E-commerce 2023-2024: Business, Technology, Society Lecture 6 PDF

16/11/2024 E-commerce 2023–2024: business. technology. society. Eighteenth Edition Chapter 11 Online Communities © 2023 Pearson Education Ltd. All Rights R...

16/11/2024 E-commerce 2023–2024: business. technology. society. Eighteenth Edition Chapter 11 Online Communities © 2023 Pearson Education Ltd. All Rights Reserved 1 Learning Objectives 11.1 Describe the different types of social networks and online communities and their business models. 11.2 Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud. © 2023 Pearson Education Ltd. All Rights Reserved 2 LinkedIn: A Different Kind of Social Network Class Discussion – How does LinkedIn differ from other types of social networks, such as Facebook, Twitter, Instagram, and TikTok? – Why do you think users trust LinkedIn more than other social networks? – Do you have a LinkedIn profile? If so, what LinkedIn features do you use most frequently? © 2023 Pearson Education Ltd. All Rights Reserved 3 1  16/11/2024 What is an Online Social Network? Working definition of social network – Group of people – Shared social interaction – Common ties – Sharing an area for period of time Online social network – Internet removes geographic and time limitations of offline social networks © 2023 Pearson Education Ltd. All Rights Reserved 4 The Growth of Social Networks and Online Communities (1 of 2) Top social networks: Facebook remains dominant both worldwide and the U.S. in terms of number of users, but growth has slowed Growth of social networks like Instagram, TikTok, and Snapchat Social networks that focus on messaging: WhatsApp, Discord © 2023 Pearson Education Ltd. All Rights Reserved 5 © 2023 Pearson Education Ltd. All Rights Reserved 6 2  16/11/2024 The Growth of Social Networks and Online Communities (2 of 2) Other ways to measure influence besides number of users – Time spent  TikTok leads, followed by Twitter, then Facebook Amount of revenue generated – Spending on social network advertising generates only about 30% of total digital ad spending – Meta (Facebook/Instagram) dominates in U.S. ad spending on social networks: $50 billion in 2021 © 2023 Pearson Education Ltd. All Rights Reserved 7 © 2023 Pearson Education Ltd. All Rights Reserved 8 Turning Social Networks into Businesses Most social networks monetize audiences through advertising – LinkedIn - fees for premium services Business use of social networks – Marketing and branding – Reaching younger audience – Listening tool, monitoring online reputation – Collaboration tool © 2023 Pearson Education Ltd. All Rights Reserved 9 3  16/11/2024 Insight on Society: Businesses Beware: The Dark Side of Social Networks Class discussion: – How can businesses accurately judge whether negative comments are from trolls, or whether they have merit and warrant a response? – Have you ever left a negative comment about a product or business? Have others’ negative comments influenced a purchase? – Should a business have any say in how an employee uses social networks outside of the office? © 2023 Pearson Education Ltd. All Rights Reserved 10 Types of Social Networks and Their Business Models (1 of 2) General communities: – Offer opportunities to interact with general audience organized into general topics – Advertising supported by selling ad space on pages and videos Practice networks: – Offer focused discussion groups, help, and knowledge related to area of shared practice – May be profit or nonprofit; rely on advertising or user donations © 2023 Pearson Education Ltd. All Rights Reserved 11 Types of Social Networks and Their Business Models (2 of 2) Interest-based social networks: – Offer focused discussion groups based on shared interest in some specific subject – Usually advertising supported Affinity communities: – Offer focused discussion and interaction with other people who share same affinity (self or group identification) – Advertising and revenues from sales of products Sponsored communities: – Created by government, nonprofit, or for-profit organizations for purpose of pursuing organizational goals © 2023 Pearson Education Ltd. All Rights Reserved 12 4  16/11/2024 Social Network Features and Technologies Algorithms, computer algorithms – Produce relationship-based content – Affinity groups Profiles, Feeds, Timeline, Stories Friends, Groups, Network discovery Favorites (Likes) Games and apps Instant messaging, Message boards Storage © 2023 Pearson Education Ltd. All Rights Reserved 13 Insight on Technology: Are Facebook’s Algorithms Dangerous? Class Discussion – How does Facebook’s News Feed (Feed) algorithm work? – What problems does using algorithms solve for Facebook? – Should Facebook be held responsible for presenting an equal number of both liberal and conservative opinions? – Do you think Facebook’s algorithm is dangerous? Why or why not? © 2023 Pearson Education Ltd. All Rights Reserved 14 Facebook’s Algorithms The algorithm compiles a list of all available posts from their connections, including friends, followed pages, and groups. This collection forms the pool of content that could appear in the user's Feed. Each post is analyzed based on various signals, which are data points reflecting user behavior and content attributes. Key signals include: 1. User Interactions: Past behaviors such as likes, comments, shares, and time spent on similar content. 