Commerce on the Internet
`
`Thomas D.C. Little
`Boston University
`
`Y Wide Web. However, this one focuses on
`
`es, here is yet another article on the World
`
`Mbps) connectivity arrives in the home, as some
`local cable-TV companies currently promise, cre-
`ating an enormous home market. Eventually, con-
`sumers will easily access on-line services via future
`TV/computer hybrids.
`This column outlines the promise and the pit-
`falls of some current strategies for electronic retail
`and digital publishing on the Web.
`
`using the WWW to support commcrce-electron-
`ic marketing and digital publishing.
`Use of the WWW is growing at an incredible
`rate. Current estimates indicate that more than
`two million WWW viewers have been distributed,
`the vast majority being NCSA Mosaic, according
`to Pitkow’s ”WWW User Survey-General Results
`Graphs” (http://www.gatech.edu/pitkow/survey/
`Business scenarios on the Web
`We all get retail catalogs in the mail; some of
`survey-1-1994/). This growth parallels that of the
`us receive more than five every day. We some-
`Internet, with most new users originating from
`the commercial and home secturs. The WWW
`times browse them quickly, but usually toss them
`or collect them for future reference. Well, thc dig-
`and tools such as Mosaic allow these new users to
`ital analogue of this activity is now increasingly
`explore a wide range of information in the form
`occurring on the Web, although within the rules
`of text, images, audio, and video. From a techno-
`of acceptable use. Much like the conventional
`logical perspective, the increases have been facili-
`tated by availability not only of Web servers and
`mail-order model, you can ask to be on a mailing
`list to receive announcements. Such a list can
`viewers, but of compatible protocols (transmission
`serve to keep customer5 aware of new products
`control protocol/Internet protocol, or TCP/IP)
`irriplemeiited on inexpensive Apple and IBM PC
`and services. However, the electronic service has
`many advantages over conventional mailing lists,
`platforms. Additional protocols such as the serial
`including low entry and operating costs, and the
`line Internet protocol (SLIP) and the point-to-
`ability to accommodate bidirectional communi-
`point protocol (PPP) support home connectivity
`cations between the advertiser and the customer.
`by enabling TCP/IP over dial-up serial connec-
`tions. Unfortunately, many of these applica-
`Digital publishing is another commercial pur-
`tions-notably Mosaic-have
`limited value over
`suit springing up on the Web. In this context, dig-
`ital piiblithing is the production, maintenance,
`low-speed connections, becoming viable at high-
`and distribution of content on the WWW that is
`end modem speeds (14.4 Kbps). Bandwidth-con-
`strained or not, millions of users access the Web.
`not specifically intended for printed form.
`the potential fur mil-
`Publishers are using the WWW to store and deliv-
`These customers-and
`er copyrighted electronic books and newsletters.
`serving as a testing group; the size
`lions more-are
`of the market is driving the development of inter-
`The tools used are, of course, the various imple-
`mentations of WWW servers (CERN, NCSA),
`active electronic marketing materials. Ultimately,
`clients (NCSA and many commercial implemen-
`Web marketing pioneers will profit from their
`experience when high-speed (greater than 1.5
`tations), and
`the associated viewers (xv,
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`mpeg-play, and ghostview, for example). Most of
`these are available from the public domain for
`individual use, though not for resale. With this
`limited toolset, many interesting capabilities exist
`for electronic commerce and marketing: digital
`publishing (newsletters or magazines), brochures,
`product demos, restaurant menus, current events,
`store-fronts, and mail-order. There are numerous
`benefits to this business use of the Web:
`
`Updates. An electronic catalog or newsletter
`can be updated at any time. This allows retailers
`to change product prices on the fly, add or remove
`products at any time, and save the cost of catalog
`printing and distribution. Moreover, the data can
`be centralized, permitting single-copy updates
`that
`immediately apply
`to all customers.
`Maintenance is simplified, and materials can get
`on line quickly and can originate from real-time
`sources.
