E-Commerce: Mechanisms, Platforms, and Tools 2

C o n t e n t s Learning Objectives Opening Case: Pinterest: A New Kid on the E-Commerce Block ...... 51 Upon completion of this chapter, you will be able to: 1. Describe the major electronic commerce 2.1 Electronic Commerce Mechanisms: An Overview ...... 54 (EC) activities and processes and the mecha- nisms that support them. 2.2 E-Marketplaces ...... 55 2. Defi ne e-marketplaces and list their 2.3 Customer Shopping Mechanisms: components. Webstores, Malls, and Portals ...... 61 3. List the major types of e-marketplaces and 2.4 Merchant Solutions: Electronic describe their features. Catalogs, Search Engines, 4. Describe electronic catalogs, search engines, and Shopping Carts ...... 64 and shopping carts. 2.5 Auctions, Bartering, 5. Describe the major types of auctions and list and Negotiating Online ...... 67 their characteristics. 2.6 Virtual Communities 6. Discuss the benefi ts and limitations of and Social Networks...... 73 e-auctions. 2.7 Virtual Worlds as an Electronic 7. Describe bartering and negotiating online. Commerce Platform ...... 80 8. Describe virtual communities. 2.8 Emerging EC Platforms: Augmented 9. Describe social networks as EC mechanisms. Reality and Crowdsourcing ...... 83 10. Understand virtual worlds and their use in EC. 2.9 The Future: Web 3.0, Web 4.0 11. Describe the emerging technologies of and Web 5.0 ...... 86 augmented reality and crowdsourcing. Managerial Issues...... 88 12. Describe Web 3.0 and defi ne Web 4.0. Closing Case: Madagascar’s Port Modernizes Customs with TradeNet ...... 93 OPENING CASE: PINTEREST: A NEW KID ON THE E-COMMERCE BLOCK Electronic supplementary material The online version of this chapter (doi: 10.1007/978-3-319-10091-3_2 ) contains supplementary material, which is available to An e-commerce site talked about a great deal authorized users since 2011 is Pinterest.

E. Turban et al., Electronic Commerce: A Managerial and Social Networks Perspective, 51 Springer Texts in Business and Economics, DOI 10.1007/978-3-319-10091-3_2, © Springer International Publishing Switzerland 2015 52 2 E-Commerce: Mechanisms, Platforms, and Tools

The Opportunity Yang’s Suggestions Quora Corporation posted a question on its Pinterest is a social bookmarking website where website: “How does Pinterest generate revenue?” users “pin” images on a virtual “pinboard.” The One of the most comprehensive answers received social bookmarking of images has been practiced was provided by “Avid Pinterest User” Yang on the Internet all over the world, for several (2012 ) who presented 13 potential monetization years. The company’s founders saw the business opportunities in four categories: charging adv- potential and the success of similar companies in ertisers (e.g., see Dembosky 2013), charging Brazil and China. Furthermore, they succeeded in e-commerce partners, charging users, and charg- attracting initial venture capital (see Chapter 16 ) ing other B2B partners. Most of these opportuni- to expand the business. For a guide, see Leland ties have existed in EC for years (e.g., charging ( 2013), and for statistics, see Smith (2014 ). for premium services, creating an online retail shop, using an affi liate program, and building a comprehensive advertisement scheme). The Solution Selling Data for Market Research Pinterest is a company that provides virtual pin- and Analysis boards that allow users to organize and share Brave (2012 ) suggested selling customer data images found on the Web (referred to as “pins”). available on Pinterest to retailers who can use ana- The pinned images (“boards”) are organized by lytics, including data mining, to conduct market any category the user wants and placed on a virtual research using this data. Customer data may reveal pinboard, just like on a real bulletin board. For important statistical associations and relationships example, one can collect pictures of sailboats and between consumer behavior, content (e.g., product pin them on one pinboard, with appropriate text recommendations, personalization, ads), and ser- explanation. You can collect decorations for your vices and products provided. These associations home on another pinboard, while you collect can be used for one-to-one relationships and seg- Chinese recipes on a third pinboard. Millions of mentation, as well as for marketing promotions and people create pinboards and anyone can search and advertisements. Retailers can use affi nity modeling view them. You can also add friends to your account and analysis to ascertain relationships so retailers and “follow” them. According to their website, can better understand consumer purchasing behav- ‘Pinterest is a tool for collecting and organizing the ior. This enables optimal marketing communica- things that inspire you’ (see about.pinterest.com/ ). tion strategies . Brave also noted that by pinning For more about what Pinterest is and how it and re-pinning at Pinterest, consumers show their works, see sheknows.com/living/articles/852875/ affi nity to certain themes or specifi c products. pinterest-what-it-is-how-to-use-it-and-why- Brave provided the following types of affi nity data: youll- be-addicted . connection between products and themes, seg- Having many visitors and a rapid growth rate are menting people based on their affi nity to products, necessary but not suffi cient for EC success. Viable or to a collection of products in specifi c themes. business and revenue models are also needed. Other Suggestions for Doing Business The Business and Revenue Models on Pinterest Pinterest does not have a formal revenue model. • Hemley (2012 ) provides 26 different sugges- (The company is privately held and it does not tions in an A-Z guide (e.g., A=Add a Pinterest have to report about such a model to the public.) “Follow” and/or “Pin it” Button; B=Brands It looks as though the company’s current priority and Pinterest; C=Crowdsourcing and so forth) is growth, as expressed in its mission statement. • Hub Spot ( hubspot.com) offers a free e-book Nevertheless, many people speculate about (or titled “How to Use Pinterest for Business” suggest) revenue opportunities for the company, ( offers.hubspot.com/how-to-use-pinterest- some of which are provided next. for- business ). It includes information such as Opening Case: Pinterest: A New Kid on the E-Commerce Block 53

how to create a Pinterest business account and some managerial issues facing the company. how Pinterest works. Representative managerial issues are: • Mitroff ( 2012) suggested using the approach of Zappos Corporation . This approach, which Legal Concerns is called PinPointing , involves product recom- Many people collect images from the Internet to mendations based on what customers pin. build their pinboards (and possibly a brand) with- Pinterest may collaborate with retailers such as out asking permission from the content creators, Zappos to jointly create product recommenda- giving them an attribute, or compensating them. tions. (See pinpointing.apps.zappos.com/ .) Some of the collected material is formally copy- • Wikipedia lists several potential revenue righted; other material may be considered copy- sources at en.wikipedia.org/wiki/Pinterest . righted. A similar problem exists with material • For more suggestions see business.pinterest. used on Facebook or by bloggers. According to com/en/pinterest-guides . Pinterest’s ‘Terms of Use,’ members are “solely responsible for what they pin and repin.” Using Pinterest for Advertising Furthermore, users must have explicit permission and Marketing from the owners of contents to post them. Most of the suggestions cited above, as well as According to Shontell (2012 ), one lawyer deleted suggestions by others, concentrate on advertising all her Pinterest boards out of fear of copyright and marketing opportunities. For comprehensive violation. Note that Pinterest places all blame and coverage, see Cario ( 2013 ), Hayden ( 2012 ), and potential legal fees on its users (who may have to Miles and Lacey (2012 ). For how retailers can pay the legal fees incurred by Pinterest also). use Pinterest, see Jopson and Kuchler (2013 ). Pinterest has taken several steps to alleviate the legal concerns of users (e.g., see Hempel 2012 ). The company is continuously adding measures to Results and Managerial Issues minimize the legal problems. For example, in May 2012, the company added a feature that Pinterest is the fastest growing social network facilitates the attribution of credit to content cre- ever, and according to a marketing service ators. For a discussion, see Hornor (2012 ). (Experian 2012 ), Pinterest is the third most popu- Finally, legal concerns may include dealing with lar social network on the Web, behind Facebook the spammers who are busy on the site. and Twitter (up from 7th place in November 2011). As of July 2013, the total number of Pinterest The Competition users worldwide was 70 million ( smallbusiness. The popularity of Pinterest has resulted in many yahoo.com/advisor/30-reasons-market-business- attempts to clone the company. Since the core pinterest-2014-infographic-184545665.html ). concept is basically image sharing, it may not be Similar reports on this amazing growth rate patentable; therefore, competitors try to jump and popularity are provided by comScore and into niche markets. For example, TripAdvisor other reporting companies. This growth has ( tripadvisor.com ) concentrates on travel. We attracted over $200 million in venture capital in Heart It ( weheartit.com) is a Brazilian company 2012/2013 and generated many suggestions on (operating in the U.S.) that is very similar to money-making possibilities with Pinterest (e.g., Pinterest. An emerging competitor is Fancy see Carr 2012 ; Loren and Swiderski 2012 ). ( fancy.com ), which partnered with Google+ in In January 2014, the valuation of Pinterest 2013. Several companies concentrate on adult was about $3.8 billion. Should the company be entertainment and pornography. Indirect com- able to generate signifi cant revenue, it probably petitors are several Chinese companies that oper- will go to the IPO route, in which case the valua- ate in a culturally different environment (see tion may be much higher. Let us look now at McKenzie 2012). Companies such as Facebook 54 2 E-Commerce: Mechanisms, Platforms, and Tools and Google may initiate a competitive service. Some believe that Pinterest may take business 2 . 1 ELECTRONIC COMMERCE away from both Facebook and Twitter due to its MECHANISMS: AN OVERVIEW better match with the business world. The many EC models and types of transactions presented in Chapter 1 are enabled by different Conclusion mechanisms. To begin with, most B2C applica- tions are conducted on the Internet. In addition, According to Hempel ( 2012 ), Pinterest is more the generic enablers of any information system business oriented than Facebook or Twitter and including databases, networks, security, soft- visitors tend to buy more from there, although the ware and server software, operating systems, latter companies drive more visitors to their sites. hardware (Web servers), and hosting services It seems that Pinterest has some potential benefi ts need to be established. Added to the above are for small businesses (e.g., designers). Many com- the specifi c EC mechanisms presented in this panies already use Pinterest to derive benefi ts chapter, such as electronic markets, shopping (e.g., see the Etsy case in Chapter 3 and Volpe carts, e-catalogs, and support services such as 2012 ). However, these applications do not cur- payment and order fulfi llment. In addition to of rently provide any revenue to Pinterest. The suc- all of the above, there are different methods for cess of Pinterest will be determined by its revenue executing EC, such as buying at a fi xed price or model and the company’s profi tability. at an auction, and each method has a different support mechanism. Finally, there are the Web Sources: Based on Brave (2012 ), Carr (2012 ), 2.0-based collaboration and communication Hempel ( 2012 ), Jopson and Kuchler ( 2013 ), mechanisms (e.g., Twitter) and special platforms Loren and Swiderski ( 2012), Yang ( 2012 ), and such as the one used by Pinterest. In this chapter, Volpe (2012 ). we describe the major EC mechanisms so that you will be able to understand their uses in the forthcoming chapters. LESSONS LEARNED FROM THE CASE Pinterest is a social network that connects people who fi nd interesting images on the EC Activities and Support Web. At the same time, Pinterest is a plat- Mechanisms form on which several activities of EC can be supported. For example, companies can EC activities are divided into six categories, build pinboards that promote their brands. which are listed on the left side of Figure 2.1 . Pinterest can be used as a platform for Each activity is supported by one or more EC facilitating innovations via idea-generation mechanisms, which are shown on the right and sharing. Pinterest is a derivative of side of Figure 2.1 , along with the section number Web 2.0 and social media and as such, it is in this chapter where they are presented. a new mechanism for supporting EC. Other Additional mechanisms exist for special activi- social media mechanisms that are covered ties, such as payment (Chapter 11 ), security in this chapter are social networks and vir- (Chapter 10 ), and order fulfi llment (Chapter tual worlds; different types of social media 12). Also, standard IT technologies such as tools such as blogs, microblogs, and wikis, RFID, EDI, and extranets are described in are discussed in Online File W2.1. This Online Tutorial T2. chapter also covers the traditional mecha- In the next section, we describe online nisms of EC such as marketplaces, mer- markets. Before we do this, however, we will chant software, and auctions. describe what happens during a typical purchas- ing process. 2.2 E-Marketplaces 55

EC Activities EC Mechanism engine may be useful. Buyers usually like to com- pare prices; therefore, an online price comparison Electronic Markets service can be useful (now available on smart- (Section 2.2) phones). Some sellers (e.g., American Airlines, Presence and Amazon.com) provide price comparisons showing Discovery, Find Information, Storefronts, Malls, competitors. If not satisfi ed, the buyer may aban- Compare, Portals don the seller’s site. If satisfi ed, the buyer will place Analyze (Section 2.3) the chosen item in a virtual shopping cart (or bag). The buyer may return to the seller’s catalog to Trading E-catalogs Buy, Sell, choose more items. Each selected item is placed in Search Engines Exchange Shopping Carts the shopping cart. When the item selection is com- Directories pleted, the buyer goes to a checkout page, where a E-maps shipment option is selected from a menu (e.g., stan- Communicate, (Section 2.4) dard, next day). Finally, a payment option is Collabrate, Learn selected. For example, newegg.com allows you to E-auctions pay by credit card, PayPal, check after billing, in installments, and so on. After checking all the (Section 2.5) details for accuracy, the buyer submits the order. Entertainment This process is illustrated in Figure 2.2 . Web 2.0 Tools, The major mechanisms that support this pro- Social Network Services cess are described in Sections 2.3 and 2.4 of this chapter. The place where buying and selling (Section 2.6) Improve e-marketplace, Performance occurs is called an which we introduce next. Virtual Worlds SECTION 2.1 REVIEW QUESTIONS Other Activities: (Section 2.7) Recruit, 1. List the major EC activities. Customer 2. List the major EC mechanisms. Service Payment Order Processing 3. Describe the online purchasing process Security, Support

(Chs. 9–11) 2 . 2 E-MARKETPLACES Figure 2.1 The EC activities–mec hanism connection Electronic markets play a central role in the digital economy, facilitating the exchange of The Online Purchasing Process information, goods, services, and payments. In executing the trading process, e-marketplaces Customers buy goods online in different ways. The create economic value for buyers, sellers, market most common is purchasing from catalogs at fi xed intermediaries, as well as for society at large. prices. Sometimes prices may be negotiated or dis- Markets (electronic or otherwise) have four counted. Another way to determine price is dynamic major functions: (1) enabling transactions to pricing, which refers to non-fi xed prices such as occur by providing a meeting place for buyers those in auctions or stock (commodity) exchanges. and sellers; (2) enabling the fl ow of relevant The process starts with a buyer logging on to a information; (3) providing services associated seller’s website, registering (if needed), and enter- with market transactions, such as payments and ing an online catalog or the buyer’s “My Account.” escrow; and (4) providing auxiliary services such E-catalogs can be very large, so using a search as legal, auditing, and security (see Table 2.1 ). 56 2 E-Commerce: Mechanisms, Platforms, and Tools

