Page 58 - Introduction to Electronic Commerce and Social Commerce

36 2 E-Commerce: Mechanisms, Platforms, and Tools

The Solution between consumer behavior, content (e.g., product recommen-
dations, personalization, ads), and services and products
Pinterest is a company that provides virtual pinboards that provided.
allow users to organize and share images found on the Web
(referred to as “pins”). The pinned images (“boards”) are orga- Other Suggestions for Doing Business on Pinterest
nized by any category the user wants and placed on a virtual
pinboard, just like on a real bulletin board. For example, one • Hemley (2012) provides 26 different suggestions in an
can collect pictures of sailboats and pin them on one pinboard, A–Z guide (e.g., A = Add a Pinterest “Follow” and/or
with appropriate text explanation. You can collect decorations “Pin it” Button; B = Brands and Pinterest;
for your home on another pinboard, while you collect Chinese C = Crowdsourcing, and so forth).
recipes on a third pinboard. Millions of people create pin- • Hub Spot (hubspot.com) offers a free e-book titled “How
boards and anyone can search and view them. You can also to Use Pinterest for Business” (offers.hubspot.com/how-
add friends to your account and “follow” them. According to to- use-pinterest-for-business). It includes information
their website, “Pinterest is a tool for collecting and organizing such as how to create a Pinterest business account and
the things that inspire you” (see about.pinterest.com). For how Pinterest works.
more about what Pinterest is and how it works, see sheknows. • Wikipedia lists several potential revenue sources at en.
com/living/articles/852875/pinterest-what-it-is-how- wikipedia.org/wiki/Pinterest.
to-use-it-and-why-youll-be-addicted. • For more suggestions see business.pinterest.com/en/
Having many visitors and a rapid growth rate are neces- pinterest-guides.
sary but not sufficient for EC success. Viable business and
revenue models are also needed. Using Pinterest for Advertising and Marketing

The Business and Revenue Models Most of the suggestions cited above, as well as suggestions
by others, concentrate on advertising and marketing opportu-
Pinterest does not have a formal revenue model. (The com- nities. For comprehensive coverage, see Cario (2013) and
pany is privately held and it does not have to report about Miles and Lacey (2012). For how retailers can use Pinterest,
such a model to the public.) It looks as though the company’s see Jopson and Kuchler (2013).
current priority is growth, as expressed in its mission state-
ment. Nevertheless, many people speculate about (or sug-
gest) revenue opportunities for the company, some of which Results and Managerial Issues
are provided next.
Pinterest is one of the fastest growing social networks ever.
Yang’s Suggestions As of July 2013, the total number of Pinterest users world-
wide was 70 million aabacosmallbusiness.com/advisor/
Quora Corporation posted a question on its website: “How 30- reasons- market-business-pinterest-2014-infographic-
does Pinterest generate revenue?” One of the most compre- 184545665.html).
hensive answers received was provided by “Avid Pinterest Similar reports on this amazing growth rate and popularity
User” Yang (2012) who presented 13 potential monetization are provided by comScore and other reporting companies.
opportunities in four categories: charging advertisers (e.g., This growth has attracted over $200 million in venture capital
see Dembosky 2013), charging e-commerce partners, charg- in 2012/2013 and generated many suggestions on money-
ing users, and charging other B2B partners. Most of these making possibilities with Pinterest (e.g., see Carr 2012).
opportunities have existed in EC for years (e.g., charging for In January 2014, the valuation of Pinterest was about $3.8
premium services, creating an online retail shop, using an billion. Should the company be able to generate significant
affiliate program, and building a comprehensive advertise- revenue, it probably will go to the IPO route, in which case
ment scheme). the valuation may be much higher. Let us look now at some
managerial issues facing the company. Representative mana-
Selling Data for Market Research and Analysis gerial issues are:

Several experts suggested selling customer data available on Legal Concerns
Pinterest to retailers who can use analytics, including data min-
ing, to conduct market research using this data. Customer data Many people collect images from the Internet to build their
may reveal important statistical associations and relationships pinboards (and possibly a brand) without asking permission