Software Agents in E-Commerce Systems

Software Agents in E-Commerce Systems

Juergen Seitz (University of Cooperative Education Heidenheim, Germany)
DOI: 10.4018/978-1-60566-026-4.ch560
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Abstract

The Internet introduces a new global marketplace for a large number of relatively unknown and not seldom small companies often offering substitutive or complimentary products and services. The merchants profit from reduced costs, reduced time, and unsold stocks. Customers are attracted by increasing convenience and fast fulfillment. Merchants offering these products and services on this new marketplace need to acquire new customers and sustain ongoing relationships. Nowadays, most merchants’ sites are passive catalogs of products and prices with mechanisms for orders (Dasgupta, Narasimhan, Moser, & Melliar-Smith, 1998). The pull strategy is also applied in auctions available over the Internet, where the seller waits passively for bids. The new push technologies for electronic commerce, like software agents, enable customers to compare a bewildering array of products efficiently, effectively, and automatically (Jennings, Sycara, & Wooldridge, 1998). Switching costs for customers and, thereby, their loyalty to previous suppliers in the marketplace decline (Phlips, 1989; Schwartz, 1999). Using the Internet, the producers profit from reduced cost through direct, non-intermediated sales. The key elements to successful long-term relationships between merchants and customers will be the offering of personalized and value-added services, like one-to-one marketing services, discounts, guarantees, and savings coupons (Seitz, Stickel, & Woda, 2003). In this article, we will analyze possible consequences of new push and pull technologies in electronic commerce for customer’s loyalty, as well as the active technologies enabling customers to purchase efficiently and for the merchants to offer high personalized, value-added, and complimentary products and services. We will discuss some examples of such services and personalization techniques sustaining one-to-one relationships with customers and other actors involved.
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Background

The World Wide Web provides a great opportunity to compare products and services. Customers as well as competitors may quickly gain detailed and up-to-date data. Especially, suppliers of digital goods are in fear of declining customer’s loyalty. Customers compare catalogs of products of merchants and producers, and conduct transactions independently of their geographic localization. The crucial basic factors responsible for a limited loyalty of customers are convenience, time, and cost of fulfillment. So, an electronic commerce system should support the ability to embed intelligence to automate the decision process (Dasgupta et al., 1998). The system should not only compare products and prices, but also negotiate and finally purchase products (Teuteberg & Kurbel, 2002). Nowadays, most systems still involve a substantial human element, that is, from the consumer’s perspective neither convenient nor efficient. The human involvement should be limited to transaction specification at the beginning of the process and to the buying or refusal decision at the end of the process (Chen, 2000). This means that an appropriate technology is necessary in the intermediate stages to coordinate between customers and suppliers (d’Inverno & Luck, 2003). Mobile software agents emerge as ideal mediators in electronic commerce and thereby as an appropriate technology for an automated procurement process. Customers may specify constraints on the features of products that enable mobile agents to select products from the merchants’ catalogs and finally to determine the terms of the transaction. Otherwise, software agents may be used by suppliers as market surveyors to determine the current demand and an appropriate price for the good (Chernev, 2003; Fay, 2004; Hann & Terwiesch, 2003; Spann, Klein, Makhlouf, & Bernhardt, 2005; Spann, Skiera, & Schaefers, 2004; Spann & Tellis, 2006). Software agent technology also abolishes the problem of different technological standards, like hardware platforms and operating systems of remote computers. This means that geographical or technological barriers for customers are of no significant importance any more. The key factors are convenience, time, and cost of the procurement process.

Key Terms in this Chapter

Collaborative Filtering: Collaborative filtering methods combine personal preferences of a user with preferences of like-minded people to guide the user.

Personalization: Web-based personalization means providing customized content to individual users using Web sites, e-mails, and push technologies.

Customization: The adjustment of products or services to individual needs. Basic characteristics are implemented in the product or service and may be controlled by parameters.

Software Agents: Computer programs that are characterized by reactivity, autonomy, and proactivity. Therefore, the software agent interacts with its environment.

Customer Loyalty: Because there is no existing ownership to service products, suppliers have to make special efforts to get long-standing customers.

Disintermediation: The elimination of agents, like wholesale dealers or brokers, who built the former relationship between producer and consumer. Disintermediation allows the direct supply of the consumer.

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