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IS6600Seminar 2

Web Based Applications and Cases

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Learning Objectives

Explore a variety of E-Commerce applications and contexts

See how the online market can be developed and exploited – globally

Focus on cultural and psychological factors like trust and guanxi

Look at E-Commerce in China Consider other Internet-based applications and

their implications for organisations

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The Buyoyo Story

Founded 1996 as DVDshelf.com, later Layoyo The largest Internet retailer of Chinese

Entertainment Products in the world. 350,000 different products: DVD, BluRay, CD,

Books, Games, Mobile Accessories, etc.. Partners galore! YoYo Cash for loyalty. A valuable niche, first mover advantage and a

potentially huge market. Hardly anyone in Hong Kong has heard of it, but

that is irrelevant to its success!

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SoleRebels (Exam Question)

http://www.solerebelsfootwear.co/ What is special about this company?

– Distinctive, innovative features of the website?– Global & Local. Small and few resources.

You are the CIO. What i- and e-business steps would you recommend for corporate development that keep it local, yet also enhance global recognition.

Is it possible to be locally sensitive, yet globally aware?

Adexus

Look at this company: www.adexus.cl Where is it located? What kind of image do they present? Who would be interested in their services? Is there anything distinctive or special? Can we learn something from this website?

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KaoLiBerry

http://www.kaoliberry.com/ What is special about this website?

– Actually it was created by an EBKM graduate of a few years ago

How could it be improved?

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eBay or TaoBao?

These two companies are similar in some respects, yet different in others.

Can you identify the similarities and differences?

eBay is dominant in most global markets, but not China, where TaoBao is King.

Why? What are the Chinese factors that drive TaoBao’s success?

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M-Commerce

Each of us can have multiple devices–These devices could even be embedded

into you (under the skin)– In some countries, prisoners and pets are

microchipped–Some clubs offer microchips to members

to help pay for goods/services www.youtube.com/watch?v=p3Ql_-bpytA

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O2O Now we also learn that Wanda+Baidu+Tencent

want to compete with Alibaba– The O2O model underlies their thinking– Connecting mobile people with offline services

China’s e-commerce market was forecast to grow to US$450B by the end of 2014 (46% more than 2013).

PWC found that 14% of Chinese people shop online at least once daily.

– Healthy Rivalry? Better integration? Tencent and Baidu tried EC before,…

Social Shopping?

What is the value proposition offered by companies like these:?– Kaboodle – www.kaboodle.com– Stylehive – www.stylehive.com– Mogujie – www.mogujie.com– Meilishuo – www.meilishuo.com– GroupOn – www.groupon.com– BeeCrazy – www.beecrazy.hk

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Smart Advertising

Japanese firm NEC is piloting smart billboards and vending machines that recognise – Gender, ethnicity, approximate age (85-90%

accuracy) but not identity (yet)– And consider time of day, weather, …

In order to market specific products– Drinks, perfume & cosmetics, …

http://wn.com/smartvending See this article:

– http://www.telegraph.co.uk/news/worldnews/asia/japan/8136743/Japanese-vending-machine-tells-you-what-you-should-drink.html

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Kinect

http://www.youtube.com/watch?v=Mr71jrkzWq8

Does this kind of idea have global potential?

What kind of barriers to its effectiveness can you imagine?

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Smart Card Enabled E-Commerce

The Octopus Card can be used for… … transport, parking, shopping, building access,

discounts, … Benefits for consumers, providers/operators

– Reduced cash handling, improved cash flow– Convenience and cleanliness– Buy 10 get 1 free offers– Swipe now for a x% discount off your next trip or a cup

of coffee Disadvantages?

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Smart Card Enabled E-Government and E-Control

We don’t have a choice about the Smart ID Card! Functionality and Privacy Issues

– Could it be scanned or detected? In a US university, sensors detect students’ ID cards when they

enter class. If they miss too many, their grades may suffer!

– Could my boss find out where I am? – And would I even know?

The police can typically locate mobile phones to within 50m. The NSA tracks all phone calls and Internet usage. There are no

secrets or privacy.

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Consumer Loyalty Drives Competitive Advantage

“Creating a compelling online experience for cyber consumers is the key to attaining competitive advantage on the Internet”

Jeff Bezos (Amazon CEO) But is it the only key? And what does “compelling online experience”

actually mean?– Do we agree on what a ‘compelling online experience’

feels like?– Could it be different in different cultures?

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Trust and Distrust

Trust is seen as a critical motivator of online buying.

What might lead a potential consumer to trust an online shop?– – – –

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Do You Naturally Prefer to Distrust Others?

Distrust propensity “I would like to buy online, but what I concern most is the e-

vendors’ untrustworthiness.” The first question that online customers ask is “is it

trustworthy?”– Lack of EC governance

“I don’t know where to complain about online fraud.”– Insufficient legal infrastructural support

“Counterfeiting is a major concern for transactions in general. It is even more serious online. Why should I bother myself with online purchases?”

– “In such a highly uncertain and risky virtual environment, distrust is a more prevalent mechanism than trust to help avoid potentially negative consequences.”