`
`Entry cost. The entry cost is relatively low for
`access to a very large audience. Establishing Web
`servers is becoming a lucrative business, and many
`providers offer construction and maintenance ser-
`vices. At the same time, the distribution chan-
`Internet-provides access to millions of
`nel-the
`users, which steals the distribution advantage pos-
`sessed by large, wealthy companies.
`
`Printing and distribution costs. Distributing
`electronic junk mail is far less expensive (if not
`less painful to receive) than printed catalogs and
`journals. The benefits to the environment are
`obvious in the decrease in paper and energy con-
`sumption.
`
`Multimedia. Retailers can provide product
`demonstrations and extensive detail without
`added distribution costs. For example, an on-line
`catalog can show many views or colors of a prod-
`uct or provide full-motion video/audio to describe
`the workings of a product.
`
`Interaction and automation. Consumer inter-
`action with the electronic catalog or journal can
`be extensive, including the ability to order prod-
`ucts or subscriptions on line. These interactive ser-
`vices can be entirely automated to save operator
`costs.
`
`Customer behavior and feedback. Interactive
`documents and feedback forms can be used to col-
`lect data on user demographics and behavior. By
`
`designing interactive materials, sellers entice cus-
`tomers to return to a site. Because bidirectional
`communication can be readily supported, com-
`monly asked questions and user behavior can be
`tracked and accommodated to provide a better,
`more efficient service to the customer. Moreover,
`retailers can correlate an individual’s profile with
`the observed access to the data.
`
`Customer profiles. On-line services can incor-
`porate customer preferences and use history, such
`as past purchases or chapters read, to provide a
`personal environment to the customer, saving
`access time.
`
`Searching. Consumers can use computer-
`based searching techniques to quickly locate prod-
`ucts and to shop for competitive prices on a single
`site or across many sites.
`
`Customer preselection. Customers who visit
`a site qualify themselves. They have sought out a
`product or service and can receive a more focused
`form of literature than mass-market approaches
`such as broadcast commercials.
`
`Many commercial organizations are extensive-
`ly using the WWW for marketing. Some examples
`include
`
`I CommerceNet (http://www.commerce.net)
`
`I Fidelity Investments (http://www.fid-inv.com)
`
`I Internet Marketing (http://cybersight.com)
`
`I Internet Shopping Network
`.internetmet)
`
`(http://shop
`
`I Pizza Hut (http://www.pizzahut.com)
`
`I Sun Microsystems (http://www.sun.com)
`
`I Quadralay (http://www.quadralay.com)
`
`Interaction i s the key
`Critical to the successful application of WWW
`technology are fostering repeat customer visits
`and managing the flow of information to and
`from the customer. Many Web sites use an excit-
`ing and dynamic opening graphic in an attempt
`to hold a customer’s interest long enough for the
`sales pitch. However, for repeat customers, retail-
`ers need to provide some kind of value-added ser-
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`Multimedia at Work
`
`Figure I . Through
`interactive forms, a
`company can build a
`database of customer
`information.
`
`Figure 2. An on-line
`magazine’s welcome
`page can point
`customers to
`subscription
`information,
`subscription forms, and
`the content itself,
`among many
`possibilities.
`
`vice in the form of useful information or services,
`searching capabilities, or incentives.
`
`Forms
`Interactive forms (Figure 1) on WWW provide
`Wry fields, radio buttons, and pull-down options.
`rhese simple components allow service providers
`:o build interfaces into the content of a Web serv-
`2r to provide access to sophisticated custom pro-
`:rams. For example, a customer might, through an
`nteractive form, indicate current age, number of
`rhildren, expendable income, and home value to
`dentify investment options for a mutual-fund
`iuying service. Using that information, the service
`night steer the customer to performance indices
`hat help in choosing investments.
`
`W
`
`UJ Y
`
`Forms are being used for other purposes too.
`Many registration services, such as Web server reg-
`istration, use forms to collect data in a standard
`format. This process can be automated to imme-
`diately post new server content on line. This tech-
`nique is being used for registration at technical
`conferences and for “reader service” cards.
