teaching electronic commerce: problem-based ...

TEACHING ELECTRONIC COMMERCE: PROBLEM-BASED LEARNING IN A VIRTUAL ECONOMY

Howard Rosenbaum Indiana University-Bloomington and Syracuse University

ABSTRACT During the spring 2000 semester, students in a graduate course in electronic commerce (e-commerce) at the School of Library and Information Science, Indiana University, US, built and operated information businesses in a web-based "virtual economy," (VE) a simulation of a competitive electronic marketplace for information products and services. They competed for the digital dollars of shoppers, who were students at the Napier University Business School in Scotland. This paper describes the redesign of the course from a traditional lecture based class to one centered around a dynamic and situated learning enviromnent in which students are confronted with a "real-life" problem - how to start upand operate aninformation "e-businesscs" in a competitive market economy. After a discussion of vproblem-based learning," the approach used as the basis for the redesign, there is a description of the VE and the student-builder and student-shopper experiences in the VE. The paper concludes with an evaluation of the problem-centered approach to

teaching e-commerce using a simulated economyand suggestions for the next iteration. INTRODUCTION This paper describes the redesign and implementation of a graduate course in electronic commerce (e-commerce) in the School ofLibrary and Information Science (SUS) at Indiana University,Bloomington. The coursehasbeen transformed from a traditional lecture based model to a dynamic and situated learning environment using an approach called "problem-based learning" (PBL) (Barrows, 1981, 1986). This has involved the development of an inquiry-based learning environment for teaching e-commerce centered on a complex problem that students explore, analyze, and resolve - how to start up and operate competitive, working, web-based, information "e-businesses." It has required a major change in pedagogical strategy, the reorganization of the

course content, and a reworking of theclass assignments to integrate PBL into the course. The objective of the course is to provide students with a challenging, novel, technology-focused, and learner-centered educational experience where they learn by "doing" e-commerce instead of listening to someone talk about "how to do" ecommerce.

The learning enviromnent is supported by a technical infrastructure, a working, robust, and web-based virtual economy (VE) that provides a powerful tool for teaching students about e-commerce. The VE can become an integral component of many different graduate and undergraduate classes that focus on e-commerce, It can also be used to experiment with non-traditional forms of instruction andas a testbed forconducting research on e-

commerce. After a brief discussion of problem-based learning, the approach used as the basis for the redesign, there is a description of the VE and the student-builder and

student-shopper experiences in the initial running of the VE in spring 2000. The paper concludes with an evaluation of PBL for teaching e-commerce using a VE and suggestions for the next iteration. WHAT IS "PROBLEM BASED LEARNING"? Since 1996, L561: Electronic Commerce has been a highly structured, teacher-centered lecture course.

Thirteen topics in electronic commerce werecovered in

Volume 2, Number 2: Curriculm Issues in Web Design and E-Commerce

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fifteen weeks, and the term project was to design a prototype of a commercial web site for a local client. The class garnered positive student evaluations over the years, yet, by summer 1999, something seemed to be missing. The course outline seemed appropriate, providing students with a reasonable survey of ecommerce. Theterm project was usefulbecausestudents could experience working in teams, negotiating with clients, and managing a lengthy web development project. However, neither the lectures nor the project involved students deeply in many of the issues discussed in thecourse. Ina sense, they learned aboute-commerce from a distance and did not get a sense of the

complexities, pressures, frustrations, andgratifications of conducting e-commerce in real time. A review of some literature on curricular redesign revealed interesting alternatives to transference (lecture) based approaches to classroom instruction. One such alternative is "situated learning." Rooted in a constructivist model, it assumes that (Abdullah, 1998; I): What we come to know and understand is fuudamentally a product of the learning situationandthe nature of the learningactivity. Leaming tasks should thus, as far as possible, be embedded in the target context and require the kind of thinking that would be done in real life. Educators in a number of disciplines have been working with situated learning, using an approach called problembased learning to develop courses that provide a more student-centered experience. The origins ofPBL lie in medical education (Barrows, 1999; 1986) where it has been used for three decades to train medical professionals (Colliver, 2000; Doig & Warner, 2000; Antepohl & Herzig, 1999; Biley & Smith, 1999; Albritton, Davis, & Karp, 1995; Donner & Bickley, 1993). Recently, PBL has been used in computer science, software design, artificial intelligence, business education, sociology, education, and library and information science (Baker, 1999; Koch & Teege, 1999; Dimitroff, et aI., 1998; Maskell, & Grabau, 1998; Brandt, 1997; Duffy & Cunningham, 1997; Coldwell, 1996; Stinson, & Milter, 1996; Sernau, 1995). Problem-based learning is a (Greening, Kay, Kingston, & Crawford; 1997; 201):