Figure 2.2 The buying process in e-markets 2.2 E-Marketplaces 57

Electronic Markets end, a back end, intermediaries and other business partners, and support services such as security and The electronic market is the major venue for payments. A brief description of each follows: conducting EC transactions. An e-marketplace (also called e-market, virtual market, or mar- ketspace ), is an electronic space where sellers and buyers meet and conduct different types of transac- • Customers. More than 2 billion Internet tions. Customers receive goods and services for users worldwide are potential buyers of money (or for other goods and services, if bartering goods and services offered on the is used). The functions of an e-market are the same Internet. These consumers are looking as those of a physical marketplace; however, com- for bargains, customized items, collec- puterized systems tend to make electronic markets tors’ items, entertainment, socialization, much more effi cient by providing more updated and more. The social customers have information and various support services, such as more power than regular customers. rapid and smooth executions of transactions. They can search for detailed informa- EC has increased market effi ciency by expe- tion, compare prices, bid, and sometimes diting and or improving the functions listed in negotiate. Buying organizations are also Table 2.1. Furthermore, EC has been able to sig- customers, accounting for more than nifi cantly decrease the cost of executing these 85% of EC volume and value activities. functions. • Sellers. Millions of webstores are adver- The emergence of electronic marketplaces , tising and offering a huge variety of especially Internet-enabled ones, has changed items. These stores are owned by com- several of the processes used in trading and sup- panies, government agencies, or indi- ply chains. In many cases, these changes, driven viduals. Every day it is possible to fi nd by technology, have frequently resulted in: new offerings of products and services. Sellers can sell directly from their web- sites or from public e-marketplaces. • Lower the search time for information • Products and services. One of the and cost to buyers major differences between the market- • Reduced information misunderstanding place and the marketspace is the possi- between sellers and buyers ble digitization of products and services • Possible reduction in the time gap between in a marketspace. Although both types purchase and possession of physical prod- of markets can sell physical products, ucts purchased online (especially if the they can also sell digital products , product can be digitized) which are goods that can be transformed • The ability of market participants to into a digital format. However, in mar- be in different locations while trading ketspaces, buyers can buy digitized online products online, anytime and from any • The ability to conduct transactions at place in seconds, and receive the pur- any time (24/7) from any place. chased goods instantly. In addition to the digitization of software, music, and airline tickets, it is possible to digitize dozens of other products and services, Components of and the Participants as shown in Online File W2.2. Digital in E-Marketplaces products have different cost curves than those of physical products. In digitiza- The major components and players in a mar- tion, most of the costs are fi xed, and ketspace are customers, sellers, products and ser- variable costs are very low. Thus, profi ts vices (physical or digital), infrastructure, a front 58 2 E-Commerce: Mechanisms, Platforms, and Tools

will increase rapidly as volume increases, • Intermediaries. In marketing, an inter- once the fi xed costs are paid. mediary is typically a third party that • Infrastructure. The marketspace infra- operates between sellers and buyers. structure includes electronic networks, Intermediaries of all kinds offer their databases, hardware, software, and more. services on the Web. Some intermedia- • Front end. Customers interact with a tion is done manually; many kinds are marketspace via a front end. The major done electronically. The role of these components of the front end can include electronic intermediaries is frequently the seller’s portal, electronic catalogs, a different from that of regular intermedi- shopping cart, a search engine, an auc- aries (such as wholesalers or retailers), tion engine, a payment gateway, and as will be seen throughout the text, espe- all other activities related to placing cially in Chapters 3 and 4 . For example, orders. online intermediaries create and manage • Back end. All the activities that are the online markets. They help match related to order aggregation and fulfi ll- buyers and sellers, provide escrow ser- ment, inventory management, purchas- vices, and help customers and/or sellers ing from suppliers, accounting and complete transactions. Physical inter- fi nance, insurance, payment processing, mediaries may be eliminated and their packaging, and delivery are done in what jobs be computerized (fully or partially) is termed the back end of the business. as described next.

Table 2.1 Functions of a market Matching of buyers and sellers Facilitation of transactions Institutional infrastructure • Determination of product offerings. • Communication • Legal Product features offered by sellers Posting buyers’ requests Commercial code, contract Aggregation of different products Posting RFQs law, dispute resolution, intellectual property protection • Search ( buyers for sellers, and • Mechanisms: provide catalogs, etc. • Regulatory sellers for buyers) Rules and regulations, Price and product information compliance, monitoring, Organizing bids and bartering enforcement Matching the seller’s offerings with the buyer’s preferences • Price discovery • Logistics • Discovery Process determination of prices Delivery of information, goods, or Provides market information Enabling price comparisons services to buyer (e.g., about competition, government regulations) • Others • Settlement Providing sales leads Transfer of payments to sellers Providing W2.0 tools Escrow services Arranging auction • Trust Credit system, reputations, rating agencies such as Consumer Reports and the BBB, special escrow and online trust agencies Sources : Based on Bakos (1998 ), E-Market Services (2006 ), and the authors’ experiences Case 2.1: EC Application: How Blue Nile Inc. Is Changing the Jewelry Industry 59

Disintermediation start-up in 1999. The company is a textbook case and Reintermediation of how EC fundamentally changes the way that an industry conducts its business. For information Intermediaries usually provide three types of about the company, see quotes.wsj.com/NILE/ services: (1) they provide relevant information company-people . about demand: supply, prices, and trading requirements. (2) they help match sellers and buyers; and/or (3) they offer value-added services The Opportunity such as transfer of products, escrow, payment arrangements, consulting, or assistance in fi nding Using the B2C EC model – eliminating the need a business partner. In general, the fi rst and second for physical stores – Blue Nile was able to offer types of services can be fully automated, and thus discounts of 35%, yet it became profi table in a it is likely to be assumed by e-marketplaces, info- short time. (The cost of operating online stores is mediaries, and portals that provide free or low- very low.) fee services. The third type requires expertise, What are the critical success factors of the such as knowledge of the industry, the market, the company? First, they offer large discounts. For products, and the technological trends, and there- example, you can purchase a $6,000 diamond fore can only be partially automated. for $4,000, which attracts more customers. Intermediaries that provide only (or mainly) Second, Blue Nile offers a huge selection of the fi rst two types of services may be eliminated; diamonds online and provides more informa- this phenomenon is called disintermediation . tion about diamonds than many physical jew- An example is the airline industry and its push elry stores can offer. In May 2012, Blue Nile for selling electronic tickets directly by the air- offered about 60,000 round diamonds that could lines. Most airlines require customers to pay $25 be used to build a customized engagement rings. or more per ticket processed by an employee via No physical store can offer so many diamonds. telephone. This results in the disintermediation Third, the company provides educational guides of many travel agents from the purchasing as well as independent (and trusted) quality rat- process. In another example, discount stockbro- ings for every stone. A customer can look over kers that only execute trades manually are disap- a rating scale for cut, clarity, color, and so on, pearing. However, brokers who manage electronic and then compare prices using Bizrate ( bizrate. intermediation are not only surviving but may com ) and other online stores. Note that there also be prospering (e.g., priceline.com and expe- usually is a 30-day 100% money-back guaran- dia.com in the travel industry and tdameritrade. tee (now an online industry standard). This pro- com in stock trading). This phenomenon, in vides customers with a comfort level of trust which disintermediated entities or newcomers against fraud and gives Blue Nile a competitive take on new intermediary roles, is called reinter- edge against stores that take the stones back but mediation (see Chapter 3 ). charge a fee. The site provides live chat, pay- Disintermediation is more likely to occur in ment options, build-your- own engagement ring, supply chains involving several intermediaries, gift ideas, and much more. The company has as illustrated by Case 2.1. a mobile app for iPhone and Android users ( m.bluenile.com ).

CASE 2.1: EC APPLICATION: HOW BLUE NILE INC. IS CHANGING The Results THE JEWELRY INDUSTRY Blue Nile’s sales reached $129 million in 2003 (a Blue Nile Inc. ( bluenile.com ), a pure-play online 79% increase over 2002), with a net income of e-tailer that specializes in diamonds and jewelry, $27 million. In 2013, net sales were $450 million capitalized on online diamond sales as a dot-com ( marketwatch.com/story/blue-nile-announces- 60 2 E-Commerce: Mechanisms, Platforms, and Tools fourth-quarter-and-full-year-2013-financial- Questions results-2014-02-06 and investor.bluenile.com/ 1. Using the classifi cation of EC (Section 1.2 , releasedetail.cfm?ReleaseID=823747). The Chapter 1 ), how would you classify the Blue company became the eighth-largest specialty jew- Nile’s business? elry company in the United States and went pub- 2. In what ways is the company changing its lic in 2004 (one of the most successful IPOs of industry? that year). While sales fell during the economic 3. What are the critical success factors of the downturn in 2008, in 2009 and 2010 the company company? rallied again with a 2.3% growth. 4. Research Blue Nile’s affi liate marketing pro- In order to sell $450 million in jewelry in 1 grams. Write a report. Include how this pro- year, a traditional retail chain needs over 300 gram helps Blue Nile. stores and over 3,000 employees. Blue Nile does 5. Competition between Blue Nile and Amazon. it with one 10,000-square-foot warehouse and com will continue to increase. In your opin- 193 employees. The company also bypasses the ion, which one will win? (Visit their websites industry’s complex supply chain, in which a dia- and see how they sell jewelry.) mond may pass through fi ve or more middlemen 6. Compare the following three sites: diamond. before reaching a retailer. Because they are a com , ice.com , and bluenile.com . large buyer, they can deal directly with original 7. Follow the performance of Blue Nile’s stock suppliers. since 2003 (symbol: NILE, go to money.cnn. As a result, some 465 small jewelry stores com). Compare it to the performance of the closed in 2003 alone. The survivors specialize in market average. What is your conclusion? custom-crafted pieces. Large traditional compa- 8. Find the payment options at Blue Nile when nies compete with Blue Nile by offering online you shop there. merchandise, becoming click-and-brick multi- channel organizations, and by streamlining their supply chain and customer service. Types of E-Marketplaces The future seems to be clear, as can be seen in Bloomberg (2004 ), in the case of Roger The term marketplace differs once it referred to Thompson, a small jeweler in Lambertville, the Web. It is sometimes refers to as e-market- New Jersey, who said, “Anyone with half a brain place or marketspace. We distinguish two types who wants a diamond engagement ring will go of e- marketplaces: private and public. to the Internet.” In the meantime, grooms who propose with Blue Nile rings can save $3,000 to Private E-Marketplaces $5,000. Private e-marketplaces are those owned and oper- Note that, the competition in the jewelry busi- ated by a single company. Starbucks.com , dell. ness is very intense, not only from jewelry retail- com , target.com , and united.com sell from their ers (both offl ine and online, e.g., bidz.com ; that websites. Private markets are either sell-side or now also sell fashion and apparel, fi ne art, and buy-side. In a sell-side e-marketplace, a com- accessories), but also from general e-tailers such pany, (e.g., net-a-porter.com or cisco.com ) will as overstock.com and amazon.com . sell either standard or customized products to individuals (B2C) or to businesses (B2B); this Sources: Based on Rivlin ( 2007 ), Bloomberg type of selling is considered to be one-to-many . (2004 ), BusinessWeek Online (2006 ), en.wikipe- In a buy-side e-marketplace, a company pur- dia.org/wiki/Blue_Nile_Company , and blue- chases from many potential suppliers; this type of nile.com/about-blue-nile (both accessed March purchasing is considered to be many-to-one , and 2015). it is a B2B activity. For example, some hotels buy 2.3 Customer Shopping Mechanisms: Webstores, Malls, and Portals 61 their supplies from approved vendors that come Webstores may target an industry, a location, or to its e-market. Walmart ( walmart.com ) buys a niche market (e.g., cattoys.com ). The webstore goods from thousands of suppliers. Private mar- may belong to a manufacturer (e.g., geappliances. ketplaces can be open only to selected members com and dell.com), to a retailer (e.g., amazon. and are not publicly regulated. We will return to com and wishlist.com.au ), to individuals selling the topic of private e-marketplaces in Chapters 3 from home, or to another type of business. Note (B2C) and 4 (B2B). that companies that sell services (such as insur- ance) may refer to their webstores as portals . Public E-Marketplaces A webstore includes tools known as merchant Public e-marketplaces are in many cases B2B software (available in a suite), that are necessary markets. They often are owned by a third party for conducting online sales. The most common (not a seller or a buyer) or by a group of buying or tools are an electronic catalog; a search engine selling companies (referred to as a consortium ), that helps the consumer fi nd products in the cata- and they serve many sellers and many buyers. log; an electronic shopping cart for holding items These markets also are known as exchanges (e.g., until checkout; e-auction facilities where auc- a stock exchange). They are open to the public tions take place; a payment gateway where pay- and usually are regulated by the government or ment arrangements can be made; a shipment the exchange’s owners. Public e- marketplaces center where shipping arrangements are made; (for B2B) are discussed in detail in Chapter 4 . and customer services, which include product and warranty information and CRM. SECTION 2.2 REVIEW QUESTIONS 1 . D e fi ne e-marketplace and describe its Microsites attributes. A microsite is a webpage(s) that acts as a supple- 2. What is the difference between a physical mar- ment to a primary website, but is external to it. It ketplace and an e-marketplace (marketspace)? expands on the content by adding editorial, com- 3. List the components of a marketspace. mercial, or educational material. 4. Defi ne a digital product and provide fi ve examples. 5. Describe private versus public e-markets. Electronic Malls

In addition to shopping at individual webstores, 2 . 3 CUSTOMER SHOPPING consumers can shop in electronic malls (e-malls). MECHANISMS: WEBSTORES, Similar to malls in the physical world, an e-mall MALLS, AND PORTALS (online mall) is an online shopping location where many stores present their catalogs. The mall Several kinds of interactions exist among sellers, charges commission from the sellers based on buyers, and e-marketplaces. The major B2C their sale volume. For example, the Emall of mechanisms are webstores (storefronts) and Maine ( emallofmaine.com ) is an e-mall that Internet malls. Let us elaborate on these, as well aggregates products, services, and providers in the as on the gateways to e-marketplaces – portals. state of Maine. It contains a directory of vacation services and product categories and the vendors in each category. When a consumer indicates the cat- Webstores egory he or she is interested in, the consumer is transferred to the appropriate independent web- A webstore ( or storefront) refers to a single store . This kind of mall does not provide any company’s (or individual seller’s) website where shared services; it is merely a directory. Other products and services are sold. malls, such as choicemall.com , or etsy.com (see 62 2 E-Commerce: Mechanisms, Platforms, and Tools

Chapter 3) do provide some shared services. Both yahoo.com and ebay.com operate electronic enterprise information portals . Corporate malls. portals appear in different forms and are described in detail in Chapters 4 and 5 . Examples of e-commerce portals can be Web (Information) Portals found at ibm.com/software/products/ en/websphere-portal-family . A portal is an information gateway that is used in • Patient Portals . Several companies e-marketplaces, webstores, and other types of offer patient portals. For example, EC (e.g., in e-collaboration, intrabusiness, and Quality Systems, Inc. ( qsii.com) and e-learning). A Web (information) portal is a mypop.healthcarepartners.com . single point of access, through a Web browser, to Quality Systems provides software for critical business information located inside and health care providers so they can offer outside of organizations. This information is information for their patients (in English, aggregated and is accessed and presented in a Spanish and Chinese) via a portal. consistent way. Many Web portals personalize for Patients have access to their personal users. Note that wireless devices are becoming information. The portal also allows com- portals for both enterprise and Internet access. A munication between patients and their schematic view of a portal is shown in Figure 2.3 . caregivers. Called ‘Next Gen Patient Information sources (external and internal) are Portal the portal increases patients’ shown on the left side, and integrated and process engagement in their healthcare. data are shown as output on the monitor’s screen. • Publishing portals. These portals are Web portals offer some generic services such as intended for communities with specifi c e-mail, news, stock prices, entertainment, shop- interests and involve relatively little cus- ping capabilities, and so forth. tomization of content; however, they pro- vide extensive online search features and Types of Portals some interactive capabilities. Examples Portals can assume many shapes. One way to dis- of such sites are techweb.com and tinguish among them is to look at their content, zdnet.com . which can vary from narrow to broad, and their • Mobile portals. Mobile portals are community or audience, which also can differ. portals that are accessible from mobile The major types of portals are as follows: devices (see Chapter 6 for details). An increasing number of portals are acces- sible via mobile devices. One example • Commercial (public) portals. These of such a mobile portal is i-mode, which popular portals offer content for anyone. is described in Chapter 6 . Although they can be customized by the • Voice portals. Voice portals are web- user, they are still intended for broad sites, usually portals, with audio inter- audiences and offer fairly routine con- faces. This means that they can be tent, some in real time (e.g., a stock ticker accessed by a standard telephone or a and news). Examples of such sites are cell phone. AOLbyPhone ( aolbyphone. yahoo.com , google.com , and msn.com . com ) is an example of a service that • Corporate (private) portals. Corporate allows users to retrieve e-mail, news, and portals provide organized access to inter- other content from AOL via telephone. nal corporate information. These also It uses both speech recognition and are known as enterprise portals or text-to-speech technologies. Products by 2.3 Customer Shopping Mechanisms: Webstores, Malls, and Portals 63

