Module 2: E-COMMERCE SYSTEMS

Learning Focus:

A. TRADITIONAL E-COMMERCE

Traditional commerce means communicating (ordering, paying) with customer and supplier using
different applications in many time-consuming different steps. The traditional commerce is where all three
components are physical. In contrast, these components are all digital at the core of electronic commerce, where
not only production, but also delivery, payment, and consumption (reading online or processing by a computer
program) occur online. The remaining white areas are part of conventional electronic commerce, in which some
of the components are digital. For example, products may be physical, but marketing and payment may be
conducted online; products may be digital, but payments could be made via checks, or buyers may be reading
printouts instead of screen outputs. The growing use of digital processes for business-to-business transactions
and consumer marketing is evident in the figure, which shows that electronic commerce dominates the traditional
market. Most of current electronic commerce applications and issues fall within the white areas of figure 1.3,
dealing with one aspect on a particular axis, for example, setting up a web store, content digitization, electronic
payments, online marketing, and so on. Later chapters in this book also tackle these issues one by one, and
consumers are not limited to digital product sellers. However, in each chapter, every effort to analyze an issue in
a broader context that includes all three components of a market is made. Therefore, product digitization (of the
product axis) is discussed in connection with online consumption and digital marketing (of the process axis) and
the role of web store sales representatives (of the player axis).
Market activities, from production to consumption, occurring online, bypassing all paper-based transactions and
traditional communications media, represent the future of electronic commerce. The Internet becomes not only
an alternative communication medium, but a microcosm, or an electronic version, of physical markets with
characteristics that are fundamentally different from physical markets.
This digital world of business, in which market institutions, agents, and products are becoming "virtual"
and native to the Internet, is also at the core of electronic commerce economics. The main difference between
the digital world of business and the traditional, physical business world stems from the very nature of digitized
products. However, there are many reasons why consumers too will behave differently in a networked market.
For example, access to product information via the network using sophisticated computer programs will certainly
affect the way consumers compare prices. In turn, efficient shopping will affect product choices, pricing strategies,
and competitive efforts among sellers. Business organizations and relationships will also be affected as spatial
and temporal limitations of the market are removed and replaced by different considerations of costs, efficiencies,
and the mode of interaction on a network. In other words, the market environment, enabled by the open distributed
Internet, resembles no other physical market. The physical distance and geographical topology of a market are
replaced with network architectures and preference-based market territories. Thus, the objective is to investigate
the economic aspects of this newly emerging market of electronic commerce by applying standard economic
tools and by evaluating qualitative differences in economic efficiencies and organizational changes.
B. EMOTION-ORIENTED E-COMMERCE

Understanding Emotion
Many theorists have discussed what emotions are and its function in human life. This debate is
continuous and presently there is no collectively accepted definition of emotions. However, humans do
experience various dimensions of emotions on a daily basis. A limitation in the study of emotion is the lack of a
common language. Words like emotions, moods, drives, sentiments and attitudes are usually interchangeable by
researchers. If a distinction is not made among the terms, confusion may take place.

Causes of Emotions
What causes emotions? The answer to this question is essential in determining how to deal with the
multiple emotions that are generated when engaging in an eCommerce activity. In an eCommerce environment,
interfaces should be designed in a manner that will encourage the desired emotion. Understanding the causes
of emotions will enable designers to determine which design elements encourages positive or negative emotions.

Social Contagion
The social contagion theory is seen as a major cause of emotion. Emotions are based upon the emotions
of others [60]. For example, a sad person will often make another person feel sad. A simple smile or frown can
affect the mood of another person [61]. Cacioppo [62] stated that social contagion represents the tendency to
automatically mimic and synchronize facial expressions, vocalizations, postures, and movements with those of
another person. In relation to interface design, what is presented onscreen will directly influence the emotions of
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the users. If a user sees a smile or a frown on the screen, the user’s emotional state would reflect the emotion
being portrayed. Emotions in interfaces can be contagious [63]. An online intelligent character that exhibit
excitement over a particular product can make the users feel even more excited.