2. Content Type: The format of the post, such as video, image, or link, and the user's historical engagement with these formats. 3. Post Recency: The age of the post, with newer content generally prioritized. 4. Poster Relationship: The user's relationship with the content creator, giving preference to posts from friends and family. Using machine learning models, Facebook predicts the likelihood of the user engaging with each post. These predictions estimate the probability of actions like commenting, sharing, or reacting to the content. Each post is assigned a relevance score based on the assessed signals and engagement predictions. Posts with higher scores are deemed more relevant and are positioned more prominently in the user's Feed. © 2023 Pearson Education Ltd. All Rights Reserved 15 5  16/11/2024 Online Auctions Consumer-to-consumer auctions: auction company acts as intermediary market maker, providing forum where buyers and sellers can discover prices and trade eBay is the market leader Although declining as a popular method for sale, there are still numerous auction sites Also used in B2B e-commerce © 2023 Pearson Education Ltd. All Rights Reserved 16 Benefits of Auctions Liquidity Price discovery Price transparency Market efficiency Lower transaction costs Consumer aggregation Network effects © 2023 Pearson Education Ltd. All Rights Reserved 17 Risks and Costs of Auctions Delayed consumption costs Monitoring costs – Possible solutions include fixed pricing Equipment costs Trust risks – Possible solution-rating systems Fulfillment costs Merchants also face risks; e.g., nonpayment, false bidding, bid rigging, and so on © 2023 Pearson Education Ltd. All Rights Reserved 18 6  16/11/2024 Auctions as an E-commerce Business Model Among the most successful early business models – eBay the most dominant and successful  Makes money from every stage in auction cycle Advantages in terms of costs – No inventory – No fulfillment activities  No warehouses, shipping, or logistical facilities Success of model qualified by market concentration and dominance of eBay Popularity of online auctions has declined © 2023 Pearson Education Ltd. All Rights Reserved 19 Types of Auctions (1 of 2) English auction: – Single item up for sale to single seller – Highest bidder wins Reverse Auction (“Name Your Own Price”) – Users specify what they are willing to pay for goods or services and multiple providers bid for their business – Prices do not descend and are fixed – Pioneered in B2C arena by Priceline; since discontinued – Now primarily used in B2B auctions © 2023 Pearson Education Ltd. All Rights Reserved 20 Types of Auctions (2 of 2) Penny (bidding fee) auction – Must purchase bids ahead of time – Items owned by the site – Timed auction; last and highest bidder wins © 2023 Pearson Education Ltd. All Rights Reserved 21 7  16/11/2024 Table 11.6 Factors to Consider When Choosing Auctions Considerations Description Type of product Rare, unique, commodity, perishable Stage of product life cycle Early, mature, late Channel-management issues Conflict with retail distributors; differentiation Type of auction Seller v s buyer bias e rs u Initial pricing Low v s high e rs u Bid increment amounts Low v s high e rs u Auction length Short v s long e rs u Number of items Single v s multiple e rs u Price-allocation rule Uniform v s discriminatory e rs u Information sharing Closed v s open bidding e rs u © 2023 Pearson Education Ltd. All Rights Reserved 22 Auction Prices: Are They the Lowest? Auction prices not necessarily the lowest Auctions are social events Herd behavior Unintended results: – Winner’s regret – Seller’s lament – Loser’s lament Consumer trust an important motivating factor in auctions © 2023 Pearson Education Ltd. All Rights Reserved 23 Fraud and Abuse in Auctions Fraud produces information asymmetries between buyers and sellers, causing auctions to fail Types include: – Bid rigging, price matching, shill feedback, feedback extortion, shill bidding, bid siphoning Fraud prevention solutions include: – Rating systems, watch lists, proxy bidding – Investigation units © 2023 Pearson Education Ltd. All Rights Reserved 24 8  16/11/2024 Copyright This work is protected by United Kingdom copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. © 2023 Pearson Education Ltd. All Rights Reserved 25 9