Content-type: text/html ~ Stephen's Web ~ Aspects of E-Commerce

Stephen Downes

Knowledge, Learning, Community

Sept 24, 1999

Posted on NewsTrolls 24 September 1999

What is E-Commerce? Here's what I have so far...

  • Affiliate Marketing
    Affiliate marketing is a lot like commissioned sales. One site acts as an online retailer. Another site - usually through the use of banner ads - refers customers to the online retailer. If that customer makes a purchase, then the referring site is paid a comission.

  • Aggregate Customer Information
    This is the collection of data regarding large groups of users. For example, if a thousand users visit a website, and three hundred pick the blue link, while only fifty pick the organe link, a certain piece of information is produced: that users prefer the blue link. Aggregate customer information is often linked by demographics: we could say, for example, that eighty percent of Italians picked the green link, while only forty perecent or Germans picked the green link. This information is sold to marketers, who in turn use it for product design and marketing.

  • Banner Advertising
    Visible throughout the web, banner advertisements are small graphics placed on websites advertisng goods or services. The ad is almost always a link to a website providing more information (and order forms) for that product. The advertiser usually contracts with a broker for a certain number of ad placements; the broker, in turn, contracts with individual sites for those placements. Payment to the site is in one of two forms: either per view, or per click-though. Views and click-throughs are monitored by the broker.

  • Brokering
    brokering is the use of an intermediary to obtain one (or usually) a set of services. A good example of a broker is an online travel agent; you tell the agent you want to go for a vacation in Jamaica, and the broker in turn arranges airfare, hotels, entertainment, and more. Online brokering systems promise to become a lot more dynamic; intelligent software agents will engage in service auctions with service providers, producing an integrated package of services.

  • Data Analysis
    Data analysis is any process of filtering, sifting, summarizing or interpreting a quantity of data. The Dow Jones Industrial Average is a simple form of data analysis; the number produced is a process of filtering (through the selection of indicator companies) and summarization (through averaging); the result is a simple piece of information which indicates a trend. Online data analysis will involve a similar set of mechanisms; examples include 'web logs', which are selections of relevant links or news items.

  • Data Mining
    data mining is the extraction of a particular piece of information from a large body of information. For example, we know that the population of Tunisia is recorded somewhere on the web. But where? A data miner obtains this information (more accurately, obtains this information from a variety of sources, and then evaluates the information for reliability and completeness).

  • Credit Card Transactions
    This service is provided by intermediaries to facilitate the flow of cash from the purchaser to the retailer. Credit card transactions were the first to develop in any widespread way on the web because there is already a well established network to facilitate such transactions. It is likely that such services will be extended to debit cards and (for kiosks and the like) smart cards.

  • Customer Service and Customer Support
    This is the use of internet technologies to offer follow-up support subsequent to a purchase or lease. For example, a company like Hewlett-Packard may place its most recent printer drivers on an FTP site and email owners of thoe printers with the location of the site. Or a person having trouble installing a piece of software may angage in an online chat with a customer service agent as he steps through the install process. Online customer service saves companies significant resources in production, distribution and staffing, and enable companies to offer a higher level of post-purchase support.

  • Customized Products and Services
    A wide variety of personalized products and services already exist on the net, and the capacity to personalize is a value people will pay for. For example, a news syndication service may offer analysts and editors customized news feeds, thus ensuring that the articles they review are tailored to their needs and interests. Or an education provider may allow students to create their own custom courses or programs from a set of educational objects.

  • E-Mail Marketing
    Email marketing is the use of email to deliver advertising messages directly to the user's desktop. It has come a long way from the days of Cantor-Siegal style SPAMs. Today's email marketing is often highly directed, drawing on the results of aggregate customer information research. Email marketing is also often of the 'opt-in' variety, where the user requests to be included because he or she is interested in the product line or service area being advertised.

  • Inventory Management
    Inventory management is the use of networked technologies to maintain a just-in-time system of supply. Long in use by major corporations 9such as auto manufacturers), online technologies allow smaller entites to manage inventory by tracking sales and purchases across distributed locations.

  • Marketing and Customer Contacts
    Used by sales and marketing people, contacts software builds a customer history, which in turn may be used to inform selected marketing, preferential pricing, or other programs. Customer purchases are tracked, as well as any records of enquiries, contacts, complaints, and other information.

  • Micropayments
    Online publishing and information ventures cannot practially charge users, since the likely cost of (say) a cent per page does not defray the costs of processing that transaction. However, things like page views can be recorded on an aggregate basis; an intermediary representing a group of users (say, students from a school board) agrees to pay page owners for all hits on their pages from that source, and in turn charge the students a flat or metered fee for page access to a large number of sites.

  • Online Banks and Banking
    Financial services have developed to a sufficient degree as to be considered a separate class of e-commerce. typical transactions, such as bill payment or account management, can now be handled online though most major banks. Additionally, financial services corporations, such as Schwab, provide online investment and stock trading. Considerable niche markets still exists, for example, online credit card applications.

  • Online Publishing
    Thousands of books, magazines and journals now publish on the internet; they earn revenues through a variety of sources, such as advertising or subscription fees. The variety of content will expand as online publishing employs multimedia and becomes much more interactive.

  • Online Retailing
    Online retailing is the sale of a product or service through the net. The best known examples include Amazon, CDNow, and Dell. Online retailing is usually supported with credit card transactions. A significant market also exists for the production of marketing software, such as shopping carts or order processing.

  • Product Affinities
    product affinity is a form of marketing; for example, if you purchase a new printer, you will probably be in the market for printer toner and paper. For a discount, you may allow the printer retailer to foward information about your purchase to qualified suppliers (you may receive a discount for this), who will send you information regarding prices and delivery. Or the associated goods may be bundled with the printer purchase itself.

  • Purchasing and Procurement
    Corporate purchasing departments, using inventory flow control technology, are likely to want automated ordering and purchasing capacities. For example, when the Strathcona safeway system reports that there are only 40 boxes of Kraft Dinner left, the software would automatically place an order for an additional twelve cases; this order would be subject to bids and suppliers would compete for the contract.

  • Relationship Management
    Relationship management is a lot like contact tracking, except that it is usually performed by a third party who specializes in this service. An online community host would be an example. The host acts as a broker between the user and the retailer; as the relationship builds the broker becomes more aware of the user's needs and tastes, and is able to carefully target marketing to that person. The broker is paid by the retailer, and in turn provides a variety of free services - such as web pages, content or email - to the user.

  • Subscriptions
    Subscriptions are a method of paying for regular content or other information; specialized online newsletters which feature insider information are likely to generate subscription revenues, as are owners of protected information, such as tendering services, stock quotes, and similar data.

  • Tracking
    Tracking is the process of monitering how a user moves through an online store or service; tracking is useful in determining the effectiveness of marketing or for product or ad placement. Online banks should have used tracking; they would have detected their users going around in circles.

  • Targetted Advertising
    targetted advertising is any advertising which uses user demographics or personalized information for ad and product placement. One example of targetted advertising is directed or 'opt-in' email advertising. Another example is category specific ads in search engines - search for 'cars' and you will be shown car ads. Targetting advertising will become much more sophisticated once a quantity of personal and demographic information is available.

  • Workflow and Collaboration
    Transactions requiring a number of people - for example, the writing, design and distribution of a newsletter - require some mechanism of collaboration. This collaboration can occur online. In such an environment, project management software will ensure not only that interaction occurs, but also that tasks are allocated, resources are made available, and timeslines are developed.

Stephen Downes Stephen Downes, Casselman, Canada

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