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is_3003_chapter_10.pptxIS 3003
Chapter 10
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Case Study - Pinterest
Pinterest - A social media site that allows people to communicate through pictures
Provides a virtual scrapbook format on which users may pin pictures of events, such as “dream weddings” (dresses, flowers, reception dinners, locations, etc.), decorating ideas, vacation photos, inspiring ideas of art subjects for artists, recipes for cooks, etc.
Companies, like Lands End, Whole Foods, Brides Magazine, use Pinterest to depict images of their products and then drive traffic back to their own sites; they claim that 3% of their website traffic comes from Pinterest referrals; most of the sales are for women’s fashions
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What drives interest in Pinterest?
Two things help interest in Pinterest:
1. It is a social networking site that allows P2P (people-to-people) interaction; the reliance on imagery is very powerful, and tends to create an expansion of ideas; the average time on the Pinterest site is 80 minutes, and 80% of the users are women;
2. Companies that have links on Pinterest back to their own websites see a much larger average sales volume than Facebook or Twitter see, e.g., $180 versus $80 average
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Ecommerce and the Internet
Ever heard of “Cyber Monday”?
The average order last Cyber Monday was $124
41.2% of all cyber Monday traffic occurred on mobile platforms
Total amount spent on Cyber Monday purchases was $2.68B
This was up about $200M from 2013, and about $1.2B from 2012
The average order value was $124, down $4 from 2013; in 2012 the average was $185
In 2014, Cyber Monday was about $1.3B ahead of Black Friday, and about $1.6B ahead of Thanksgiving Day
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In 2013, the ecommerce sales exceeded $419B, which is 9% of all retail sales; it is growing at 12% per year, as opposed to 3.5% for traditional retail sales
The key words relative to this new ecommerce world are social, mobile, and local
Ecommerce began in 1995 when Netscape.com accepted ads from major companies and popularized the idea that the web could be used for advertising and sales
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Ecommerce history
The history of ecommerce has mirrored that of many other technologies of the recent decades, such as the telephone, radio, and TV; in 2001, this profile was interrupted by a bubble known as the DOTCOM bubble; this bubble burst and caused a recession that forced a flattening of the curve shown on the last slide
Amazon, e-Bay, Expedia, Google, and a few other websites survived the down turn, but a very large number failed; the experience for the survivors has allowed them to fine tune their business models
As evidence of this, Amazon strengthened its position, and in 2012 had increased its revenues to $61B up 50% over 2011
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The new ecommerce social, mobile and local
Online marketing consists of making a website and using it; online advertising consists of display ads, ad words, and emails; the display ad is the workhorse of online advertising;
Two terms associated with online marketing are:
1. eyeballs – the number of viewers each website generates
2. Impressions – one ad shown to one person is an impression
The combination of eyeballs and impressions, at one time, determined ad revenues over a specified period
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Ecommerce has become more social; with the rapid growth of Facebook and other social networks, and with associated hardware, such as iPhones, since 1995, there arose an interest in local marketing, along with the notions of conversations, and engagements; the former means to talk to many at once, and the latter means to interact in many different ways
The emphasis in online marketing has shifted from a focus on eyeballs to a focus on participating in customer-oriented conversations
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So, the evolution of computational devices from large, e.g., desktop, to small, e.g., smartphones/iPhones, has had a large role in evolving advertising, and marketing in general; there are three types of marketing of interest in the ecommerce world:
1. social marketing – is based on associations, and interactions among special-interest groups, and those pushing the interactions, such as facilitators (Google), and vendors (Pinterest), both of whom have something to be gained, i.e., money
2. mobile marketing – is based on the use of a mobile device where the message is based on apps, clicks, or time on the mobile device
3. Local marketing – is based on the availability of local vendors for potential customers through apps, or random spot ads, such as Constant Contact
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Why ecommerce is different
What is it about the Internet that makes it so well suited for e-commerce? Here are some answers:
Ubiquity – e-commerce is everywhere that the Internet is
Global reach – the Internet is all over the world, mostly in developed and emerging countries
Universal standards – the Internet standards are consistent throughout the network
Richness – the content of messages in ecommerce has a wide range of capabilities that can be tailored to any circumstance
Interactivity – the Internet allows contact with just about anyone
Information density – an almost limitless amount of data can be generated, stored, and transmitted
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Why ecommerce is different (cont’d)
Personalization – ecommerce may be tailored for specific customer types, regions, financial status, and other characteristics; in other words – it can be customized
Social technology – the Internet in general and ecommerce in particular are well suited to accommodate conversations (emails), publishing (text, pictures, videos), intercourse (interaction/dialogue), messaging (real-time commentary), and all other methods of human communication
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Key concepts of ecommerce: digital markets and digital goods
Information asymmetry – this situation occurs when one party has more information relevant to a transaction than the other party; digital marketplaces have more transparency (equality), because both have about the same information
Digital markets:
Have lower menu costs – costs of price changing
Have dynamic pricing – price of a product due to demand, availability, etc. in real-time or nearly so
Disintermediation – the stripping away of process layers due to intermediate steps
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