`Another technique used on the Web to support
`electronic advertising in on-line magazines is to
`offer an incentive to interact with the service. This
`incentive can be an on-line reward (such as an
`article, movie, or access to real-time newsfeeds),
`delivery of a physical product sample, or entry
`into a contest. In contrast, a more conventional
`advertising technique is to force the material to be
`seen by mixing it with articles in an inseparable
`way, as we see in television, newspapers, and mag-
`azines. The more interesting approach is to offer
`customers an incentive to read or interact with
`advertisements.
`Once interaction is supported, data on indi-
`viduals can be maintained both by direct cus-
`tomer involvement (for example, updating the
`name and mailing address) and by monitoring the
`documents accessed. A personal profile can cap-
`ture basic demographics as well as individual
`information and environmental preferences. This
`information can be used for a number of interest-
`ing purposes, including
`
`1. to configure the interface presentation,
`
`2. to fuel Web “agents” who actively search the
`net or site based on the profile, and
`
`3. to tailor and select site-specific information to
`present to the customer (for example, showing
`children’s ads to children and adult-oriented
`ads to adults).
`
`All of these activities can be performed dynami-
`cally on a Web server.
`As an example, Figure 2 illustrates a hypothet-
`ical WWW subscription service to an electronic
`magazine. The opening menu provides a map to
`the magazine and its subscription process. “Join
`the Club” permits a customer to subscribe on line
`by interacting with the Web site and, potentially,
`to authenticate a credit card as payment.
`Subsequently, the customer can connect to the
`magazine via “Log into Service” (Figure 3) with a
`username and password.
`This example illustrates one of the most signif-
`icant benefits of Web technology: The manage-
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`‘ Figure 3. On-line
`1 publishers can support
`1 paid subscriptions by
`assigning readerr a
`userriame and
`password.
`
`individual customer accounts and
`ment of
`requests can be automated through user interac-
`tion with the content, providing a high degree of
`control with low overhead. This automation can
`also monitor and track customer behavior for
`billing and for developing more effective market-
`ing solutions. Other methods of automation can
`provide automatic responses to customer queries
`based on forms, notification of new products via
`e-mail, and other services.
`
`Protecting property rights
`Traditional publishers fear they will lose rev-
`enue when publications are put on the Web,
`because the Web facilitates uncontrolled data
`replication without financial compensation. Such
`replication is certainly possible, but often miti-
`gated by the following:
`
`1. Sometimes the publications are iriteriderl to be
`widely replicated and distributed, as is the case
`with announcements, PR materials, and
`brochures. Widespread
`replication
`then
`becomes a bonus.
`
`2. Data are often time-dependent and lose value
`with time, such as news, weather, and market
`studies. (This is also true for most software.)
`
`3 . For artworks, low-resolution images can pro-
`vide a hint of the true piece, whether music,
`film, sculpture, or portraiture, that entice a
`customer to subsequently order a high-res
`image or physical copy delivered via another
`medium.
`
`4. Content separated from custom interaction
`features can have little or no value.
`
`The current strategy for limiting access to paid-
`subscription materials is to provide password
`access to the content. Access can be billed based
`on number of accesses-to discourage subscribers
`from giving away their passwords-or on a flat
`rate per month. (Connect time is irrelevant for a
`connectionless service provided by a Web server).
`Furthermore, a publisher can develop charges
`based on the amount of detail the customer
`extracts: For instance, a publisher could charge per
`chapter of a book read. All of this is possible
`because of the ability to monitor a customer’s
`behavior and charge accordingly. Several addi-
`tional duplication scenarios are worth consider-
`ing further.
`
`Duplication scenarios
`Suppose someone copies the contents of an
`electronic book to their local computer. lhey
`would obtain all of the contents but would lose
`the interactivity and the infrastructure for its
`delivery. This is analogous to cutting the spine out
`of a book and removing all of the page numbers,
`the index, and the table of contents, and separat-
`ing the figures from the text (assuming the elec-
`tronic book has been prepared properly).
