes that are going to take a few years to fill around custody, key and recovery phrase management, taxes, regulatory clarity, etc.

From a merchant perspective, we have to think about the value prop to them here in the US, and it’s far from clear. They have to deal with all of the same issues that consumers do around custody and that’s no easy feat for most businesses. There’s just not a clear benefit to most merchants to accept crypto in the US until the value prop for consumers to earn, hold, and spend crypto clarifies itself.

With all of this being said, I can envision a future where an ‘internet money’ gains traction and provides a lot of value to both merchants and consumers, but we’re likely more than a decade away, if it even ends up happening at all. Until the full ecosystem gets built out, there won’t be mass adoption. This ecosystem will have to include everything from crypto dispersed payroll and retirement contributions to lending/borrowing instruments. We’re already seeing lending products come to market like the folks at BlockFi. It’s likely that payments is just one use case that crypto proves useful for, but it won’t happen in the next 5 years. We first need to see if the store of value use case pans out. After all, what merchant will want to accept something that isn’t considered a trustworthy store of value? It’s extremely exciting to think about the progress that will be made over the next 5 years in the crypto space regarding regulations, taxes, custody, onramps, and new value props while we learn if bitcoin satisfies the store of value use case.

My advice to any retailer thinking about accepting crypto as a form of payment would be to think long and hard about who your customer (or desired customer) is and what value they’re getting out of paying in crypto. It’s highly likely that the demand just isn’t there yet. You may get more value out of headlines promoting that you are accepting crypto than you will out of new customers that shop with you due to the fact that you accept crypto. If you think there’s value and want to explore it further, then reach out to Coinbase about their Coinbase Commerce product. I’m pretty sure they aren’t even charging for the service at this time. If you’re already a believer in bitcoins likelihood of becoming a store of value with an increasing price, then it’s probably worth adding it to your website even if you only get a few sales, because those few sales just may end up being worth the same amount in the future as many sales generate for you today. But know that it’s a big ‘if’.

I absolutely agree with Jared’s point of view; today it’s probably worth more PR value than anything else and I don’t see an important strategic advantage to gaining some early adoption. When we see consumer adoption of cryptocurrency and a preference for using it to make purchases online we’ll have plenty of options for incorporating cryptocurrency as a form of payment. It’s similar to the decisions we had to make around incorporating PayPal as an alternative payment method in it’s early days. The finance team didn’t want another bank account to reconciles (a time consuming one at that) if there wasn’t enough volume to warrant it.

At the same time, having finally played around with Android Pay in the last year and making some NFC purchases here and there, I feel that there is a lot ton of opportunity to dramatically improve the customer experience when it comes to payments. Apple, Google and Amazon will continue to lead the way while entrepreneurial companies like Affirm, Blispay, Klarna and many others will take a run at reducing checkout friction.


about the author

Shilo Jones StatBid Co-Founder.png

Shilo co-founded StatBid with Roy Steves.  Shilo has spent nearly two decades building e-commerce businesses starting with evo.com where he served as the President as well as holding leadership positions at DestinationLighting.com and GolfDiscount.com.

Shilo Jones, Co-Founder, StatBid