The Ecommerce Scam
alex.posterous.com
alex.posterous.com
Furthermore, cameras used in the example are quite different -- the more expensive camera shoots 720p video, has optical image stabilization, and a larger display.
Which sounds like one codec chip that is still too new to be a commodity, one routine that takes a lot of time and effort to get really right, and an actually more expensive part. Additionally, the internals for the video might require a more expensive bus going out to the storage device and possible more cache memory to grease the wheels. I'm not having a hard time believing this all adds up to around $100 of parts and design labor. Maybe it doesn't, but it's enough I'd want to see proof of the claim the customer is getting ripped off.
I'm assuming that's where he is going. From his twitter bio: Currently co-founding an ecommerce search company.
1. Title is deceptive, it should have been labeled 'Deceptive Pricing Scam' or 'A need for better product reviews' and not 'E-commerce Scam'. It's a blank statement with no meaning. Almost every website in the electronic shopping sphere offers orders of magnitude better than the brick & mortar alternative, which is zero, with regard to reviews. Additionally, this sort of price problem exists in both traditional retail and online shopping. How is the problem specific to online shopping?
2. Saying that Amazon returns 24,000 hits for Canon Digital Camera as a problem is like saying Google returns 12,400,000 for the same search (which it does). Search is evolving in all areas, not just e-commerce.
3. I'm going to assume that the statement 'no innovation has been made since the 90s' was in specific reference to product review/consumer option entitlement. Leaps and bounds of improvement have been made to user interface, credit card security, guided navigation, payment options, search (believe it or not), scalability, advanced marketing, etc.
E-commerce sites could be much more than electronic mail-order catalogs. Amazon has tapped one dimension with customer reviews, but there's enormous room for improvement.
As Alex points out, the burden is still on the consumer to perform labor-intensive research. We need to change this.
Kallow certainly isn't the ultimate answer, but it's a step in the right direction.
Reduce those margins, and it's possible that the prices paid by savvy shoppers could go up, and the pace of innovation -- exploring the technology/marketing solution space -- go down.
Better to spend money that encourages companies to research more genuinely useful products rather than products that simply may be more marketable because they have a useless extra 2 megapixels.
I would be more confident of your prediction if there were some suppliers/retailers that only sold the high-margin items with "overpriced" bells and whistles. But there aren't: the exact same companies that produce and retail the "good" "valuable" products also make money from related high-margin products for naive and price-to-value-oblivious consumers. And these high-margin products help pay for some of the same shared research/design/marketing costs as support high-value/low-margin products for savvy buyers.
If the article author's goals are met -- the casual consumers now "overpaying" are directed to cheaper products they'll be just as happy with -- the thing you can be sure of is that industry margins will go down. Lower-margin industries have fewer upstarts and slower product cycles, so the idea that "the direction/efficiency of innovation would improve" is dubious at best.