The future of e-commerce is in our head

The march of new technology continues to push e-commerce into new and exciting directions, opening up new markets and redefining the user experience. Therefore it would be totally logical to think that technology will define the future direction of e-commerce, however with the development of behavioural economics and studies of the human brain maybe the biggest opportunities exist in simply better understanding how humans think.

The best selling book “Thinking, Fast and Slow” by Daniel Kahneman and leading industry advocates such as Rory Sutherland show us the potential that still exists in creating products that better understand the psychology involved in purchasing decisions.  As a “headline” that encapsulates the intriguing way humans think, the book title “Predictably Irrational” by Dan Ariely perfectly describes the baffling logic that we as humans employ when making decisions.

Yet despite our belief that we have evolved to a level of sophistication in our thinking, our consumer behaviour consistently demonstrates how our brains are hard wired to cut corners that can misdirect our choices in predictable ways. Understanding these strange and sometimes amusing phenomenon that take place in the human brain represent fantastic opportunities for better UX and more effective e-commerce experiences

Product Managers are employing ever more sophisticated psychological techniques within their customer journey and the efficiency at which they can relieve consumers of their surplus cash accelerates. Regardless of the sophistication of the consumer, these techniques strike right at the essence of how almost every human thinks and can exploit and manipulate the most educated and experienced individual.

Daniel Kahneman talks of the 2 systems in the brain “System 1" is fast, instinctive and emotional; "System 2" is slower, more deliberative, and more logical. The problem is that “System 2” is lazy and whenever we can just employ “System 1” we do. This leads us to make more heuristic / irrational decisions that can be exploited by smart purchasing funnels. Loss aversion, reciprocity, social proof, chunking, framing, relative price, decoy effect, scarcity and the Goldilicks principle are all examples of conversion tactics that exploit the “Cognative Biases” within consumer thinking.

An interesting point is that "Systems 1 & 2" area not identical for every person and certain acquired skills & thinking can pass into “System 1” depending on our education and experience ( e.g as a driver we don't think we just drive to the point of almost being on auto-pilot). Now if we consider the current buzzword “big data” ( no e-commerce article would be complete without it) suddenly we know more about our customers to better personalise the experience to maintain dialogue in the “emotional” state of “System 1”.

Knowing how to engage each consumer in their “auto pilot” mode using “big data” and their digital footprint is both exciting ( as a retailer) and a little scary ( as a consumer).

Forget going to the supermarket for milk and buying a whole basket of other stuff, it will be “l popped on Facebook for 5 mins and a chatbot sold me a flight to New York, how the hell did that just happen?”