Users’ Needs
A user uses a computer to achieve a particular result – typing a document, accessing email, or
purchasing a product. The degree to which an interface encourages or limits the achievement of the needs of the
user, will ultimately affect their emotional state. A system which recognizes and interprets the emotions of the
user can use such information to determine whether their needs are being met [63]. Zhang et. al. suggested
revisiting Maslow’s basic need hierarchy to ask what humans want or what they need in their lives and then use
technologies to support humans’ higher needs in the needs hierarchy [65]. When a certain situation satisfies the
needs of the user, positive emotions would take place. The elements which interfere with satisfying these needs
would cause negative emotions. In emotion-oriented eCommerce, the design of the interface requires good
understanding of the customers’ needs.

Intelligent Emotion Recognition

Emotion recognition is very important for the development of affective human-machine interaction
systems [68] and emotions can be provoked using various methods. The main methods include imagination,
hypnosis, music, social interaction, imitation of a facial expression, or memories of positive and negative life
events. Perhaps one of the most controversial and widely used methods to induce an experimental emotion or
mood is the Velten (1968) Mood Induction Procedure [26]. In this procedure, subjects read a series of cards that
either progress from mildly happy to absolutely euphoric, or from mildly depressing to clearly depressing. Because
the actor is instructed to attempt to feel the emotion expressed in the cards, and because there can be no doubt
what that emotion is, several investigators have argued that the emotion created by the Velten technique simply
represents the actor’s compliance to demand characteristics [27]. The importance of affect or emotion on
cognitive processes and behaviour [20] and the growth in the use of the internet warrants the understanding of
factors that would influence affect during someone’s online experience. It is important to remember that ‘affect’
is an umbrella term to describe moods and emotions [12]. A study was done to examine whether positive or
negative emotions can be induced by viewing positive or negative materials online. If an emotion can be induced
online through visual and written stimuli, designers of websites may use these stimuli to induce certain reactions
in users such as increasing their remembrance of advertisements or influencing their purchase decisions Once
emotion shows to be an important variable in cognition and decision behaviour future studies can have potentially
important implications for measurements in research that investigates online decision behaviour. The study of
emotion-oriented eCommerce falls under the purview of affective or emotion-oriented computing. Emotion-
oriented computing relates to, arises from or deliberately influences emotion or another affective phenomenon.
Research has contributed to [15]:
• Designing new methods for people to communicate affective cognitive states.
• Developing new technologies that would enter frustration, stress and mood indirectly through natural
interaction and conversation.
• Show how computer can be more emotionally intelligent, especially reducing the person’s negative
feelings.
• Creating personal technologies for improving self-awareness of affective states
• Examination of ethical issues in affect computing.
Once companies have applied the techniques to encourage the positive emotion in the eCommerce
customer, the system must be able to recognize and respond to those emotions. Emotion recognition involves
assigning computers with the ability to observe, interpret and generate affect features. Its intent is to improve the
quality of communication between the customer and eCommerce system. The capturing and processing of
emotions by the computer is a new study. The standard procedures of affective interaction consist of affect
information capture and modelling, and affect understanding and expression. Researchers are utilizing various
methods of capturing emotions of the user. Such data should be processed to generate an adequate emotional
response that would satisfy the customer’s needs. Bianchi-Berthouze developed a technology that improves the
sense of engagement or immersion of its users (positive usability) by taking into account their affective states.
Their body postures were used as an indicator of human affective states. A comprehensive framework for the
study relies on a computationally-tractable characterization of emotion in terms of the intensities of its autonomic
response, its communicative intent, and the influence of cultural factors. The recognition of affective human
communication may provide developers with a rich source of information for creating systems that are capable
of interacting well with humans. Posture has been acknowledged as an important modality of affective
communication. Behavioural studies have shown that posture can communicate discrete emotion categories as
well as affective dimensions [11]. Picard [15] utilized a number of techniques for capturing emotive behaviour,
namely eye-tracker, face reader, affective learning. Measuring emotions is a valuable component in interface
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design and usability testing. Knowledge of the users’ emotions provides useful feedback regarding the intended
targets of the system to be achieved. Social interfaces should have the ability to recognise and respond to
emotions emitted from users in an effort to effectively execute real-world interpersonal interaction strategies [15].
Emotional signals whether from visual or auditory responses are key elements in the social communication
process. People express emotion through facial expression, body movements and gestures, voice behaviour and
other bio patterns.