Figure 2.3 How a portal works

The Roles and Value of Intermediaries companies such as Microsoft’s Tellme in E-Marketplaces ( tmaa.com/microsoftand247inc.html ) and Nuance OnDemand ( nuance.com/ Intermediaries, such as brokers, play an impor- for-business/by-solution/customer- tant role in commerce by providing value-added service-solutions/solutions- services/ activities and services to buyers and sellers. hosted-contact-center-solutions/ There are several types of intermediaries. The index.htm ) offer access to the Internet most well-known intermediaries in the physical from telephones, as well as tools to world are wholesalers and retailers. build voice portals. Voice portals are The two major types of online intermediaries especially popular for 1–800 numbers are brokers and infomediaries. (enterprise 800 numbers) that provide self-service to customers with informa- Brokers tion available in Internet databases (e.g., A broker in EC is a person or a company that fi nding your balance or last deposit made facilitates transactions between buyers and sellers. at your bank). The following are different types of brokers: • Knowledge portals. Knowledge por- tals enable easy access to knowledge by knowledge workers and facilitate • Trading. A company that aids online collaboration. trading (e.g., E*TRADE or eBay). • C ommunities’ portals. These are usu- • Organization of online malls. A com- ally parts of online communities. They pany that organizes many online stores are dedicated to some theme and may be in one place (e.g., Yahoo! Shopping and sponsored by a vendor such as Sony. Alibaba.com). • An example is 17173.co-- portal for • Comparison agent. A company that helps gamers in China. consumers compare prices, encourages 64 2 E-Commerce: Mechanisms, Platforms, and Tools

One example of such software is osCom- user comments, and provides customer merce, which is open-source software (see service at different stores (e.g., Bizrate oscommerce.com ). Another example can be for a great diversity of products and seen at smallbusiness.yahoo.com/ecommerce . Hotwire, Inc. for travel-related products and services. • Shopping aids provider. A company Electronic Catalogs that helps online shopping by providing escrow, payments, shipping, and secu- Catalogs have been printed on paper for genera- rity (e.g., PuntoMio, Inc.). tions. Recently, electronic catalogs on a DVD (or • Matching services. These services CD-ROM) and on the Internet have gained popu- match entities such as jobs to applicants, larity. Electronic catalogs (e-catalogs) consist and buyers to sellers. of a product database, directory, and a presenta- tion function. They are the backbone of most e-commerce sales sites. For merchants, the Distributors in B2B objective of e-catalogs is to advertise and pro- A special type of intermediary in e-commerce is mote products and services. For the customer, the B2B e-distributor . These intermediaries con- the purpose of such catalogs is to locate informa- nect manufacturers with business buyers (cus- tion on products and services. E-catalogs can be tomers), such as retailers (or resellers in the searched quickly with the help of search engines. computer industry). E-distributors aggregate Some offer tools for interactions. For an exam- product information from many manufacturers, ple, see Infi nisys ‘Change My Image’ for sometimes thousands of them, in the e- distributor’s Microsoft Windows at en.infi nisys.co.jp/prod- catalog. An example is W.W. Grainger ( grainger. uct/cmimage , and for Macintosh at en.infi nisys. com ). The distributor buys the products and then co.jp/product/cmimage_mac . This product sells them, as supermarkets do. permits a buyer to insert his/her photo and then change the hairstyle and color in the photo, so SECTION 2.3 REVIEW QUESTIONS the buyer can see his/her look with a new hair- 1. Describe webstores and e-malls. style. E-catalogs can be very large; for example, 2. List the various types of webstores and Amazon.com’s catalog contains millions of e-malls. products. 3. What are Web (information) portals? List the Most early online catalogs were static presen- major types. tations of text and messages from paper catalogs. 4. Describe e-distributors. However, online catalogs have evolved to become more dynamic, customizable, and integrated with selling and buying procedures, shopping carts, 2 . 4 MERCHANT SOLUTIONS: order taking, and payment. E-catalogs may ELECTRONIC CATALOGS, include video clips. The tools for building them SEARCH ENGINES, are being integrated with merchant software AND SHOPPING CARTS suites and Web hosting tools (e.g., see smallbusi- ness.yahoo.com/ecommerce ). Examples of a To enable selling online, a website usually needs simple product catalog can be seen at JetPens EC merchant server software. Merchant soft- ( jetpens.com and Starbucks Store ( store.star- ware includes several tools and platforms. Such bucks.com ). software offers basic tools that include electronic Although used only occasionally in B2C catalogs, search engines, and shopping carts; all are commerce, customized catalogs are used fre- intended to facilitate the electronic trading process. quently in B2B e-commerce. 2.4 Merchant Solutions: Electronic Catalogs, Search Engines, and Shopping Carts 65

EC Search Activities, Types, and Engines puter fi les (e.g., using copernic.com or windows.microsoft.com/en-us/win- Search activities are popular in EC, and many dows7/products/features/windows- tools for conducting searches are available. A search ). Searching for documents is study by Stambor (2010 ) published in Internet done by looking through all the infor- Retailer revealed that 94% of shoppers conduct mation that is available on the user’s research online before making any purchase, and PC. A simple example is the ability to 61% use a search engine when shopping online. search all fi les related to your e-mail Consumers may search inside one company’s archive. A search also can be extended catalog to fi nd a product or service, or use Google to photos, USB ports, and Word or Bing to fi nd companies that sell the product documents. For details, see pcmag. they need. Here we describe only the essentials com/encyclopedia/term/41175/ for EC search. For a video illustration, see desktop-search . “Google Commerce Search” (2009) by Google+ Your Business (2:15 minutes) at youtube.com/ watch?v=gj7qrotOmVY. To read publications on electronic research and e-commerce at the All search types discussed above are accom- Research at Google website, see research. plished by using search software agents. google.com/pubs/EconomicsandElectronic Commerce.html. Let us now look at three major Search Engines types of searches. Customers tend to ask for information (e.g., requests for product information or pricing) in Types of EC Searches similar ways. This type of request is repetitive, The three major types of EC searches are Internet/ and answering such requests manually is costly. Web search, enterprise search, and desktop Search engines deliver answers economically search. and effi ciently by matching questions with fre- quently asked question (FAQ) templates, which respond with “canned” answers. In general, a search engine is a computer program that can Internet/Web Search. This is the most access databases of Internet or intranet resources, popular search that involves looking for search for specifi c information or keywords, and any documents on the Web. According report the results. to Pew Research Internet Project Google and Bing are the most popular search ( pewinternet.org ) and other statistical engines in the U.S. Baidu is the primary search sites (e.g., see infoplease.com/ipa/ engine in China. Portals such as Yahoo! and MSN A0921862.html ), fi nding information is have their own search engines. Special search one of the most frequent activities done engines organized to answer certain questions or on the Web. search in specifi ed areas include ask.com , Enterprise Search. An enterprise search mamma.com , and looksmart.com . Thousands describes the search for information of different public search engines are available within the fi les and databases of an orga- (see searchengineguide.com ). Each of these nization. For example, Google has a tools excels in one area. These can be very spe- powerful Enterprise Search Appliance cialized with different capabilities. In addition, (known as GSA). many companies have their own enterprise search Desktop Search. A desktop search engines. For example, Endeca Commerce from involves a search of a user’s own com- Oracle ( oracle.com/technetwork/apps- tech/ commerce/endeca-commerce/index.html) is a 66 2 E-Commerce: Mechanisms, Platforms, and Tools special search engine for online catalogs. For The technology lets users see what terms like more information about training in Oracle Endeca “red high-heeled pumps” mean. It also created Commerce, see education.oracle.com/pls/web_ algorithms that evaluate how well red pumps prod-plq- dad/ou_product_category.getPage? match specifi c clothing the consumer plans to p_cat_id=338 . buy. Visual search is popular when conducted on mobile devices. Voice-Powered Search To ease searching, especially when using a smart- Social Network Search Engines phone, Google introduced a voice-powered tool Social network search, also known as social (Google Voice Search; google.com/insidesearch/ search is a class of online search engines that features/voicesearch/index-chrome.html ) that help people fi nd material about social networking allows you to skip the keyboard altogether. The activities, such as in user generated content, dis- fi rst product was included as part of iPhone’s cussion groups, or recommendations. Like all mobile search application. It allows you to talk search engines, these organize, prioritize, and fi l- into your phone, ask any question, and the results ter search results. Examples of such search of your query are provided on your iPhone. In engines are: socialmention.com – ‘real time addition to asking questions by talking into your social media search and analysis,’ yoname.com – iPhone, you can also listen to search engine ‘people search across social networks, blogs, and results. For an example of Apple’s intelligent per- more,’ bing.com/explore/social . For an over- sonal assistant, “Siri,” see apple.com/ios/siri and view, see the blog “Social is the Next Search” imore.com/siri . available at info.gigya.com/rs/gigya/images/ Gigya-Social-The-Next-Search.pdf . For a dis- Video and Mobile Search cussion of the benefi ts and concerns, see en. There are dozens of dedicated search tools and wikipedia.org/wiki/Social_search . sites that will search for videos and other images. Some of them, such as bing.com/videos will search across multiple sites; others, such as YouTube will search only for their own content. Shopping Carts For a list of over 40 sites (compiled in 2010) see thesearchenginelist.com/video-search . For An electronic shopping cart (also known as another example, the search engine Bing has a shopping bag or shopping basket) is software that search feature that allows you to listen to more allows customers to accumulate items they wish than 5 million fulllength songs. to buy before they arrange payment and check out, much like a shopping cart in a supermarket. Mobile Search The electronic shopping cart software program Several search engines are adapted to mobile automatically calculates the total cost, and adds search. Notable are Google, Yippy, and Yahoo! tax and shipping charges when applicable. Customers can review and revise their shopping Visual Shopping Search Engine list before fi nalizing their purchase by clicking Visual search means looking for information that on the “submit” button. is presented visually (photos, images, etc.) For an Shopping carts for B2C are fairly simple (visit overview, see scholarpedia.org/article/Visual_ amazon.com to see an example), but for B2B, a search. This technology can be used to support shopping cart may be more complex. Shopping e-commerce. For example, google.com/ cart software is sold or provided free to store shopping provides a visual search engine based builders as an independent component outside a on machine learning and computer vision that merchant suite (e.g., see networksolutions. focuses on consumer products. com/e-commerce/index-v3.jsp – ‘create an 2.5 Auctions, Bartering, and Negotiating Online 67 online store now, zippycart.com , and easycart. com). It also is embedded in merchants’ servers, 2 . 5 AUCTIONS, BARTERING, such as smallbusiness.yahoo.com/ecommerce . AND NEGOTIATING ONLINE Free online shopping carts (trials and demos) are available at volusion.com and 1freecart.com ; One of the most interesting market mechanisms powered by MyFreeCommerce.com. For shop- in e-commerce is the electronic auction. Auctions ping cart applications for Facebook, see ecwid. are used in B2C, B2B, C2C, G2B, and G2C. com/facebook-app.html and the Ecwid app page on Facebook at facebook.com/ecwid . D e fi nition and Characteristics Product Confi guration (Self Customization) An online auction is an electronic space where A key characteristic of EC is the ability to sellers and buyers meet and conduct different self- customize products and services, as done types of transactions. This market mechanism by dell.com , nike.com , or jaguarusa.com . uses a competitive process where a seller solicits Manufacturers like to produce customized prod- consecutive bids from buyers (forward e-auctions) ucts in economical and rapid ways so that the or a buyer solicits bids from sellers (reverse price of their products will be competitive. e-auctions). A wide variety of online markets qualify as auctions using this defi nition. Prices Questions and Answers Online are determined dynamically by the bids. Auctions, Intelligent search engines can answer users’ an established method of commerce for genera- questions. A leading engine is ask.com, a subsid- tions, deal with products and services when con- iary of IAC. As of 2009, Ask.com had over 300 ventional marketing channels are ineffective or million questions and answers in its database (see ineffi cient. For example, e-auctions can expedite billhartzer.com/pages/askcom-unveils- the clearance of items that need to be liquidated database- of-300-million-questions-and- or sold quickly. Rare coins, stamps, and other answers ). The Q&A service matches answers collectibles are frequently sold at e-auctions. from the database to questions users ask. For There are several types of auctions, each with details, see ask.com and answers.ask.com . A its own specialties and procedures. (For coverage, competing engine is answers.com , a question see en.wikipedia.org/wiki/Online_auction_ and answer (Q&A) site, which comprises wiki- business_model .) Auctions can be conducted on answers.com . Wiki Answers is a community- public auction sites, such as ebay.com, or on pri- generated social knowledge Q&A platform vate auction sites, which may be by invitation available in several languages. People ask ques- only. For example, the state of New York periodi- tions on the platform and the community answers cally auctions old vehicles from its fl eet on eBay. them. Another similar platform is answers. wikia.com/wiki/Wikianswers . Dynamic Pricing SECTION 2.4 REVIEW QUESTIONS 1. List and briefl y describe the dimensions by One major characteristic of auctions is that they which electronic catalogs can be classifi ed. are based on dynamic pricing. Dynamic pricing 2. List the benefi ts of e-catalogs. refers to prices that are not fi xed, but are allowed 3. Describe an electronic shopping cart. to fl uctuate, and are determined by supply and 4. Describe voice- and vision-related search demand. In contrast, catalog prices are fi xed, as engines. are prices in department stores, supermarkets, 5. What is self-customization? and most webstores. 68 2 E-Commerce: Mechanisms, Platforms, and Tools

Dynamic pricing appears in several forms. to an IBISWorld report, e-commerce and Internet Perhaps the oldest forms are negotiation and auction industry sales are expected to increase to bargaining, which have been practiced for many 10% to $278 billion in the U.S. in 2013 (from generations in open-air markets. The most popu- $219 billion in 2011). The annual growth rate of lar today are online auctions. the industry is expected to increase at a rate of 11.6% in the 5 years to 2013 (between 2007 and 2012 was 10.4%) (IBISWorld 2012 , 2013 ). Traditional Auctions Versus Electronic auctions (e-auctions) are similar E-Auctions to offl ine auctions except that they are conducted online. E-auctions (or online auctions) have been Traditional, physical auctions are still very popu- in existence since the 1980s over LANs (e.g., for lar. However, the volume traded on e-auctions is fl owers; see Saarinen et al. 2006 ). Host sites on signifi cantly larger and continues to increase. In the Internet, which were started in 1995, serve as addition, person-to-person auctions are done brokers, offering services for sellers to post their mostly online. goods for sale and enabling buyers to bid on those items. Limitations of Traditional Offl ine Auctions Major online auction sites, such as eBay (see Traditional offl ine auctions, regardless of their Online File W2.3), offer consumer products, type, have several limitations. They usually last electronic parts, artwork, vacation packages, air- only a few minutes, or even seconds, for each line tickets, and collectibles, as well as excess item sold. This rapid process may give potential supplies and inventories that are being auctioned buyers little time to make a decision, so they may off by businesses. Another type of B2B online decide not to bid. Therefore, sellers may not get auction is used to trade special types of commod- the highest possible price; bidders may not get ities, such as electricity transmission capacities what they really want, or they may pay too much and gas and energy options (e.g., see energyauc- for the items. Additionally, in many cases, the tionexchange.com ). Furthermore, conventional bidders do not have much time to examine the business practices that traditionally have relied goods before placing a bid. Bidders have diffi - on contracts and fi xed prices increasingly are culty learning about auctions and cannot com- converted into auctions with bidding for online pare what is offered at each location. Bidders procurements. must usually be physically present at auctions; For a comparison of 10 online auction thus, many potential bidders are excluded. sites (2014), see online-auction-sites.topten- Similarly, it may be diffi cult for sellers to reviews.com . move goods to an auction site. Commissions are fairly high because a physical location must be rented, the auction needs to be advertised, and an Types of Auctions auctioneer and other employees need to be paid. Electronic auctioning removes these drawbacks. It is customary to classify auctions into the fol- lowing major types based on how many buyers Electronic Auctions and sellers are involved. The Internet provides an infrastructure for execut- ing auctions electronically at lower cost, with a One Buyer, One Seller wide array of support services, and with many In this confi guration, one can use negotiation, more participating sellers and buyers than physical bargaining, or bartering. The resulting price will auctions. Individual consumers and corporations be determined by each party’s bargaining power, can both participate in this rapidly growing and supply and demand in the item’s market, and very convenient form of e-commerce. According (possibly) business environment factors. 2.5 Auctions, Bartering, and Negotiating Online 69

