Enhancing E-Commerce through Sticky Virtual Communities

Enhancing E-Commerce through Sticky Virtual Communities

Sumeet Gupta (National University of Singapore, Singapore)
DOI: 10.4018/978-1-60566-014-1.ch064
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Abstract

Virtual communities (VCs) are places on the Web where people can find and then electronically ‘talk’ to others with similar interests. VCs primarily act as coffee shops, where people come and meet each other rather than focusing on content or commerce (Gupta & Kim, 2004). Still there are commercial ones where people can conduct transaction, auction, and commerce. The concept of a virtual community was born in 1993 when the Internet was first established in the United States (Rheingold, 1993). Today, virtual communities are more than just a means of connecting individuals and organisations. Today VCs acts as a business model employed by the digital economy for generating income, primarily through advertising (Reinhard & Wolkinger, 2002). Although virtual communities are still widely popular today, accounting for 84% of the Internet usage in 2002 (Horrigan, 2002), no one has yet agreed on a common definition for the term (Schoberth & Schrott, 2001). Schubert and Ginsberg (2000) defines a virtual community as a shared semantic space where individuals and organisations come together regularly to share common interests and values electronically. The definition varies depending upon the purpose served by the Web site. Based on a comprehensive research, Gupta and Kim (2004) developed a definition based on essential elements of a virtual community and define VC as a groups of like-minded strangers who interact predominantly in cyberspace to form relationships, share knowledge, have fun, or engage in economic transactions (Gupta & Kim, 2004). VCs play a bigger role in many aspects of a member’s life, from forming and maintaining friendships and romantic relationships, to learning, forming opinions, purchasing, and consuming products and services (Hagel & Armstrong, 1997). VCs are also ideal tools for e-commerce, marketing, knowledge building, and e-learning activities. Particularly, VCs add value by providing repeated points of contact which increase the stickiness of the Web site (Laudon & Traver, 2003). People love to interact on Internet and by facilitating their interaction users can be retained on site. The longer they are on site the greater are the chances of making the sale. How do these VCs exactly increase the stickiness of the Web site and how do they add business value to the Web site? To answer these questions we will visit hardwarezone.com (Appendix 1), a Singapore based virtual community which has been phenomenally successful since its inception. But before that we will briefly review the concept of stickiness.
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Introduction

Virtual communities (VCs) are places on the Web where people can find and then electronically ‘talk’ to others with similar interests. VCs primarily act as coffee shops, where people come and meet each other rather than focusing on content or commerce (Gupta & Kim, 2004). Still there are commercial ones where people can conduct transaction, auction, and commerce. The concept of a virtual community was born in 1993 when the Internet was first established in the United States (Rheingold, 1993). Today, virtual communities are more than just a means of connecting individuals and organisations. Today VCs acts as a business model employed by the digital economy for generating income, primarily through advertising (Reinhard & Wolkinger, 2002).

Although virtual communities are still widely popular today, accounting for 84% of the Internet usage in 2002 (Horrigan, 2002), no one has yet agreed on a common definition for the term (Schoberth & Schrott, 2001). Schubert and Ginsberg (2000) defines a virtual community as a shared semantic space where individuals and organisations come together regularly to share common interests and values electronically. The definition varies depending upon the purpose served by the Web site. Based on a comprehensive research, Gupta and Kim (2004) developed a definition based on essential elements of a virtual community and define VC as a groups of like-minded strangers who interact predominantly in cyberspace to form relationships, share knowledge, have fun, or engage in economic transactions (Gupta & Kim, 2004).

VCs play a bigger role in many aspects of a member’s life, from forming and maintaining friendships and romantic relationships, to learning, forming opinions, purchasing, and consuming products and services (Hagel & Armstrong, 1997). VCs are also ideal tools for e-commerce, marketing, knowledge building, and e-learning activities. Particularly, VCs add value by providing repeated points of contact which increase the stickiness of the Web site (Laudon & Traver, 2003). People love to interact on Internet and by facilitating their interaction users can be retained on site. The longer they are on site the greater are the chances of making the sale. How do these VCs exactly increase the stickiness of the Web site and how do they add business value to the Web site? To answer these questions we will visit hardwarezone.com (Appendix 1), a Singapore based virtual community which has been phenomenally successful since its inception. But before that we will briefly review the concept of stickiness.

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Concept Of Stickiness

Various definitions emerge characterising stickiness of a Web site and therefore it would be worthwhile to understand what exactly stickiness is. Various researchers describe stickiness in quantitative terms (such as time spent online in a given time period and number of repeat visits paid by customers) and qualitative terms (such as ability of a Web site to retain customers, usefulness of the site, and increase in switching costs). To clearly understand the concept of stickiness, therefore, we should look into why we need stickiness in the first place. The basic problem with an Internet Web site is that it does not guarantee the return of a customer. Keeping the customers on the site is important to increase the popularity of the site especially when it comes to e-commerce and e-business. A sticky Web site is one which is able to retain customers or members for a length of time. Now whether to measure stickiness qualitatively or quantitatively depends on the context under consideration. For Web sites obtaining revenues from advertising, it is important that the customer stays at the site for a long period of time as to be exposed to the advertisement. For Web sites obtaining revenues from transaction, it is important that the customer repeatedly visits the Web site, though it is desirable that the customer completes the transaction in as minimum clicks as possible.

Key Terms in this Chapter

Revenue Model: The source of revenue generation for any business. For a VC the revenue can come from advertisements posted at the site, from the subscription obtained from members of the VC, from the selling of stuff at the VC, and so on.

VC Content: VC Content refers to the content placed in the VC. It could be posted by the site moderators or it could develop through interaction among VC members.

Word of Mouth Advertising: Also known as viral marketing, it refers to marketing techniques that use pre-existing social networks to produce increases in brand awareness. It can harness the network effect of the Internet and can be very useful in reaching a large number of people rapidly.

Opinion Leader: A person who is an active media user and who interprets the meaning of media messages or content for lower-end media users. Typically the opinion leader is held in high esteem by those that accept their opinions.

Lock-in Strategy: A strategy in which the customer is so dependent on a vendor for products and services that the customer cannot move to another vendor without substantial switching costs, real and/or perceived.

Network effect: Network effect refers to the phenomenon whereby a service becomes more valuable as more people use it, and this in turn encourages new users to become adopters of the service.

Sense of belongingness: A stage in interaction with other community members where interaction is so deep that the members begin to identify themselves with the community.

Forum Moderator: A person who moderates the discussions in the VC forums. The person could be the owner of the community itself or could have arisen as a leader among a group of interacting people due to experience or contribution to the community.

Virtual Communities: Groups of like-minded strangers who interact predominantly in cyberspace to form relationships, share knowledge, have fun, or engage in economic transactions.

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