KEY TECHNOLOGIES IN EMOTION RECOGNITION

1. Speech Processing
2. Facial Expression
3. Motor Behavioral Patterns
4. Body Gestures and Movements

Intelligent emotion-oriented eCommerce Systems

Studies on intelligent emotion-oriented eCommerce systems are very limited up to this point Any
affective eCommerce system would need to assess the affective state of the customer through affective
sensing and recognition in order to determine an appropriate reaction According to Schleiffer [18], affective
responses to web interfaces play a significant role in the acceptance of certain websites.
Intelligent emotion-oriented eCommerce system can be seen as a system that can
effectively identify, interpret and respond to a customer’s emotions in an eCommerce environment.
The idea of developing emotion-oriented eCommerce systems may be difficult to conceive, however,
this type of eCommerce systems provides many advantages. Despite the many capabilities the computer
system may possess, e.g., storage of large volumes of data, processing speed and performing complex
calculations, computers are unable to determine the way the user may feel or think. An eCommerce system
which is able to detect the emotional state of the customer should be able to take the necessary steps to
produce a positive emotional environment. Electronic commerce entails business-to-business, business-to-
customer and customer-to-customer transactions. It encompasses a wide range of issues including security,
trust, reputation, law, payment mechanisms, advertising, ontologies, electronic product catalogs,
intermediaries, multimedia shopping experiences, and back-office management [50]. The rapid growth of e-
commerce has motivated many studies on the relationship between website design, company reputation,
and purchase intent.
Users are influenced by assurances of goodwill, integrity and the ability to complete the transactions.
Emotional-oriented factors increase feelings of attraction and loyalty. Such factors help reduce awkwardness,
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 complexity and uncertainty, and increase confidence in an eCommerce environment [51]. Providing
information that elicits emotions would reduce and limit reasoning to those that induce positive feelings [35].
Designing human-computer interfaces that are easy to use is important for the use of computer technology
today. The approach of allowing emotional agents to interpret and respond to consumers’ emotions is
imperative as emotions have a strong influence on interactions. As technology develops users are looking
for emotional satisfaction from using and interacting with the products and the companies who are involved
[52]. In a recent study on emotions, films and slides were found to elicit common target emotions [53].
Computer interfaces can be seen as a collection of slides composed of an assorted array of visual and
auditory stimuli. These computer interfaces have the potential to induce emotional reactions from users which
further has implications for the design of customer interfaces in electronic commerce systems. Kim and Moon]
also investigated the possibility of designing emotive interfaces which involve customers emotionally, in order
to enhance the quality of decisions made during the interaction process. Experiments were done to identify
the emotive reactions of the participants to the interface design of cyber banking sites. Additional research
also identified the influence of induced emotions on motor-behaviour parameters while shopping on an
eCommerce website for office supplies [58]. Bio physiological parameters like respiration, pulse, skin
conductance level and corrugator activity were measured. The experiments proved that emotive behaviour
can be successfully analysed through the use of the mouse and keyboard. In the internet world, some people
may enjoy the process of randomly browsing the internet for pleasure [38] while others may decide to seek
out internet sites for informational purposes. Numerous literature sources indicate that in order to understand
and analyse the role emotions play in an online shopping environment, designers should identify what factors
motivates the customer to use the website. McGuire noted that it seemed less important to understand how
a medium could hold a user’s interest. However, internet scholars have voiced the importance of understating
the holding power of Web site content. Therefore, while browsing may be a general motivation for internet
use, what a commercial web site provides as content and the application of the right combination of design
factors are important in influencing positive purchase decisions in consumers.
Understanding the emotions which bring consumers to a site can be profitable [39].
Knowledge of what consumers’ desire to purchase and how these desires can be turned into a final
purchasing decision will provide Internet marketers with the ability to efficiently serve their shopping audience.
A study was done by Stafford & Stafford [42], applying the understandings of general consumer motivations
for accessing the commercial areas of the internet.

Requirements for Design of Intelligent Emotion-oriented eCommerce System

There are two scenarios that could be investigated in relation to intelligent emotion-oriented
eCommerce systems:
(1) Customer - to - the intelligent emotion-oriented eCommerce systems – The customer communicates with
the system via the chosen input medium.

(2) Intelligent emotion-oriented eCommerce systems - to - Customer - The system would request input from
the customer and in return provide the necessary feedback.

