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Utility and necessity are key to online sustainability

January 13, 2012

In one of my favourite movies, George Clooney, playing retiring army Major Archie Gates, has a few lines in one of my favourite movies that goes something like this:

Archie Gates: What’s the most important thing in life?

Troy Barlow: Respect.

Archie Gates: Too dependent on other people.

Conrad Vig: What, love?

Archie Gates: A little Disneyland, isn’t it?

Chief Elgin: God’s will.

Archie Gates: Close.

Troy Barlow: What is it then?

Archie Gates: Necessity.

Troy Barlow: As in?

Archie Gates: As in people do what is most necessary to them at any given moment. 

 

Let’s face it, necessity is a fundamental that gets lost with the slurry of fun and cool things we can now do online. I was thinking about it while casting my eye over some old ecommerce data over a few glasses of wine the other night.

One report that jumped out at me was one by the Australian Communications & Media Authority (ACMA) from mid last year, which puts some common sense back into some of the hype around eCommerce and even mcommerce.

One table, replicated below, showed that while it was indeed exciting that mcommerce gained significant momentum in the 12 months leading up to June 2011, the vast majority of usage according to Roy Morgan was for banking and paying bills. In fact, only 3% of mobile internet users had actually purchased goods & service with their phone. I’ve seen other data to contest that figure, but the issue is apparent – necessity comes before desire.

The other table that caught my eye showed the propensity of Australians by location to buys goods and services online. It showed that across a number of key categories the difference between remote, regional and city areas. I’ve replicated four of the categories in the table below. You’ll see pretty quickly that Internet users living in remote areas of the country have the highest propensity to purchase travel, personal items (including fashion), household goods and music & video content online.

You might argue that buying travel, fashion and DVDs don’t reflect ‘necessity’ of course, but keep in mind that with Maslow’s hierarchy of needs comes a fluctuating definition of ‘necessity’ depending on one’s circumstances. Here in Australia, we’re doing OK, and for many of these Internet shoppers in remote areas, things like travel, clothing and entertainment have become the thing they need most, and the accessibility that eCommerce provides means that they are much more likely of course to go shopping online where they can instead of driving several hours to the nearest store.

Accessibility in itself is of course a necessity for people in rural and regional areas, which is what really went through

my mind while looking at these figures. The need for the Internet to be accessible provides people with the means to find and acquire things they need and want. In that sense, the utility of ecommerce is the most important thing to people in rural and regional areas.

The implication of necessity in ecommerce and other online technologies is what I hope will steer the next generation of startup businesses. The example above is related to locality, but every market segment has specific elements of necessity that can be met better using online tools.

So for all the startup folk out there, stop trying to build more social networking tools and start trying to deploy [more] business models that make a difference to someone’s life. He or she who provides actual utility to their target audience’s life (In startup speak that is normally phrased “what specific problem are you trying to solve, and for whom?”) in a simple and meaningful way will resound far greater over the next couple of years than any new social sharing tool will.

And the movie? It’s Three Kings, of Course.

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