Exercise 1 - Analysis of the online communities paradigm

Exercise 1: Analysis of the online communities paradigm

1. Visit http://yahoo.com and http://facebook.com as examples of online communities.

a. What is meant by an online community and how is it important for e-commerce?

The term online community generally refers to a meeting place for people on the Internet, often designed to facilitate interaction and collaboration among people who share common interests and needs. These “communities” can be open to all or by membership only and may or may not offer moderator tools. Wikipedia (2010) has an an interesting, albeit short entry on online communities. The Internet is teeming with such communities, each with its own set of interests and personalities including popular online communities such as Yahoo, Facebook and MySpace. Facebook in particular markets itself as a social networking site which consists of a representation of each user (often a profile), his or her social links, and a variety of additional services. Most online communities are web based and provide means for users to interact over the internet, such as e-mail and instant messaging. Given the explosive popularity on online communities, their importance to e-commerce cannot be underestimated. Yahoo, by way of example is an online community which offers commerce services such as Yahoo Shopping, Yahoo Autos, Yahoo Real Estate and Yahoo Travel, which enables users to gather relevant information and make commercial transactions and purchases online. In addition, Yahoo offers an e-commerce platform called Yahoo Merchant Solutions and hosts other internet retailers. Further, given sites such as Facebook contain profiles which may be seen as “virtual potential customers” these communities provide unprecedented access to markets. The traditional constraints such a geographical boundaries no longer exist, giving marketers access to large numbers of consumers in one virtual location.

b. Is there a common thread and a local community sense in action?

For both Yahoo and Facebook, and the vast majority of successful online communities there is a common thread and local community sense through creating a sense of belonging to that particular community. With Facebook, members sign-up and create their own profiles and then begin to add “friends” with who they may share pictures, blogs and other website content. Members of this community are interacting and building relationships and social networks online, and through doing this, creating a community sense. By creating a place where users can interact with like-minded individuals and establish a sense of belonging, a common thread and community sense is naturally created through human interaction, albeit online. When you think about it online communities really aren’t that much different to traditional communities. They are groups of people coming together over a common interest, sharing their unique language and building an identity that provides value to everyone and makes them stronger.

2. Visit the famous online store front at http://www.amazon.com a. Why has it been a successful site? How does the purchase of a book work?

Amazon has been so very successful due to their focus on the customer and their needs, reflected through their user friendly website, their encouraging of customer interaction and customer feedback and complex inventory and distribution system. Amazon has worked on the premise of firstly identifying customer needs that are meaningful and durable and then working towards delivering a solution to meet that need. This has meant that Amazon has steadily branched from a simple online book seller into retail sales of music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewellery, watches, health and personal-care items, beauty products, musical instruments, clothing, industrial & scientific supplies, groceries and much more. Buying a book on Amazon.com is as simple as going to the website, searching for a book by either title or author using the easy to use search facility. Once you have located the book you would like to purchase, you can simply add in to your virtual shopping cart and then proceed to the virtual checkout by clicking the relevant buttons. Once at the checkout, if you are a first time user, you will be required to set up an account, where you enter a user name and password and delivery details. Once this is done, provided the delivery address for a particular user remains the same, you only have to complete this once and subsequent purchases will only require the user to log in. Once the method of delivery is chosen, the customer is directed to the payment site. Amazon user may choose to have their credit card details stored on a secure server so that they don’t have to enter details every time. Once payment is made, the order is processed.

b. Are there any secure transactions not involving money?

On Amazon there are numerous payment options including all major credit cards, payment using the Amzon.com store card, using a promotional card or using a checking account.

3. What happens with new models emerging such as price comparison sites.

Despite the wording of the question, price comparison sites aren’t new and have been in existence since the late nineties. Price comparison sites allows customers to see different lists of prices for specific products. Again, Wikipedia (2010) has an interesting artile on Price Comparison Services. Most price comparison sites do not actually sell products themselves, but source prices from retailers from whom users can buy. Price comparison sites typically do not charge users anything to use the site. Instead, they are make money through payments from retailers who are listed on the site. How this occurs depends on the particular business model of the comparison shopping site but retailers will either pay a flat fee to be included on the site or pay a fee each time a user clicks through to the retailer web site or pay every time a user completes a specified action.