Quiz 4 Section 1

1.  General Communities – These are social sites that people visit in order to talk about their daily activities, exchange general community information or to seek or share information.  Example: aascu.org (This is a website by the Association of State Colleges and Universities to increase political engagement of students).   Revenue: General advertising, user donations.

2.  Practice Networks – These are sites that could be work-related, where an individual can draw resources from other members of the networks to which they belong.  Example: Adgrabber.com   Revenue: General advertising, user donations.

3.  Interest Based Communities – These are social sites where users have similar intentions, shared interests in hobbies, music or politics.  Example: ilt.columbia.org (Columbia University’s Institute for Learning Technologies) which provides general information on different philosophers.  Revenue: User donations, general advertising.

4.  Affinity Communities – These are social sites which provide opportunities for government or political affiliation, romantic relationship initiation, or anything related to a group identification.  Examples: Match.Com, mobilize.org (network dedicated to educate young people).  Revenue: Sales of service/products, user donations, general advertising.

5.  Sponsored Communities – These are social sites that offer information on country’s population, economy, history, current events, increase political engagement or publish your opinions of the government.  Examples: Census.gov, fordemocracy.com.  Revenue:  User donations, general advertising

6.  Enterprise Portals –  These are portals used by companies or schools to disseminate information to all it’s employees or students.  This is where employees of a company or students of schools will obtain the latest company news and departmental information, or in the case of students courses offered .  Example: T-Mobile One Voice, North Seattle.edu.  No revenue since it is normally supported by the company or the school.

7.  General Purpose Portals – These portals are accessible to the general public and could offer free Web-based e-mail accounts. Examples: CNET and AOL.  Revenue:  General advertising, fees to merchants for access.

8.  Vertical Market Portals – These portals located within a general purpose portal that specialized in one particular market.  Example: NFL game schedules or scores on Fox network.   Revenue: General advertising, sales of service, subscription fees.

9.  Affinity Groups – These are groups where people identify themselves by their attitudes and behavior and encourage members to take some kind of action. Example: ACLU.org.  Revenue:  General advertising, user donations.

10.  Focused Content Groups – These are groups that provide information on a particular topic that members are interested in.  Example: pbs.org/ktca/liberty (the PBS Liberty series of the American Revolution that offers an in-depth look at the Revolutionary War).  Revenue: General advertising, user donations.

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Strongest E-commerce trends for 2014

Amazon is the biggest e-commerce retailer and controls most of the e-commerce market because they sell their goods cheaper than anyone else.  However, with the latest e-commerce trends, the outlook for competition is getting fierce.  In my opinion, the bigger worry for Amazon are the three e-commerce trends of increase mobile shopping, better delivery of goods and services and personalization and marketing of local brands.

Mobile shopping was the catalyst in the stronger demand for goods and services through e-commerce.  The Huffingtonpost blog by Ian Mills titled, The Future of Ecommerce for Small Business,  dated March 3, 2014 states that consumers can now shop anywhere and anytime using their smartphones and tablets, thus small business needs to adopt to mobile in their sales strategy.  The article also adds that according to eMarketer’s data released late last year, worldwide business-to-consumer e-commerce sales is potentially enormous and is likely to grow.  The figures released by eMarketer showed, “16 percent of the U.S. e-commerce market (in 2013) will come from mobile devices and it is estimated that 62.5 percent of the total mobile-based sales will be generated from tablets.”  With stiff competition coming from big e-commerce companies, small business has tiny profit margins. With the market to which they rely are declining, small business must be willing to change and reorient to new markets through the adaptation to a mobile sales strategy.

With an increase of sales as a result of mobile shopping, comes a promise of easy and cheap delivery of goods ordered online. The Brandwatch.com blog, 10 Powerful Ecommerce Marketing Trends that will Dominate 2014, explained that, “Large online stores do more to reduce delivery times and offer more shipping options.”  An example of this latest trend is Walmart’s solution to counter Amazon’s efficiency to deliver on tight deadlines.  Walmart has a great  idea of pulling together shops, warehouses, delivery fleets and technology into a “market ecosystem.”  This will enable the customer to order goods online and pick it up in a convenience store the same day rather than drive several miles away to a supercenter.  With the advantage of better delivery and a lower risk of losing customer’s goods, Walmart can withstand Amazon’s promise of easy delivery while developing a closer relationship with it’s customers.

Despite Amazon’s strength of cheap goods, small business can improve the local branding and marketing of goods and services to make them more competitive.  It has been said that something that has worked before has a good chance that it will work again. As indicated in Brandwatch.com blog, 10 Powerful Ecommerce Marketing Trends that will Dominate 2014,  small  e-commerce store owners will, “Use traditional SEO to target customers in a limited geographic area and combine it with social media engagement to personalize relations with local customers.”  These small e-commerce stores’ personalization of their products has an enduring appeal.  In addition to aesthetic satisfaction, quality rather than quantity, small e-commerce stores have the ability to delight customers by tapping into their fond memories.  With rising incomes, employment surpassing the pre-recession 2008 levels, more working hours, and a rapid aging customer base, I believe that the demand for goods and services from small e-commerce stores will continue to soar.