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Guanxi/Relationships and E-commerce

Guanxi (close personal ties and social networking, typically operating in a dyadic and reciprocal fashion)

Can guanxi be created online? How does guanxi differ from trust? Recent research suggests that guanxi is an intimate

part of TaoBao’s web-strategy. Such cultural variables must be considered by

website managers and business leaders.

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Figure 1. PLS Results of Structural Model with Formative Measures (n=338)

Model of TaoBao Buyers’ Development of Trust and Swift Guanxi with Sellers (n=338)

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Personalization

Do all customers want the same interface? Do they all respond to the same stimuli? Are they all equally goal or process

oriented? Can we use the same tactic to get their

loyalty? Personalization is recognised as a major

opportunity - yet also a major headache.

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Personalization

Studies of culture tell us that stereotyping is dangerous.

Some people like a simple interface, easy to use, quick to find what they want.

Others appreciate a more challenging, or fun, interface.

Hedonism (enjoyment/entertainment value) is a big turn on for some people

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Hedonism

But are you turned on– by colourful graphics, and visually arousing

displays of information?– or by distracting icons and flashing lights?– or by a very simple interface that loads fast and

gets you what you want? Also, is it safe to assume that all people in

one cultural group will share similar characteristics?

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BUSINESS / REVENUE MODELS (1)adapted from Michael Rappa http://digitalenterprise.org/models/

Auctions Market makers bring buyers and sellers together

Advertising Extends traditional broadcast model

Infomediary Collects and sells data about users or products

Merchant Online retailers

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BUSINESS / REVENUE MODELS (2)

Community Loyal users provide funds and/or content

Subscription Users pay for access

Utility Metered usage or pay-as-you-go approach

Manufacturer Web compresses distribution channel; customers can tailor their goods before delivery

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BUSINESS / REVENUE MODELS (3)

Financial Intermediaries

Government Services

Aggregators

E-Ticketing

Trading Intermediaries & Market Spaces

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Which Business/Revenue Models Work Most Effectively in HK?

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GroupOn Seems to Work! Each day, there are multiple groupons to buy – in

different market segments. If a certain number of people sign up for the offer,

then the deal becomes available to all. If not, no one gets it.

This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools.

Groupon makes money by keeping a % of the money the customer pays for the coupon.

So a $400 massage could be purchased by the consumer for $200; Groupon and the retailer would share the $200.

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How About BeeCrazy?

What is special about this site? Is it successful? Is the business model sustainable? Can it be globalised further?

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Revenue in Developing Countries

Web companies that rely on advertising need to get their viewers to click on the ads

In developing countries – they won’t! They can watch content for hours and hours, but

never click anything It costs a lot – servers, bandwidth – to support all

the content provision – and there is no revenue Some providers are now denying access based on

where you come from (IP detection)

New York Times, April 27, 2009

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Veoh

In 2008, Veoh, a US-based video-sharing site decided to block users in Africa, Asia, Latin America and Eastern Europe from accessing the site

“There may be 1.6 billion people in the world with Internet access, but fewer than half of them have incomes high enough to interest major advertisers”

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Facebook

Facebook has looked at lowering the quality of videos & photographs delivered to some locations to cut costs.

70% of Facebook’s members live outside the US, many in places that contribute little to the company’s profit. However, these members upload 850 million photos and eight million videos each month – all that material has to be stored somewhere!

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Strategic Impacts of EC

Information is a source of revenue Companies must be able to provide immediate

response to requests for information Quality and speed of information is critical Extensive information is available from the

government and commercial sources (including competitors)

Web-literate (and liberated) consumers have access to all makes and models of a product line

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Problematic Issues with EC

EC is not without its fair share of problems These involve such disparate areas as

– Taxation– Complaints, Refunds and Returns– Transborder Data Flows

Not to mention consumer comfort with– Security, privacy, lack of ‘touch-and-feel’

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What if…? I live in Hong Kong, and use a Canadian

intermediary (but the servers are physically located in Fiji) to buy a book from an Egyptian bookshop, with the payment verified by a bank located in France (which offshores data processing to China), using my Hong Kong issued credit card, and delivery organised through the Cairo office of Federal Express (which is governed by US law).

Where is the transaction taking place? Which tax law applies? What should I do if the book doesn’t arrive? Are there legal concerns about data flow?

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Lessons for EC

The world (or a lot of it) should be the market Creating a compelling experience is essential Developing buyer-seller trust cannot be ignored,

especially if no legal protection for transactions There are many business/revenue models, but

which one is going to work? Mobile commerce is growing very fast,…so You have to take risks…

– Some cultures seem to be more risk tolerant than others

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How Are Social Media and Apps Transforming E-Commerce

Consider the changes we are seeing with social shopping sites, group-buying sites, and social media more generally.

What changes can we expect to see in Global E- and M- Commerce?– Think in terms of the customers, the kinds of

products, the media/channels involved, the payment systems.

Who will the future, global, successful web-entrepreneurs be?