Learner-centered approach in which learning episodes are motivated by an initial problem

that bears some resemblance to "real world" problems. As such, it is an important characteristic of a problem that it be ill-structured. Clearly, a key to PBL is a carefully formulated problem, ideally one that students are likely to face as professionals. An effective problem has a realistic context and is couched in an appropriate vocabulary. The problem should be complex and ill-structured, without clear-cut and easy answers and with nuances and subtleties that are not immediately apparent. It should support discovery and self-directed learning while engaging the interest and curiosity of students (Desmarchais, 1999). In medical education, the problem might be a clinical scenario in which a patient displays a set of symptoms (Margetson, 1998); in computer science, the problem might to develop a plan for implementing an IT infrastructure in an organization (Koch & Teege, 1999). Working in small groups, students seek out and work with resources outside of the instructor and, in many cases, the class reading list. Depending on the context of the class they propose plausible explanations or hypotheses to account for the problem or develop plans and strategies to resolve the problem. Then, working with the instructor or "tutor," they gather information that will allow them to test their hypotheses or critically evaluate their explanations and plans. Evaluation research has been mixed about the effectiveness of PBL, although most of this work has focused on its use in medical education. For example, Vernon and Blake's (1993) meta-analysis of 35 studies ofPBL supports its superiority over traditional methods. Fenwick and Parsons (1998) are critical of the approach and argue that it privileges authority (clinicians and doctors) over those who are the focus of typical problems (patients). Advocates of PBL suggest that it could be a valuable addition to curricula in many disciplines (Duffy & Cunningharn; 1997; Savery & Duffy, 1995). Consequently, this approach was used as a foundation for the redesign ofthe e-commerce course. The strategy was to reverse the traditional approach to instruction by developing a situated learning enviromnent (Larsen & Mcinerney, 2000; Cole & Engestrom, 1993; Lave, & Wenger, 1991; Brown, Collins, & Duguid, 1989). This class would start with a problem that would stimulate student learning and be the basis for their activities throughout the semester. As they worked with the problem, students would arrive at general principles and concepts about e-commerce that they could then generalize to other situations.

46

Journal of Informatics Education and Research

....

-

....-

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...

_ - - - - - - _ . _ - - _ . _ - _ ..

_._.

---- •...

USING PBL FOR THE COURSE REDESIGN

On the first day of class, students were confronted with the problem of developing web-based e-businesses that would sell information products. The basic problem was described in the course syllabus (Rosenbaum, 2000).

You will join an internet start-up team to create an online information business that will be one of five stores operating in an working, competitive virtual economy. You create the business andshoppers come to your store from the middle of February until the end of the term. They purchase digital products and services from your store (or your competitor's stores), and the cost of their purchase is deducted from their accounts in the bank and placed in your store's account. The groupwhose store has the

problem the students were completing as they got their stores ready to go online. The reordering of the class sessions can be seen in Table I: Topic outline for the course.

The change in pedagogical strategy involved the addition of regular tutorials where each group met separately with the instructor. Every other week throughout the term the instructor met with each group to discuss its 'progress. During these meetings, group members discussed the current status of their projects and asked questions about the problems they were facing at that time. These questions ranged from technical problems, such as techniques for optimizing animated banner advertisements to social problems of group dynamics.

TABLE! TOPIC OUTLINE FOR THE COURSE

most money at the end of the term wins - a .05% bonus will be added to their final project grade.

These e-businesses had to be operating by the end of the seventh week. To add the pressure of working in "internet time," students were told that there were approximately 80 Scottish business school students who were going to shop at their stores looking to purchase products that would help them with their class

assignments. This is an example of "problem-stimulated" PBL because the basic structure of the problem, the tasks involved in analyzing and resolving it, the timeline, benchmarks, and an initial collection of resources were all provided for students. The problem was subdivided into a series of tasks following the model of an internet start-up company. In starting up, designing, and managing webbased information e-businesses, the students faced a classic ill-structured problem that engaged their knowledge, skills, and interest over the semester. None had worked for an e-business and they were not yet familiar with research on e-commerce, They had no idea of what would be involved in creating a business from the ground up. Curricular support for this problem required the development of new materials (readings, tutorials, and interactive assignments). areorganization of thestructure of the course and a new pedagogical strategy to support the e-business start-up cycle. For example, new material was made available about developing business plans, including a business plan template that could be downloaded in several formats. Classes for the first seven weeks mirrored the sequence of the components of the

Old I. 2. 3. 4. 5.

6. 7. 8. 9. 10. 11. 12. 13. 14. IS.


