IS6600 Seminar 2

1. IS6600Seminar 2 Global Electronic Commerce & Digital Enablement

2. How Global is E-Commerce? • 45% of the world’s population is online • But of course 55% is not • More Chinese are online than Americans • But so what? One country, or two, is not global • In most developed countries, 75+% of citizens are online; in some less developed, below 10% are online • Markets today involve businesses, governments, consumers and citizens, all talking & transacting with each other

3. Why Are People Online? • To socialise • To shop • To become part of a community • To be entertained • To learn • To have fun • To date • Learning about: • New subjects 47% • The world 45% • Disease 31% • Medicine 27% • Health 26% • Buying • Clothes 38% • Electronics 27% • Music 27% • Movies 20% This data is from a US survey. Would it be the same in HK? CN? DE? NL? PK? VE? PY? FJ? NP? BW? CM? DZ? HR? GR? LK? ZA? MQ? TT? PG? NU?

4. Learning Objectives • Explore a variety of E-Commerce applications and contexts, including digital media • See how the online market can be developed and exploited – globally • Focus on cultural and psychological factors like trust and guanxi • Look at E-Commerce in China • Consider other Internet-based applications and their implications for organisations

6. The Buyoyo Story (www.buyoyo.com) • Founded 1996 as DVDshelf.com, later Layoyo • The largest Internet retailer of Chinese Entertainment Products in the world. • 495,000 different products: DVD, BluRay, CD, Books, Games, Mobile Accessories, etc.. • Partnersgalore! • YoYo Cash for loyalty. • A valuable niche, first mover advantage and a potentially huge market. • Do you consider this to be a successful business?

7. SoleRebels – www.solerebelsfootwear.co • What is special about this company? • Distinctive, innovative features of the website? • Global & Local. Small and few resources. • Imagine that you are the CIO. What e-business steps would you recommend for corporate development that keep it local, yet also enhance global recognition. • Is it possible to be locally sensitive, yet globally aware/visible?

8. Avaaz – www.avaaz.org • A global activist organisation • Tens of millions of members, distributed globally • What do they do? • Is this website blocked in some countries?

9. Tiki.vn and Timo.vn • What do these sites offer?

10. PlusGrade • What is the special service offered by this company to its customers?How does it work? • www.plusgrade.com

11. The WeChat Ecosystem • What are your favourite apps – and why? • What about wechat.co.za?

12. C2C/B2C – What about You? • E-Commerce has become normal, yet web businesses need to develop interfaces and content that consumers will find attractive • What are the innovations that you have seen recently? • What opportunities are still to be enabled? • What would you like to do – but can’t?

13. B2B2C Reintermediation • Look at www.theoutnet.com • Reintermediating between luxury brands • Who don’t know how to sell online? • And high-end customers • Who have cash, but no time to buy offline • With promises of authenticity, no-fakes, guaranteed returns… • And a huge marketplace • It is all about finding the niche…

14. eBay or TaoBao? • These two companies are similar in some respects, yet different in others. • What are the similarities and differences? • eBay is dominant in most global markets, but not China, where TaoBao is King. • What is American about eBay? • What is Chinese about TaoBao? • How do the Chinese factors drive TaoBao’s success?

15. S-Commerce • What is the value proposition offered by companies like these:? • Pinduoduo - www.pinduoduo.com • Kaboodle – www.kaboodle.com • Little Red Book – www.xiaohongshu.com • GroupOn – www.groupon.com • Mogujie – www.mogujie.com

16. O2O • E-Commerce is not purely online • O2O is a hybrid form that combines online and offline segments • Online customers can be drawn to offline stores in a complementary not competitive fashion • Online platforms can link to offline businesses • Groupon, Uber, Airbnb, DidiChuxing, • Mobile Internet and Payments are the main drivers of O2O

17. M-Commerce • Each of us can have multiple devices • These devices could even be embedded into you (under the skin) • In some countries, prisoners and pets, even regular employees, are microchipped • Click here • Some clubs offer microchips to members to help pay for goods/services

18. Recommendation Agents (RAs) • Many large e-commerce platforms now use RAs to drive consumer impulsive behaviour • Amazon: Cross-selling mechanisms • There are also private programmes that facilitate consumer searching • http://www.isearchthenet.com/isearch • http://nowdiscount.com/nowdiscount_web/

19. RAs • Are designed to • Provide manageable amounts of information • Make the search process more effective • Reduce sociality stress – the stress associated with unwanted sales people telling you what to buy • RAs also provide consumers with more control and ideally satisfaction • However, RAs are also associated with impulsive purchase behaviour

