ecommerce

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					       e-commerce:
From online stores to
     social networks
  Michael McDonnell
           Winterstorm Solutions
        michael@winterstorm.ca
    http://syntheticlibrarian.com/
                       2007-10-30
                   My 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


                                      e-commerce - Michael McDonnell
     B2C E-Commerce:
             Overview

1      Online Stores


2   Advertising Networks


3     Social Networks
                   e-commerce - Michael McDonnell
          Online Stores:
  Components & Processes
                                     Catalogue
Customer
             a
                     Catalogue   1   • List of Products
                                     • Descriptions
                                     • Prices
                                     • Options, size, etc.
                      b              • Pictures

                                     Shopping Cart
                     Shopping
                       Cart      2   • A temporary list of
                                       item to be
                                       purchased
                      c
                 d                   Checkout
Payment
Collection
                     Checkout    3   • Billing Info
                                     • Shipping Address
                                     • Shipping Cost
                                     • Record Order
                                     • Process Payment
                                     e-commerce - Michael McDonnell
                Online Store Example:
                         Bubblehut.ca
   http://www.bubblehut.ca
       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
                                                     e-commerce - Michael McDonnell
                Online Store Example:
                          Chapters.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)

                                                  e-commerce - Michael McDonnell
                              Payment Process:
        Internet Merchant Account
                      a
                                 Store
  Customer
                                Website


                               b



                                          d
                          c
   Charge                       Payment                   Pay the
 Credit Card                    Gateway                   Merchant


Example: http://www.beanstream.com/
                                              e-commerce - Michael McDonnell
                      Payment Process:
                        PayPal Account

Customer
                  a



                        PayPal
              b                  c



  Charge                                 Pay the
Credit Card                              Merchant


                                 e-commerce - Michael McDonnell
           Payment Security:
Virtual Accounts at Citi Bank




                     e-commerce - Michael McDonnell
                                  Payment Secutiy:
                                   Visa 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.
                                          e-commerce - Michael McDonnell
     Payment Security:
Mastercard SecureCode




              e-commerce - Michael McDonnell
                Online Purchase Behaviour
                 Most Purchased                             Least Purchased

 1.     Computers & Software                        1.   Food
 2.     Travel                                      2.   Cars & Car Parts
 3.     Gift Cards                                  3.   Pet Supplies
 4.     Toys                                        4.   Appliances and tools
 5.     Videogames                                  5.   Health & Beauty Products
 == “Commodity” Items                               == “High Touch” Items

                              Digital Products – Ideal for Online Sale
 1.     Commodity-like                              Examples:
 2.     Mass-customizable                           • Tickets (travel, events)
 3.     Delivered by download                       • Music, Images, Video
 4.     No need for intermediary                    • Books, News, other info.
 5.     Global in reach                             • Software
Source: Shop.org; Forrester Research                                e-commerce - Michael McDonnell
          Advertising Networks
   Online stores are now common
     Internet used to increase sales
     not just to facilitate sales

   Advertising is now big business
     US$7.9 BILLION in 1st Q 2006
     37% higher than 1st Q 2005


   Web Analytics is growing
     Analyze web data to convert visitors into
      buyers
                                      e-commerce - Michael McDonnell
                                     Example:
                              Google AdWords
• Pay-per-click                  • Targeted by keyword
   – Price set by bid              – Select keywords
   – Pay when user clicks          – Set maximum price for
                                     add to appear with that
• Ads appear on                      keyword
   – Search results
   – Related Website
                                 • Ad Position
   – Other places                  – Determine by
                                     competition based on
                                     bids
 http://adwords.google.com/
                                             e-commerce - Michael McDonnell
                                 Example:
                           Google AdSense
• Display Ads                    • Targeted by keyword
  – Get paid!                      – Ad keywords match
                                     content of your
• Pay-per-click                      webpage
  – Paid when user clicks          – Ad are relevant to your
                                     audience
• Pay-per-impression
  – Paid when is displayed       • Ad Appearance
    1000 times                     – You determine size,
                                     and appearance of
                                     ads
http://www.google.com/adsense/
                                             e-commerce - Michael McDonnell
                      E-commerce 2.0
   Participation == Value
       For the customer
       For the business
   Examples
       YouTube
       Amazon
       E-bay
       “Professional” Bloggers


                                  e-commerce - Michael McDonnell
                                 Example:
                                 YouTube
Customers
Participate
     by
distributing
  the ads



               http://www.youtube.com/watch?v=zBu5dL4QCnY
                                       e-commerce - Michael McDonnell
                                           Example:
                                            Amazon
   user generated content
       Reviews
       Ratings
       Buying Patterns
           “People who bought this book also bought…”

   Online Bookstore or Online Community?