Pros and Cons of a LinkedIn Account

Employers are constantly seeking a more qualified, dedicated and versatile workforce, in order to keep-up with an increasingly global, demanding and varied businesses.  Human Resource (HR) recruiters review thousand of resumes for every position.  HR recruiters are turning to social media sites to research job candidates and to find out as much information as possible about a potential employee, and to decide who will be invited for an interview.  LinkedIn business networking membership site has become a key channel for HR recruiters to identify and contact people on a targeted basis.

There are many reasons why job seekers ought to sign-in to the very widely and heavily used LinkedIn.  According to the company’s website, “LinkedIn operates the world’s largest professional network on the Internet with more than 300 million members in over 200 countries and territories, and professionals are signing-up to join LinkedIn at a rate of more than two new members per second.”  This social networking site plays an important role in the recruiting process and has become an extra tool for the HR department.  Cost saving is another advantage for companies to bypass big headhunting firms and instead use LinkedIn.  According to John Campagnino, Accenture’s head of global recruiting, “If I were to go out to a major recruiting firm, for example, we could potentially pay upwards of $100,000 to $150,000 for one person.”

One important concern before individuals sign-up and create a LinkedIn account is the potentially relevant privacy concern.  A NewsFix news article dated October 24, 2013 made mention of a new LinkedIn email app that raises privacy concern. The article is worried about the LinkedIn Intro app, “(the app) Redirects email through LinkedIn servers so that the company can revise the emails to display a sender’s LinkedIn information.”  The app doesn’t alter the message contents, but it gives LinkedIn access to all emails someone gets.  However, LinkedIn stated that the app is an opt-in product, that if you don’t want it, don’t install it.  Another adverse consequence of a LinkedIn account is that users may be putting themselves at risk both offline (e.g. stalking) and online (e.g. identity theft) due to display of personal information.  Privacy concern doubt has been aired in a Qualigence.com website.  The website claimed that, “Nearly every other social media tools has the ability to block fellow users.  LinkedIn, does not allow for the capability unless a court order is issued.”  Lastly, although LinkedIn is useful for organizational communication and information-gathering, in my opinion, it does not provide signals on personality issues like emotional stability or maturity.

Overall, from a financial standpoint, I think that LinkedIn is a remarkably good social networking site.  In addition to supporting relationships, keeping people in contact even when life changes move friends and co-workers away from each other, LinkedIn connections can have a strong payoffs in terms of jobs, internships and other employment opportunities.

Current Trend in E-Commerce – Same-Day Delivery

 We can tell that the AmazonFresh same-day grocery delivery service here in Seattle(which is also available in San Francisco and Los Angeles) is on its peak because of the presence of  the Amazon green delivery vans all over the place. But in March 1988, the Internet start-up company called Kozmo.Com began operations with a unique business model of customers ordering goods online and free delivery of nearly any product (a candy bar, DVDs, electronics, snacks, etc) you want, sent to your home in an hour or less. It was available in nine cities and poised to challenge UPS and FexEx. But the free delivery and no minimum purchase is a money-losing business proposition. The company realized that it was costing more to deliver than make a profit. So, it instituted a $10 minimum charge in the first quarter of 2001. By April 2001 it was forced to shut down its service.

Currently, several online delivery startups are applying the lesson-learned from Kozmo.Com in their own businesses. Instacart is a same-day grocery delivery service that delivers in as little as an hour. As explained in their website, for most stores, delivery costs in less than two hours is $3.99. A customer can review delivery prices of individual order at checkout. It also offers Instacart Express which is a grocery delivery membership. With Instacart Express, all two hour & scheduled grocery deliveries over $35 are free. There’s a 14-day free trial, and an  annual fee of $99. Instacart uses freelance “personal shoppers” who use their own vehicles to collect and deliver goods. An Instacart smartphone app tells the freelance personal shoppers which shops to visit, what to pick up and where to take it. For now, Instacart same-day grocery service is not available in the Seattle area. Postmates is another online same-day delivery company headquartered in San Francisco whose mission is “To become the on-demand delivery infrastructure for every major city in the world. “ It connects customers with local couriers, who purchase and deliver goods from any restaurant or store in a city. Postmates same-day delivery service is available in the Seattle area.

In addition to Amazon, big online companies are into the same-day delivery business model. According to CNET.Com news Google now offers Google Shopping Express, Google’s online marketplace that offers goods from both major retailers and small, local shops, with overnight shipping for customers in Northern California. The only disadvantage of Google’s same-day delivery service is in order to get an item the next day, customers must place their orders by 7 p.m. eBay Now is another service offered by eBay. Customers can now order from local stores on eBay.com and in about two hours. A local valet will hand-deliver the items to you at your home, office, or where ever you need it delivered. And if you’re not aware of it, Amazon has an online magic wand called the Dash.   It is offered free to AmazonFresh customers. The Dash is voice controlled and has a barcode scanner which will make easy ordering goods through AmazonFresh.  As you can see, this current trend in E-commerce of same day delivery has come a long way from business model pioneered by Kozmo.Com more than fifteen years ago.

