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2.1 Electronic Commerce Mechanisms: An Overview 37

from the content creators, giving them an attribute, or com-
pensating them. Some of the collected material is formally LESSONS LEARNED FROM THE CASE
copyrighted; other material may be considered copyrighted.
A similar problem exists with material used on Facebook or Pinterest is a social network that connects people who
by bloggers. According to Pinterest’s “Terms of Use,” mem- find interesting images on the Web and organized them
bers are “solely responsible for what they pin and repin.” on virtual boards. At the same time, Pinterest is a plat-
Furthermore, users must have explicit permission from the form on which several activities of EC can be sup-
owners of contents to post them. According to Shontell ported. For example, companies can build pinboards
(2012), one lawyer deleted all her Pinterest boards out of fear that promote their brands. Pinterest can be used as a
of copyright violation. Note that Pinterest places all blame platform for facilitating innovations via idea genera-
and potential legal fees on its users (who may have to pay the tion and sharing. Pinterest is a derivative of Web 2.0
legal fees incurred by Pinterest also). Pinterest has taken sev- and social media, and as such, it is a new mechanism
eral steps to alleviate the legal concerns of users. The com- for supporting EC. Other social media mechanisms
pany is continuously adding measures to minimize the legal that are covered in this chapter are social networks and
problems. For example, in May 2012, the company added a virtual communities; different types of social media
feature that facilitates the attribution of credit to content cre- tools such as blogs, microblogs, and wikis are dis-
ators. Finally, legal concerns may include dealing with the cussed in Online File W2.1. This chapter also covers
spammers who are busy on the site. the traditional mechanisms of EC such as market-
places, merchant software, and auctions.
The Competition

The popularity of Pinterest has resulted in many attempts to
clone the company. Since the core concept is basically
image sharing, it may not be patentable; therefore, competi- 2.1 ELECTRONIC COMMERCE
tors try to jump into niche markets. For example, TripAdvisor MECHANISMS: AN OVERVIEW
(tripadvisor.com) concentrates on travel. We Heart It
(weheartit.com) is a Brazilian company (operating in the The many EC models and types of transactions presented in
USA) that is very similar to Pinterest. An emerging com- Chapter 1 are enabled by several mechanisms. To begin with,
petitor is Fancy (fancy.com), which partnered with Google+ most applications are conducted on the Internet. In addition,
in 2013. Several companies concentrate on adult entertain- the generic enablers of any information system including data-
ment and pornography. Indirect competitors are several bases, networks, security, software and server software, oper-
Chinese companies that operate in a culturally different ating systems, hardware (Web servers), and hosting services
environment (see McKenzie 2012). Companies such as need to be established. Added to the above are the specific EC
Facebook and Google may initiate a competitive service. mechanisms presented in this chapter, such as electronic mar-
Some believe that Pinterest may take business away from kets, shopping carts, e-catalogs, and support services. In addi-
both Facebook and Twitter due to its better match with the tion to all of the above, there are different methods for
business world. executing EC, such as buying at a fixed price or at an auction,
and each method has a different support mechanism. Finally,
there are the Web 2.0-based collaboration and communication
Conclusion mechanisms (e.g., Twitter) and special platforms such as the
one used by Pinterest. In this chapter, we describe the major
Pinterest is more business oriented than Facebook or Twitter EC and social commerce mechanisms so that you will be able
and visitors tend to buy more from there, although the latter to understand their uses in the forthcoming chapters.
companies drive more visitors to their sites. It seems that
Pinterest has some potential benefits for small businesses
(e.g., designers). Many companies already use Pinterest to EC Activities and Support Mechanisms
derive benefits (e.g., see the Etsy case in Chapter 3). However,
these applications do not currently provide any revenue to EC activities are divided here into six categories, which are
Pinterest. The success of Pinterest will be determined by its listed on the left side of Figure 2.1. Each activity is supported
revenue model and the company’s profitability. by one or more EC mechanisms, which are shown on the right
Sources: Based on Carr (2012), Jopson and Kuchler side of Figure 2.1, along with the section number in this chapter
(2013), Loren and Swiderski (2012), and McKenzie (2012). where they are presented. Additional mechanisms exist for special