E-Commerce – customer focus

Computing Science, University of Aberdeen 1

E-Commerce – customer focus

Attracting and keeping customers» Key issue: trust, security

Legal issues Personalization Adverts


Customers are not all the same!

Consumer types» Individual consumers» Organizational buyers

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

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


Consumer Behaviour

Prentice Hall, 2002


Consumer Satisfaction

Prentice Hall, 2002


Trust/Security Trust/Security

» Will the company actually deliver the correct product/service 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 Human aspects: Focus here on trust and, to some

extent, policies


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


On-line trust What makes you trust an e-commerce

shop?


On-line Trust Experience: I trust Amazon because I’ve used them

before» Reputation: because my friends use them» Very important with e-shops» Specific technicalities; for example,

accounts/cards compromised or not? Appearance: Do I trust Amazon because they have a

nice website?» Less important than with physical shops» Marketing helps


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?


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


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


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!


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


Personalization 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

One-to-One MarketingBuild a long term associationMeeting customers cognitive needs

Customer may have novice, intermediate or expert skillE-loyalty—customer’s loyalty to an e-tailer

costs Amazon $15 to acquire a new customer costs Amazon $2 to $4 to keep an existing customer

Trust in EC Deterrence-based —threat of punishment Knowledge-based —reputation Identification-based —empathy and common values Referrals – Viral Marketing

Personalisation…

Personalisation - Marketing Model“Treat different customers differently”

Prentice Hall, 2002

Personalisation“Process of matching content, services, or

products to individuals’ preferences”Build profiles – N.B. Privacy Issues

Solicit information from users Use cookies to observe online behavior Use data or Web mining


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

Data Mining

Automated prediction of trends and behaviors Example: from data on past promotional mailings, find out

targets most likely to respond in futureAutomated discovery of previously unknown patterns Example: find seemingly unrelated products often purchased

together Example: Find anomalous data representing data entry errors

Mining tools: Neural computing Intelligent agents Association analysis - statistical rules

Web Mining - Mining meaningful patterns from Web resources Web content mining – searching Web documents Web usage mining – searching Web access logs

searching for valuable information in extremely large databases


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?


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


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


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


Advertising E-Shops (and other sites) can make

money via advertising» Google makes billions from its “sponsored

links”» Amazon has adverts as well


Web Advertising Conventional advertising focuses on

visual appeal Less successful on web

» Flashy animated banner adverts are a nuisance and distraction


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


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!


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


E-Commerce Summary Sometimes technology really helps

» Recommender systems, targeted adverts Sometimes technology works but

society doesn’t like it» Differential pricing

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E-Commerce – customer focus