Page 72 - Introduction to Electronic Commerce and Social Commerce

50 2 E-Commerce: Mechanisms, Platforms, and Tools

Online Negotiating mainly the Internet. Virtual communities parallel typical
physical communities, such as neighborhoods, clubs, or
Dynamic prices also can be determined by negotiation. associations, but people do not meet face to face. Instead,
Negotiated pricing is commonly used for expensive or special- they meet online. Virtual communities offer several ways for
ized products. Negotiated prices also are popular when large members to interact, collaborate, and trade (see Table 2.2 for
quantities are purchased. Much like auctions, negotiated prices types of virtual communities).
result from interactions and bargaining among sellers and buy-
ers. Negotiation also deals with terms, such as the payment
method, timing, and credit. Negotiation is a well-known pro- Characteristics of Traditional
cess in the off-line world (e.g., in real estate, automobile pur- Online Communities and Their
chases, and contract work). A simple peer-to- peer (P2P) Classification
negotiation can be seen at ioffer.com. For more on negotiation
in P2P money lending, see the Lending Club Company. See Most virtual communities are Internet-based, known also as
also the ZOPA and Prosper cases in Online File W7.1. Internet communities.
Hundreds of thousands of communities exist on the
Internet, and the number is growing rapidly. Pure-play
SECTION 2.5 REVIEW QUESTIONS Internet communities may have thousands or even hundreds
of millions of members. By early 2016 (its 12th anniver-
1. Define auctions and describe how they work. sary), Facebook had grown to about one billion active mem-
2. Describe the benefits of e-auctions over traditional (off- bers around the world. This is one major difference from
line) auctions. traditional purely physical communities, which usually are
3. List the four major types of auctions. much smaller. Another difference is that off-line communi-
4. Distinguish between forward and reverse auctions. ties frequently are confined to one geographic location,
5. Describe the “name-your-own-price” auction model. whereas very a few online communities are geographically
6. Describe penny auctions. confined.
7. List the major benefits of auctions to buyers, sellers, and
auctioneers. Classifications of Virtual Communities
8. What are the major limitations of auctions?
9. Define bartering and describe the advantages of e-bar- Virtual communities can be classified in several ways.
tering.
10. Explain the role of online negotiation in EC. Public Versus Private Communities
Communities can be designated as public, meaning that their
membership is open to anyone. The owner of the community
2.6 VIRTUAL COMMUNITIES may be a privately held corporation (e.g., Twitter), public for
AND SOCIAL NETWORKS profit, or nonprofit organizations. Many of the large social
networks, including Facebook, belong to the public for profit
A community is a group of people with common interests category.
who interact with one another. A virtual community is one In contrast, private communities belong to a company, an
where the interaction takes place over a computer network, association, or a group of companies and their membership

Table 2.2 Applications in social gaming types of virtual communities
Community type Description
Transaction and other Facilitate buying and selling. Combine an information portal with an infrastructure for trading. Members are
business activities buyers, sellers, intermediaries, etc., who are focused on a specific commercial area (e.g., fishing)
Purpose or interest No trading, just exchange of information on a topic of mutual interest. Examples: Investors consult The Motley
Fool (fool.com) for financial advice; music lovers go to mp3.com
Relations or practices Members are organized around certain life experiences. Example: seniornet.com is for senior citizens.
Professional communities also belong to this category. Example: aboutus.org/Isworld.org is a space for
information systems faculty, students, and professionals
Fantasy/role playing Members share imaginary environments. Examples: sports fantasy teams at espn.go.com see sports.yahoo.com/
fantasy, horseracegame.com
Social networks Members communicate, collaborate, create, share, form groups, entertain, and more. Facebook is the leader
Virtual worlds Members use avatars to represent themselves in a simulated 3-D environment where they can play games, conduct
business, socialize, and fantasize about whatever they like