20. Digital Enablement • Digital Enablement (DE) is an emerging but unstable phenomenon of our times • Digital technologies transform, empower and popularize the business, social & consumer activities in which we engage • DE creates opportunities for individuals & organizations • It also helps developing countries to leapfrog over intervening technology developments • But DE is not a magic bullet • Human creativity, innovation and intervention are required • Some people will be disadvantaged by DE • DE requires a) infrastructure, b) education, c) strategy

21. DE Requirements • Technology Access + Infrastructure • We take it for granted, invisible and omnipresent • Governance • Essential for security, financial regulation, IP protection • Trust • Assumed, yet if people don’t trust it, they won’t want it • Security • Critical, yet data is regularly hacked from organisations • Education • We need to know why we need it. Digital literacy. • In Africa, the top reason for people not using the Internet is not knowing how to use it or why they should use it.

22. The Digital Divide • The old digital divide was concerned with who had access to the Internet • That’s still here, but with some refinements • The ITU estimates that one billion people do not have telephone access, with an extra 3 billion not connected to broadband Internet • The digital divide has narrowed (more people are visible and online) but also deepened (each new generation of technology leaves some people further behind, ever more invisible)

23. Four Barriers to DE (Huawei) • Availability • The access problem; networks and devices; power supply; high speed; infrastructure • Applications that meet local needs in local languages with local content • Affordability • Of the hardware and network • But also relative to the value that is obtained • Appetite • Why do I need it? How will it benefit me? Fear. • Ability • Digital literacy. How can I do it? Education. • http://www.huawei.com/minisite/digital-enablement/download/Digital+Enablement_ENGLISH+online.pdf

24. Success Stories in Developing Countries • Mobile social media (for work and play) is common, though most of the apps are global, not local • Mobile payments are popular • TaobaoVillages in China • But outside urban areas, connectivity is an issue • The range of local applications is more limited

25. DE for Individuals - 1 • Mobile Money Systems • e/m-Wallets – linked to bank/cc accts • PayPal • Apple Pay • AliPay • Smart Cards – un/linked to accts • Octopus, Oyster, Myki, Opal, EZ-Link, Touch ‘n Go,

26. DE for Individuals 2 • Phones • SIM cards (mobile purchases, savings and transfers) • WeChat, M-Pesa, M-Birr, M-Paisa, bKash, mKash, Smart, Mukuru, etc.

27. DE for Individuals 3: BoP • The Bottom of the Pyramid (BoP) refers to the ~3 billion people who live on less than HK$20 a day – and the 200 million small businesses who don’t have access to the banking system • Although poor, there are so many people here that they may represent a huge economic opportunity, especially as entrepreneurs • Mobile money systems provide an opportunity for these unbanked people to become banked

28. DE for Employees • The Better than Cash Alliance (www.betterthancash.org) tracks DE events • It reports that GAP plans to pay all (1M+) garment workers in Tier 1 suppliers (800 factories in 30 countries) digitally by 2020 • GAP wants to draw unbanked workers (80% female) into the financial system to give them better control over saving, transferring and investing

29. DE for Individuals 4: M-Pesa • M-Pesa led the wave with a number of mobile money market initiatives, HQed in Kenya, currently operating in 10 countries with 25+ million registered customers • Established in 2007, by 2014, 50% of Kenya’s GDP flowed through it. • It has also brought financial inclusion to 20 million unbanked Kenyans • Thousands of businesses depend on M-Pesa for most transactions

30. DE for Individuals 5: China • Clearly the China market continues to break records with the number of people who use various apps for various purposes • and who no longer use cash for anything • China is world-leading in mobile apps, in terms of variety and transaction volumes • But why is China so advanced? • And why are other countries so backward? • Or is it not that simple?

31. DE for Individuals 6: WeChat • WeChat is trying to become a global app • In South Africa, Standard Bank directly backed WeChat’s Wallet with support for the most popular apps: • P2P transfers, hotel and restaurant bills, taxis • wechat.co.za • But WeChat in Africa will not be the same as WeChat in China: it is localized and each of the 54 countries will require something different.

32. DE for Individuals 7: mHealth • This is one of the most popular domains for DE • There are hundreds of mHealth pilots, though few scale up • A new disease has emerged: pilotitis! • mClinica is a rare scaled-up success story • Digital networks of pharmacies, physicians, and patients in six ASEAN countries.

33. DE for Individuals 8: mHealth • Most mHealth apps are limited to one country, even one city or district • mCamPharma is one – from Cameroon • Designed to help patients find where prescription drugs are available for purchase, because supplies are unreliable • Great idea – but will it scale up? • What is the business model? Strategy?

