Ecommerce: From Online Stores to Social Networking

e-commerce:From online stores to

social networks

Michael McDonnell

Winterstorm Solutions

[email protected]

http://syntheticlibrarian.com/

2009-03-18

mailto:[email protected]

e-commerce - Michael McDonnell

My BackgroundMy Background

E-Commerce Experience

•TELUS Charitable Giving System ($X,000,000+)

•Skibanff.com ($X00,000)

•Bernard Callebaut Chocolate e-store ($X0,000)

•E-commerce infrastructure at TELUS ($X0,000)

•Mortgage Application for many Credit Unions


Online Stores

Advertising Networks

Social Networks

B2C E-Commerce: B2C E-Commerce: OverviewOverview

11

22

33


Online Stores:Online Stores:Components & Components & ProcessesProcesses

Customer Catalogue

ShoppingCart

CheckoutPaymentCollection

a

b

c

d

Catalogue• List of Products• Descriptions• Prices• Options, size, etc.• Pictures

11

Shopping Cart• A temporary list of

item to be purchased

22

Checkout• Billing Info• Shipping Address• Shipping Cost• Record Order• Process Payment

33


Online Store Example:Online Store Example:Hummingbird Soap & Candle Hummingbird Soap & Candle

http://www.hummingbirdsoap-candle.com/ Site sells soaps and candles

The website is just a catalogue No database at all Just “flat” files stored on the web server

All “e-commerce” is handled by the 3rd party Shopping cart Checkout Payment processing

Paypal never tells bubblehut your CC info


Pay theMerchant

Payment Payment Process:Process:PayPal AccountPayPal Account

Customer

PayPal

a

b c

ChargeCredit Card


Online Store Example:Online Store Example:Chapters.caChapters.ca

http://chapters.ca/ Site sells books The website has an extensive catalogue

BIG Database Probably uses software called “endeca” (very popular

for high-end retail and large university libraries) All “e-commerce” is handled “on-site”

Shopping cart Checkout Payment processing (with the exception of payment

clearing)


Pay theMerchant

Payment Payment Process:Process:Internet Merchant AccountInternet Merchant Account

Customer StoreWebsite

PaymentGateway

a

b

c d

ChargeCredit Card

Example: http://www.beanstream.com/


Online Store Example:Online Store Example:Bubblehut.caBubblehut.ca

http://www.bubblehut.ca Site sells soaps and candles The website is just a catalogue

A database is used to store all product info Web pages are created “on-the-fly” by a program

Only Payment is handled by the 3rd party Shopping cart is part of the website Checkout is part of the website Payment processing is 3rd party

Bubblehut has your CC info if you so choose


Payment Security:Payment Security:Virtual Accounts at Citi BankVirtual Accounts at Citi Bank


Payment Secutiy:Payment Secutiy:Visa Chip CardsVisa Chip Cards

A typical plastic card with an embedded computer chip and microcomputer.

Enables encryption of confidential information and personalization of usage limits.

A card reader reads the encrypted data, and password authentication is used to verify users.


Payment Security:Payment Security:Mastercard SecureCodeMastercard SecureCode


E-commerce is Now “Normal”E-commerce is Now “Normal”

Online Shopping Experience:

7+ Years: 38% of people< 1 Year : 9% of people

2007 is the first time in history that there are more people with online shopping experience than those that don’t

Source: Shop.org; Forrester Research


Online Purchase BehaviourOnline Purchase Behaviour

Most Purchased Least Purchased

1. Food2. Cars & Car Parts3. Pet Supplies4. Appliances and tools5. Health & Beauty Products== “High Touch” Items

1. Computers & Software2. Travel3. Gift Cards4. Toys5. Videogames== “Commodity” Items

Digital Products – Ideal for Online Sale

1. Commodity-like2. Mass-customizable3. Delivered by download4. No need for intermediary5. Global in reach

Examples:• Tickets (travel, events)• Music, Images, Video• Books, News, other info.• Software

Source: Shop.org; Forrester Research


Spending onSpending onAdvertising NetworksAdvertising Networks

US$21 BILLION in 2007

25% higher than 2006

Expected to be 18%, on average, of advertising budgets by 2012


Example:Example:Google AdWordsGoogle AdWords

• Pay-per-click– Price set by bid– Pay when user clicks

• Ads appear on– Search results– Related Website– Other places

• Targeted by keyword– Select keywords– Set maximum price for

add to appear with that keyword

• Ad Position– Determine by

competition based on bids

http://adwords.google.com/


Example:Example:Google AdSenseGoogle AdSense

• Display Ads– Get paid!

