e-commerce:
From online stores to
social networks
Michael McDonnell
Winterstorm Solutions
[email protected]
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
a
Customer
Catalogue
1
Catalogue
• List of Products
• Descriptions
• Prices
• Options, size, etc.
• Pictures
2
Shopping Cart
• A temporary list of
item to be
purchased
3
Checkout
• Billing Info
• Shipping Address
• Shipping Cost
• Record Order
•e-commerce
Process
Payment
- Michael
McDonnell
b
Shopping
Cart
c
d
Payment
Collection
Checkout
Online Store Example:
Bubblehut.ca

http://www.bubblehut.ca


Site sells soaps and candles
The website is just a catalogue



All “e-commerce” is handled by the 3rd party




No database at all
Just “flat” files stored on the web server
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
Website
Customer
b
Charge
Credit Card
c
d
Payment
Gateway
Pay the
Merchant
Example: http://www.beanstream.com/
e-commerce - Michael McDonnell
Payment Process:
PayPal Account
Customer
a
PayPal
b
Charge
Credit Card
c
Pay the
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
1.
2.
3.
4.
5.
Computers & Software
Travel
Gift Cards
Toys
Videogames
== “Commodity” Items
Least Purchased
1.
2.
3.
4.
5.
Food
Cars & Car Parts
Pet Supplies
Appliances and tools
Health & Beauty Products
== “High Touch” Items
Digital Products – Ideal for Online Sale
1.
2.
3.
4.
5.
Commodity-like
Mass-customizable
Delivered by download
No need for intermediary
Global in reach
Source: Shop.org; Forrester Research
Examples:
• Tickets (travel, events)
• Music, Images, Video
• Books, News, other info.
• Software
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
– 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/
e-commerce - Michael McDonnell
Example:
Google 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 - Michael McDonnell
E-commerce 2.0

Participation == Value



For the customer
For the business
Examples


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
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
– 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)
e-commerce - Michael McDonnell
Questions?
[email protected]
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
•Prices
•Descriptions
•Accounts
Your Website
Payment
Processor
Database
Web Hosting Company
e-commerce - Michael McDonnell
Online Stores:
Hardware Infrastructure
Web Server
Catalogue
Software Programs
1. Catalogue
Data
1. Product Info
2. Shopping Cart
3. Checkout
Shopping
Cart
4. Payment
Processing
5. Static Data
• Images
• Web Pages
Database
Server
2. Shopping Cart
Contents
3. Orders
4. Customer
Account Info
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
Hackers
“sniff” and
capture data
Encrypted
data can be
captured, but
not decrypted
Browser
Router
Server
Router
Router
Router
Router
Hacker
Router
Sniffer
e-commerce - Michael McDonnell
Why SSL?
Digital Signatures




Authentication
Hackers
reroute
connections
Server “key”
cannot be
faked
Fake server
cannot pretend
to be real one
Browser
Router
Server
Router
Router
Router
Router
Hacker
Router
FAKE
Server
e-commerce - Michael McDonnell
3rd Party Hosted Shopping
and Payment
1
Customer
Catalogue
2
Online Store
Payment
Processing
Company
Shopping
Cart
3
4
Checkout
Payment
Collection
e-commerce - Michael McDonnell
rd
3
Party Payment Only
1
Customer
Catalogue
Online
Store
Website
2
Shopping
Cart
Payment
Processing
Company
3
4
Checkout
Payment
Collection
e-commerce - Michael McDonnell
Payment Processing
Hidden From User
1
Customer
Catalogue
Online
Store
Website
2
Shopping
Cart
Payment
Processing
Company
3
4
Checkout
Payment
Collection
5
Payment
Gateway
e-commerce - Michael McDonnell
B2C Marketing: Spawn.com Video

http://highered.mcgrawhill.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


Del.ico.us


http://flickr.com/
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