Why E-Commerce Gets Dissed By Retail

Pity poor E-Commerce. It's barely 18 years old, has racked up about $200 billion in revenue last year and still has trouble getting noticed. Consider MasterCard's and Visa's EMV announcements. Both brands set various incentives for retailers if they process 75 percent of their transactions through EMV contact-and-contactless terminals. Of course, what MasterCard and Visa meant was in-store transactions. The idea that an E-Commerce transaction is not a real transaction should be repugnant to any retailer in 2012. But those old prejudices that stores are where serious commerce happens are apparently acceptable.

At a technical level, it's understandable how EMV would fuel a store-only discussion. After all, there are no viable methods widely available today for supporting the chip part of EMV in an E-Commerce or M-Commerce transaction. It's not that easy, though. Online purchases today are still a single-digit percentage of total retail revenue, which the National Retail Federation (NRF) pegged at about $2.5 trillion last year. That helps justify the perception that E-Commerce can be dismissed or at least be shunted aside as its own area.

How many chains today truly embrace the concept of merged channel, where all sales—regardless of channel—are considered equal? We also should remember that no one really knows the size of E-Commerce. Other than a few large, pure-play, publicly traded E-commerce shops (consider the $48 billion in sales that Amazon reported for 2011), most chains are vague about their E-Commerce sales. And the huge number of mom-and-pop E-tail sites, when combined, represent a non-trivial number of E-Commerce sales, almost none of which is included in national estimates.

To be clear, Visa and MasterCard do support E-Commerce. However, it has shades of the old separate but equal attitudes. Words have power, and these statements are carefully phrased. The fact that both brands felt that "transactions" would be universally seen as "brick-and-mortar transactions" reveals much more about the card brands' thinking than they intended.