   More participation = More value

                                                e-commerce - Michael McDonnell
                                 Example:
                                    E-bay
   Customer-to-Customer (C2C) Sales

   Customer Participation IS the business
       Reputation Ratings
       Payment Processing

   More participation = More value



                                      e-commerce - Michael McDonnell
                          Example:
             Professional Bloggers
   FREE Content
   PAID for Advertisements

   Goal: attract an ATTENTION
   Goal: find an AUDIENCE

   Audience Participation
       Builds COMMUNITY


   More participation = More value (to community)
                                         e-commerce - Michael McDonnell
                               Light Reading
• Fiction                      • Blogs
   – Rainbow’s End by Verner      – Seth Godin
      Vinge                       – Micropersuasion
   – Pattern Recognition by       – Charlene Li (Forrester
      William Gibson                Research)
• Non-fiction                     – Many-to-many
   – The Tipping Point by         – Apophenia (Web 2.0
      Malcolm Gladwell              section)
   – The Long Tail by Chris
      Anderson
                               • Articles
• Makin’ Money!
                                  – Viral Marketing (Jurvetson
   – AdWords (Pay for Ads)
                                    1997)
   – AdSense (Get Paid for
      Ads)                        – What is Web 2.0 (O’Reilly
                                    2005)

                                              e-commerce - Michael McDonnell
                     Questions?

     michael@winterstorm.ca
   http://syntheticlibrarian.com/

I would be happy to answer your
    questions you have now,
         or by email later.
                             e-commerce - Michael McDonnell
                             OLD SLIDES
   All slides after this one are old slides deleted
    from the presentation but preserved for
    reference.




                                        e-commerce - Michael McDonnell
                              Online Stores
                            Customers


                                                          Banks




Suppliers   •Products                                   Payment
            •Prices          Your Website
                                                       Processor
            •Descriptions
            •Accounts

            Database

                   Web Hosting Company
                                            e-commerce - Michael McDonnell
                 Online Stores:
          Hardware Infrastructure
Web Server                        Database
                    Catalogue      Server
Software Programs
1. Catalogue                    Data
                                1. Product Info
2. Shopping Cart

3. Checkout         Shopping    2. Shopping Cart
                                   Contents
                      Cart
4. Payment
                                3. Orders
   Processing
                                4. Customer
5. Static Data
                                   Account Info
    • Images
    • Web Pages     Checkout

                                   e-commerce - Michael McDonnell
                      Early e-commerce:
                           Online 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)




                                            e-commerce - Michael McDonnell
                                 Why SSL?
                                 Encryption
   Encryption
                    Browser   Router    Router            Router
   Hackers
    “sniff” and
    capture data
   Encrypted        Router    Router   Hacker            Router

    data can be
    captured, but
    not decrypted                       Sniffer
                     Server



                                         e-commerce - Michael McDonnell
                         Why SSL?
                 Digital Signatures
   Authentication
                     Browser   Router    Router            Router
   Hackers
    reroute
    connections
   Server “key”      Router    Router   Hacker            Router
    cannot be
    faked
   Fake server
    cannot pretend    Server
                                         FAKE
                                         Server
    to be real one

                                          e-commerce - Michael McDonnell
   3rd Party Hosted Shopping
                and Payment
           1
Customer            Catalogue

               2   Online Store

                    Shopping           Payment
                      Cart            Processing
               3
                                       Company
                                  4
                                           Payment
                    Checkout
                                           Collection

                                       e-commerce - Michael McDonnell
     3rd   Party Payment Only
           1
                               Online
Customer           Catalogue
                                Store
                               Website
               2


                   Shopping            Payment
                     Cart             Processing
                                       Company
               3

                               4
                                       Payment
                   Checkout
                                       Collection

                                   e-commerce - Michael McDonnell
               Payment Processing
                 Hidden From User
           1
Customer        Catalogue
                                Online
           2                     Store
                                Website
                Shopping                              Payment
                  Cart                               Processing
                                                      Company
           3

                            4   Payment         5       Payment
                Checkout
                                Collection              Gateway

                                             e-commerce - Michael McDonnell
     B2C Marketing: Spawn.com Video
   http://highered.mcgraw-
    hill.com/sites/007305223x/instructor_view0/vi
    deos.htm#




                                      e-commerce - Michael McDonnell
                          Future e-commerce:
                                     Web 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

                                        e-commerce - Michael McDonnell
                        Example:
             My 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)
                                          e-commerce - Michael McDonnell

				
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