Topics Introduction: Business models for electronic commerce Make it look nice: Basics of commercial web site design E-commerce, advertising and the economy of attention Customer service for ecommerce Business strategies for ecommerce: Portals, ASPs, auctions... Now what?: Managing a web-based ecommerce infrastructure The ecommerce marketplace: What is it and how does it work? Marketplace (cont.): Who is it? Net demographics and market research Foundations A history and development of electronic commerce Cryptography: A technical basis of trust in ecommerce Encryption: Working with PGP $$: Digital money and electronic banking The legal and regulatory environment of ecommerce Infrastructure: Ecommerce and the economics of networking Conclusions: The future of electronic commerce

order New

10

5 New 8

9 3

4 I

6 7 10 12 2

13

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The instructor assisted them by steering them towards resources that would help them progress and suggesting strategies to resolve the problems. On the first day of class, students organized themselves into five groups, each of which had five members with technical and content expertise. Since they would be developing a complex web site and selling a wide range of digital information products that would have to be gathered, prepared, and organized, it was necessary to divide labor. Although there was a syllabus with topical

readings, students were responsible, in part, for determining what they needed to learn in order to

develop and manage their e-businesses. Over the semester, they drew upon resources from a range of disciplines to resolve the smaller problems they faced. The various activities (see below: The student experience

in the VE: Store owners) built upon one another as students experienced e-commerce in "internet time." The Scottish shoppers explored the VB and purchased products for nine weeks. Their activities generated realworld benchmarks against which the students' work was evaluated (sales, repeat visits, complaints and refunds, and other feedback). The shoppers were not shy about letting store owners know what was working and what was not (see below: The student experience in the VE: Shoppers). The focus on self-directed learning, the use of multidisciplinary resources, the presence of benchmarks and real-time feedback are some of the essential elements on problem-based learning (Barrows, 1999). Students found that to manage their businesses, they had to apply what they were learning from their readings and classroom. This created an "authentic learning" environment where "students publicly exhibit their learning, and there are often real life standards of quality" (Gordon 1998: 391).

Teaching e-commerce in a virtual economy is an improvement over similar attempts to create e-commerce simulations (Angeles, 2000; Dhamija, Heller, and Hoffman, 1999) because in this case the shoppers were external to the class and were not known to the students. Because the shoppers were in Scotland , there was no possibility of face-to-face interaction with the Indiana University students, simulating another feature of ecommerce. The overall experience, including the group work and independent investigations of e-commerce issues led to desirable learning outcomes as students "achieve[d] higher levels ofcomprehension, develop[ed] more learning and knowledge-forming skills and more social skills" (Rhem, 1999). What was interesting about this experience is that students had regular and immediate feedback about their work reflected in daily 48

and weekly sales figures and customer feedback. This is as close to the experience of running a small e-business as students can have in school without having to go into debt or run the risk of bankruptcy. Problem-based learning and the VB were used here to redesign the educational experience to give students a palpable sense of a world that many want to join.

STRUCTURE OF THE VIRTUAL ECONOMY The first version of the VB was built using HTML, Cold Fusion, and Oracle. 11 is a password-protected web space where participants conduct business under conditions simulating real-world business-to-consumere-cornmerce. Stores sell digital information products of varying types (annotated lists of websites, topical collections of online papers, bibliographies, legislative and policy summaries) to shoppers who spend digital money. Shoppers and storeowners interact with each other using several communication channels (primarily email, webboards, and chat rooms). The current VE can be accessed at: http://ella.lib.indiana.eduig/ecstoreO/login.cfrn (login: tourist; password: tourist; select Spring 2000). The VE has three main components (see Figure 1: Structure of the virtual economy). The first is the VB portal, the entryway to the marketplace. Shoppers are registered, receive passwords and digital bank accounts, and then access the VB through the login page. When their accounts have been verified, they are linked to the portal page on which there are six banner ads. There is also text under each banner announcing store promotions, sales, and other activities. Shoppers click through to the stores. When finished in a store, shoppers return to the portal in order to explore other stores.

FIGURE! STRUCTURE OF THE VIRTUAL ECONOMY ~N

FlowoldIgItaIMOII....

_

_ W.hln.. not topolUl to"o,,_


The second component is the storefront. Each store has the same basic template - a bare bones web page with a custom Cold Fusion tag . This tag calls a script that contains a product catalog, a shopping cart, and a checkout procedure. The product catalog is configured to allow the storeowners to enter two levels of product and service information using a web-based form. The first level uses three fields, one for a brief (200 character) description of the product, a second for the price, and the third for the URL of an image. When the form is submitted, the description, price and image are added to a product catalog page where the products are listed in alphabetical order. Each product in the catalog has a link that leads to the second level of product information, a dynamically generated page containing a more detailed product description, the image, and pricing information. This page has a "add to cart" button that allows shoppers to add the item to their shopping cart. From these two pages, shoppers have the ability to check their sales histories by clicking on an "account status" button at the bottom ofthe product catalog. The resulting report displays all of their purchases at all ofthe stores in reverse chronological order.

platform. Cold Fusion can encrypt the code for the primary functions (product catalogs, shopping cart, and digital bank), so the VE is relatively secure. This architecture will allow the VE to be used easily by ecommerce (and related) classes throughout the IU system and potentially on other campuses. THE STUDENT EXPERIENCE IN THE VE: STORE OWNERS The first participants in the VE were divided into two groups: store teams and shoppers. There were five store teams, each with five graduate students. The shoppers were Master's or advanced undergraduate students in an e-commerce class at the Napier University Business School in Edinburgh, Scotland. Over the course of the semester, each store tearn (see Table 2: Timeline for the VE).