An intelligent emotion-oriented eCommerce system is best suited for a business-to-customer

eCommerce environment as the aim is to gain the customer’s trust and loyalty. The ultimate goal is customer
satisfaction and appealing to the emotions of customers provides a pathway for solidifying a positive purchase
decision. The intelligent emotion-oriented eCommerce system should therefore adapt to the following
requirements:
• Follow a social model that takes into consideration the affective behaviour of the customer;
• Follow a framework that would address the aesthetic dimensions of an interface, interaction and
information delivery which would facilitate easy communication between the system and the customer;
• Make provision for rational and reasoning requirements in which the system would know how to
appropriately respond to the customer’s state and requests.

C. SOCIAL E-COMMERCE
Social commerce is a subset of electronic commerce that involves using social media, online media
that supports social interaction, and user contributions to assist in the online buying and selling of products
and services.
More succinctly, social commerce is the use of social network(s) in the context of e-commerce
transactions.

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 The term social commerce was introduced by Yahoo! in November 2005[2] to describe a set of online
collaborative shopping tools such as shared pick lists, user ratings and other user-generated content-sharing
of online product information and advice.
The concept of social commerce was developed by David Beisel to denote user-generated
advertorial content on e-commerce sites,[3] and by Steve Rubel[4] to include collaborative e-commerce tools
that enable shoppers "to get advice from trusted individuals, find goods and services and then purchase
them". The social networks that spread this advice have been found[5] to increase the customer's trust in
one retailer over another.
Today, the area of social commerce has been expanded to include the range of social media tools
and content used in the context of e-commerce, especially in the fashion industry. Examples of social
commerce include customer ratings and reviews, user recommendations and referrals, social shopping tools
(sharing the act of shopping online), forums and communities, social media optimization, social applications
and social advertising.[6] Technologies such as Augmented Reality have also been used with social
commerce, allowing shoppers to visualize apparel items on themselves and solicit feedback through social
media tools.[7]
Some academics[8] have sought to distinguish "social commerce" from "social shopping", referring
to social commerce as collaborative networks of online vendors, and social shopping as collaborative activity
of online shoppers.

Facebook Commerce (f-commerce)

Facebook commerce, f-commerce, and f-comm refer to the buying and selling of goods or services
through Facebook, either through Facebook directly or through the Facebook Open Graph.[9] In March 2010,
1.5 million businesses had pages on Facebook[10] that were built using Facebook Markup Language (FBML).
A year later, in March 2011, Facebook deprecated FBML and adopted iframes.[11] Among other things, this
allowed developers to gather more information about their Facebook visitors.[12]

Twitter Commerce (t-commerce)

Brazil is a pioneer in the industry with the platform Plu$tter, integrated payment system PagSeguro,
meets the needs of ordinary users and even large businesses. To make pluck, the site has a system that
reports in real time the status of transactions via direct message (DM).

Price and product comparison of the Social Commerce

Today there are hundreds of shops inside Facebook and Twitter, offering thousands of products and
services. But how to find the product or service you want, or maybe that store that offers the best product and
cheaper. Until now this was the question of thousands of users and how the Social Commerce brings a whole
new the need arose, his best adviser on the purchase. The brings together the best products and the Social
Commerce of the best shopping in one place and even compare prices, products and stores indicates the more
tanned the moment.

Onsite vs. Offsite Social Commerce

Social Commerce has become a really broad term encapsulating a lot of different technologies. One
way to categorize it is Offsite vs. Onsite social commerce.
"Offsite social commerce" includes activities that happen outside of the retailers' website. These may
include Facebook storefronts, posting products on Facebook, Twitter, Pinterest and other social networks,
advertisement etc. However, many large brands seem to be abandoning that approach [13]. The poor
performance has been attributed to the lack of purchase intent when users are engaged on social media sites.
"Onsite social commerce" refers to retailers including social sharing and other social functionality on
their website. Some notable examples include Zazzle which enables users to share their purchases, Macys
which allows users to create a poll to find the right product, and Fab.com which shows a live feed of what other
shoppers are buying. Onsite user reviews are also considered a part of social commerce.

