Ecommerce and Web 2.0 - Essay Example

Contents Contents Introduction 2 What is exactly Second Life? 3 Personal experience with Second Life 6 ECommerce and Web 2.0 A study 9 What is Web 2.0 and how is it shaping eCommerce? 9 Web 2.0 and how it can be integrated within the eCommerce activities of companies from the certain 10 How do companies move towards Web 2.0? 13 References 14 Bibliography 16 Introduction The internet has evolved over the last decade by allowing people to do activities they could not have done in real life. Online communities have become so popular in today’s world that 2 out of every 3 people of the global online population visit online communities – including social networks and blogs. The reasons for which a person is motivated to form, join, or even idolize an online community are often very different. There are three types of needs which a person may feel at a particular time - Biogenic Needs, Psychogenic Needs or Motive. Needs which arise from a psychological state of unease such as thirst, hunger or discomfort is labeled as Biogenic Needs. Also known as innate needs, these are vital for the survival of an individual. Psychogenic Needs are more acquired in nature – they include the need for social belongingness, recognition and self-esteem. (Solomon, M.R., Dann, S., Dann, S. & Russell-Bennett, R. 2007). Motive, on the other hand, is an intensified need. One can argue that the reason(s) for which people are moving in numbers to the online communities and different online groups and platforms are more of an acquired nature. The internet has been successful in giving acceptance, love, and self-fulfillment as achievements to separate individuals. Every need brings along an appropriate and distinct goal into the limelight. The specific goals are often interdependent on specific variables like the person’s age, gender, experience, prevailing cultural values and norms, and the degree to which the goal is accessible in the present social setup. (Farrior M., August 2005) Social communities often help the individual to set up specific goals for themselves which might not have been possible for them to set for themselves in the real world. A person sets a goal for losing a few pounds, which he is unable to accomplish in real life. However the internet provides him with the option of being the real ‘Marlboro Man’ – lean, rugged and handsome. So it, in turn, helps him to achieve the goal of becoming accepted due to bringing up a new identity for him. (Jonathan L., 2002). Second Life goes further than the online communities, it is a virtual world, which is accessible by users online. Users develop their own avatars, or profiles, and interact with other users. They lead a complete life online – they socialize, travel, participate in activities, own and trade in commodities, and can even enjoy live music and theatre (Au, W. J., 2008)! What is exactly Second Life? Second Life is an online, multi-user, fully integrated, 3-D virtual world that is built as a direct prototype to the modern society. Linden Research Inc., created Second Life in 2003 and this has created a lot of traffic for net traffic for the company – the popularity of which can be seen by the fact that users were found spending 28,274,505 hours "inworld" during January 2008. More over around 38,000 users could be found logged in at any particular moment during this period of time (Dubner, S., 2007). The online users create a three dimensional ‘Avatar’, a form by which they can interact in this virtual world. The worlds in Second Life is known as the grid and the users, known as the residents can do almost any thing here – trade, build, socialize, the list goes on and on. The status of Second Life as a game has been long debated – unlike a common computer game Second Life has no objectives that it sets for the users. People can creatively pursue exploration, which is the mainstay of this virtual platform. The resource specifications for Second Life are modest – users need to download a free software, a client program, and use it on their personal computer to connect to the virtual world. The software platform of Second Life uses a simple three dimensional modeling tool based on geometric shapes, allowing even the most novice users to explore their creativity and construct their own requirements according to their own specifications. The Linden scripting language, a coding tool can be used further to make the objects created functional. The Second Life platform also allows users to do further modifications using external software. The hardware specifications for Second Life are also standard – it runs on a variety of operating system platforms like Windows xp, Mac OS and Linux. The minimum system requirements for Second Life are a broadband internet connection, 512 MB RAM, 50 MB free hard disk storage space, a 800 MHz x86 CPU and separate graphic cards like nVidia GeForce 6600 or ATI Radeon 8500. Second Life is best experienced with the aid of a 3Dconnexion Space Navigator. Second Life has enjoyed immense popularity from the time of its inception. There are both generic as well as specific reasons for this. As a generic development it has been noticed that - interaction and the possibilities of ‘many to