• Pay-per-click– Paid when user clicks

• Pay-per-impression– Paid when is displayed

1000 times

• Targeted by keyword– Ad keywords match

content of your webpage

– Ad are relevant to your audience

• Ad Appearance– You determine size,

and appearance of ads

http://www.google.com/adsense/


E-commerce 2.0E-commerce 2.0

Participation == Value

For the customer & For the business

ExamplesYouTubeAmazonE-bay “Professional” Bloggers


Spending on Spending on “Social Computing” Tactics “Social Computing” Tactics

2007 Average Spending

Online Ads: $1.4 million per retailer Direct Email: $300,000 per retailer Blogs: $11,000 per retailer Social Networks: $600 per retailer RSS Feeds: $83,000 per retailer Virtual Worlds: $6,000 per retailer


Big Spenders Big Spenders use Social Networksuse Social Networks

The people who spend the most money online:

68% use social networks25% creator content

Only 27% are inactive in social networks


Example:Example:YouTubeYouTube

Customers

Participate by

distributing

the ads

http://www.youtube.com/watch?v=zBu5dL4QCnY


Example: Example: AmazonAmazon

user generated content Reviews Ratings Buying Patterns

“People who bought this book also bought…”

Online Bookstore or Online Community?

More participation = More value


Example: Example: E-bayE-bay

Customer-to-Customer (C2C) Sales

Customer Participation IS the business Reputation Ratings Payment Processing

More participation = More value


Example: Example: Professional BloggersProfessional Bloggers

FREE Content PAID for Advertisements

Goal: attract an ATTENTION Goal: find an AUDIENCE

Audience Participation Builds COMMUNITY

More participation = More value (to community)


Light ReadingLight Reading• Fiction

– Rainbow’s End by Verner Vinge

– Pattern Recognition by William Gibson

• Non-fiction– The Tipping Point by

Malcolm Gladwell– The Long Tail by Chris

Anderson• Makin’ Money!

– AdWords (Pay for Ads)– AdSense (Get Paid for

Ads)

• Blogs– Seth Godin– Micropersuasion– Charlene Li (Forrester

Research)– Many-to-many– Apophenia (Web 2.0

section)

• Articles– Viral Marketing (Jurvetson

1997)– What is Web 2.0 (O’Reilly

2005)

http://adwords.google.com/

http://www.google.com/adsense/

http://sethgodin.typepad.com/

http://sethgodin.typepad.com/

http://www.micropersuasion.com/

http://blogs.forrester.com/charleneli/

http://many.corante.com/

http://www.zephoria.org/thoughts/archives/web20/

http://www.dfj.com/cgi-bin/artman/publish/steve_tim_may97.shtml

http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html


Questions?Questions?

[email protected]://syntheticlibrarian.com/

I would be happy to answer your questions you have now,

or by email later.


OLD SLIDESOLD SLIDES All slides after this one are old slides deleted

from the presentation but preserved for reference.


•Products•Prices•Descriptions•Accounts

Your Website

Database

Web Hosting Company

Suppliers

Online StoresOnline Stores

Customers

Banks

PaymentProcessor


Online Stores:Online Stores:Hardware Hardware InfrastructureInfrastructure

Catalogue

ShoppingCart

Checkout

Software Programs

1. Catalogue

2. Shopping Cart

3. Checkout

4. Payment Processing

5. Static Data• Images• Web Pages

Web Server Database Server

Data

1. Product Info

2. Shopping Cart Contents

3. Orders

4. Customer Account Info


Early e-commerce:Early e-commerce:Online StoresOnline Stores

Internet used to conduct retail sales (B2C)

A bit of history: Problem:No Security = No Sales

Solution: Encryption and Digital Signatures SSL : Secure Socket Layer HTTPS = HTTP + SSL (Security)


Why SSL?Why SSL?EncryptionEncryption

Encryption Hackers

“sniff” and capture data

Encrypted data can be captured, but not decrypted

Browser Router

Server

Router Router

Router RouterRouter Hacker

Sniffer


Why SSL?Why SSL?Digital SignaturesDigital Signatures

Browser Router

Server

Router Router

Router RouterRouter Hacker

FAKEServer

Authentication Hackers

reroute connections

Server “key” cannot be faked

Fake server cannot pretend to be real one


Online Store

33rdrd Party Hosted Shopping Party Hosted Shopping and Paymentand Payment

Customer Catalogue

ShoppingCart

Checkout PaymentCollection

1

2

3

4

PaymentProcessingCompany


OnlineStore

Website

33rdrd Party Payment Only Party Payment Only

Customer Catalogue

ShoppingCart


1

2

3

4



Payment Processing Payment Processing Hidden From UserHidden From User

Customer Catalogue

ShoppingCart


1

2

3

4


PaymentGateway

5

OnlineStore

Website


B2C Marketing: Spawn.com VideoB2C Marketing: Spawn.com Video

http://highered.mcgraw-hill.com/sites/007305223x/instructor_view0/videos.htm#

http://highered.mcgraw-hill.com/sites/007305223x/instructor_view0/videos.htm

http://highered.mcgraw-hill.com/sites/007305223x/instructor_view0/videos.htm


Future e-commerce:Future e-commerce:Web 2.0Web 2.0

Collaboration and Participation Read+WRITE vs Read-ONLY Examples

Flickr http://flickr.com/

Del.ico.us http://del.ico.us/

AskMetaFilter http://ask.metafilter.com


Example: Example: My Space & FacebookMy Space & Facebook

“Social Networks” PAID for Advertisements PAID for Customer Profile Information??

Goal: develop a NETWORK

Audience Participation Reveals IDENTITY Builds COMMUNITY

More participation = More value (to business)

Business

Ecommerce: From Online Stores to Social Networking