The 6 C's of Social Commerce

Discussed at the 2011 BankInter Foundation for Innovation conference on Social Technologies were
the 6 C's of Social Technologies.[14] This references the original 3 C's of E-Commerce and adds 3 new C's to
update for an era of Social sharing.
Content – The basic need to engage with customers, prospects and stakeholders through valuable
published content on the web. Early examples of this were the brochure sites for organizations and this has
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 matured into a vast and growing body of material being published in real time onto the web. Google is the
organization that has been at the forefront of indexing and making findable content on the web.
Community – Treating the audience as a community with the objective of building sustainable
relationships by providing tangible value. Early incarnations of Community were mobilized through registration
and engaged via email programs, this evolved into online forums, chat-rooms and membership groups where
users were able to interact with each other, an early example being Yahoo! Groups. Social Networks are the
latest incarnation of community and of the many networks Facebook is the leading organization providing the
platform for interpersonal interactions.
Commerce – Being able to fulfill customers' needs via a transactional web presence, typically online
retailers, banks, insurance companies, travel sales sites provide the most useful business-to-consumer
services. Business-to-business sites range from online storage and hosting to product sourcing and fulfillment
services. Amazon emerged in the 90's and has gone on to dominate the B2C commerce space extending its
services beyond traditional retail commerce.
Context – The online world is able to track real-world events and this is primarily being enabled by
mobile devices. An online bill payment via Google Checkout or a checkin at a physical location via Facebook
or Foursquare links a real world event to an online data entity such as a business or a place. This is a vital
element to Social Commerce where the data is now available to organizations wishing to provide products and
services to consumers.
Connection – The new online networks are defining and documenting the relationships between
people – these relationships may originate in the physical world or online and may manifest in the other as a
result of a connection in the first. LinkedIn, Facebook, Twitter are prime examples of online networks –
Professional, Social and Casual. The relationships, the scope of those relationships and the interactions
between individuals are a basis for the actions of Social Commerce.
Conversation – The Cluetrain Manifesto noted that all markets are conversations – this may now be reversed for
Social Commerce to say that all conversations are markets. A conversation between two parties will likely surface a
need that could be fulfilled, thus providing a potential market for supplier organizations. The challenge is for suppliers
to be able to tap into those conversations and map those into the range of products and services that they supply.
Simple examples of such 'conversations that indicate demand' are where people place objects of desire on their
Pinterest board or a 'Like' of an item inside Facebook.
Using this structure, organizations wishing to transcend the notions of 'Social Media' (defined as the interaction
pathways) and move to true 'Social Commerce' must aim to leverage 'Context, Connection and Conversation'MOBILE
E-COMMERCE
The phrase mobile commerce was originally coined in 1997 to mean "the delivery of electronic
commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology.Many choose to
think of Mobile Commerce as meaning "a retail outlet in your customer’s pocket."
According to BI Intelligence in January 2013, 29% of mobile users have now made a purchase with their
phones. Walmart estimated that 40% of all visits to their internet shopping site in December 2012 was from a
mobile device. Bank of America predicts $67.1 billion in purchases will be made from mobile devices by European
and U.S. shoppers in 2015.
• Mobile Money Transfer
In Kenya money transfer is mainly done through the use of mobile phones. This was an initiative of a
multimillion shillings company in Kenya. Mobile money transfer services in Kenya are now provided an (ZAP).
The oldest has and is now generally used to refer to mobile money transfer services even by other companies
other than.
e.g. G-Cash
• Mobile ATM
With the introduction of mobile money services for the unbanked, operators are now looking for efficient
ways to roll out and manage distribution networks that can support cash-in and cash-out. Unlike traditional ATM,
sicap Mobile ATM have been specially engineered to connect to mobile money platforms and provide bank grade
ATM quality. In Hungary, Vodafone allows cash or bank card payments of monthly phone bills. The Hungarian
market is one where direct debits are not standard practice, so the facility eases the burden of queuing for the
postpaid half of Vodafone’s subscriber base in Hungary.
• Mobile ticketing
Tickets can be sent to mobile phones using a variety of technologies. Users are then able to use their
tickets immediately, by presenting their mobile phone at the ticket check.
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 • Mobile vouchers, coupons and loyalty cards
Mobile ticketing technology can also be used for the distribution of vouchers, coupons, and loyalty cards.