TABLE 2 TIMELINE FOR THE VE

After filling their shopping carts, shoppers click on the "buy" button to check out. The checkout page displays the products in the shopping cart, quantity totals, individual prices, and the total price. Shoppers can complete the transaction, change quantities, remove items from the cart, or opt out of the entire transaction. If they make a purchase, they see a screen that displays the purchase information, shows them how much money is left in their bank accounts, and thanks them for their business. Email is sent automatically to the store owners informing them that a purchase has taken place.

Week I:

Introduction: Developing a start-up company Week 2-7: Design, build, and test the site Week 2: Present business plan and begin content development Week 3: Database population, evaluation of sites and development of initial prototype Development of advertising and marketing Week 4: plan WeekS: Final design online ad auction Week 6: Presentation of customer service and support strategies, testing and redesign Week 7-15: Operate the storefronts

The third component is a digital bank. When shoppers are registered, they are given a bank account with $2000 in digital cash. Each store also has an account in the bank and receives money on the basis of the successful presentation of their business plan (in Spring 2000, each store received $20,000). When a shopper makes a purchase, the amount of the purchase is deducted from his or her account and added to the appropriate store's account. The bank is relatively secure - shoppers and storeowners can check their balances but cannot make changes; they also do not have access to each other's

Developed and implemented a bnsiness plan outlining the product line, describing how the business will operate and forecasting its profitability. This plan was presented in class during the second week to a "venture capitalist" (the instructor) who decided on a level of investment.

accounts. The VE is a proprietary design that has been written to be transparent to the participants. No programming knowledge is required for students to set up and operate storefronts or to shop in the VE. The programming is modular, portable and currently runs on a UNIX

Designed its store in an iterative process of examining other web sites and prototyping and testing a design that was aesthetically pleasing, usable, allowed browsing, and handled transactions. They designed content pages (product descriptions, help pages, etc) and used a template page containing a product catalog, transaction procedures, and a shopping cart. As shoppers came into the VE, some teams redesigned their stores in response to feedback.


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Developed content, creating products for assignments in the course taken by the Napier students. These included annotated bibliographies and collections of print and/or digital resources, reviews of web sites, newsletters, subscription services, paper editing, and research consulting. One enterprising group developed content for a business model based on entertainment. Teams developed and added content throughout the nine weeks in response to shoppers' activities. Created advertising and marketing strategies, including banner ads for the VE portal page, sales, and other promotions. Teams participated in a sealed bid email auction for banner placement that took place in three rounds over three days. Stores changed their banners at least weekly and experimented with digital coupons, loss leaders, sales, and rebates. Set up customer service and loyalty programs with clear policies to protect customer privacy, handle grievances and complaints. and provide technical support. They explored trust- and community bnilding, using mailing lists, newsletters, sales, and discount offerings to build a customer base. The Napier students were demanding shoppers forcing stores to develop strategies to handle customer complaints, requests for refunds and other customer service problems. Some teams developed loyalty prograros, offering, for exarople, discounts for repeat business. Managed the business, by monitoring the store's accounts, handling customer service and support, and maintaining inventory. Teams were responsible for the web pages in their stores. A system administrator handled technical maintenance of the VB.

documents explaining the structure and content of business plans and a template were made available on the class web site. The groups had access to "market research" information about the student-shoppers. This included background information on Napier University and the program in which the student-shoppers were enrolled, a description of the class, and their assignments and due dates. Based on this information, the groups developed four different business models for their stores; two groups shared a model, but each developed a different variation so, in effect, there were five distinct models used in the VB. During the nine weeks that the VE was open, groups were encouraged to periodically re-evaluate their business plans and make adjustments as conditions changed. Because the store teams began with the same basic page template, they struggled to distinguish themselves through design and product and service offerings. Consequently, two of the five groups did make changes in their models and all developed interesting exit strategies for the last few days of simulation. Each model will be described along with the exit strategy and sales and transaction figures will be provided (See Table 3: Summary of sales and transactions in the VB). The retail model. The shared business model was based on a simple value proposition - the stores would provide the shoppers with the highest quality information products quickly, efficiently, and at a fair price. Using a classic retail approach, two groups decided to operate information "supermarkets" where shoppers could browse, sample, and make purchases. Their models differed, however, in approaches and pricing schemes.