One Seller, Many Potential Buyers 2003, bidders pushed the bid from $30,000 to In this confi guration, the seller uses a forward $250,100. The highest winning bid was in 2012, auction, which is an auction where a seller enter- by an anonymous bidder, in the record-setting tains bids from multiple buyers. (Because for- amount of $3,456,789. However, in 2014, the ward auctions are the most common and highest bid was $2.2million. In addition to ben- traditional form, they often are simply called efi ting the needy, the auction provides an auctions.) The four major types of forward opportunity for people (with money) to meet auctions are English and Yankee auctions, in Mr. Buffett. which bidding prices increase as the auction pro- gresses, and Dutch and free-fall auctions, in One Buyer, Many Potential Sellers which bidding prices decline as the auction pro- Two popular types of auctions in which there is gresses. Each of these can be used for either liq- one buyer and many potential sellers are reverse uidation or for market effi ciency. auctions (tendering) and name-your-own-price auctions. Example: Warren Buffet’s Annual Power Lunch Auctions Reverse Auctions Every year, Warren Buffet, the famous U.S. When there is one buyer and many potential sell- investment guru, has an auction with the prize ers, a reverse auction (bidding or tendering being a lunch with him; the winner may also system) is in place. In a reverse auction, the buyer bring along up to seven friends. The winner places an item he or she wants to buy for a bid (or pays big money for the honor. The money is tender ) on a request for quote (RFQ) system. donated to a charity called the Glide Foundation, Potential suppliers bid on the item, reducing the which helps the poor and homeless in San price sequentially (see Figure 2.4 ). In electronic Francisco. In the past, Buffett charged $30,000 bidding in a reverse auction, several rounds of per group. Since July 2003, Buffett has placed bidding may take place until the bidders do not the invitation on an online auction (eBay). In reduce the price any further. The winning supplier

Figure 2.4 The reverse auction process 70 2 E-Commerce: Mechanisms, Platforms, and Tools is the one with the lowest bid (assuming that only Because most bidders will receive nothing in price is considered). Reverse auctions are primar- return for their paid bids, some observers have ily a B2B or G2B mechanism. (For further dis- stated that the fee spent on the bid is actually cussion and examples, see Chapter 4 , including equivalent to a lottery or wager. The auctioneer its opening case). receives income both in the form of the fees col- lected for each participant bidder as well as in the The Name-Your-Own-Price Model form of a commission for the winning bid. Priceline.com pioneered the name-your-own- Examples of penny auction companies are us. price model. In this model, a would-be buyer madbid.com and quibids.com/en. At 100auc- specifi es the price (and other terms) that he or she tionsites.com , you can fi nd a list of several penny is willing to pay to any willing and able seller. auction companies. Some companies allow the For example, Priceline.com ( priceline.com ) auction’s unsuccessful bidders to use all their presents consumers’ requests to sellers, who fi ll bidding fees toward a purchase of items at regular as much of the guaranteed demand as they wish or slightly discounted prices. Users need to be at prices and terms requested by buyers. The sell- careful of scams. For additional information, see ers may come up with counter offers managed by en. wikipedia.org/wiki/Bidding_fee_auction . Priceline. Alternatively, Priceline.com searches Several other innovative auctions are available. its own database that contains the participating vendors’ lowest prices and tries to match supplies with requests. Priceline.com asks customers to Benefi ts and Limitations guarantee acceptance of the offer if it is at or of E-auctions below the requested price by giving a credit card number. This is basically a C2B model, although E-auctions are becoming important selling and some businesses also use it. buying channels for many companies and indi- viduals. E-auctions enable buyers to access goods Many Sellers, Many Buyers and services anywhere auctions are conducted. When there are many sellers and many buyers, Moreover, almost perfect market information is buyers and their bidding prices are matched with available about prices, products, current supply sellers and their asking prices based on the quanti- and demand, and so on. These characteristics ties on both sides. Stocks and commodities markets provide benefi ts to all. are typical examples of this confi guration. Buyers and sellers may be individuals or businesses. Such Benefi ts of E-Auctions an auction is also called a double auction . The auction culture seems to revolutionize the way customers buy, sell, and obtain what they want. A listing of the benefi ts of e-auctions to sellers, Penny Auctions buyers, and e-auctioneers is provided in Table 2.2 .

A bidding fee auction, also called a penny auc- Limitations of E-Auctions tion, is a new type of online forward auction in E-auctions have several limitations. The most which participants must pay a small nonrefund- signifi cant limitations are minimal security, the able fee each time they place a bid (usually in possibility of fraud, and limited participation. small increments above the previous bid). When the time expires, the last participant to have Minimal Security placed a bid wins the item and also pays the fi nal Some of the C2C auctions conducted on the bid price, which is usually signifi cantly lower Internet are not secure because they are done in than the retail price of the item. For a tutorial, see an unencrypted (or poorly protected) environ- the video titled “BidBidSold Penny Auction ment. This means that credit card numbers can be Site Tutorial” (2:23 minutes) at youtube.com/ stolen during the payment process. Payment watch?v=ngr2kJcnAr4 . methods such as PayPal ( paypal.com) can be 2.5 Auctions, Bartering, and Negotiating Online 71

Table 2.2 Benefi ts of e-auctions Benefi ts to sellers Benefi ts to buyers Benefi ts to E-auctioneers • Increased revenues from • Opportunities to fi nd unique • Higher repeat purchases. broadening bidder base and items and collectibles marketresearch.com found that auction shortening cycle time. Can sites, such as eBay, tend to garner higher sell anywhere globally repeat-purchase rates than the top B2C sites, such as Amazon.com • Opportunity to bargain • Entertainment. Participation in • High “stickiness” to the Web site (the instead of selling at a fi xed e-auctions can be entertaining tendency of customers to stay at sites price. Can sell at any time and exciting (e.g. virtual live longer and come back more often). and conduct frequent auction site tophatter.com ) Auction sites are frequently “stickier” auctions than fi xed-priced sites. Stickier sites generate more ad revenue for the e-auctioneer • Optimal price setting • Convenience. Buyers can bid • Easy expansion of the auction business determined by the market from anywhere, even using a (more buyers, more mobile device; they do not have information) to travel to a physical auction place • Sellers can gain more • Anonymity. With the help of a customer dollars by offering third party, buyers can remain items directly (saves on the anonymous commission to intermediaries; also, physical auctions are very expensive compared to e-auctions) • Can liquidate large quantities • Possibility of fi nding bargains, quickly. for both individuals and • Improved customer organizations relationship and loyalty (in the case of specialized B2B auction sites and electronic exchanges)

used to solve the problem (see Chapter 10 ). In on internet fraud in general, see fraud.org/learn/ addition, some B2B auctions are conducted over internet-fraud and for information for sellers, highly secure private lines. see fraud.org/component/content/article/2- uncategorised/62-seller- beware . Lately, several Possibility of Fraud people have warned about fraud on penny auctions In many cases, auction items are unique, used, or sites. For examples of scams, see tomuse.com/ antique. Because the buyer cannot see and touch penny-auction-fraud-scam-cheat-bidders . the items, the buyer may receive something differ- ent than she (or he) had in mind. In addition, prod- Limited Participation ucts may be defective. Buyers may also commit Some auctions are by invitation only; others are fraud (e.g., by receiving goods or services without open only to dealers. Limited participation may paying for them). Thus, the fraud rate in e-auctions be a disadvantage to sellers, who usually benefi t is relatively high. For a discussion of e-auction from as large a pool of buyers as possible. Buyers fraud and fraud prevention, see fraud.org/scams/ also may be unhappy if they are excluded from internet-fraud/online- auctions. For information participation. 72 2 E-Commerce: Mechanisms, Platforms, and Tools

Impacts of Auctions be very effective. Representative bartering web- sites include u-exchange.com – ‘Trade anything, Because the trade objectives and contexts for Pay nothing,’ swapace.com – ‘Swap anything for auctions are very diverse, the rationale behind anything,’ and barterdepot.com . The typical auctions and the motives of the different bartering process works like this: First, the com- participants for setting up auctions are quite dif- pany tells the bartering exchange what it wants to ferent. The following are some representative offer. The exchange then assesses the value of the impacts of e-auctions. company’s products or services and offers it cer- tain “points” or “bartering dollars.” The company Auctions as a Mechanism can use the “points” to buy the things it needs to Determine a Price from a participating member in the exchange. Given their characteristics, auctions create a mar- Bartering sites must be fi nancially secure; oth- ket where prices are determined. This is espe- erwise, users may not have a chance to use the cially true in markets for unique or rare items. points they accumulate. (For further details, see Typical examples are fi ne art or rare stamp auc- virtualbarter.net and barternews.com .) tions. For example, wine collectors can fi nd a global wine auction site at winebid.com . Online Negotiating Auctions and Social Networks Some social networks enable auctions (e.g., see Dynamic prices also can be determined by nego- Internet Exercise #3). tiation . Negotiated pricing is commonly used for expensive or specialized products. Negotiated prices also are popular when large quantities are Online Bartering purchased. Much like auctions, negotiated prices result from interactions and bargaining among Bartering, the exchange of goods and services, sellers and buyers. Negotiation also deals with is the oldest method of trade. Today, it is done terms, such as the payment method, timing, and primarily between organizations. The problem credit. Negotiation is a well-known process in the with bartering is that it is diffi cult to match trad- offl ine world (e.g., in real estate, automobile pur- ing partners. Businesses and individuals may use chases, and contract work). A simple peer-to- peer classifi ed ads to advertise what they need and (P2P) negotiation can be seen at ioffer.com . For what they offer in exchange, but they still may more on negotiation in P2P money lending, see not be able to fi nd what they want. Intermediaries the ZOPA and Prosper cases in Online File W7.1. may be helpful, but they are expensive (20–30% Online (electronic) negotiation may be more commissions) and very slow. effective and effi cient than offl ine negotiation. E-bartering (electronic bartering) – barter- ing conducted online – can improve the matching SECTION 2.5 REVIEW QUESTIONS process by attracting more partners to the barter. 1 . D e fi ne auctions and describe how they work. In addition, matching can be done faster, and as a 2. Describe the benefi ts of e-auctions over tra- result, better matches can be found. Items that are ditional (offl ine) auctions. frequently bartered online include offi ce space, 3. List the four major types of auctions. storage, and factory space; unused facilities; and 4. Distinguish between forward and reverse labor, products, and banner ads. (Note that auctions. e- bartering may have tax implications that need 5. Describe the “name-your-own-price” auc- to be considered.) tion model. E-bartering is usually done in a bartering 6. Describe penny auctions. exchange , a marketplace where an intermediary 7. List the major benefi ts of auctions to buyers, arranges the transactions. These exchanges can sellers, and auctioneers. 2.6 Virtual Communities and Social Networks 73

8. What are the major limitations of auctions? Table 2.3 Types of virtual communities 9. List the major impacts of auctions on Community type Description markets. Transaction and Facilitate buying and selling 10. Defi ne bartering and describe the advantages other business Combines an information portal with of e-bartering. activities an infrastructure for trading. Members are buyers, sellers, intermediaries, etc., 11. Explain the role of online negotiation in EC. who are focused on a specifi c commercial area (e.g., fi shing) Purpose or No trading, just exchange of 2 . 6 VIRTUAL COMMUNITIES interest information on a topic of mutual interest. Examples: Investors consult AND SOCIAL NETWORKS The Motley Fool ( fool.com ) for fi nancial advice; music lovers go to A community is a group of people with mp3.com common interests who interact with one another. Relations or Members are organized around certain A virtual community is one where the interac- practices life experiences. Examples: ivillage. com caters to women and seniornet. tion takes place over a computer network, mainly com is for senior citizens. Professional the Internet. Virtual communities parallel typical communities also belong to this physical communities, such as neighborhoods, category. Examples: aboutus.org/ clubs, or associations, but people do not meet Isworld.org is a space for information systems faculty, students, and face-to-face. Instead, they meet online. Virtual professionals communities offer several ways for members to Fantasy/role Members share imaginary interact, collaborate, and trade (see Table 2.3 for playing environments. Examples: sports types of virtual communities). fantasy teams at espn.com see games. yahoo.com , horseracegame.com Social networks Members communicate, collaborate, create, share, form groups, entertain, Characteristics of Traditional and more. Facebook is the leader Online Communities and Their Virtual worlds Members use avatars to represent Classifi cation themselves in a simulated 3-D environment where they can play games, conduct business, socialize, Most virtual communities are Internet-based, and fantasize about whatever they like known also as Internet communities . Hundreds of thousands of communities exist on the Internet, and the number is grow- ing rapidly. Pure-play Internet communities Classifi cations of Virtual may have thousands, or even hundreds of mil- Communities lions of members. By early 2014 (its 10th anni- Virtual communities can be classifi ed in several versary), Facebook had grown to about 1.23 ways. billion members around the world (see busi- nessweek.com/articles/2014-01-30/ Public Versus Private Communities facebook-turns-10-the-mark- zuckerberg- Communities can be designated as public , mean- interview ). This is one major difference from ing that their membership is open to anyone. The traditional purely physical communities, which owner of the community may be a privately held usually are smaller. Another difference is that corporation (e.g., Twitter), public for profi t, or offl ine communities frequently are confi ned to non-profi t organizations. Many of the large social one geographic location, whereas only a few networks, including Facebook, belong to the online communities are geographically con- public for profi t category. fi ned. For images of virtual communities, do a In contrast, private communities belong to a Google search. company, an association, or a group of companies 74 2 E-Commerce: Mechanisms, Platforms, and Tools and their membership is limited to people who work is Facebook. LinkedIn is a business- meet certain requirements (e.g., work for a par- oriented network. ticular employer or work in a particular profes- sion). Private communities may be internal (e.g., The Size of Social Network Sites only employees can be members), or external Social network sites are growing rapidly, with (for customers). some having over 100 million members. For example, in late 2013, Pinterest had 70 million Classifi cation Categories members. The typical annual growth of a suc- Another option is to classify the members as cessful site is 40–50% in the fi rst few years and traders, players, just friends, enthusiasts , or 15–25% thereafter. For a list of the major friends in need . A more common classifi cation sites (including user counts), see leveragenew- recognizes six types of Internet communities: (1) agemedia.com/blog/social-media-infographic transaction, (2) purpose or interest, (3) relations and en.wikipedia.org/wiki/List_of_social_ or practices, (4) fantasy, (5) social networks, and networking_websites . (6) virtual worlds. The most popular type of virtual community A Global Phenomenon today is the social network, the subject of our Although Facebook, Pinterest, Twitter, next section. Google+, and other social networks attract the majority of media attention in the United States, they also have many members in other coun- Online Social Networks and Social tries. Other country-based social network sites Network Sites are proliferating and growing in popularity worldwide. For example, renren.com , weixin. Let us fi rst defi ne social networks and then look qq.com and us.weibo.com are large communi- at some of the services they provide and ties in China; mixi.jp has been widely adopted capabilities. in Japan; and vk.com in Europe (primarily in Russia). Dutch users have embraced hyves.nl ; A D e fi nition and Basic Information and Nasza Klasa ( nk.pl ) has captured Poland. As you may recall, in Chapter 1 we defi ned a Hi5.com, a social network (now part of Tagged) social network site as a company, such as has been popular in Latin America, the U.S., Facebook, that provides free Web space and South America, and Europe. Migente.com is an tools for its community members to build pro- English language site geared toward the fi les, interact, share, connect, and create and Hispanic community. Additionally, previously publish content. popular communication and community ser- A list of the characteristics and capabilities of vices have begun implementing social network- social networks was provided in Section 1.3 of ing features. For example, the Chinese instant Chapter 1 . messaging service qq.com became one of the largest social networking services in the world once it added profi les and made friends visible Social Network Services to one another. Finally, Cyworld conquered the Korean market by adding ‘buddies.’ Note that, Social network services (or sites) are companies international entrepreneurs, inspired by the suc- that host social communities. They are also cess of the largest social network sites and their known as social networks . capabilities, have created their own local clones Social networks appear in a variety of forms; of successful U.S. companies. Information about the most well-known, mostly social-oriented net- the magnitude of social networks is changing 2.6 Virtual Communities and Social Networks 75 rapidly; therefore, to get the most up-to-date Business-Oriented Public Social data, go to alexa.com and comscore.com . Networks

