E-commerce Strategies

18 August 2006

By Kellie Tranter

An Australian Overview

Internet Usage

A 2003 report by the National Office for the Information Economy provides detailed statistics in respect of Internet usage in Australia, including the following:

the total number of Internet subscribers in Australia increased to just over 5,000,000 in the first quarter of 2003;
55% of households had Internet access in the second quarter of 2003;
58% of the Australian population had immediate access to the Internet during June 2003;
by June 2002, 70% of businesses with any employees, 80% of businesses with five or more employees, and 90% of businesses with 20 or more employees were online; and
during June 2003, about 28% of Internet users aged over 14 engaged in "online buying or selling related activies".

National Office for the Information Economy, The Current State of Play: Online Participation and Activities, December 2003, available from the NOIE website.

The Borderless Beast

The borderless beast we know as the Internet allows for services and information products to be sold on-line without requiring physical delivery. In both the services and information products areas there is potential for a huge boost in global trade because of on-line activities. Here the business model says sell cross-border because there is no extra infrastructure required.

But the problem with selling cross-border is that you are likely to get a different legal regime in every country where you do business.

When businesses go to their lawyers they are not getting an answer that says "what you want to do is legal or illegal". Instead they hear, "what you want to do is definitely legal here, possibly legal here, almost certainly illegal here". They then have to make a decision about how far they run their business when it may be breaking the law in a second country.

Normally an e-commerce company works out its deal then sets up its business partners, before calling in lawyers who can explain the problems. I am there in the strategy stage so I can help guide and shape the operation in a way that deals with those legal challenges. This early input is particularly valuable when you are looking cross border at jurisdictions which have heavy regulatory impact: Setting it up one way could give you enormous legal problems, whereas setting it up another way could make it almost problem free.

Challenges for the Law

It is clear that the Internet poses a number of significant challenges for the law. Many of these spring from its multi-jurisdictional nature and the very difficult question of the appropriate law or laws to apply to a particular publication or transaction, and there may be important policy considerations flowing from the answers to these questions.

A key difficulty in arriving at appropriate solutions in such a multi-jurisdictional arena is that cooperative policy making is required on an international level. In many cases, lack of standardisation of laws across jurisdictions means that publishers and users alike may be contravening laws of other jurisdictions by conduct that is entirely legal in their "home jurisdiction". Although developments in this respect have so far tended to be relatively haphazard in that individual legislatures (and judiciaries) have simply adopted laws as they see fit on a case-by-case basis, there has been some success on an international and regional level.

The difficulty however lies in achieving a delicate balance between the interlocking and sometimes competing interests of:

users and consumers of online material;
online players: the publishers, businesses and infrastructure providers; and
governments that are anxious to ensure that their sovereignty (and no doubt their treasury) is not diluted.

Inevitably, this is a potent mix of interests, and, to date, many critical legal questions remain unanswered.

Encouraging E-Commerce Consumer and Stakeholder Confidence

This is a general guide for Australian businesses to use when developing an online presence.

Your full contact details, including a street address, will give consumers more confidence. Some may even choose to make contact before making a purchase "just to be sure".
If trust marks or seals are used they should be easy to verify and relevant.
Secure online payments, or the provision of an offline alternative, are vital. Few consumers are prepared to trust their money to an unsecured site.
Terms and conditions should be clearly written and displayed, easily accessible and comply with all state and federal laws.
Products/services should comply with all Australian standards such as product safety standards.
Advertising and any representations made about the product/service should be accurate with no hidden fine print. Consumers do not like surprises where their bank account is concerned. It is important to keep representations made about products/services current.
If prices are displayed, accuracy is the key. For instance consumers should be made aware of which currency is being used.
A reliable complaints handling procedure will also encourage consumer confidence in a business. Noone wants things to go wrong but if a speedy, helpful service is in place the customer's experience should ultimately be a positive one.
Special care should be taken when dealing with a minor: when appropriate, get consent from the child's parent or guardian.
Contact prospective merchants and obtain details of their fees and charges. You need to ascertain the general financial viability of implementing an e-commerce system before you go any further.
Always seek proper legal assistance from a lawyer with expertise in this area.

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