Business Models in the VE An important step in creating the ill-defined problem was to begin the simulation during the pre-funded stage of the e-business life cycle. On the first day of class, students were told that they were going to create information businesses that were going to operate in a working virtual economy. The point was made forcefully that they were going to be working in "internet time" and would have seven weeks in which to take their ideas from concept to reality. During the first week of the course, each group developed a business model and presented it as part of a business plan during the second week of class. Students were not told what types of stores or plans they had to develop. The single constraint was that they had to sell "digital products" (Kling and Lamb; 2000) because order fulfillment had to take place over the internet. Because some students had never written a business plan, 50

Stout.com sold information products in bundles of varying sizes. Making clever use of a beer metaphor, they designed their site to resemble a friendly neighborhood pub. The first tier of their three-tiered product model was a $25.00 "sample" that contained the URL for an online article. an evaluative annotation about the article, and the article itself. The second tier was a $200.00 "pint" and contained the same information for five articles. The third tier was a $400.00 "yard" and contained the same information for 10 articles. This package had the added bonus of being able to be "topped off;" shoppers could return to the site and request updates to their packages, since articles were added to the store's inventory on a weekly basis. This group also offered consulting and editing services but the bulk of their business was in selling these packages. As an exit strategy, they only sold ''yards'' and raised the price from Journal ofInformatics Education and Research

TABLE 3 SUMMARY OF SALES AND TRANSACTIONS IN THE VE Store Worksmarter Stout ExnertInfo InTheKnow SickLillleMonkev Totals

Sales $26983.00 $56,480.00 $4386.00 $20129.00 $11,345.28 $119323.28

% Sales 23% 46% 4% 17% 10% 100%

Transactions 73 141 14 983* 81 1292

%Transaction 6% 11% 1% 76% 6% 100%

$ffransactions $369.63 $400.57 $313.29 $20.48 $140.07 $248.81

*210 free transactions 17 transactions per shopper

$400.00 to $1,000 dollars. This model turned out to support a high cost, low volume business. Stout.corn accounted for 46% of total sales ($56,480.00) and 11% of all transactions (141), averaging $400.57 per transaction. The second group, IntheKnow, pursued a "Wal-Mart" approach to retail. They stocked their store with a wide variety and large number of articles and annotated collections of URLs, all of which were priced between $15.00 and $50.00. They promised a 24-hour turnaround and offered products in a variety offormats. As a loss leader to drive traffic to their site, they offered a set offree articles that shoppers could download to assess the quality of the store's offerings. They also offered discounts to high volume purchasers. This model supported a low cost-high volume business and the store had a steady stream of customers throughout the simulation. As an exit strategy, they dropped their prices and experienced a last minute surge of customers. This group accounted for 17% oftotal sales ($21,290.00) and 76% of all transactions (983, excluding the 210 free transactions), averaging $20.48 per transaction. Snbscription model. Worksmarter.com, developed a business model based on the sale of subscriptions. Their site had several publicly accessible pages that explained their model, outlined their privacy and customer service policies, and provided samples of their products. The main site, however, was only accessible with a password that was provided with the purchase of a $300.00 subscription. With this password, shoppers had access to a constantly growing database of relevant articles, bibliographies, and annotated lists of web sites. They also could take advantage of customized services

including specialized searching, consultation, graphic design, and assistance with bibliographic formats. There were no additional charges for this basic level of service. Group members reported that the issue of pricing the subscription was their most difficult challenge in developing the model. They assumed that ifthey enticed each of the 76 shoppers to subscribe, they would end up with 15% of the money spent in the VE; this, they thought, would be enough market share to vault them into the lead in the competition for sales. During the last week, Worksmarter .com advertised their custom search services, initially to their subscribers and then to everyone. Shoppers submitted search requests and group members provided results within 24 hours, complete with a money-back guarantee. Subscribers received this service for $150; non-subscribers paid $300. During the last three days, this group conducted searches for shoppers charging them all the money left in their accounts. This exit strategy proved to be extremely successful, producing almost one third of their total sales revenues. All told, Worksmarter.com accounted for 23% oftotal sales ($26,983.00) and 6% ofall transactions (73) in the VB, averaging $369.73 per transaction. Entertainment model. One group moved in an entirely different direction, deciding to sell entertainment instead of information products. Rather than help the studentshoppers with their work, SickLillleMonkey, attempted to generate revenue by capturing their disposable income. Their model involved two products. The first was a comedy store, where, for $19.99, people would have access to hnmorous text and multimedia files that they could view and download. Their premium product was, for want of a beller phrase, performance art. Shoppers