Representative Capabilities and Services Business-oriented social networks, also known Provided by Social Network Sites as professional social networks, are social networks Social network sites provide many capabilities whose primary objective is to facilitate business. and services such as: The prime example here is linkedin.com , which provides business connections and enables recruiting and fi nding jobs. Another example is craigslist.org , the largest classifi ed ad site, • Users can construct a Web page where which offers many social-oriented features (see they present their profi le to the public. Case 2.2 later in this section). Another example • Users can create a circle of friends who is The Brain Yard, a place for executives to fi nd are linked together. news, knowledge and contacts. Finally, doxim- • The site provides discussion forums (by ity.com is a medical network for U.S. physicians subgroup, by topic). and health care professionals. Businesses are • Photo, video, and document viewing using business social networks to advertise their and sharing (streaming videos, user- brands as well as making and enhancing con- supplied videos) are supported. tacts globally. • Wikis can be used to jointly create documents. Example of a Business-Oriented • Blogs can be used for discussion, dissem- Social Network ination of information, and much more. Originating in Germany, xing.com is a business • These sites offer community e-mail and network that attracts millions of executives, sales instant messaging (IM) capabilities. representatives, and job seekers from over 200 • Experts can be made available to answer countries (2014 data). The site offers secure ser- member queries. vices in 16 languages. According to xing.com • Consumers can rate and comment on and the authors’ experiences, users can visit the products and services. site to: • Online voting may be available to poll • Establish new business contacts and fi nd sales member opinions. trends. • The site may provide an e-newsletter. • Promote themselves professionally to • The site supports conference (group) employers. chatting, combined with document and • Identify experts that can give their advice on image sharing. problems and opportunities (for a fee or for • Message and bulletin board services are free). available for posting information to • Participate in or organize meetings and groups and individuals on the website. events. • The site provides storage for content, • Develop and grow a network of contacts. including photos, videos, and music. • Control the level of privacy and ensure that • Users can bookmark self-created their personal data are protected. content. • Keep up-to-date with industry groups. • Users can fi nd other networks, friends, or topics of interest. Some Capabilities of Business-Oriented Networks With Web 2.0 tools, companies can engage users These capabilities can make social networks in new innovative ways (for an example, see user-friendly. Online File W2.4). More direct communication 76 2 E-Commerce: Mechanisms, Platforms, and Tools is achieved by offering additional ways for con- Finally, there are over 50 billion page views per sumers to engage and interact among them- month. For more statistics, see alexa.com/ selves and with organizations. For example, a siteinfo/craigslist.org and siteanalytics.com- company can: pete.com/craigslist.com/#.Uw27nfmICm4 . According to Alexa.com, Craigslist is the elev- enth most visited site in the United States. In addition, Craigslist features over 100 • Encourage consumers to rate and topical discussion forums with more than 200 comment on products and services. million user postings. Every day, people from • Allow consumers to create their own 700 local sites in 70 countries worldwide check topic areas and build communities classifi ed ads and interact on forums. Craigslist (forums) around shared interests possi- is considered by many as one of the few web- bly related to a company’s products. sites that could change the world because it is • Hire bloggers or staff editors who can lead simply a free social-oriented, popular, and use- discussions about customer feedback. ful notice site. Although many other sites offer • Provide incentives such as sweepstakes free classifi eds, no other site comes close to and contests for customers to get Craigslist. involved in new product (service) design and marketing campaigns. • Encourage user-made videos about products/services and offer prizes for • It gives people a voice. winning video ads. • It is consistent and champions down-to- • Provide interesting stories in earth values. e-newsletters. • It illustrates simplicity. • It has social-networking capabilities. • It can be used for free in most cases (you can post free ads, except for business; for rent, or for sale ads in a few large An interesting business-oriented company cities; some employment ads; and for that uses classifi ed ads is craigslist.org , which is adult and therapeutic services). described in Case 2.2. • It is effective and well visited.

CASE 2.2: EC APPLICATION: CRAIGSLIST: THE ULTIMATE For more information, see craigslist.org/ ONLINE CLASSIFIED COMMUNITY about/factsheet . Users cite the following reasons for the If you want to fi nd (or offer) a job, housing, goods popularity of Craigslist: and services, social activities, romance, advice, As an example of the site’s benefi ts, we and much more in over 700 local sites in 13 lan- provide the personal experience of one of the guages, and in more than 70 countries worldwide authors, who needed to rent his condo in Long (2014 data), go to Craigslist ( craigslist.org ). The Beach, California. The usual process to get the site has much more information than you will condo rented would take 2–4 weeks and $400 to fi nd in newspapers. According to their website, $700 in newspaper ads, plus ads in local online Craigslist receives 80 million new classifi ed ads sites for rental services. With Craigslist, it took every month. Each month there are more than 60 less than a week at no cost. As more people dis- million visitors to the site in the United States cover Craigslist, the traditional newspaper-based alone (see craigslist.org/about/factsheet ). classifi ed ad industry will probably be the loser; Case 2.2: EC Application: Craigslist: The Ultimate Online Classifi ed Community 77 ad rates may become lower, and fewer ads will be 5. What are some of the risks and limitations of printed. using this site? In some cities, Craigslist charges for “help wanted” ads and apartments listed by brokers. In addition, Craigslist may charge for ads with rich Private (or Enterprise) media features. Social Networks

In addition to public-oriented business social Concerns About Craigslist networks such as LinkedIn and Craigslist, there are many private social networks (also called Critics charge that some users post illegitimate or enterprise networks) within an organization. false ads on the site and the Craigslist staff are An example is the opening case in Chapter 1 unable to effectively monitor this practice. Some (Starbucks). Other companies with notable users have complained about questionable ads and internal networks for employees only include scams being posted. Craigslist also attracts crimi- Northwestern Mutual. According to the com- nals seeking to commit fraud by paying with bad pany, they have an internal blog (“Mutualblog”) checks. The anonymity of Craigslist’s users as well and a Yammer account internally, which is used as the lack of ratings encourages unlawful acts. by over 1,000 employees to dialog and make Another concern is that adult services make connections on non-proprietary topics. Private up a signifi cant portion of the total traffi c on the networks are for employees, business partners, site and may involve illegal activities, especially and customers. concerning minors. With the sheer volume of users and ads posted per day, such monitoring is not possible given the modest workforce of only Business Models and Services 40 plus that the site employs (data of 2014). (As Related to Social Networking of September 8, 2010, Craigslist has been trying to control such activities.) Social networking sites provide innovative busi- On the other side, many supporters contend ness models, ranging from customer reviews of that attempts to control Craigslist may simply food and night life in India ( burrp.mumbai. cause users to use other, less-regulated sites. com ), to users who dress up paper dolls that look In China, a company called 58.com Inc. ( 58. like celebrities ( stardoll.com ). New revenue com ) is modeled after Craigslist and provides models are being created almost daily. Although similar information and generates sizeable reve- some generate limited revenue, others succeed. nue and profi ts. The company is listed in the Lately, the Pinterest model has become popular, NYSE under the symbol WUBA. as described in Chapter 7 . Many communities attract advertisers. For Sources: Based on Clark ( 2008 ), Liedtke ( 2009 ), example, vivapets.com attracts pet lovers with and craigslist.org (accessed May 2014). wiki contributions in its attempt to catalog all pet breeds. The site attracts hundreds of thousands of Questions unique visitors per month. Obviously, pet food- 1. Identify the business model used by Craigslist. related vendors are interested in placing ads 2. Visit craigslist.org and identify the social net- there. work and business network elements. Some of the popular social-oriented services are: 3. What do you like about the site? What do you 1 . Xanga.com hosts blogs, photoblogs, and dislike about it? social networking profi les. Users of Xanga are 4. Why is Craigslist considered by some as a site referred to as “Xangans.” Xanga was originally that “could change the world?” launched as a site for sharing book and music 78 2 E-Commerce: Mechanisms, Platforms, and Tools

reviews. Today it is one of the most popular Mobile social networking is especially popu- blogging and networking services, with an lar in Japan, South Korea, and China, generally estimated 10,000,000–100,000,000 million due to better data pricing (fl at rates are wide- users worldwide. Xanga has a very popular spread in Japan). In Japan and South Korea, blogring in Hong Kong, Macao, and where 4G networks offer more bandwidth, the Singapore. (A blogring links together a num- leaders in social networking are mixi.jp and ber of blogs that share mutual interests and Mobage by Dena ( mbga.jp). Numerous other can be searched by subject matter). In 2013 mobile social networking sites have been the company was planning to get involved in launched in Japan. For statistics on the exponen- online gambling. tial growth of mobile social networks, see com- 2 . Digg.com is a community-based website that score.com . takes short reports from members on podcasts, Experts predict that mobile social networks news articles, and videos, which are then voted will experience explosive growth, as evidenced in on by other participants. Digg is available on a 2012. For how social platforms are powering website, iPhone app, and daily e-mail. mobile commerce see Gupta (2011 ).

Mobile Enterprise Networks Several companies have developed (or fully Mobile Social Commerce sponsor) mobile-based social networks. For example, Coca-Cola has a social network that Mobile computing is growing faster than any other can only be accessed by mobile devices. There type of EC computing. According to Bent (2014 ), Coca-Cola employees attempt to infl uence young mobile data traffi c grew 81% (from 820 petabytes people to buy its products. per month in 2012 to 1.5 exabytes per month in 2013). This clearly boosts mobile commerce. Examples of Social Mobile According to The Retail Bulletin (2012 ), 64% of Commerce Applications smartphone consumers used them to shop online. There are several types of social mobile applica- In subsequent chapters, we will discuss many tions. Illustrative examples are provided next. mobile applications. Here we present the basic defi nitions, technologies, and a few examples. Example 1 Coca-Cola created a social network under its Sprite brand (Sprite Yard), which is only acces- Mobile Social Networking sible via cellphones. The network was aimed at the youth market, and members could set pro- Mobile social networking refers to social net- fi les, meet friends, share photos and so on. The working where members chat and connect with idea was to use the site mainly for promoting the one another using any mobile device. Most major brand. To attract visitors, the company offered social networking websites now offer mobile ser- free content (music and video clips). However, vices. According to Protalinski (2012 ), in July the free access requires a PIN code found under 2012 the number of mobile subscribers accessing Coca-Cola bottle lids. This service was discon- Facebook was 543 million out of a total member- tinued in 2013. ship of 955 million. By Q4 2013, Facebook had 945 million mobile users out of a total 1.23 Example 2 billion million monthly active users (see IBM is a leader in social commerce adoption on techcrunch.com/2014/01/29/facebook-is-a-mobile- mobile devices. Following are some examples of ad-company and newsroom.fb.com/Company- IBM’s initiatives according to Taft (2011 ). info ). Some social networking sites offer mobile- • IBM Mobile Connect (formerly IBM Lotus only services (e.g., path.com and javagala.ru ). Mobile Connect) (social media and social Case 2.2: EC Application: Craigslist: The Ultimate Online Classifi ed Community 79

networks building software, abbreviated as Connect) is popular in industry.. Customers mobile messaging app for smartphones. can get immediate access to blogs, wikis, and Users can form groups, send each other other tools. They can also share photos, vid- unlimited images, video and audio media eos, and fi les on major mobile devices (e.g., messages. The company was acquired by Android, BlackBerry, iOS). Facebook in 2014 for around $19 billion. • IBM Connections allows people to generate • Ortsbo.com − Enabler of real-time con- and vote on ideas at work (see ibm.com/con- versational translation mainly in social nections/blogs/SametimeBlog/?lang=en ). media. • The capabilities in IBM Connections 4.0, such as • Droid Translator ( droid-translator. Moderations, or Ideation Blogs, enabled workers tiwinnovations.com ) – Translates to embrace networks of engaged people. phone calls, video chats (e.g., Skype), and text conversations into 29 different Example 3 languages. (For more information, see A poll conducted by travelclick.com in October Petroff 2014 ). 2011 revealed that half of the participating hote- • Tagged.com − A maker of social dis- liers around the globe are investing in mobile covery products that enable people to technologies to support social commerce (see meet and socialize with other people bizreport.com/2011/10/travelclick-hotels-to- through playing games, browsing fea- invest-more-in-mobile-social-marketing.html ). tures, shared interests, and more. You With the current technology, we also see a can share tags, browse profi les, and trend toward sophisticated interactions of Internet exchange virtual gifts. social networks with images, voice, and videos. • Viber.com , line.me/en , etc . – This is expected to be a powerful managerial and Companies that provide free voice and marketing feature in the near future. video calling, etc. for mobile devices and desktops (e.g. Viber for Desktop). • Instagram.com − A free platform for Recent Innovative Tools sharing photos and videos. As a social and Platforms for Social Networking network, it allows for creation of reviews, etc. (Acquired by Facebook in 2012.) A large number of software tools and platforms • Hshtags.com ; (‘A social media search are available for social networking. Well known engine dedicated to hashtags’) –Enables tools are blogs, microblogs, and wikis, which are users to see in real-time, all public con- described in Online File W2.1. Note that the tent related to any keyword and join any capabilities of these tools are changing related public conversation in real time continuously. Here we provide a representative (see digitaltrends.com/social-media/ list of recent innovative tools: new-search-engine-like-google-social- web ).

• Snapchat.com − A mobile photo mes- saging service for “chatting” with friends through photos, videos, and captions Mobile Community Activities “like ‘texting’ with pictures or videos” In many mobile social networks, devices can be (see webtrends.about.com/od/Iphone- utilized to conduct the same activities that are per- Apps/a/What-Is-Snapchat.htm ). formed in a non-mobile confi guration. Customers • Whatsapp.com − According to its web- can even create their own mobile community. site, WhatsApp is a cross-platform free Mobile video sharing, which sometimes is combined with photo sharing, is a new techno- 80 2 E-Commerce: Mechanisms, Platforms, and Tools logical and social trend. Mobile video-sharing the video titled “Philip Rosedale: Second Life, portals are becoming popular (e.g., see myubo. Where Anything Is Possible” (28:31 minutes) at com ). Many social networking sites offer mobile youtube.com/watch?v=lHXXsEtE3b4 . features.

