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Efraim Turban Judy Whiteside David King - Introduction to Electronic Commerce and Social Commerce

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Introduction to Electronic Commerce and Social Commerce
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Efraim Turban Judy Whiteside David King / Jon Outland
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Springer International Publishing, Cham
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Part I
Introduction to E-Commerce and E-Marketplaces

Chapter 1 Overview of Electronic Commerce and Social Commerce

Chapter 2 E-Commerce: Mechanisms, Platforms, and Tools

Springer International Publishing AG 2017

Efraim Turban , Judy Whiteside , David King and Jon Outland Introduction to Electronic Commerce and Social Commerce Springer Texts in Business and Economics 10.1007/978-3-319-50091-1_1

1. Overview of Electronic Commerce and Social Commerce

Efraim Turban 1, Judy Whiteside 2, David King 3 and Jon Outland 4

(1)

University of Hawaii, Kihei, HI, USA

(2)

Lang Associates, Charleston, IL, USA

(3)

Dataffiti, LLC, Scottsdale, AZ, USA

(4)

Herzing University, Rapid City, SD, USA

Electronic supplementary material:

The online version of this chapter (doi: 10.1007/978-3-319-50091-1_1 ) contains supplementary material, which is available to authorized users.

Learning Objectives

Upon completion of this chapter, you will be able to:

Define electronic commerce (EC) and describe its various categories.
Describe and discuss the content and framework of EC.
Describe the major types of EC transactions.
Describe the drivers of EC.
Discuss the benefits of EC to individuals, organizations, and society.
Discuss social computing.
Describe social commerce and social software.
Understand the elements of the digital world.
Describe some EC business models.
List and describe the major limitations of EC.

Opening Case: How Starbucks Is Changing to a Digital and Social Enterprise

Starbucks is the worlds largest coffee house chain, with 23,043 retail stores (see news.starbucks.com/uploads/documents/AboutUs-Company_Timeline-Q42015.pdf ). Many people view Starbucks as a traditional store where customers drop in, place an order, pay for coffee or other products, consume their choices in the store, and go on about their business. The last thing many people think about is the utilization of computers in this business. The opposite is actually true. Starbucks is turning itself into a digital and social company.

For a long time, Starbucks was known as appealing to young people because of the free Wi-Fi Internet access provided in its U.S. and Canadian stores. But lately, the company embarked on several digital initiatives to become a truly tech-savvy company.

The Problem

Starting in 2007, the companys operating income declined sharply (from over $1 billion in 2007 to $504 million in 2008 and $560 million in 2009). This decline was caused by not only the economic slowdown, but also by the increased competition (e.g., from Green Mountain Coffee Roasters), which intensified even during the recession. Excellent coffee and customer service helped, but only in the short run. A better solution was needed.

Starbucks realized that better interaction with its customers was necessary and decided to solve the problem via digitization.

The Solution: Going Digital and Social

In addition to traditional measures to improve its operation and margin, the company resorted to electronic commerce , meaning the use of computerized systems to conduct and support its business. The company appointed a Senior Executive with the title of Chief Digital Officer to oversee its digital activities. It also created the Digital Venture Group to conduct the technical implementation.

The Electronic Commerce Initiatives

Starbucks deployed several e-commerce projects; the major ones follow.

Online Store

Starbucks sells many of their products online at store.starbucks.com . These offerings include coffee, tea, and Starbucks equipment and merchandise. The store was in operation for years, using a typical shopping cart (called My Bag), but in August 2011, the company completely redesigned the webstore to make shopping more convenient and easy. In addition, customers (individual or companies) can schedule deliveries of standard and special items. Customers can order rare and exquisite coffee that is available only in some U.S. stores. Finally, online customers get exclusive promotions.

The eGift Card Program

Customers can buy Starbucks customized gift cards digitally (e.g., a gift card for a friends birthday is auto delivered on the desired date). Payments can be made with a credit card, through PayPal, or the Starbucks app for mobile devices. The gift card is sent to the recipient via e-mail or postal mail.

The recipients can print the card and go shopping at a Starbucks physical store, transfer the gift amount to their Starbucks card, or to a Starbucks gift card.

Loyalty Program

Like airlines and other vendors, the company offers a Loyalty Program (My Starbucks Rewards). Those who reach the gold level receive extra benefits. The program is managed electronically.

Mobile Payments

Customers can pay at Starbucks stores with prepaid (stored value) cards, similar to those used in transportation, or pay using the Starbucks mobile app from smartphones. Shoppers can download an app on their mobile device. Payment is made by selecting touch to pay and holding up the barcode on the device screen to a scanner at the register. The system is connected automatically to a debit or credit card. The system works only in company-owned stores.

Social Media Projects

Starbucks realized the importance of social media that uses Internet-based systems to support social interactions and user involvement and engagement (Chapter ). Thus, it started several initiatives to foster customer relationships based on the needs, wants, and preferences of its existing and future customers. The following are some representative activities.

Exploiting Collective Intelligence

My Starbucks Idea ( .

Starbucks Activities on Facebook

Starbucks maintains a strong social media presence on Facebook ( facebook.com/Starbucks ), with over 36 million Likes (as of March 2016). The company uploads videos, blog posts, photos, promotions, product highlights, and special deals. The millions of people who like Starbucks on Facebook verify that the company has one of the most popular fan pages (see current statistics at fanpagelist.com and at facebook.com/Starbucks ). Starbucks offers one of the best online marketing communication experiences on Facebook to date as well as mobile commerce engagements. Starbucks posts diversified information on its Facebook page, whether it is content, questions, or updates. The company also advertises on its Facebook page (e.g., contests, events, new products).

Starbucks Presence on LinkedIn and Google+

Starbucks has a profile on LinkedIn site with over 667,000 followers (March 2016). It provides business data about the company, lists new hires in managerial positions, and advertises available jobs. Starbucks is also active on Google+. It provides business data about the company, shows employee profiles, and advertises available jobs. Note that Starbucks is regularly assessing the costbenefit of advertising on social networks .

Starbucks Activities on Twitter

In March 2016, Starbucks had over 11 million followers (Follow@starbucks) on Twitter ( twitter.com/starbucks ). Whenever the company has some new update or marketing campaign, the company posts a tweet (e.g., discounted drinks). By October 2013, Starbucks was the number one retailer to follow on Twitter. In November 2013, Starbucks gave away a $5 gift certificate to 100,000s of their customers who Tweeted a coffee to one of their friends or followers (see blissxo.com/free-stuff/deals/cash-back-and-rebates/free-5oo-starbucks-gift-card ).

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