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paid $100.00 to post dares and were charged $15.00 to vote for the dare of their choice. At the end of each week, one group member would carry out the dare receiving the most votes. The dare would be videotaped, digitized and placed in their store for free viewing. There were three constraints placed on this group by the instructor; the student could not place himselfin physical danger, break the law, or perform indecent acts. During the nine weeks, SickLittleMonkey showed Quicktime and MPEG movies of the student throwing his television from the top of a ten story fire tower, shaving his legs, attending class in a French maid's outfit, shooting his old computer with a shotgun, preparing and eating a pound of haggis, and eating a Twinkie from a toilet bowl. Although this was a good ideas that might have worked well in a different environment, SickLittleMonkey did not do well in the VE. One problem occurred because shoppers could post dares anonymously; it was not long before a post appeared that would have resulted in the student's arrest for indecent exposure had he performed it. An administrator at Napier saw this particular post and warned the student -shoppers not to engage in such behavior, placing a damper on their participation. In addition, they were not very willing to spend their money on products not related to their assignments, leaving SickLittleMonkey in a difficult situation. Their response was to post movies of six dares, giving the impression that shoppers were posting dares and that they were receivingmanyvotes. Theirexit strategy wasto abandon their entertaimnent model and sell bundles of subjectspecific articles about different e-commerce topics. During the final week, SickLittleMonkey earned most of its revenues, accounting for 10% of total sales ($11,345.28) and 6% of all transactions (81) in the VB, averaging $140.07 per transaction. Expert chat model. ExpertInfo's business model was based on the idea that providing an alternative and unique service would attract the attention of shoppers and drive them to the store. They assumed that the shoppers in the VB would qnickly realize that much of the information being offered for sale was easily available to them with a little web searching. After visiting their competitors' sites, ExpertInfo surmised that the shoppers would be looking for something different. They offered abiweeklyseries of five one hour, real-time, online chats with experts in different aspects of e-commerce. One problem this group had to resolve was the timing of the chats. They settled on the late morning to allow the Napier students to participate in the late afternoon or early evening. The group set up a java-based chat room and spent the first six weeks of the term soliciting the

52

participation of scholars specializing in internet regulation, the economics of e-commerce, cryptography and security, and web-based customer relationship management. These experts were approached through email and all but one agreed to participate. Student-shoppers would purchase seats for these chats, each of which was limited to eight participants. Because of the limited attendance and the caliber of the expert participants, ExpertInfo thought that there would be demand for these sessions, so they charged $499.00 per seat. Sadly, they turned out to be wrong and were not able to hold any chats at all. The Napier students reported later that were not comfortable with the chat room enviromnent and were intimidated by the thought of chatting with e-commerce experts. For their exit strategy, the group arranged a chat with lenni, the successful entrepreneur behind lenni-cam, one of the longest running web cam sites. Five seats were auctioned off for this chat with the opening bid set at $1.00. Unfortunately, there were no takers and this chat was also cancelled. Their last attempt to generate revenue was to offer $1O.00(US) to the person who gave them the most digital money during the last three days. This too proved to be unsuccessful. ExpertInfo accounted for 4% of total sales ($4,386.00) and I % of all transactions (14), averaging $313.29 per transaction. Results of the Spring 2000 VE. After the VB closed, final statistics were gathered to determine the relative standings of the five stores. There were two major expenses incurred by the stores during the simulation. One was the cost of the banner space on the portal page. The store tearns had participated in a sealed-bid three round email auction for six positions on the portal page. The upper right corner went to Worksmarter.com for

$15,236.00. Stout.com purchased the upper left corner for $18,003.00. The center right position went to InTheKnow for $110.00. SickLittleMonkeys won the center left position for $70.00. The lower right position went to ExpertInfo for $50.00. In the Know also won the lower left position for $50.00. The second expense was Three stores the cost of refunds to shoppers. returned a total of $6,703.80; Stout.com refunded $3,600.00, IntheKnow refunded $450.00, andExpert Info returned $50.00. After subtracting these expenses, the final standing are shown in Table 4: Results of the VB simulation (revenues, expenses. and profits). In addition

to profits, the stores were also ranked by nmnber of transactions. and dollars generated per transaction (See

Table 5: Results of the VB simulation (transactions, dollars/transaction, and profits).


TABLE 4 RESULTS OF THE VE SIMULATION (REVENUES, EXPENSES, AND PROFITS) Store Worksmarter Stout Exnertlnfo InTheKnow SickLittleMonkevs Average Totals

Sales $26983.00 $56480.00 $4,386.00 $20129.00 $11 345.28 $23864.66 $11932328

Auction costs $15236.00 $18003.00 $50.00 $160.00 $70.00 $6,703.80 $33519.00

Refnnds $0.00 $3600.00 $50.00 $410.50 $0.00 $812.10 $4060.50

Profits $11 747 00 $34877.00 $4286.00 $19558.00 $11 275.00 $16348.76 $81783.78

Rank 3 I 5 2 4

TABLES RESULTS OF THE VE SIMULATION (TRANSACTIONS, DOLLARSffRANSACTION, AND PROFITS) Store Stout Worksmarter In the Know SickMonkev Exnertlnfo