SECTION 2.6 REVIEW QUESTIONS Major Features 1 . D e fi ne virtual communities and describe their characteristics. There are several different types and purposes 2. List the major types of virtual communities. of virtual worlds; however all share the 3. Defi ne social network. following features (compiled from The Virtual 4. Describe mobile social commerce. Policy Network’s ‘A Virtual Worlds Primer’ at 5. List some major social network sites. virtualpolicy.net/resources/virtual-worlds- 6. Describe the global nature of social networks. primer ), and the authors’ experiences: 7. Describe social networking. 8. Describe mobile social networking and commerce • The worlds can be used by many users who access them via online interface 2 . 7 VIRTUAL WORLDS AS AN • The interface is mostly 3D, which is ELECTRONIC COMMERCE more engaging than 2D. PLATFORM • All interactions are in real time from anywhere. A virtual world is a site for online communities • Most of the content is user-generated. It in a computer-generated setting, where users is facilitated by tools provided on the socialize and work with one another through the sites. use of avatars. The creation of objects, jobs, • The virtual world is always in motion, homes, and businesses in the 3D environment, regardless of the presence of its which are owned by their residents, is the founda- residents. tion of these worlds. It is an interactive environ- • Socialization is encouraged. Tools are ment, which is fun and satisfying. Virtual worlds provided for engagement and for creating (also referred to as digital worlds or Metaverse ), groups and socially-oriented activities. usually structured as interactive 3-D virtual envi- ronments, are created for users to inhabit and interact in. Users feel as if they are actually within Additional features are: the environment because they have the ability to • Communication among users can control certain features of the virtual world. include text, graphical icons, visual ges- Virtual worlds, according to Wikipedia, initially tures, video clips, sound, and so forth. appeared in massively multiplayer online games; • Use of avatars is a common way to rep- however, they are not limited to games. Players resent the residents of the virtual worlds. can create a character that travels between build- ings, towns, and even planets and stars as well as conducting activities there. In a virtual world, you can be anyone you want. You can build a dream house, decorate it, have a job, or fl y a spaceship. Avatars For a comprehensive overview, see Malaby (2009 ). For research directions, see Wasko et al. Residents of virtual worlds can represent them- (2011 ). To learn more about Second Life, see selves by 2-D or 3-D images known as avatars. wiki.secondlife.com/wiki/Video_Tutorials , and Avatars are interactive, animated, computerized 2.7 Virtual Worlds as an Electronic Commerce Platform 81

“characters” that are graphical images designed ers a conversational interface to web visitors to look like humans and are programmed to which stimulates human conversation. Nuance’s exhibit people’s behavior. Avatars have unique Natural Language Understanding (NLU) technol- names and can move around. Advanced avatars ogy allows applications like Ask Jess to under- can “speak” and display behaviors such as emo- stand a customer’s intent through an interactive, tions, gestures, and facial expressions. They can text-based chat experience. By understanding be fully automated to act like robots. Avatars are what customers want, Ask Jess makes getting designed to gain the trust of users. Then, they can information on booking, baggage and seating eas- be programmed to perform human tasks. Many ier than navigating pages on a Web site. Jetstar’s companies use avatars as tour guides or to staff Ask Jess virtual assistant is also fully integrated virtual reception desks. For a demonstration of with the company’s existing live chat service, avatars in action, see meez.com . delivering a seamless handover to human support The purpose of avatars is to make the human– when required.” (To ask Jess a question, see computer interface more realistic. Thus, they are jetstar.com/au/en/customer-service.) sometimes referred to as interactive conversa- tional characters. They are being used exten- Example 2: American TESOL sively to support users’ Internet chat with The American TESOL, Teaching English to companies (e.g., Live Chat), representing the Speakers of Other Languages Institute ( american- company’s people. A popular use is the live chat tesol. com/blogger/p=1367) teaches and certifi es with avatars. You ask questions and the avatar, qualifi ed individuals to teach English worldwide. using natural language processing, attempts to The company deploys multiple avatars throughout understand your question. Then, the avatar its website. The avatars provide tips for ESL matches an answer from a database. For an exam- (English as a Second Language) students to help ple, see “Ted”, at tdameritrade.com . Instant- them improve their conversational abilities. Other messaging programs such as google.com/ activities are: hangouts use avatars (e.g., see hangoutapps. • Engaging students with talking avatars com ). Avatars can improve customer satisfaction • Students introducing their avatars in Second and retention by offering personalized, one-to- Life one service. They also can help companies get to • Using avatars in text-to-movie and much know their customers in order to better design more. promotions. For more on avatars you must see For more information see sanako.com . the 2009 movie Avatar .

Example 1: Jetstar Airways Business Activities and Value According to Business Wire (2013 ), Nuance in Virtual Worlds Communications, Inc., announced that Jetstar “has launched a new virtual assistant called ‘Ask Virtual worlds provide an interesting platform for Jess,’ which is based on Nuance Nina Web, an business activities. Businesses compete in virtual intelligent virtual assistant that delivers a human- worlds, just like they do in the real world. Many like, conversational customer service experience. companies and organizations now incorporate Customers simply type their request to Jess, and virtual worlds as a new form of advertising and Jess provides the answers. Jetstar is the fi rst air- sales. line to deploy Nuance Nina Web virtual assistant There are several types of business activities for customer service. The new Ask Jess virtual in virtual worlds: assistant draws on Nuance Nina, an intelligent • Creating and managing a virtual business virtual assistant that leverages innovative technol- (see Terdiman 2008 for guidelines on how to ogy for natural language understanding and deliv- do this) 82 2 E-Commerce: Mechanisms, Platforms, and Tools

• Conducting regular business activities (e.g., gers by giving them information about ground advertising, marketing, collaboration) within transportation, etc. (see abcnews.go.com/ the framework of the virtual world Travel/york-airports-introduce-avatars- • Providing services for those who build, man- assist- passengers/story?id=16957584 ). The age, or make money with virtual properties avatars are human sized. For a demonstration of For additional business activities, see Mahar the avatars in the New York airports, watch and Mahar (2009 ) and Chapter 8 . WNYC’s video titled “Airport Avatar In a cover story in Businessweek Magazine , Demonstration” (47 seconds) at youtube.com/ Hof ( 2006 ) discusses the various opportunities watch?v=tI3YBf36twk. Advanced avatars can for conducting business in Second Life. conduct vocal conversations with passengers Specifi cally, he introduces seven residents who (sometimes in several languages). Similar avatars make substantial amounts of money. These act as guides in some companies, universities, include the Anshe Chung avatar, known as the and tourist attractions. New York airports are “Rockefeller of Second Life.” Her successful working on developing avatars that will allow company buys virtual land from Second Life, customers to ask questions about the airport “develops” it, and sells or rents it globally. (see digitaltrends.com/cool-tech/new-york- For more on business applications for virtual airports-are-installing-virtual-avatars-to- worlds, see knowledge.wharton.upenn.edu/?s= help-visitors ). virtual+worlds . Following is an example of how companies Virtual Shopping use virtual worlds in businesses: You can go shopping with friends while each shopper is located at his or her individual home. Example: Market Research You enter a virtual store in the virtual mall and Starwood Hotels constructed a prototype of its fi nd jeans on sale. Your avatar tries on the jeans Aloft brand hotels before they were built in 2008. (the avatar’s body’s size is the same as yours) and People using Second Life were asked to view the displays it to your friends. If you like it, you may prototype and give the company their opinions on buy the pants online or visit the physical store the model. Then, using the feedback, the com- later. Virtual shopping is gaining popularity (see pany completed the design and built the hotel. Turban et al. 2015 , and Chapter 7 ). Using virtual worlds gives companies a chance One type of virtual shopping is described next. to receive and examine feedback about new prod- ucts or services. This can be crucial because it Trading Virtual Properties gives the companies insight into what the market As you will see in the closing case, trading virtual and customers really want from new products. properties is a very popular activity in Second The 3D presentation helps users better under- Life. Habbo.com (formerly known as Habbo stand products; thus giving companies a competi- Hotel ), a Finnish social networking site for teenag- tive edge. For other potential activities, see Mahar ers, sells more virtual furniture worldwide than the and Mahar (2009 ), Stinton (2013 ), and the clos- giant Swedish retailer IKEA sells actual furniture. ing case of this chapter. There is an increased use The virtual furniture is designed by teens on the of avatars in help desks. site who decorate their Habbo rooms with the fur- nishings. The teen users are buying not only furni- Example ture but also clothes, bags, etc., for their avatars. Avatars guide and advise passengers in airports. As of 2012 you can see avatars acting as greeters SECTION 2.7 REVIEW QUESTIONS in many airports in Europe (e.g., Paris) and the 1 . D e fi ne virtual worlds. U.S. (New York), that are there to help passen- 2. Describe avatars. Why do we use them? 2.8 Emerging EC Platforms: Augmented Reality and Crowdsourcing 83

3. List some business activities in virtual worlds. potential applications. Finally, Wikipedia lists Categorize them by type. many e-commerce related applications of AR. 4. Describe virtual shopping. Example 1: Net-a-Porter This innovative company (Chapter 1 ) is using an 2 . 8 EMERGING EC PLATFORMS: iPhone/iPad app to view an AR ‘shopping AUGMENTED REALITY window.’ As can be seen in the video “Net-A- AND CROWDSOURCING Porter Augmented Reality Shopping Windows” (1:37 minutes) available at digitalbuzzblog.com/ Several technologies are used as platforms that net-a- porter-augmented-reality-shopping- enable innovative EC applications. Here we windows, customers at the company’s physical present two. store can point the mobile device camera at a clothing display (e.g., in the stores or store win- dows), and see a 360 degree view of the clothes. Augmented Reality They also can see presentations at fashion shows, price, availability, and other relevant information. An increasing number of business applications Furthermore, the window shoppers can immedi- use the technology of augmented reality (AR). ately buy the clothing online using their mobile See Marcom on a Dime ( 2010) for more details. device (for the download, see itunes.apple.com/ The term AR has several defi nitions depending ne/app/net-a-porter/id318597939?mt=8 ). on its fi eld of applications. According to Wikipedia, augmented reality is “a live or indi- Example 2: IKEA rect view of a physical, real-world environment IKEA uses AR to show how its furniture can whose elements are augmented (or supple- fi t in your house. For details on this mobile phone mented) by computer-generated sensory input app, see Truong ( 2013) and watch the video such as sound, video, graphics or GPS data” (see “Place IKEA Furniture in Your Home with en.wikipedia.org/wiki/Augmented_reality). Augmented Reality” at youtube.com/watch? Such an arrangement helps people enhance the v=vDNzTasuYEw . sensory perception of reality. The computerized layer can be seen through an application on mobile devices such as smartphones, webcams, or 3D glasses (including 3D TV). Google devel- Crowdsourcing oped Augmented Reality (AR) glasses called ‘Google Glass’ (see Chapter 6 and Bilton 2012 ). Another platform for e-commerce is crowdsourc- For how AR works, see Bonsor (2001 ). Bonsor ing. Crowdsourcing is a platform for collective also explains the relationship of AR to virtual intelligence in e-commerce and social commerce reality . (see the industry website crowdsourcing.org ). Here we present the essentials of the technology. Applications in E-Commerce In Chapter 8 we present the applications that are The major applications in e-commerce are in the based on this technology. areas of advertising and marketing (for details, see Rorick 2012 ), as will be described in Chapter 9 . D e fi nitions and Major Concepts An application in real estate is described in Chapter The term crowd refers to any group of people 3. There are potentially many other areas of such as a group of consumers, employees of a applications. For example, Hayes (2009 ) corporation, or members of a social network who describes 16 business applications, while iPhone- offer expertise. A crowd is frequently referred to ness (2010 ) and Elliott (2009 ) describe more a large group. 84 2 E-Commerce: Mechanisms, Platforms, and Tools

Figure 2.5 The elements of crowdsourcing

Tasks Psychology, Technology, Web Sociology of 2.0 Crowd

Process, Crowd Models Implementations

Applications in Social Gaming mentation issues such as incentives paid to the AR is already used in several applications. participants. According to t-immersion.com/augmented- reality/use-cases/social-augmented-reality- The Process of Crowdsourcing games , social AR gaming is a superb tool for Crowdsourcing can be viewed as a collective generating marketing leads and brand recognition problem-solving or work sharing process, and because of the huge number of players engaged usually is conducted as a Web-based activity. In a in games connected with a product. typical use of crowdsourcing, problems are Crowdsourcing utilizes crowds to collec- broadcast either to a known crowd (e.g., employ- tively execute tasks such as solving problems, ees or business partners) or to an unknown group innovating, or getting large projects completed of participants (e.g., expert problem solvers or by dividing the work among many people. The consumers). The communication usually starts as term was coined by Jeff Howe in June 2006 an open call for solutions (see fi rst step in (Howe 2008 ). In the crowdsourcing process, the Figure 2.6 ). The members of the crowd are orga- initiator recruits a crowd (e.g., customers) to cre- nized as online communities, and members sub- ate content, a cumbersome task (e.g., translating mit individual solutions. The crowd may also Wikipedia articles), or in research and develop- discuss the solutions and may vote for a fi nal ment. This is based on the idea that two heads are short list. Alternatively, the short list is then pri- better than one. The collective intelligence of oritized (e.g., ranked). The fi nal selection can be large groups is assumed to be able to solve com- made by the crowd or by management plex problems at low cost (Sherman 2011 ; (Figure 2.6 ). The winning individuals in the Brabham 2013 ). crowd are well compensated, either monetarily or The basic elements of crowdsourcing are with special recognition. In other cases, the only illustrated in Figure 2.5 . Three elements are rewards may be the satisfaction with a job well involved: the task(s) to be carried out, the crowd, done. The use of crowdsourcing can yield results which is used to work on the task and the models from amateurs or unrecognized professionals. and processes used by the crowd (to execute the task). These elements are connected by features Example related to the tasks and the crowd (such as the In 2008, Starbucks introduced My Starbucks Idea psychology of the crowd), the technologies used ( mystarbucksidea.force.com), a social media (such as idea generation and voting), and imple- site designed to solicit ideas and feedback from 2.8 Emerging EC Platforms: Augmented Reality and Crowdsourcing 85

Crowd members Possible Open call for generate ideas discussions, contributions modifications

Final selection. Evolution by Possible By crowd crowd (voting), or prioritizing of (voting) or by by company candidates management elimination

Figure 2.6 A typical crowdsourcing process

its customers (see opening case in Chapter 1 ). The site was built around four key themes: (1) ideas research project simultaneously. Also, are user generated; (2) users can vote to short list designs of products may be expedited. ideas, discussing them before and/or after the • The contributing crowd may reside vote; and (3) company employees act as “idea within the organization; therefore, partners,” providing answers to questions and talents may be discovered. leading discussions. • By listening to the crowd, organizations The process is visible to the entire Starbucks gain fi rst hand insight into the desires of community. The members can see the status of their customers (or employees). There is each proposal. built-in market research when the crowd Note that crowdsourcing focuses on innovation, is composed of customers. creativity, and the problem-solving capabilities of a • Crowdsourcing can tap into the global crowd organization. An overview of crowdsourcing world of ideas. The crowd may include is provided in BrightSightGroup’s video titled “Jeff business partners, customers, academi- Howe - Crowdsourcing” (3:20 minutes) at youtube. cians, etc., and the members of the com/watch?v=F0-UtNg3ots, also see crowd- crowd can reside in different countries. sourcing.org , Sherman (2011 ) and Crowdsortium • Customers tend to be more loyal if they ( crowdsortium.org ). These specialists have devel- participate in a company’s problem oped best practices for the industry. solving project (see the opening case in Chapter 1 ). Benefi ts of Crowdsourcing The major perceived benefi ts of crowdsourcing include the following:

For additional benefi ts to crowdsourcing, see • Problems can be analyzed or solved at Sherman (2011 ). comparative little cost. (Payment can be determined by the results; however, Uses of Crowdsourcing sometimes there is no monetary pay- in E-Commerce ment, just praise or accolades). There are several EC applications of crowdsourc- • Solutions can be reached quickly since ing – notable is the creation of Wikipedia. Sherman many people work on the needed ( 2011) presents many successful applications; the major ones are described in Chapter 8 . 86 2 E-Commerce: Mechanisms, Platforms, and Tools

SECTION 2.8 REVIEW QUESTIONS 1 . D e fi ne augmented reality. • Enable smarter machines (Gartner 2014 ) 2. Describe how AR can facilitate EC. • Enable much wider bandwidth 3. Defi ne crowdsourcing. • Enable better visualization including 4. List the elements of crowdsourcing. 3-D tools 5. Describe the process of crowdsourcing. • Simplify the use of mobile computing 6. What are the major benefi ts of crowdsourcing? and mobile commerce 7. How is crowdsourcing used in EC?