These items are represented by a virtual token that is sent to the mobile phone. A customer presenting a mobile
phone with one of these tokens at the point of sale receives the same benefits as if they had the traditional token.
Stores may send coupons to customers using location-based services to determine when the customer is nearby.
• Content purchase and delivery
Currently, mobile content purchase and delivery mainly consists of the sale of ring-tones, wallpapers,
and games for mobile phones. The convergence of mobile phones, portable audio players, and video players into
a single device is increasing the purchase and delivery of full-length music tracks and video. The download
speeds available with 4G networks make it possible to buy a movie on a mobile device in a couple of seconds.
• Location-based services
The location of the mobile phone user is an important piece of information used during mobile commerce
or m-commerce transactions. Knowing the location of the user allows for location-based services such as:
o Local discount offers
o Local weather
o Tracking and monitoring of people
• Information services
A wide variety of information services can be delivered to mobile phone users in much the same way as
it is delivered to PCs. These services include:
o News
o Stock quotes
o Sports scores
o Financial records
o Traffic reporting
Customized traffic information, based on a user's actual travel patterns, can be sent to a mobile device.
This customized data is more useful than a generic traffic-report broadcast, but was impractical before the
invention of modern mobile devices due to the bandwidth requirements.
• Mobile banking
Banks and other financial institutions use mobile commerce to allow their customers to access account
information and make transactions, such as purchasing stocks, remitting money. This service is often referred
to as Mobile Banking, or M-Banking.
• Mobile brokerage
Stock market services offered via mobile devices have also become more popular and are known as
Mobile Brokerage. They allow the subscriber to react to market developments in a timely fashion and irrespective
of their physical location.
• Auctions
Over the past three years[when?] mobile reverse auction solutions have grown in popularity.[by whom?]
Unlike traditional auctions, the reverse auction (or low-bid auction) bills the consumer's phone each time they
place a bid. Many mobile SMS commerce solutions rely on a one-time purchase or one-time subscription;
however, reverse auctions offer a high return for the mobile vendor as they require the consumer to make multiple
transactions over a long period of time.
• Mobile browsing
Using a mobile browser—a World Wide Web browser on a mobile device—customers can shop online
without having to be at their personal computer.
• Mobile purchase
Catalog merchants can accept orders from customers electronically, via the customer's mobile device.
In some cases, the merchant may even deliver the catalog electronically, rather than mailing a paper catalog to
the customer. Some merchants provide mobile websites that are customized for the smaller screen and limited
user interface of a mobile device.
• Mobile marketing and advertising
In the context of mobile commerce, mobile marketing refers to marketing sent to mobile devices.
Companies have reported that they see better response from mobile marketing campaigns than from traditional
campaigns. Mobile campaigns must be based on the global Content Generationor what is called Generation C
and four other 'C's: Creativity, Casual Collapse, Control, and Celebrity. A brief introduction... Creativity: let's face
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 it, we're all creatives, if not artists! (Notice we didn't mean talented artists ;-). And as creativity normally leads to
content, the link with GENERATION C is obvious. Which then brings us to Casual Collapse: the ongoing demise
of many beliefs, rituals, formal requirements and laws modern societies have held dear, which continue to
'collapse' without causing the apocalyptic aftermath often predicted by conservative minds. From women's rights
to gay marriage to not wearing a tie to work if you don't feel like it?

D. MULTI-CHANNEL E-COMMERCE
Multichannel retailing is the merging of retail operations in such a manner that enables the transacting
of a customer via many connected channels. Channels include: retail stores, online stores, mobile stores,
mobile app stores, telephone sales and any other method of transacting with a customer. Transacting includes
browsing, buying, returning as well as pre- and post-sale service.
Multichannel retailing is often said to be dictated by systems and processes when in fact it is the
customer that dictates the route they take to transact. Systems and processes within retail simply facilitate the
customer journey to transact and be served. Pioneers of multichannel retailing include Macy's, Next PLC, John
Lewis and Neiman Marcus. The pioneers of multichannel retail built their businesses from a customer centric
perspective and served the customer via many channels long before the term 'multichannel' was used. Recent
variations of the term include omni-channel.

Post-test:
Explain briefly the following:
1. What are the advantages and disadvantages of:
a. Mobile e-commerce?
b. Social e-commerce?
c. Multi-channel e-commerce

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