 

Disadvantages of Collection of Sales Tax on E-Commerce Transactions

When I used to live in New Orleans, there were several taxes levied on any sale transaction.  There’s a state sales tax, a county sales tax and a city sales tax.  Although the total sales tax does not exceed ten percent, it is still so confusing for customers when they tried to decipher the sales receipts.  If a customer like me is having a hard time understanding the taxes imposed on a single sales receipt, how much more a small online merchant who deals with hundreds or probably thousands of sales online from various states.

For a big e-commerce businesses like Amazon and E-Bay who are supported by dedicated accounting and taxation departments, this will probably not be an issue.  But for a small online company the current state and locality taxation system is so cumbersome, complicated, and hard to understand.  If there will be collection of sales tax on e-commerce, then there will be additional expense for small online companies to hire tax experts just to sort-out various state and locality taxation.

 

E-Commerce Taxation

Protest by shopping mall retailers and brick-and-mortar retailers led lawmakers in Congress to propose the Marketplace Fairness Act (MFA) bill of 2013.  The MFA of 2013 will supposedly give states the authority to compel online and catalog retailers, no matter where they are located, to collect sales tax at the time of transaction, much like brick-and-mortar already do.  On March 6, 2013, the U.S. Senate passed the MFA.  However, due to lack of support, the bill died in the U.S. House of Representatives.  It has been said that the MFA of 2013 would allow shopping mall and brick-and-mortar retailers to compete fairly with online retailers.

There was pressure from Congress to enact federal legislation to collect sales tax on out-of-state businesses.  In the 1992 case Quill v. North Dakota, the U.S.Supreme Court ruled that remote retailers didn’t have to collect taxes when shipping to other states. According to the Court, different states and localities levy different tax rates to different tax bases which will force retailers to figure out appropriate tax to collect to each location. The Court added that this would be a time-consuming, expensive and unacceptable administrative burden to out-of-state businesses.

According to Forbes magazine article, A Terrible Response to the Internet Sales Tax Mess, dated March 8, 2014, there were discussions in the U.S. House of Representatives on an idea of a set of national rules for sales tax collection based on the location of sellers. An example of an argument against this proposal is when online retailers will set-up business in Oregon, this will lead to unemployment in those states with sales tax.  Consequently, online companies will come-up with a different strategy to avoid paying sales tax.  In 2011, Amazon shut down a warehouse in Texas and  canceled plans to hire 1,000 additional workers after the state’s government demanded $270 million in back taxes.

There are pluses and minuses on this issue of e-commerce taxation. Online retailers are anxious of the effects of it on their Internet business.  Brick-and-Mortar retailers believe that as a result of online sales tax loopholes, there is an economic disadvantage on their local businesses. Local governments wanted to raise revenues and bring in more tax to  support law enforcement, fire department, education and other public services.  Then we have the taxpaying consumers, who are probably not trying to evade taxation, but if legally allowed, would not pay sales tax at all.  I think the e-commerce taxation trend will eventually lead to collection of tax on online sales.  With the abundance of information technology and software these days, the government can simplify the collection and remittance of online sales tax.  Surely in the next few months, there will be an app for that.

 

Use of Social Media for E-Commerce

As discussed in class, e-commerce involves using Web 2.0 technologies and infrastructures to support online transactions, and in advertisement of products and services.  Consequently, businesses are taking advantage of social media networks such as Facebook, Linkedin and Twitter to help launch their products and strengthen their brands.  According to an article Friends, Fans and Followers: Do Ads Work on Social Networks  (David G. Taylor, Jeffrey E. Lewin, and David Strutton. “Friends, Fans, and Followers: Do Ads Work on Social Networks?” Business Faculty Publications (2011), advertising presented on online networks can be effective, but that a perception of excessive commercial exploitation of a social media can lead its members to abandon it.  The article also suggests that consumers react most favorably to advertising which was perceived as offering entertainment or information value.

Personality has been shown to be relevant to many types of interactions.  Since social media is a place where users reveal personal details (e.g. Facebook profile) and insights into their lives, businesses are then using some of this information to sell their products and services based on customer’s preference.  Businesses collect all types of customer data, analysis, personality traits and use these information in media advertisement design, mobile interface, and broader e-commerce domains.  In addition, people rely on trust and familiarity to reduce uncertainty.  The social support, trust and familiarity provided by social media influence the customer’s intention to use social media over and over again.  This social media interaction will eventually affect customer visit intention and purchase intention in e-commerce.

As predicted in an a 2011 article Turning “Like” to “Buy” Social Media Emerges as Commercial Channel, by Booz and Co. it is inevitable that some consumers will post comments relating to what they are going to do and what products they like. In so doing, companies found that social networking sites are great ways to engage customers by setting up Facebook or Twitter feeds.  The article concluded with that fact that, “A company that has something appealing to sell through an initiative involving social media, provide an  impetus far superior to traditional advertising-recommendations from the most influential people of all, the prospective buyer’s friends and family.”