If we build it, they will come: Teaching ecommerce in a virtual economy

1. If we build it, they will come: Teaching ecommerce in a virtual economy Howard Rosenbaum Indiana University hrosenba@indiana.edu Margaret Lennox University of Greenwich M.E.Lennox@greenwich.ac.uk Jannette Moody The Citadel Janette.Moody@Citadel.edu Catherine Ridings Lehigh University ridings@lehigh.edu William Spangler Duquesne University spangler@duq.edu August 5, 2001

2. I. Introduction • The virtual economy and ecommerce II. Pedagogical strategy • What is problem based learning? • Structure of the course III. The student experience in the VE • Store owners • Shoppers IV. How the VE works • Results and next steps

3. I. Introduction The virtual economy and ecommerce Challenge: to design and develop an inquiry-based learningenvironment for teaching ecommerce Objective: providestudents with a challenging, novel, technology-focused, and learner-centered educational experience They learn by “doing” ecommerce instead of listening to someone talk about how to do ecommerce Technology: a working, robust, and web-based virtual economy (VE: Web, Cold Fusion, and Oracle) Syllabus: http://www.slis.indiana.edu/hrosenba/www/L561/syll/syll6.html

4. I. Introduction • The virtual economy and ecommerce II. Pedagogical strategy • What is problem based learning? • Structure of the course III. The student experience in the VE • Store owners • Shoppers IV. How the VE works • Results and next steps

5. II. Pedagogy What is problem based learning (PBL)? Learning: confronting and resolving a series of problems related to starting up and managing an ebusiness Activities: students start up, design, and operate e-businesses which compete in the VE Shoppers use digital money to purchase information products and services VE: a distributed digital marketplace simulating a competitive environment for buying and selling Teaching: developing, implementing, using and testing a curriculum based on “problem based learning”

6. The pedagogical approach: PBL and the development of a situated learning environment In starting up, designing, and managing an ebusiness, students face a complex and ill-structured problem They work in small, self-directed teams and investigate issues involved in creating web-based ebusinesses Students are responsible for determining what they need to learn to develop and manage their ebusinesses They draw upon a range of disciplines to resolve the problems they face

7. There are real-world benchmarks against which student work can be evaluated Sales, repeat customers, traffic reports, and customer feedback Students apply what they learn to the basic problem as it evolves over time This is “authentic learning” because “students publicly exhibit their learning, and there are often real life standards of quality” (Gordon 1998: 391) Outcome: “higher levels of comprehension, more learning and knowledge-forming skills, more social skills” (Rheem, 1999)

8. Structure of the course and timeline for the VE Week 1: Introduction: Developing a start-up company Week 2-7: Design, build, and test the site 2: Present business plan, begin content development 3: Database population, evaluation of sites and development of initial prototype 4: Development of advertising and marketing plan 5: Final design; online ad auction 6,7: Presentation of customer service and support strategies, testing and redesign (if necessary) Week 8-15: Operate the storefronts

9. Shoppers were business school students from the following institutions (with participating faculty): Australia University of Canberra: Ric Jentzsch University of Queensland: Sophie Cockcroft UK University of Bath: Richard Vigden, Joe Nandhakumar University of Greenwich: Margaret Lennox US The Citadel: Janette Moody Dusquesne University: A. Graham Peace, William Spangler Kennesaw State University: Martha Meyers Lehigh University: Catherine Ridings University of Oklahoma: Laku Chidambaram Georgia College and State University: Ric Bialac

10. I. Introduction • The virtual economy and ecommerce II. Pedagogical strategy • What is problem based learning? • Structure of the course III. The student experience in the VE • Store owners • Shoppers IV. How the VE works • Results and next steps

11. The student experience in the VE: Store owners: Developed and implemented business plans Designed working storefronts Designed content pages (product descriptions, help pages, etc) Used a template page to set up a product catalog, transaction procedures, and an order form Developed content Annotated bibliographies and collections of articles, web site reviews, newsletters, subscription services, editing and consulting activities, and entertainment

12. They: Created advertising and marketing strategies, banner ads for the portal page, sales, and other promotions Participated in an ad auction Set up customer service and loyalty programs Developed policies to protect customer privacy, handle grievances, complaints, and technical support Managed their businesses Monitored store accounts, handled customer service and support, and maintained inventory Added and removed content and redesigned sites

13. Through their actions, store owners raised some fascinating ethical issues They Took advantage of the architecture of the VE Looked at each others’ store directories Read each other’s weekly reports Searched for pricing information One group downloaded at least one of another group’s articles and sold it as their own When do business practices cross the line between competitive and unethical?