Sales I 2 3 4 5

Transactions 2 3 I 4 5

THE STUDENT EXPERIENCE IN THE VE: CONSUMERS The shoppers were 76 advanced undergraduates and graduate students in an e-commerce class at Napier University Business School in Edinburgh, Scotland. The teaching team used the class to explore consumer perceptions and experiences of e-commerce. Data were gathered in pre- and post-shopping questionnaires, in student diaries, and in student presentations given at the end of the shopping period. The Napier faculty are publishing their results in a separate paper. Informal feedback at the time of writing (May 2000) indicates that the "action learning" approach used in this class was fully endorsed by students, and led to intense student engagement with the YE. Napier class syllabus is: http://www.bim.napier.ac.nkI-hazellindex.httn. The student-shoppers were instructed to visit the YE, explore the stores and make purchases. They were told that they would find information products for sale that would help them with their assigmnents (a short paper, a

$/transaction I 2 5 4 3

Profits I 3 2 4 5

long paper, and a final exam). Although shoppers were required to visit each store, there were no constraints placed upon their purchasing patterns. Because of the coordination between the Indiana University and Napier University faculty before the semester, the Napier students' assigmnents were provided to the Indiana University students in the form of a "market research" report. This information allowed the storeowners to stock their stores with products likely to appeal to the shoppers. The student-shoppers were very active during the nine weeks that the VE was open. Each had $2,000 and by the close of business, they had spent $119,323.28 (79%) ofthe $152,000.00 available to them. With an average of 17 transactions, each shopper spent an average of $1,570.04 (see Table 6: Consumer activity in the VEl. Fifty-five shoppers had zeroed out their accounts by the time the VE closed; strangely, four shoppers finished the term having spent no money at all. The Napier faculty speculated that these students had received copies offiles purchased by friends in the class.


53

The shoppers employed three interesting strategies that allowed them to maximize their benefits. The first was the "buying circle." This strategy developed without the knowledge of the faculty at either school. Two groups of students (one with five and the other with seven participants) coordinated their purchasing activities. The groups met several times to discuss the topics they were investigating. Members visited all of the stores and agreed on a specific set of products of sufficient interest to the entire group. Then each sbopper purchased different products from this set and made them available to the rest of the buying circle. Sbaring the documents was trivial since they were already in digital form. These buying groups used their resources very efficiently and developed impressive libraries of digital information for use in theirassignments.

accounts. Anyone wanting a search was asked to reply to the message, filling in the amount of his or her remaining bank balance in the space provided. The message was intended to serve as a receipt. They received many requests and completed the searches. Because of the structure of the VE, Worksmarter.com was not able to check shoppers' accounts and took them at their words. They forwarded the emails from the shoppers to the banker (the instructor) who made make the appropriate transfers. In ten of 29 transactions, the shoppers had over-reported their remaining balances, sometimes by as much as $400.00 (recall that shoppers could easily check their account balances). This ended up costing Worksmarter.com some $2,000.00 in lost revenues.

CONCLUSION The second strategy involved the purchase of a document that arrived, according to the shopper, as a corrupted file that could not be opened or read. The shopper then requested a different document be sent in place of the

TABLE 6 CONSUMER ACTIVITY IN THE VE

# of Shoppers # of Stores Weeks online Total monev to be spent Total money spent Avz. soentJshoooer Aw. transactions/shoooer Total money remaining Avg. remaininz/shonner

76 5 9 $152000.00 $119,323.28 179%) $1570.04 17 $32,676.72 (21%) $429.96

damaged document. Since there was no way for storeowners to check the status of the file, they would take the shopper at his or her word and send the additional document. The original document had in fact been received, opened, and used. According to anecdotal evidence reported to the author when meeting with student-shoppers at Napier University during the seventh week of the VE, this occurred at least five times. The third took advantage of Worksmarter.com's exit strategy. During the last three days of the VE, they offered customized searches with a 24-hour turn-around and charged a sliding scale. They sent email to all of the shoppers and asked them for all of the money left in their 54

At the time of this writing, the first iteration of the VE is complete. Student reactions fromboth sides of the ocean have been overwhelmingly positive. Indiana University students reported that the VE provided them with a unique and challenging learning experience and allowed them to gain an insider's understanding of the complexities of creating and operating web-based ebusinesses. Over the course of the semester, they developed creative strategies for resolving the problems that accompanied starting up their businesses. The VE has provided a demanding, student-centered learning environment wherestudents experienced e-commercein real time. The Napier University students reported that they learned about the complexities of e-commerce by studying the stores in the VE and found the information products to be very useful in their work. The use of PBL as the foundation for the redesigned course has been a qualified success. The use of a complex problem as the central focus of the course worked well. It fully engaged the students for the entire semester and was taken very seriously, affecting their behavior in interesting ways. Although the grade bonus of 0.05% was minimal, it did provide an incentive for store tearns to compete. Groups were protective of their stores and secretive about their plans and strategies. They asked to present their business models, advertising and marketing plans, and customer service strategies in vague and general terms to avoid losing what they sawas their competitive advantages. Although students reported that the course reqnired a heavy commitment in time and energy, they did not seem to be complaining. In fact, they said that because the work of design and implementation was concentrated at the beginning of the term, they found that they had sufficient time to devote to these activities. They reported that working hard to get the stores online Journal of Informatics Education and Research

and then recervmg immediate feedback from "real" shoppers (in sales and in complaint and other feedback)

This problem provided them with a good exposure to the challenges and complexities of real-time business to consumer e-commerce. As students moved from taskto task, the complexities and nuances unfolded before them and they realized that there were no clear-cut and easy answers to the problems they faced. All of the groups eventually had to confront the same questions.