many’ communication are the basic tenets on which an online community flourishes. Secondly, online communities strive to attract newer members and retain older members so that they become directly involved in the events being done in the community, thus creating value. This may be regarded as the single best reason for which a community flourishes – it gives the scope of creativity, indulgence and fan following. It also opens up a stronger proponent of human psyche – Group influence. (Iriberri A. & Leroy G, 2009) Thirdly, the community is focused and is able to satisfy the needs of the users – so it gives the incentive to the members to return again and again. People would be the member of a successful group, even if by nature, the person in question is timid and/or submissive. There are however more prominent reasons specific to Second Life for its success. Firstly it allows users to replicate elements of the real world with practical applications. This calls for a sense of entrepreneurship in every user – Second Life fulfils this beautifully. It has its own currency – the Linden dollars. The Linden dollars can be used to trade, buy, sell, rent and conduct a multitude of other economic activities, thus elevating Second Life from a mere virtual environment to something in which activities could be performed. The Linden dollars can be purchased by US and other currencies – on the LindeX exchange of the Linden Lab, independent third party brokers like VirWoX and MaxMoney, and can also be bartered from other users. This also throws up the answer to queries about the profitability of the venture – and how money is made on Second Life . Though there are no monetary charges for creating a Second Life account, individuals can create premium accounts by paying annual memberships of 119.4 USD. The premium account holders get stipends worth 300Linden dollars per week along with access to better technical support. Individuals can do almost anything – and many of them often indulge in money making activities. The currency receipts are used to pay Second Life subscription and Second Life is yet to see a plethora of online millionaires. Of around 64,000 people who made profits in February 2009 in Second Life, only about 233 made profits in the excess of 5000 USD. There exists business entities on Second Life who have made profits in the one million USD (Wagner J. A., 2009). It is not that only individuals make money in Second Life. Several companies like Adidas, IBM, Best Buy, Reuters, Sears, Dell, Coldwell Banker, Pontiac, BMW and Wells Fargo have created a space for themselves in the virtual world of Second Life. Vast majority of small businesses also operate in Second Life – catering to a multitude of revenue making avenues. They include organizations involved in the selling of virtual goods, proving services, Brokers and information providers, , Entertainment operators, Entertainers, Software and content developers and several Non-profit services. However the bigger organizations use Second Life to reinforce their brand image, and are lured in by its growing popularity among users of a diverse age class. Second Life is available to users from all age groups – it operates in two formats, the first for the age group 13 – 17, known as the Teen Second Life, while the normal version for people 18 years and above. Second Life caters to several sociological, economical, and technological perspectives. Second Life is used by 300 universities all across the world for conducting research and disbursing education in general. Several top rung scientific organizations like NASA has been using Second Life to reach to a new class of people. Second Life has also been in the centre of several new product launches – including literature launches and music albums. The chief eCommerce concepts that are apparent in Second Life – the relative ease with which a vast majority of people that can be reached by advertisement, the lowering of cost barriers and the incentive that the imagination of the users provide to the organizations for coming up with a newer product or service. Personal experience with Second Life The documentary about Second Life showed how the avatars lived in their virtual world. It was a testimony to the daily activities which one could perform, in some cases even outperform, in the virtual domain of their existence. Though it added some extra zing to a character (one can fly in Second Life), the second innings gives a person the chance to outdo even himself when it comes to socializing and creating valuable contributions. The documentary also shows the scope for knowledge based activities which can be performed with ease over the internet. The opening screen for Second Life is refreshing, it gives the potential user the chance to see for himself what hi is going into. The registration process, similarly is simple and fast – ECommerce and Web 2.0 : A study What is Web 2.0 and how is it shaping eCommerce? The Web 2.0 is often credited to be the future of the world wide web. The differences in its design which allows it to be distinguished from Web 1.0, or the original world wide web is its ability to let users to use the network as a backbone for computational purpose. Therefore Web 2.0 