Going, Going, Gone! e-commerce Erases More Than Paper Money


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Imagine a meeting of Major League Baseball team owners as they collaborate to improve their financial results. You’re in the room. A scrawl of operating statistics covers several flip charts. Alternatives ranging from increasing ticket prices to cutting fan perks are discussed. But at the end of the 10-hour meeting, one option prevails: beginning next season, the pitcher’s mound in every stadium will be moved a modest six inches closer to home plate.

Great excitement follows. Owners can take the results to the bank, and players and fans won’t even notice! How? The executives figure that the shorter distance will make it possible to play a full game in just under three hours, down from the current average of three and a half. They reason that six fewer inches of throwing distance cuts the decision time for a hitter to swing, resulting in more strikeouts. More strikeouts mean less playing time, and less playing time means shorter operating hours for stadiums. (There were about 33,000 strikeouts in 2008.)

Eyes light up as numbers are eagerly keyed into pro-forma spreadsheets on flickering laptop screens. The thirty-minute per game reduction will save millions of dollars of operating expenses for every team. Lower labor and utility costs! Faster fixed charge coverage for expensive stadiums! The savings will drop right to the bottom line!

If you think the boundary-changing idea sounds preposterous, think again. This principle behind this imaginary gambit isn’t fantasy in e-commerce. The difference is that the boundaries are abstract and the money is real—to those receiving it. Want proof? This year, banks are projected to earn $38.5 billion in overdraft charges by shifting a long-assumed boundary called “I accept the charges.” How? According to a recent editorial in The Washington Post (Overdrawn and Uninformed, 9/22/09): “. . . from time to time, you may have found yourself inadvertently making a debit card purchase that exceeds your remaining funds. Alas, the way you may have found out about the overdraft was a notice from your bank, days later, informing you that you owe a $30 service fee. The bank just automatically floated you a small loan and charged you for it without giving you a chance to accept or reject the offer.”

Missed the boundary change? Don’t worry. Thirty-eight and one-half billion dollars in 2009 overdraft fees suggests you’re not alone. The bank extracts money through a silent, virtual ka-ching, with binary 1’s and 0’s flowing to complete the seamless transaction, absent the faces of Jackson and Hamilton. And that’s just the point. Customers don’t attempt to intervene because the experience fails to excite the same area of the brain that real money does—a phenomena that author Jonah Lehrer describes in his book How We Decide. A small transaction-boundary shift yields a $38.5 billion reward—a sensational feat that now has the attention of Congress.

Elsewhere in e-commerce, changing abstract boundaries also keeps fiscal 1’s and 0’s moving from payer to vendor. Ever receive a charge on your credit-card statement for a “trial offer” you didn’t really want? It’s probably because you didn’t remember to “opt out” after you “opted in.” Where, exactly, was boundary for the transaction? It’s clear as mud.

Opt in/opt out. It’s today’s tool of choice for e-commerce boundary changers. Remember Facebook’s Beacon Debacle, in which a man purchased a diamond ring (for his wife?) from overstock.com, and 720 Facebook friends were informed about the transaction? As Christopher Caldwell wrote in The New York Times (“Intimate Shopping,” 12/23/07), “Facebook designed Beacon so that members would be able to “opt out” by clicking a pop-up window. But these windows were hard to see and disappeared very fast. If you weren’t quick on the draw, your purchases were broadcast to the world, or at least to your network . . . Privacy advocates urged that Beacon be made an “opt in” program, which members would have to explicitly consent to join . . . Facebook agreed to this approach. The Beacon fiasco gives a good outline of what future conflicts over the Internet will look like. Whether a system is opt-in or opt-out has enormous influence on how people use it.” No joke. And on how much revenue can be generated, as well.

Of course, boundary changing has as much to do with our (presumably) private information sold to others as with the flow of money. Did you “accept” the data-collection cookie that resides on your hard drive? Better check the Terms of Use. “Increasingly, there are no limits technologically as to what a company can do in terms of collecting information . . . and then selling it as a commodity to other providers,” said Representative Edward Markey in August, 2008.

These examples prove that dollars can be taken and lost in the blurry zone between asking for specific approval to complete a transaction, and simply assuming assent for things that formerly required it. Whether it’s baseball or banking, with scalability, a little boundary shift goes a long, long, way.


  1. Andy, I’ve been busy the past two days or I would have responded sooner.

    What has happened is that we’ve gone from “professional/educated (about products) shoppers/customers” to “uneducated shoppers/customers.’ When I say “uneducated,” I’m not talking about this in a academic way but it refers to the fact that we’ve gone for so many years with clerking instead of salespeople who would teach their customers about the merchandise they were interested in buying.

    The attitude had been that selling could be handled by using off-pricing, two-fers, etc. there was no need to hire and train salespeople. But, this wasn’t just retail salespeople that was thought be not necessary. Manufacturers’ reps went from being Peddlers to peddlers and some had no idea of how the products they sold were used by their customers or their customers. Web sites with erroneous information that could be posted without any need to have the information verified, blogs that could say anything that came to mind even though the blogger knows nothing about what they are writing about. Oh, btw, there are a lot in management who are just as ignorant of what their firms sells or does but they can read numbers?

    Thus, banks, like all types of businesses know that customer/clients are not, have not, been taught what the real story is and, as you wrote, can easily find ways to extract money from the uneducated consumer.

    While the computer does a lot of great things, Newton’s Law is evident here. What it has done is “take the personality” out of things. SKUs have little or no logical numbering system, no POS or inventory control system that I’ve seeked gives a buyer “rate of sale” in a horizontal picture. If you think credit card invoices are difficult to figure out, you should see some invoices that some firms send to customers. The only difference is the size of the fonts used.

    What I don’t understand by those who make the decisions such as you brought up would say if they were victims of the same types of shenanigans they are foisting on their customers/clients?

    When I read in the paper with comments on the things in your article, what comes to mind Learned Hand’s comment during the McCarthy hearing, “Sir, have you no conscience?” (I’m not sure that’s the exact statement, but it’s close.)

    Now, I’ll pose a question to you. Where did attitudes that are causing this come from . . . what influences these business people to go along with this type of thinking?


    Alan J. Zell, Ambassador of Selling, Attitudes for Selling

    You are invited to suggest to your associates, acquaintances, family, friends, customers/clients to read the business articles on our web site to learn why they, like you and I, have something to sell.

  2. Hi Alan: thanks for your question. The Washington Post editorial I cited mentioned that there are no laws that constrain or dictate the boundaries of these fees. Essentially, what bankers and others have discovered is fuzziness in what constitutes a legal transfer from payer to receiver (note I didn’t write buyer to seller. The fact that legal specifications address an infinitesimal number of potential business actions has left obvious room for interpretation. In those situations, one would hope that Party A would be motivated to ask “what is the right thing to do?”

    Whether bankers are ethical in taking an estimated $38.5 billion from a blurry transaction zone isn’t for me to decide. That’s up to Congress.


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