Exercise 1: Analysis of the online communities paradigm

1. Visit http://yahoo.com/ and http://facebook.com/ as examples of online communities.

a. What is meant by an online community and how is it important for e-commerce?
An online community is a virtual community that exists online with members joining in all over the world. Members can share their thoughts and live experience by posting contents in words and photos. Joining groups and before fans of certain brands in order to receive the latest information and activities. This is why Facebook becomes another platform to promote a brand where promoters can post information to their group such as activity photos and new product information. The promotion effect is much more effective and long lasting than advertising on newspapers and TV which last only for days but now last for weeks without any cost imposed. Fan in the group would also discuss on certain product and activities which further enhance the promotion effect.
b. Is there a common thread and a local community sense in action?
We can see there is a common thread and local community sense in action on the Internet. Take Hong Kong as an example, in 2008, police has arrested people posting celebrity porn photos on the Internet. Recently, police has also accused a teenager posting on forum regarding the blow up of the residence of chief executive.


2. Visit the famous online store front at http://www.amazon.com/

a. Why has it been a successful site? How does the purchase of a book work?
Having visited Amazon, we have discovered that the success comes the simplicity of buying a book in Amazon and its huge collection of books. It develops a website which focuses on the value delivered to customers as it is user friendly. Orders can be processed online anytime and everywhere in the world. Amazon now even launches a new gadget called “Kindle” which is a electronic book reader. It further extends a platform for book selling in electronic format.
The database of the book stock in Amazon is huge and you can easily locate any books you want. The items you have previously searched would be recorded in the cookies in case you want to buy it next time. You may also put the items in the wish list or shopping cart even you are not a member of Amazon and only need to register your details until you decided to checkout your items.

b. Are there any secure transactions not involving money?
There is no secure transactions not involving money in the market. Secure transaction or more specifically Secure Electronic Transaction (SET) is a standard protocol for securing credit card transactions over insecure networks. It is intended to become the standard of payment method on the Internet between the merchants, the buyers and the credit-card companies.


3. What happens with new models emerging such as price comparison sites?

Price comparison sites are basically a one way data collection from merchants. These price comparison sites would not charge users using the site. New business models emerge as these sites brings traffic to merchants and would charge them for each time users click to the retailer web site via the link on the comparison site. In the UK, these services made between 120m pounds and 140m pounds in revenue in 2005 and is growing in an annual rate of 30% to 50%


References
Price Comparison Service. Retrieved Mar 18, 2010, from http://en.wikipedia.org/wiki/Price_comparison_service

Secure Electronic Transaction. Retrieved Mar 15, 2010, from http://en.wikipedia.org/wiki/Secure_Electronic_Transaction