websites will allow users to do more than retrieve data, it will let them use the network as a platform on which some levels of computations could be performed, allowing users to run software applications through their individual browsers, there by speeding up the entire retrieval process and letting providers provide information in a more processed form. Users can modify the content and improve on the websites’ functionality, as a sharp contrast to the earlier scenario where only the owner of the website had the privilege to modify the content. Thus information is getting processed at a variety of points – making it more relevant and useful. The different distinguishable features of Web 2.0 are RSS (Really Simple Syndication) Systems which allows people to refer and subscribe to online distribution system of news, blogs, podcasts, or other information. Podcasts, which are basically audio or video files. It is distributed in the form of a multimedia blog. They reach the general public through an aggregator, such as iTunes. Blogs, which are online diaries that are hosted on a Web site and are maintained regularly by a single or a group of readers. Collective intelligence, which capitalizes the computing ability of several individuals as compared to a single entity to provide viable solutions. Mash ups, which are amalgamations of different service content on a single platform. Peer-to-peer networking, which is a better and efficient way of transferring and storing data online. Web services, which are software systems that make it efficient for different systems to coordinate with one another seamlessly in order to pass information or carry out transactions. Wikis, which are systems for collaborative publishing, thereby enhancing information, and Social networking, which is basically brought forward by the development of several networking sites which allow the coming together of individuals bridging the boundaries. Web 2.0 and how it can be integrated within the eCommerce activities of companies from the certain Most Web 2.0 tools are simple-to-use, user friendly and platform independent applications that are hosted offsite in computers which may be far away from the users, which makes them easy to implement, as agents of change in doing eCommerce and eBusiness. The internet is a powerful tool, helping us to shed boundaries and giving us a second chance to set up our own perimeter. The reasons are varied – people want to belong to a group which gives them a sense of power and belongingness. "Social networking has become a fundamental part of the global online experience," says John Burbank, CEO of Nielsen Online. "While two-thirds of the global online population already accesses member community sites, their vigorous adoption and the migration of time show no signs of slowing. Social networking will continue to alter not just the global online landscape, but the consumer experience at large” (“Time Spent” on These Sites Growing Three Times Faster than Overall Internet Rate, Now Accounting for Almost 10 Percent of all Internet Time, March 9, 2009 ). The net has shown the people how to be bold and be themselves without actually moving out from the confines of their homes or cubicles. Thus people who are opinion leaders hold their sway in facebook, it is safe to learn from the experiences and reactions of first hand users of different products and services. Facebook also lets the organizations to retrieve important customer data, from the different communities and clubs, follow behavioral patterns, so that they can come out with a better offering the next time. Web 2.0 is the platform on which the concepts of Travel 2.0, Health 2.0, eGovernment 2.0 and Social shopping flourish. Travel 2.0 pertains to one of the most dynamic and largest of all the sectors of the world economy – travel and tourism. The building blocks of Travel 2.0 are – transparency of data, peer collaboration, speed and predictive information. Thus it is possible, through Web 2.0 based applications to collate valuable, reliable information from first hand tourists about different places to visit and cherish. A typical new form of CRM has emerged, that between the customers and other customers – so that at the end of the day the customer has access to only relevant data. Health 2.0 is built on practices like electronic medical records, telemedicine, and the use of the web by the patients themselves. Health 2.0 is pioneering innovations involving the way in which the patients get informed about their illnesses, getting educated about medical status, and sharing relevant opinions (“Health 2.0 : Technology and society: Is the outbreak of cancer videos, bulimia blogs and other forms of “user generated” medical information a healthy trend?”, 2007). Social Shopping is the most prominently visible phenomenon among other derivatives of Web 2.0 on facebook. People can get surveys, technological reviews at the click of the mouse thereby enhancing the shopping experience. The impact on eCommerce by such an phenomenon is most clearly measureable, not only end users but producers are benefitted by user reviews, and better a marketing campaign by several times. A recent Neilson report states that 3 out of 10 people visit facebook – the world’s most visited social network site. As a significant development, it has also been observed that over 2 million users now access these networking sites with the help of their mobiles. The internet has been able to create an online domain for the common man – a separate space for him to socialize, innovate and create. This lowering of barriers has resulted in the spawning of groups and communes over the net – a have given the common man the incentive to go out and test his barriers. Groups of people have started to come together and share information like never before. (Grossman L., 2007). This can be used to explain the business benefit from the perspective of these companies, in terms of incremental revenues, increased customer satisfaction, and increased brand perception and value. Following the results of an global survey done by McKinsey (How businesses are using Web 2.0: A McKinsey Global Survey, 2007), it has been seen that more than 50 percent of respondents were pleased with the results shown by the Web 2.0 investments while 75 percent of the respondents claimed that they would hold on to or increase investments in Web 2.0 technologies in the near future. Clearly Web 2.0 was having a bearing on the revenue models of the companies. Some of the respondents claimed that their companies are using more than two of these technologies, like per to peer networking, blogs etc, and almost 70 percent of those whose companies are investing in Web 2.0 technologies, think that they are important for maintaining the company’s market position – both revenue based as well as ‘share of mind’, either to be equipped with a competitive edge or to match the competition on the net and address latent and existing customer demand. Companies are affected by the Web 2.0 in a majority of ways - better collaboration among employees within the company, superior customer engagement, and a better process to manage the PR of the company online. RSS and blogs are found to be helping a company with the customer churn rate and are proding ideas for the company to develop new products and services. How do companies move towards Web 2.0? In an effort towards moving towards Web 2.0, enterprises around the globe have adopted several initiatives into their software and hardware setups. The main motive of the Web 2.0 applications is to remove the shreds of difficulty that the customers face while entering into a business transaction with a company, and give the potential and existing clients a chance to get near to the company and its offerings by allowing them to interact freely, seek opinions – thereby enriching the entire shopping and business experience. Though the efforts on the part of the entire industry are similar, it would be prudent to consider how industries have or can in the near future move towards Web 2.0. One of the industries which can use Web 2.0 effectively is the travel, tourism and hospitality industry. Applications in demand for this particular industry division is one which allows the organizations real time flexibility to segment the client base accurately and fulfill their needs. It has been observed that a majority of travel operators are using the same approach for catering to different customer bases - as against an operative in which the require a keen understanding of the customers habit and tastes and by an experience to customize products, services, and channels to different, strategically separate consumer groups — whether high class service seekers, online power shoppers, traditional holiday enjoyers, or bargain seekers. The first priority is, therefore, to develop a system which can successfully replicate human intelligence. Moreover they need to be based on software platforms which allow decision making real-time – like pricing, availability of seats, matching the clients’ willingness to pay to his specific travel plans and offer intelligent advice. This requires a very dynamic booking engine – one which can update the information regarding product type, pricing, procurement, and inventory management systems that can react immediately to customer requests and to prices that change almost every minute. Thus a Web 2.0 website will be covering multiple needs for a client – it will be informative (with an option of letting users deal with other customers), store customer data or speedier transactions in the future, provide cost effective scalability and harness collective intelligence. References “Health 2.0 : Technology and society: Is the outbreak of cancer videos, bulimia blogs and other forms of “user generated” medical information a healthy trend?”, 2007, The Economist, September 2007 “Time Spent” on These Sites Growing Three Times Faster than Overall Internet Rate, Now Accounting for Almost 10 Percent of all Internet Time, March 9 2009, The Nielsen Company, [Online] Available : http://www.nielsen-online.com/pr/pr_090309.pdf [May 24 2009] Au, W. J., 2008, The Making of Second Life, Collins ISBN 978-0-06-135320-8. Dubner, S., 2007, Philip Rosedale Answers Your Questions, New York Times. [Online] Available http://freakonomics.blogs.nytimes.com/2007/12/13/philip-rosedale-answers-your-second-life-questions/?hp. 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