For additional capabilities see Patel (2013 ). 2 . 9 THE FUTURE: WEB 3.0, WEB 4.0 AND WEB 5.0 Web 3.0 and the Semantic Web One of the major possible platforms of Web 3.0 Web 2.0 is here. What’s next? The answer is a technologies is the Semantic Web. . The term was still-unknown entity referred to as Web 3.0 , the presented by the inventor of the Web, Tim Berners- future wave of Internet applications. Some of the Lee, who visualized the Semantic Web as the plat- desired capabilities of Web 3.0 will be discussed form for making the Web smarter. There is no later in this section. In general, there is optimism standard defi nition of Semantic Web . It is basi- about the future of the use of the Web 3.0 to facil- cally a group of methods that focus on machines itate EC (see siliconangle.com/blog/2013/08/02/ (in contrast with Web 2.0 that focuses on people). the-future-of-ecommerce-with-web-3-0 ). The technology attempts to enable computers to understand the semantics (i.e., the meaning) of information, by using natural language under- Web 3.0: What Does the Future Hold? standing tools. For a video titled “Evolution Web 1.0, Web 2.0 to Web 3.0” (3.58 minutes) see you- Web 3.0 is projected to deliver a new generation tube.com/watch?v=bsNcjya56v8 . of business applications that will see business A similar view regarding the role of the and social computing converge. Web 3.0 could Semantic Web is expressed by Borland (2007 ), change the manner in which people live and work who believes that new Web 3.0 tools (some of as well as the organizations where they work, and which are already helping developers put together it may even revolutionize social networking (see complex applications) will enhance and automate Laurent 2010 ; Aghaei et al. 2012 ). database searches, assist people in choosing According to several experts, Web 3.0 could vacation destinations, and make sorting through have the following capabilities: complicated fi nancial data more effi cient. An experimental Semantic Web browser has been in use lately. This browser enables users to • Make current applications smarter by display data, draw graphs, and make browsing introducing new intelligent features more interactive. (e.g., see w3.org/standards/ • Provide easier and faster interaction, semanticweb). Another example would be collaboration and user engagement “friend-of-a-friend” networks, where individuals • Facilitate intelligent-based powerful in social networks provide data in the form of search engines links between themselves and friends. • Provide more user-friendly application- For a video titled “Web 3.0” (14:25 minutes) creation and human-computer interac- see youtube.com/watch?v=CG9cPtIYy8Y . tion capabilities • Increase the wisdom and creativity of Concerns people The following are a few concerns regarding the implementation of Web 3.0 and the future of EC. 2.9 The Future: Web 3.0, Web 4.0 and Web 5.0 87

ogy advances (e.g., see Gartner 2014 ). Of the • Future Threats. According to Stafford many predictions, we cite two here. (2006 ), Laurent (2010 ), and the authors’ experiences, the following trends may McKinsey & Company’s Prediction slow the growth of EC and Web 3.0, and According to this prediction (Bughin et al. may even cripple the Internet. 2010 ), there are 10 tech-enabled business • Security concerns. Shoppers, as trends to watch. These include the developments users of e-banking and other ser- in the global information grid, new collabora- vices, and members of social net- tion technologies, and pervasive computing works, worry about online security. (Chapter 6 ). The Web needs to be made safer. Defi nitions, details, and discussions are pro- • Lack of Net neutrality. If the big vided by Bughin et al. (2010 ). Also, see Gartner’s telecommunications companies are annual reports about Strategic Technology Trends allowed to charge companies for a at gartner.com/technology/research . guarantee of faster access, critics fear that small innovative Web com- Nicholas Carr’s Predictions panies could be demolished by the In his free e-book, Nicholas Carr (2008 ) dis- big companies that can afford to pay cusses the following trends: more for effi cient Internet usage. 1. More intelligent computers (see Chapter 15 ). 2. Larger and more effi cient data centers based • Copyright complaints. The legal on cloud computing problems of YouTube, Craigslist, 3. Use of virtualization in computing infrastruc- Wikipedia, and others may result ture that will enable the running of any appli- in a loss of originality, dedication, and cation on an external computing grid creativity of user-generated content. 4. Parallel processing grids that will cut process- • Insuffi cient connectivity. Upstream ing costs by 90% bandwidths are still constraining 5. Utility and cloud computing will become the applications, making uploading of norm video fi les a time- consuming task. • Language Fitness. There will be a need Web 4.0 to reconsider the existing spoken lan- Web 4.0 is the Web generation after Web 3.0. It is guages with Web 3.0 taxonomies and still an unknown entity. It is known as Symbiotic schemes. Web (see Aghaei et al. 2012 for a description). • Standards. There will be a need for However, Coleman and Levine ( 2008 ) envision it architectural standards for Web 3.0. as being based on islands of intelligence and on being ubiquitous. For the evolution from Web 1.0 to Web 4.0 see Aghaei et al. ( 2012 ). For a discus- Therefore, some believe that the Semantic sion, see Koren (2013 ). Web will never work (see the 91 minute video at youtube.com/watch?v=oKiXpO2rbJM ). Web 5.0 Despite these concerns, Web 3.0 and According to Patel (2013 ), “Web 5.0 is still an e-commerce could thrive due to several innova- underground idea in progress and there is no exact tions in the technological environment. defi nition of how it would be. Web 5.0 can be con- sidered as a Symbionet Web, decentralized.” Patel provides some technical information. The Technological Environment SECTION 2.9 REVIEW QUESTIONS The future of EC and the Semantic Web is depen- 1. What is Web 3.0, and how will it differ from dent on how far the relevant information technol- Web 2.0? 88 2 E-Commerce: Mechanisms, Platforms, and Tools

2. Defi ne Semantic Web. 5 . Shall we take part in virtual worlds? For 3. List the major potential inhibitors and con- many companies and applications, the tech- cerns of e-commerce and Web 3.0. nology is still immature and cumbersome. A 4. What are the major infl uencing computing good strategy is observing what other compa- and IT trends? nies, especially in the same industry, are doing 5. What are Web 4.0 and Web 5.0? in Second Life.

MANAGERIAL ISSUES SUMMARY

Some managerial issues related to this chapter In this chapter, you learned about the following are as follows. EC issues as they relate to the chapter’s learning 1 . Should we use auctions for selling? A major objectives. strategic issue is whether to use auctions as 1 . Activities and mechanisms. The major sales channels. Auctions do have some activities are information dissemination and limitations, and forward auctions may create presence, online trading, collaboration, confl icts with other distribution channels. If a entertainment, and search. The major mech- company decides to use auctions, it needs to anisms are marketplaces, webstores, shop- select auction mechanisms and determine a ping carts, catalogs, search engines, Web 2.0 pricing strategy. These decisions determine tools, and virtual worlds. the success of the auctions and the ability to Most of the activities are between sellers attract and retain visitors on the selling site. and buyers. However, there also are collabo- Auctions also require support services. ration activities among supply chain mem- Decisions about how to provide these ser- bers as well as among people within vices and to what extent to use business part- organizations. EC attempts to automate the ners are critical to the success of high-volume interaction process for the above activities. auctions. 2 . E-marketplaces and their components. An 2 . Should we barter? Bartering can be an inter- e-marketplace or marketspace, is a virtual esting strategy, especially for companies that market that does not suffer from limitations lack cash, need special material or machinery, of space, time, or borders. As such, it can be and have surplus resources. However, the val- very effi cient and effective. Its major compo- uation of what is bought or sold may be hard nents include customers, sellers, products to determine, and the tax implications in some (some digital), infrastructure, front-end pro- countries are not clear. cesses, back-end activities, electronic inter- 3 . How do we select merchant software? There mediaries, other business partners, and are many products and vendors on the market. support services. Small businesses should consider offers from The role of intermediaries will change as Yahoo! or eBay since the software is com- e-markets develop: Some will be eliminated bined with hosting and offers exposure to the (disintermediation); others will change their vendor-managed e-market. The functional- roles and prosper (reintermediation). In the ities of the software as well as the ease of B2B area, for example, e-distributors con- building webstores need to be examined (see nect manufacturers with buyers by aggregat- discussion in Chapter 13 ). ing e-catalogs of many suppliers. New 4 . How can we use Facebook and other social value-added services that range from content networks in our business? There are many creation to syndication are mushrooming. possibilities that are presented in Chapter 7 , 3 . The major types of e-marketplaces. In the mostly in marketing and advertising. Any pro- B2C area, there are webstores and e-malls. gressive organization should examine and In the B2B area, there are private and public experiment with social networking. e-marketplaces, which may be vertical Summary 89

(within one industry) or horizontal (across ers and marketers.) Using chat rooms, dis- different industries). Exchanges are the plat- cussion spaces, and so forth, members can form for many buyers and sellers to meet and exchange opinions about certain products trade. Different types of portals provide and services. Of special interest are commu- access to e-marketplaces. nities of transactions, whose interest is the 4 . Electronic catalogs, search engines, and promotion of commercial buying and selling. shopping carts. The major mechanisms in Virtual communities can foster customer e-markets are e-catalogs, search engines, loyalty. This may increase sales of products software (intelligent) agents, and electronic made by vendors that sponsor communities, shopping carts. These mechanisms, which and facilitate customer feedback for improv- are known as merchant suites, facilitate EC ing service and business operations. by providing a user-friendly and effi cient 9 . Social networks as EC mechanisms. These shopping environment. are very large Internet communities that 5 . Types of auctions and their characteris- enable the sharing of content, including text, tics. In forward auctions, bids from buyers videos, and photos, and promote online are placed sequentially, either in increasing socialization and interaction. Hundreds of mode or in decreasing mode. In reverse auc- social networks, are emerging around the tions, buyers place an RFQ and suppliers world, competing for advertising money. submit offers in one or several rounds. In Millions of corporations advertise, entertain, name-your-own-price auctions, buyers spec- and even sell on social networks. ify how much they are willing to pay for a Business-oriented communities concen- product or service, and an intermediary tries trate on business issues, both in one country to fi nd a supplier to fulfi ll the request. Penny and around the world (e.g., recruiting, fi nd- auctions are forward auctions where a small ing business partners). Social marketplaces fee is paid each time a bid is made. The fi nal meld social networks and some aspects of member to bid wins the auction when the business. Notable business-oriented social designated time is up. networks are LinkedIn and XING. Some 6 . The benefi ts and limitations of auctions. companies are active in public social net- The major benefi ts for sellers are the ability works such as Facebook. Other companies to reach many buyers, sell quickly, and save own and operate their own social networks on intermediary commissions. Buyers have within the company, which are known as excellent access to auctions, and a chance to enterprise social networks. Their members obtain bargains and collectibles while shop- are usually employees and retirees. They are ping from their homes. The major limitation used mainly for collaboration, knowledge is the possibility of fraud. creation and preservation, training, and 7 . Bartering and negotiating. Electronic bar- socialization. Many large companies have tering can greatly facilitate the swapping of such networks (e.g., IBM, Wells Fargo, goods and services among organizations, Northwestern Mutual). thanks to improved search and matching 10. Virtual worlds. These environments pro- capabilities, which is managed by bartering vide entertainment, trading of virtual prop- exchanges. Software agents can facilitate erty, discussion groups, learning, training, online negotiation. and much more. Everything is simulated, 8 . The structure and role of virtual commu- animated, and supported by avatars. Many nities. Virtual communities create new types companies have established presences in vir- of business opportunities. They bring people tual worlds, especially in Second Life, with similar interests together at one website. mainly offering dissemination of informa- (Such groups are a natural target for advertis- tion and advertising. 90 2 E-Commerce: Mechanisms, Platforms, and Tools

11. Augmented Reality (AR) and crowdsourc- Dynamic pricing ing. These emerging technologies facilitate E-bartering (electronic bartering) two types of EC activities. AR blends visual E-distributor aspects of computer and physical worlds. Electronic auction (e-auction) Thus, it can facilitate advertisement and pre- Electronic catalog (e-catalog) sentation of information. It works by point- Electronic shopping cart ing a mobile device (e.g., smartphone) to a E-mall (online mall) product or building and adds information to E-marketplace what you see (e.g., 360 degree view, price Enterprise search tag). Crowdsourcing solicits the wisdom of Forward auction the crowd for idea-generation or problem Front end solving. It also is used to divide a large task Intermediary among many people, each of whom is exe- Mobile portal cuting a different, small subtask. Mobile social network 12. Web 3.0 and Web 4.0. Web 3.0, the next Name-your-own-price model generation of the Web, will combine social Penny auction and business computing. It will be more Reverse auction (bidding or tendering system) portable and personal, with powerful search Search engine engines, increased clout, and greater con- Sell-side e-marketplace nectivity with the wireless environment and Semantic Web on-demand applications. Knowledge man- Virtual community agement will be one of its main pillars. The Virtual world Semantic Web will play a major role in Web Voice portal 3.0 applications. Web 3.0 and its applications Web 3.0 will depend on IT trends such as the develop- Web 4.0 ments in cloud computing, utility computing, Web (information) portal parallel processing, and machine intelli- Webstore (storefront) gence. Web 4.0 is a futuristic Web that will be built on ubiquitous and intelligent sys- tems. It will connect “islands” of intelligence DISCUSSION QUESTIONS from different sources. 1. Compare physical marketplaces with mar- ketspaces. What are the advantages and limi- KEY TERMS tations of each? 2. Discuss the competitive advantage Craigslist Augmented reality has using classifi ed ads. Avatar 3. Discuss the value of a virtual world as an EC Back end environment. Why does it attract users? Why Bartering does it attract companies? How can it pro- Bartering exchange vide a competitive advantage to a company Business-oriented social network that has a presence there? What are its Buy-side e-marketplace limitations? Crowdsourcing 4. Discuss the need for portals in EC. Desktop search 5. How do business-oriented networks differ from Digital products regular social networks such as Facebook? Disintermediation 6. Why are social marketplaces considered to be Double auction a Web 2.0 application? Internet Exercises 91

7. Discuss the following statement: “Technically, increases productivity and innovation. you can put together a portal in a weekend, but Others say it is a waste of time and ban the culturally there are a slew of things to con- use of Facebook, YouTube, and other such sider; therefore it takes much longer.” sites at work. 8. Discuss the pros and cons of selling cars via 10. Debate the business value of social network- auctions. ing. To start, read Tom Davenport’s blog of 9. Discuss the pros and cons of using avatars in October 2007 titled “Where’s the ‘Working’ help desks. What are the benefi ts? The in Social Networking?” at blogs.hbr. limitations? org/2007/10/wheres-the-working-in- social-n . 11. Debate: Facebook and Twitter compete for TOPICS FOR CLASS DISCUSSION advertisers’ money. Which one has a better AND DEBATES chance to get more ad money and why? (Consult Mangalindan 2010 .) 1. Compare and contrast the effi ciency of tradi- 12. Some of the largest social media networks tional markets with that of digital markets. exist in China ( qq.com , qzone.qq.com , us. 2. Some claim that social networking, espe- weibo.com , weixin.qq.com and renren. cially microbloging and social network sites, com ). Find information about these networks displace the traditional electronic bulletin and list their properties. How do they differ board systems. Discuss. from U.S. social networks? 3. Discuss the advantages of dynamic pricing strategy over fi xed pricing. What are the potential disadvantages of dynamic pricing? INTERNET EXERCISES 4. Enter Facebook and search for companies that do auctions on the site. Identify the dif- 1. Enter droid-translator.tiwinnovations.com ferent types of auctions on the site. and tranzactive.com and compare their 5. What is the advantage of a business using translation capabilities. eBay instead of conducting auctions from its 2. Examine how bartering is conducted online own site? Distinguish between C2C and B2B at tradeaway.com , barterquest.com , and cases. u-exchange.com . Compare and contrast 6. Debate: Should companies build in-house the functionalities and ease of use of these social networks for external activities or use sites. existing public social networks? (e.g., see 3. Enter volusion.com and identify all specifi c Roberts 2008 ). e-commerce mechanisms (or solutions) pro- 7. Debate: Should Craigslist and YouTube vided by the company. monitor and control what users publish 4. Enter respond.com and request a product or there? Who will pay the cost? a service. Once you receive replies, select the 8. Debate: Social network services can provide best deal. You have no obligation to buy. good security to enterprise social networks. Write a short report based on your However, security may limit users’ creativity experience. and disrupt the business. Should a company 5. Enter dtsearch.com and fi nd its capabilities. use such a service? What type(s) of search does it conduct (e.g., 9. Debate: Some research suggests that the use desktop, enterprise, general)? of public social networks by employees 6. Enter cars.com . List all services available to during work hours can be good for a busi- both sellers and buyers of cars. Compare it to ness because employees develop relation- carsdirect.com. Finally, identify the revenue ships and share information, which sources of both sites. 92 2 E-Commerce: Mechanisms, Platforms, and Tools

