Dr. Ehud Reiter, Computing Science, University of Aberdeen1 E-Commerce (2) l Attracting and keeping customers »Issue: security, trust l Legal issues l.

Dr. Ehud Reiter, Computing Science, University of Aberdeen 1

E-Commerce (2)

Attracting and keeping customers» Issue: security, trust

Legal issues Personalisation Adverts

Dr. Ehud Reiter, Computing Science, University of Aberdeen 2

Customers are different!

Consumer types» Individual consumers» Organizational buyers

Goal of shopping» Pragmatic: buy something useful, cheaply» Hedonic: have fun

Personality» Impulsive buyers—purchase quickly» Patient buyers—make some comparisons first» Analytical buyers—do substantial research before buying

Dr. Ehud Reiter, Computing Science, University of Aberdeen 3

Consumer Behaviour

Prentice Hall, 2002

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Consumer Satisfaction

Prentice Hall, 2002

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Security/Trust

Security/trust» Will the company actually deliver the

correct product in reasonable shape, in a reasonable time, at correct price

» Will the customer pay up (is the credit card stolen, will it be repudiated)

Technical aspects (CS5401) Focus here on trust

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Trust in physical shops

Experience: shoppers trust shops they’ve used before

Appearance: shoppers trust store that look reputable

Complaints: easy to complain, shop can’t hide

Transactions are simple

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On-line trust

What makes you trust an e-commerce shop?

Dr. Ehud Reiter, Computing Science, University of Aberdeen 8

On-line Trust

Experience: I trust Amazon because I’ve used them before» Reputation: because my friends use them» Very important with e-shops

Appearance: do I trust Amazon because they have a nice website???» Less important than with physical shops» Marketing helps

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On-line trust

Complaints: Harder to complain since don’t know where shop is

Transactions are complex because of delivery» Where many e-shops mess up

Third-party: do I trust Amazon more if another web site says good things about Amazon (???)

Dr. Ehud Reiter, Computing Science, University of Aberdeen 10

Does Amazon Trust Me?

Amazon trusts me because» Experience: I’ve always paid Amazon

before» Reputation: I’ve used other companies and

always paid up» Marketing: Amazon threatens nasty things

to customers who don’t pay up

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Trust

We know how trust is established in physical shops.

We are developing mechanisms for establishing trust in e-shops» Partially technology, but psychology and

sociology probably matter more» Lack of trust mechanisms is barrier to new

e-shops

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Legal Issues: Tax

In USA, one driving force behind early e-store success was less tax» Because of a tax loophole, sales tax (VAT)

was not charged on e-commerce sales Automatically gave price advantage to

e-commerce sites!

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Legal Issues: Intl E-Commerce

In theory, e-commerce means sites can sell globally

In practice, difficult because of different tax rules, regulations, customs, etc» More common to set up subsidiaries in

different countries, as Amazon has done Lack of global legal/regulatory

framework hinders ecommerce

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Personalisation

E-Commerce sites can treat customers differently» Offer recommendations, special deals» Personalise web site» Adjust prices

In theory, “personalised shop” one of the great benefits of e-commerce

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Recommendation

Build profiles» What has X bought?» What has X looked at?» Demographics: age, gender, etc

Recommendation» Rules: If X buys Harry Potter 6, recommend HP 7» Data Mining: Other people who bought Harry

Potter also bought Lord of the Rings» Collaborative: X’s overall buying profile is similar

to Y, so recommend whatever Y bought

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Recommendations

If done well, perceived very positively» Real benefit, not just marketing spam» Credit-card companies have done this well

– Have the most purchasing data?

Data privacy issues» Can Visa sell data about you to Amazon?» Spyware to track all of your web browsing?

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Personalise Web Sites

Let customers create their own “shop front” focusing on their interest

Adjust appearance (eg, for visually disabled, or strict Muslims)

Doable, not huge success

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Personalised Pricing

Companies would love to be able to charge people different amounts for the same product» Airline seats, cars, etc» Full price for people who are keen, in a

rush, don’t care about money» Discount for choosy/finicky

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Personalised Pricing

Amazon, etc have tried this, but customers hated it.

So has gone “underground” for now. Technology permits this, but society’s

expectations does not allow it

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Advertising

E-Shops (and other sites) can make money via advertising» Google makes billions from its “sponsored

links”» Amazon has adverts as well

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Web Advertising

Conventional advertising focuses on visual appeal

Less successful on web» Flashy animated banner adverts are a

nuisance and distraction

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Targeted adverts

Web allows relevant adverts to be associated with a web page» Google sponsored links based on search» Amazon could display different adverts for

sci-fi and romance novel Very effective if done well

» So Web sites can charge more for targeted adverts

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Web adverts

Initially treated like TV adverts, put huge effort into flashy multimedia banner ads

Now focusing on simple targeted adverts instead

Advertising models cannot be blindly moved from TV to web» need new models!

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E-Commerce Summary

Initially tried to make e-shops similar to high street shops. But» Need different business model» Trust issues much more important» Need appropriate legal framework

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E-Commerce Summary

Sometimes technology really helps» Recommender systems, targeted adverts

Sometimes technology works but society doesn’t like it» Differential pricing