34. Business Perspectives: Consumer Loyalty Drives Competitive Advantage • “Creating a compelling online experience for cyber consumers is the key to attaining competitive advantage on the Internet” Jeff Bezos (Amazon CEO) • But is it the only key? • And what does “compelling online experience” actually mean? • Do we agree on what a ‘compelling online experience’ feels like? • Could it be different in different cultures?

35. Business Perspectives: Trust and Distrust • Trust is seen as a critical motivator of online buying. • What might lead a potential consumer to trust or distrust an online shop?

36. Do You Naturally Prefer to Distrust Others? • Distrust propensity • “I would like to buy online, but what I concern most is the e-vendors’ untrustworthiness.” • Lack of EC governance • “I don’t know where to complain about online fraud.” • Insufficient legal infrastructural support • “Counterfeiting is a major concern for transactions in general. It is even more serious online. Why should I bother myself with online purchases?” • “In such a highly uncertain and risky virtual environment, distrust is a more prevalent mechanism than trust to help avoid potentially negative consequences.”

37. Guanxi/Relationships and E-commerce • Guanxi (close personal ties and social networking, typically operating in a dyadic and reciprocal fashion) • Can guanxi be created online? • How does guanxi differ from trust? • Recent research suggests that guanxi is an intimate part of TaoBao’s web-strategy. • Such psychosocial variables must be considered by website managers and business leaders.

38. Model of TaoBao Buyers’ Development of Trust and Swift Guanxi with Sellers (n=338) Figure 1. PLS Results of Structural Model with Formative Measures (n=338)

39. Personalization (1/2) • Do all customers want the same interface? • Do they all respond to the same stimuli? • Are they all equally goal or process oriented? • Can we use the same tactic to get their loyalty? • Personalization is recognised as a major opportunity - yet also a major headache.

40. Personalization (2/2) • Studies of culture tell us that stereotyping is dangerous. • Some people like a simple interface, easy to use, quick to find what they want. • Others appreciate a more challenging, or fun, interface. • Hedonism (enjoyment/entertainment value) is a big turn on for some people

41. Hedonism • But are you turned on • by colourful graphics, and visually arousing displays of information? • or by distracting icons and flashing lights? • or by a very simple interface that loads fast and gets you what you want? • Also, is it safe to assume that all members of a cultural group share similar preferences? What about across cultures?

42. Compare • www.sina.com • www.rakuten.co.jp • www.alriyadh.com

43. BUSINESS / REVENUE MODELS (1)adapted from Michael Rappahttp://digitalenterprise.org/models/ Auctions Market makers bring buyers and sellers together Advertising Extends traditional broadcast model Infomediary Collects and sells data about users or products Merchant Online retailers

44. BUSINESS / REVENUE MODELS (2) Community Loyal users provide funds and/or content Subscription Users pay for access Utility Metered usage or pay-as-you-go approach Manufacturer Web compresses distribution channel; customers can tailor their goods before delivery

45. BUSINESS / REVENUE MODELS (3) Financial Intermediaries Government Services Aggregators E-Ticketing Trading Intermediaries & Market Spaces

46. Strategic Impacts of EC • Information is a source of revenue • Companies must be able to provide immediate response to requests for information • Quality and speed of information is critical • Extensive information is available from the government and commercial sources (including competitors) • Web-literate (and liberated) consumers have access to all makes and models of a product line

47. Problematic Issues with EC • EC is not without its fair share of problems • These involve such disparate areas as • Taxation • Complaints, Refunds and Returns • Transborder Data Flows • Not to mention consumer comfort with • Security, privacy, lack of ‘touch-and-feel’

48. What if…? • I live in Hong Kong, and use a Canadian intermediary website (but the servers are physically located in Fiji) to buy a book from an Egyptian bookshop, with the payment verified by a bank located in France (which offshores data processing to China), using my Hong Kong issued credit card, and delivery organised through the Cairo office of Federal Express (which is governed by US law). • Where is the transaction taking place? • Which tax law applies? • What should I do if the book doesn’t arrive? • Are there legal concerns about data flow?

49. Lessons for EC • The world (or a lot of it) should be the market • Creating a compelling experience is essential • Developing buyer-seller trust cannot be ignored, especially if no legal protection for transactions • There are many business/revenue models, but which one is going to work? • Mobile commerce is growing very fast,…so • You have to take risks… • Some cultures seem to be more risk tolerant than others

50. How Are Social Media and Apps Transforming E-Commerce • Consider the changes we are seeing with social shopping sites, group-buying sites, and social media more generally. • What changes can we expect to see in E- and M- Commerce? • Think in terms of the customers, the kinds of products, the media/channels involved, the payment systems. • Who are the future successful web-entrepreneurs?