14. The student experience in the VE Shoppers Had to develop familiarity with ecommerce Used the VE extensively Checked their accounts and purchase histories Provided extensive feedback to store owners and the instructor Committed fraud Claimed files were corrupted or never delivered Took advantage of closing strategies Formed buying circles

15. I. Introduction • The virtual economy and ecommerce II. Pedagogical strategy • What is problem based learning? • Structure of the course III. The student experience in the VE • Store owners • Shoppers IV. How the VE works • Results and next steps

18. Synergia: information services Vegas Casino: entertainment GetBusy: information, services DigiTeam: collaboration services SWOT.com: information GetBusy Business Bistro: bundled information Succinct: subscription

19. Virtual Economy Spring 2001: Participants Total shoppers: 424 Unique shoppers 213 Stores: 7 Total $$ to be spent: $848,000 Weeks online: 8 Total $$ spent: $218,269.31 (25.7%) Total $$ remaining: $566,730.69 (74.3%) Avg. $$ left/shopper: $1,336.63 Avg $$ spent/shopper: $514.78

20. Virtual Economy Spring 2001: Activity Store Sales %sales Transactions %transaction $/transactions ve16: SWOT $21,089.00 9.7% 643 28% $32.80 ve17: Succinct $55,019.25 25.2% 547 23% $100.58 ve18: GetBusy $8,634.95 3.9% 112 5% $77.10 ve19: Vegas Casino $32,473.00 14.9% 375 16% $86.59 ve20: Business Bistro $60,066.86 27.8% 310 13% $195.70 ve21: Digiteam $4,175.00 1.9% 139 6% $30.04 ve22: Synergia $36,055.00 16.5% 220 9% $163.89 ve10: Test store $156.24 .07% 4 0% $39.06 Totals $218,269.31 100% 2350 100% $90.72

21. VE: Gross Revenues ve22:$36,055 ve16:$21,089 ve17:$55,019.25 ve21:$4,175 ve20:$60,066.86 ve18:$8,634.96 ve19:$32,473 Total revenues: $218,269,31

22. VE: Market share ve22:16.5% ve16:9.6% ve17:25.2% ve21:1.9% ve20:27.8% ve18:3.9% ve19:14.9%

23. Revenues over time Weeks

24. VE: Total transactions ve16:643 (27%) ve22:220 (9%) ve21:139 (6%) ve20:310 (13%) ve19:375 (16%) ve17:547 (23%) ve18:112 (5%) Total transactions: 2350

25. Transactions over time Number of transactions Weeks

26. VE: Average transaction in dollars $195.70 $163.89 $100.58 $86.59 $77.10 $32.80 $39.06 $30.04 Average transaction in dollars: $90.72

27. VE: Expenses $32,100 $30,150 $26,526 $17,978 $13,078 $6,496 $5,128 Expenses: Auction Market report Web hosting Consulting Refunds

28. VE profits $94,981.25 $100,170.86 $61,077 $50,011 $45,323 $23,108.96 $14,075

29. VE 2000: Final standings (profits) Store Sales Expenses Profits Rank ve16: SWOT ve17: Succinct ve18: GetBusy ve19: Vegas Casino ve20: Business Bistro ve21: DigiTeam ve22: Synergia $13,078 $5,128 $26,526 $30,150 $6,496 $32,100 $17,978 $50,011.00 $94,981.00 $23,108.96 $45,323.00 $100,170.86 $14,075.00 $61,077.00 4 $21,089.00 $55,019.25 $8,634.95 $32,473.00 $60,066.86 $4,175.00 $36,055.00 2 6 5 1 7 3

30. VE: Summary of results Sales Transactions Profits 1. 2. 3. 4. 5. 6. 7. Business Bistro Succinct Synergia Vegas Casino SWOT GetBusy Digiteam SWOT Succinct Vegas Casino Business Bistro Synergia DigiTeam GetBusy Business Bistro Succinct Synergia SWOT Vegas Casino GetBusy DigiTeam

31. Next steps: Continue to improve the usability and efficiency of the back end (working with the Cold Fusion and Oracle database) Make the experience more realistic Using an external class as venture capitalists Developing more products to sell to stores (traffic reports, tables in the database, auction and chat modules) Investigate research questions Learning outcomes Examining scenarios of trust building Factors affecting successful (usable design)

32. Explore variations in the running of the VE Have a team from one or more universities develop stores in the VE to compete with my students Have distributed teams (at IU and other universities) developing and managing stores)