`Reproducing the electronic book would require
`significant effort, like reproducing a printed book
`does, but would not be impossible.
`Suppose someone gives a valid password to a
`colleague in a manner analogous to loaning a
`magazine. This activity could be detected as a new
`combination of username and originating com-
`puter 11’ address; the publisher can then either pre-
`vent such activity or encourage it as a good means
`of advertising. Further, if the same username-
`machine name pair accumulates a high number
`of accesses, the publisher can suspect password
`distribution and suspend the account. The right
`approach depends on the overall publishing
`objectives.
`Benefits of electronic publishing include the
`fact that the electronic book, journal, or sales
`brochure takes up no shelf space. If a customer
`does need a hard copy, WWW tools support the
`generation of printed documents at the customer
`end. Finally, on-line publishing makes custom
`reprinting easy. Want that old article on ski
`resorts? Go to the Web site and search for it. The
`Web server is always there.
`
`CD-ROM versus WWw
`Don’t bother with CD-ROM. As a delivery
`medium, it is slow and static, with a significant
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`Multimedia at Work
`
`design-to-distribution time. CD-ROM technology
`will soon be supplanted by high-speed communi-
`cations and rich-content archives that can change
`instantly and eliminate the need to store data
`locally.
`
`Limitations
`As with anything, the WWW has limitations.
`The high product return rate of TV home shop-
`ping is one of the side effects of customers losing
`the ability to physically touch and see products.
`This benefits neither the customer nor the mer-
`chandiser. The service end can only automate so
`much user interaction; you still need someone to
`answer the phone and provide customer service.
`Also, poorly designed automation can have ill
`effects; for example, a defective mail robot can irk
`an entire customer base by erroneously replicat-
`ing and distributing product announcements.
`Finally, the explosion in electronic distribution of
`promotional materials via e-mail diminishes its
`value as it moves toward junk-mail status.
`Another problem is that creating and main-
`taining useful content requires effort and expense.
`Most Web servers, both commercial and non-
`commercial, rely on relatively static information
`content. Commercial sites commonly translate
`promotional materials such as brochures, maps,
`and product literature into HTML-compliant doc-
`uments suitable for browsing. On-line journals
`and magazines post recent articles to encourage
`browsing on their sites. The challenge is how to
`maintain this information as it changes over time
`with minimal effort.
`Servers are relatively straightforward to set up,
`as evidenced by the number currently on line.
`Developing highly interactive services, however,
`can require significant development efforts tai-
`
`lored to an application domain. In all cases, the
`ability to attract and keep customers depends on
`the quality of the offered services and products.
`Maintenance and operating costs depend on the
`frequency of content changes and the amount of
`bandwidth consumed in content delivery.
`
`Conclusion
`Businesses are increasingly using the Web for
`advertising and electronic catalog-based retail
`sales. Immediate benefits from the use of the tech-
`nology include the ability to monitor and track the
`behavior of one's customers, provided by access
`statistics the WWW server maintains. In addition,
`many aspects of managing customer interaction
`can be automated, for example, submission and
`collection of customer surveys, billing, and so
`forth. In the future, more organizations will use
`the net for innovative ways of providing on-line
`magazines and electronic commerce. Although the
`approximately 20 million Internet users represent
`only a small fraction of the world population, the
`dramatic growth of the market in recent years will
`continue to lure commerce on line.
`MM
`
`Acknowledgments
`I thank the following individuals for sharing
`their experiences with the WWW: Peter Bray of
`Internet Marketing, David Butcher of Nine Lives,
`Brian Combs of Quadralay, and Hassan Schroeder
`of Sun Microsystems.
`
`Contact Miiltimedia at Work editor Thoinas D.C.
`Little at the Department of Electrical, Computer, and
`Systems Engineering, Boston University, 44
`Cummington St., Boston, MA 0221 5, e-mail
`tdclC!bii.edu.
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