7. Enter ups.com . 16. Enter secondlife.com and fi nd the commer- (a) Find out what information is available to cial activities of the following avatars: Fizik customers before they send a package. Baskerville, Craig Altman, Shaun Altman, (b) Find out about the “package tracking” FlipperPA Peregrine, and Anshe Chung. system; be specifi c. Briefl y describe what they represent. (c) Compute the cost of delivering a 17. Enter zippycart.com and read the article “13 10″ × 20″ × 15″ box, weighing 40 pounds, Ecommerce Link Building Tactics for Your from your hometown to Long Beach, Online Store” at zippycart.com/ecommerce- California. Compare the cost for the news/1430-13-ways-to-gain- inbound- fastest delivery option with to the lowest links-to-your-online-store.html . Write a possible delivery cost. brief summary. (d) Prepare a spreadsheet using Excel for two different types of calculations avail- able on the UPS site. Enter data to solve TEAM ASSIGNMENTS for two different calculations. AND PROJECTS 8. Register at Second Life, and enter the site. (a) Find what three corporations are doing 1 . Assignments Related to the Opening Case on the site. (a) Why is Pinterest considered a social (b) Find out what three universities are network? doing on the site. (b) What are the company’s business and rev- (c) Write a report on your fi ndings. enue models? 9. Create an avatar on Second Life. Let your (c) How can manufacturers advertise on avatar interact with avatars of some compa- Pinterest? nies. Why do we consider an avatar a mecha- (d) Compare Pinterest and We Heart It. Pay nism for EC? Write a report. attention to the business models. 10. Enter ibm.com and oracle.com . Prepare a (e) Pinterest has a large amount of money. list of the major products available for build- How does it use this money on its website ing corporate portals. to increase its competitive advantage? 11. Enter go.sap.com/index.html and fi nd the 2. Assign each group a large e-tailer (e.g., key capabilities of its enterprise portals. List Amazon.com, Walmart.com, Target.com, the benefi ts of using fi ve of the capabilities Dell.com, Apple.com, and HP.com). Trace the of SAP’s portals. purchasing process. Look at the catalogs, 12. Enter networksolutions.com . View the search engines, shopping carts, Web 2.0 fea- shopping cart demo. What features impress tures, and any other mechanisms that improve you the most and why? What related services e-shopping. Prepare a presentation that does it provide? Compare it to storefront. includes recommendations for improving the net , nexternal.com and ecwid.com . existing process. 13. Enter the website of a social network service 3. Build your own business in Second Life (SL). of your choice. Build a homepage. Add a This can be done by each member or each chat room and a message board to your site group. Determine what business you want to using the free tools provided. Describe the build. Then read Terdiman’s book ( 2008 ), other capabilities available. Make at least Mahar and Mahar’s book ( 2009), or a similar fi ve new friends. book. Register at SL and begin to work. In 14. Enter vivapets.com and dogster.com and your project, do the following: compare their offerings. (a) Select a business category and develop a 15. Enter w3.org . Find material about Semantic business strategy. Web (SW); check their RDF/FAQ and search (b) Develop a business plan and model for for some applications. Write a report. your virtual enterprise. Closing Case: Madagascar’s Port Modernizes Customs with TradeNet 93

(c) Choose where (island or property) to com . Look at another country of your choice. establish a business. Explain your choice. Comment on the cultural differences. Write a (d) Conduct a budget and cash fl ow analysis report. (see Appendix B in Terdiman 2008 ). (e) Buy virtual land and other virtual properties. (f) Develop marketing and advertising plans CLOSING CASE: MADAGASCAR’S (examine the competition). PORT MODERNIZES CUSTOMS (g) Look for any possible revenues; make a WITH TRADENET pricing decision. (h) Plan all support services using the SL Madagascar is an island-state in Africa whose tools. port is critical to its trade activities and the over- (i) Watch for legal issues and other risks; all economy. The country’s customs operations plan their mitigation. play an essential part in the port operations. (j) Build the business (using the SL tools). (k) Build a supporting blog. How would you use it for viral marketing? The Problem 4. Watch the O’Reilly Media video titled “Online Communities: The Tribalization of Business” The trade administration process in this underde- (Part 1 is 6:15 minutes; Parts 2 and 3 are veloped country used to be cumbersome and optional) at youtube.com/watch?v=qQJ slow. This limited the trade volume and the cus- vKyytMXU and answer the following toms revenue. Madagascar’s ‘Trading Across questions: Borders’ indicator position was one of the world’s (a) Why is the term tribalization used in the lowest (143rd ranking). The country’s Logistics video? Performance Index was also low (120th place). (b) What are virtual communities? (c) How can traditional businesses benefi t The Business Process from online communities? According to CrimsonLogic (2014 ), “Everyone (d) What is the value of communities for the exporting to Madagascar must fi rst register and customers? fi ll in an electronic form, called Advance Cargo (e) Compare social vs. marketing frameworks. Information – ACI…, for each consignment. The (f) How are virtual communities aligned with exporter attaches copies of the trade documents, the businesses? such as the commercial invoice, bill of lading and (g) Discuss the issues of measurements, met- certifi cate of origin to the BSC and these are then rics, and CSFs. transmitted electronically to the Customs in (h) Optional: View Part 2 ( youtube.com/ Madagascar to be verifi ed for consistency and watch?v=U0JsT8mfZHc#t=15) and Part risk profi ling.” 3 ( youtube.com/watch?v=AeE9VWQY Once completed, the importer or customs broker 9Tc) (6:50 and 10:24 minutes respec- can submit the customs declaration electronically. tively), and summarize the major topics Once submitted, the approval process begins. discussed. It may involve several government agencies, port 5. The team’s mission is to analyze Pinterest’s container terminal management, commercial U.S. and global competition, including similar banks, and the country’s Central Bank and companies in China and Brazil. Start by read- Treasury. While the submission portion was ing McKenzie (2012 ) about the Chinese social computerized and fairly effi cient, the approval sites Meilishuo and Mogujie and compare process was not. Overall, the cargo clearance them to Pinterest. Do the same for weheartit. took over 15 days. 94 2 E-Commerce: Mechanisms, Platforms, and Tools

The Solution customs declarations data into GasyNet, which in turn transmits the data to TradeNet, which Originally, Customs had been using enables all involved partners to share data and ASYCUDA++ (a legacy computerized system transmit results. The results that are returned to designed by the United Nations Conference on TradeNet are transferred to GasyNet and then to Trade and Development). This system helped the importers. To use TradeNet, users need to with the submission, but the overall process was buy special software from TradeNet Frontend still slow due to lack of integration of all partici- Solution. The software enables data entry by the pants’ subsystems. The port had diffi culties users (e.g., the customs declarations) from PC’s competing with other ports in the area that or mobile devices. The system provides permit offered faster and more effi cient customs man- status information, company billing inquiries, agement systems. Therefore, the Medagasy ability to retrieve lost permits, acknowledge- Community Network Services (“GasyNet”) saw ment notifi cation, an audit trail, permit listings the need to create a single online platform to and more. connect the entities in the trade community. The system links the multiple partners in the They relied on a new system, which is an inte- trade by creating a single point of transaction for gration of TradeNet, an electronic data exchange, all the standard documents involved. and ASYCUDA++.

What Is TradeNet? TradeNet is an electronic data interchange (EDI) The Results system (see Online Tutorial T2) developed in Singapore in 1989. It is now administered, oper- The system is an effi cient platform for the B2B ated, and maintained by CrimsonLogic of customs-related transactions. It reduced the cargo Singapore. TradeNet, which initially operated clearance time from more than 15 days to less only in Singapore, is used today in several ports than fi ve days for sea shipments, which resulted around the world, including Madagascar. The in increased trade volume. In addition, customs current system also includes Windows-based revenue more than doubled in 5 years (account- and Web-based portions. Using the TradeNet- ing for around half of Madagascar’s total income). based system the trading community can submit Other recorded benefi ts include: elimination of electronically all the forms needed by the unnecessary bureaucracy and cost reduction due Customs administration. The system then routes to paperless processes. the applications for processing. Approved per- Finally, Madagascar’s ‘Trading Across mits are then returned electronically to the send- Borders’ indicator improved from 143rd to 109th ers via ASYCUDA++. The process starts before place, and their Logistics Performance Index ships even enter the port. For an overview of ranking improved from 120th to 84th. TradeNet, see customs.gov.sg/leftNav/trad/ Sources: Based on Fjeldsted ( 2009 ), Crimson TradeNet/An+Overview+of+TradeNet.htm , Logic (2014 ), and Singapore Customs (2014 ). and the United Nations Economic Commission for Europe ( unece.org/energy.html ). Questions 1. Describe the role of GasyNet in the process. The Integrated System 2. Describe the contribution of TradeNet. In order to improve the fl ow of information 3. What is the role of EDI in this system? and provide an effi cient trade environment, 4. The TradeNet system is a typical B2B the TradeNet system was integrated with platform. Explain why. ASYCUDA++. The importers input their 5. Relate the content of this chapter to the case. Glossary 95

sound, video, graphics, or GPS data” (see en. ONLINE FILES wikipedia.org/wiki/Augmented_reality ). available at affordable-ecommerce- Avatar Interactive, animated, computerized textbook.com/turban characters designed to look like humans and are programmed to exhibit people’s behavior. Back end Where activities that are related to W2.1 Social Software Tools: From Blogs to order aggregation and fulfi llment, inventory Wikis to Twitter management, purchasing from suppliers, W2.2 Examples of Digital Products accounting and fi nance, insurance, payment W2.3 Application Case: eBay: The World’s Largest processing, packaging, and delivery. Auction Site Bartering The exchange of goods and services. W2.4 Application Case: Social Media at Eastern Bartering exchange A marketplace where an Mountain Sports intermediary arranges barter transactions. Business-oriented social network A social net- work whose primary objective is to facilitate business. COMPREHENSIVE EDUCATIONAL Buy-side e-marketplace Where a company WEBSITES purchases from many potential suppliers; this type of purchasing is considered to be many- wiki.secondlife.com : Learn SL in a fun, easy to- one , and it is a B2B activity. way. Look for videos and tutorials. Crowdsourcing Utilizing crowds to collec- vectec.org/resources : The Virginia Electronic tively execute tasks such as solving problems, Commerce Technology Center offers special innovating, or getting large projects done by reports, e-business news, and statistics. dividing the work among many people. allthingsweb20.com : Reference for locating the Desktop search The search of a user’s own top social marketing sites. computer fi les. The search is done by looking informationweek.com: Large collection of through all the information that is available on EC-related material. the user’s PC. cioinsight.com : A comprehensive collection of Digital products Goods that can be transformed all type of resources. to digital format. bloombergmarketing.blogs.com : A compre- Disintermediation Elimination of interme- hensive Marketing Blog. diaries between sellers and buyers because zdnet.com/blog/hinchcliffe: Dion Hinchcliffe’s they offer only services that can be fully compendium of articles, reviews, galleries, automated. Double auction An auction in which multiple videos, podcasts, and downloads about buyers and their bidding prices are matched Enterprise 2.0. with multiple sellers and their asking prices, awarenesstechnologies.com : A collection of considering the quantities on both sides. webinars on social media, Web 2.0, ROI, and Dynamic pricing Prices that are not fi xed but marketing. that are allowed to fl uctuate, and are deter- mined by supply and demand. E-bartering (electronic bartering) Bartering GLOSSARY conducted online, usually in a bartering exchange. Augmented reality “A live, copy, view of a E-distributor An entity that basically physical, real-world environment whose ele- aggregates product information from many ments are augmented (or supplemented) by manufacturers, sometimes thousands of them, computer-generated sensory input such as in the e-distributor’s catalog. 96 2 E-Commerce: Mechanisms, Platforms, and Tools

E-mall (online mall) An online shopping cen- Search engine A computer program that can ter where many online stores present their access databases of Internet resources, search catalogs. for specifi c information or keywords, and E-marketplace An electronic space where sell- report the results. ers and buyers meet and conduct different Sell-side e-marketplace A place where a com- types of transactions. pany sells either standard or customized prod- Electronic auction (e-auction) An auction con- ucts to individuals (B2C) or to businesses ducted online. (B2B); this type of selling is considered to be Electronic catalog (e-catalog) The presentation one-to-many. of product information in electronic form; the Semantic Web A group of methods that focuses backbone of most e-selling sites. on machines (in contrast with Web 2.0 that Electronic shopping cart S oftware that allows focuses on people), trying to enable machines customers to accumulate items they wish to buy to understand the semantics (i.e., the meaning) before they arrange payment and check out. of information using natural language under- Enterprise search The search for informa- standing tools. tion within the fi les and databases of an Virtual community A community where the organization. interaction takes place over a computer net- Forward auction An auction where a seller work, mainly the Internet. entertains bids from multiple buyers. Virtual world A site for online communities Front end The place where customers interact in a computer-generated setting where users with a marketspace. The major components socialize and work with one another through of the front end can include the seller’s portal, the use of avatars. The creation of objects, electronic catalogs, a shopping cart, a search jobs, homes, and businesses in the 3D envi- engine, an auction engine, a payment gateway ronment is the foundation of these worlds and and all other activities related to placing orders. is fun and satisfying. Intermediary A third party that operates Voice portal A portal with audio interfaces between sellers and buyers. that can be accessed by telephone or cell Mobile portal A portal accessible via a mobile phone. device. Web 3.0 A term used to describe the future of the Mobile social networking S ocial networking World Wide Web. It is projected to deliver a new where members converse and connect with generation of business applications that will see one another using any mobile device. business and social computing converge. Name-your-own-price model Auction model Web 4.0 The Web generation after Web 3.0. It in which a would-be buyer specifi es the price is still an unknown entity. However, it is envi- (and other terms) he or she is willing to pay to sioned as being based on islands of intelli- any willing and able seller. It is a C2B model gence and as being ubiquitous. that was pioneered by Priceline.com. Web (information) portal A single point of Penny auction A new type of forward auction access, through a Web browser, to critical in which participants must pay a small nonre- business information located inside and out- fundable fee each time they place a bid (usu- side organizations. ally in small increments above the previous Webstore (storefront) A single company’s (or bid). When time expires, the last participant to individual seller’s) website where products or have placed a bid wins the item and also pays services are sold. the fi nal bid price. Reverse auction (bidding or tendering system) Auction in which the buyer places REFERENCES an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid on the Aghaei, S., M. A. Nematbakhsh, and H. K. Farsani. job, with the price reducing sequentially, and “Evolution of the World Wide Web: From Web 1.0 to the lowest bid wins; primarily a B2B or G2B Web 4.0.” International Journal of Web & Semantic mechanism. Technology (IJWesT) , January 2012. References 97

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