-store until five days into the simulation. They had problems dividing the labor required to get their web pages designed and marked up and to gather, prepare, and upload their information products. As is reported in _ the literature, these students floundered because of the lack of externally imposed structure (Tipping, Freeman, & Rachlis, 1995). Another group experienced genderbased difficulties where the women thought the men were controlling the technical development of the store and leaving them to do the information gathering. In both cases, meetings with the instructor diffused the situations.

What kind of business model should we use as the basis for our business? What types of products should we sell and how should we sell them? How should we price our products? What strategies should we used to deal with our customers (both for customer service and to build customer loyalty) How should we deal with our competition?

Another problem revolved around the tutorials. While they worked well, they were held too infrequently. The. instructor met officially with each group six times, four of which were during the simulation. Students felt pressured during the first six weeks when they were designing and building and during the first week of the simulation. More frequent meetings would have helped to bring to the surface problems that they were facing, some of which could have been resolved easily through

made the experience more realistic and worth their investment.

• •

•

instructor intervention. However, many students took

Students had to learn to make quick decisions in a group context about the directions of their businesses and live with the consequences of their decisions. For example, ExpertInfo decided to stay with their expert chat business model and was the least successful of the five while SickLittleMonkey abandoned their entertainment model during the last week of the simulation, generating enough revenue selling information products to lift their company out of last place. Students also engaged in self-directed learning throughout the semester. For example, atleasttwo of the groups spent considerable time early in the term trying to leam as much as they could about the Napier University business school to get a sense of their target market. These groups independently discovered a web page for the Napier class listing the names, email addresses, and final paper topics of the student-shoppers. One group used the information to conduct targeted direct emailing. The other group created a mailing list and offered students a weekly newsletter containing information about new additions to their store, sales, and other

promotions.

There were also some problems with PBL. Because of the heavy emphasis on group work, attention to the group process is extremely important. Not enough time was

spent in class discussing group dynamics and project management in groups. As a result, there were some

groups that had difficulties that affected their performance. For example, one group did not open their

advantage of email andwere in veryregular contactwith the instructor, so some of the tutorial functions were

handled through this channel. In general, this modified version ofPBL in combination with the VE is a useful way to teach e-commerce. In redesigning the course from a straight lecture based experience to a more student-centered experience.

students gained a valuable opportunity to learn about ecommerce by running their own web-based information e-businesses. This required a change in pedagogical strategy, reorganization of course content. and the development of new material, and a tremendous

commitment of time from the instructor throughout the term. Using a "problem-situated" approach to PBL the instructor gave students an ill-structured complex problem, broke it down in to component tasks, provided a timeline and benchmarks, and made available a preliminary list of resources. The outcome of this work has been worth the effort. Echoing the findings of Angeles (2000; 1834), students reported that they had a much clearer understanding of the problems and challenges involved in business to consumer e-commerce, particularly those that arise in

internet start-ups. They have a greater appreciation for the importance of group dynamics and specifically fast and efficient group decision making for successful ebusinesses. Many reported that they felt more confident about their abilities to search for and find the resources


55

they need to solve the types of problems posed throughout the semester. In the near future, we will be redesigning the VE as a robust application with more sophisticated storefront templates, simpler transactionprocedures, better security. more usable reporting functions for store owners and system administrators, and stable database back end. It will include a wider range of e-commerce services including a searchable, database driven product catalog that can be used on multiple pages. Each store will have a searchable customer information database to provide store teams with data for marketing campaigns and a stable live chat facility for customer service. The VE will the capability of holding online auctions, and an online evaluation tool that can be used by shoppers. Recent funding from Ameritech and Sun Microsystems will allow us to work with other academic units at

Indiana University and elsewhere to develop versions of the VE that can be used in undergraduate classes and in distance education. However. thenext immediate stepis to conductevaluationresearchto determine whether this is an effective pedagogical device. The VE will be used in Fall 2000 and Spring 200 I and data will be collected during these semesters. We will begin reporting the results of this work in summer 2001. The author gratefully acknowledges Dr. Elisabeth Davenport, Dr. Hazel Hall, and Dr. Keith Horton of the Napier University Business School fortheir assistancein this project. They graciously volunteered the students in their Spring 2000 "Information Challenges" class and have been extremely helpful coordinating the Scottish shoppers. The author thanks the students in the spring 2000 version ofL561 Electronic Commerce, all of whom are pioneers. Finally, the author acknowledges the helpful comments of the anonymous referees.

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Journal ofInformatics Education and Research