COMPLETE SCHOOL PROJECT TOPICS & MATERIALS :
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ABSTRACT
If a store owner wishes to sell a product online, they traditionally have two options for deciding on a price. They can sell the product at a fixed price like the products sold on sites like Amazon, or they can put the product in an auction and let demand from customers drive the final sales price like the products sold on sites like eBay. Both options have their pros and cons. An alternative option for deciding on a final sales price for the product is to enable negotiation on the product. With this, there is a dynamic nature to the price; each customer can negotiate with the store owner on the price which allows the final sales price to both change over time and on a customer by customer basis. The issue with enabling negotiation in the context of eCommerce is the time investment needed from the store owner. A store owner cannot negotiate every time an offer comes in from a potential customer, the potential time investment would not be acceptable. Using software agents to automate the process of negotiation for the seller is a potential solution to enabling negotiation in eCommerce for store owners. In this research, a system such as the one just described is developed in a way that mirrors real life negotiations more closely and after evaluation, is found to be a potential solution for the enabling of negotiation in eCommerce.
CHAPTER 1
INTRODUCTION
Background
Online marketplaces are websites that facilitate products trading between Internet buyers and Internet sellers (Ngai, 2007). Currently, the two most popular methods for trading products through these marketplaces are fixed price selling (e.g. Amazon) and online auctions (e.g. eBay). Despite their popularity, both methods have drawbacks for both sellers and their potential buyers. Fixed price selling lacks flexibility; a price must be set from the get-go and unless later updated, is the only price available to buyers. This requires sellers needing to decide on prices very carefully. Too high and buyers will be lost, too low and the sellers profit margin will fall. Online auctions fix this by allowing sellers to set a reasonably low starting price and letting demand drive price even higher. This reduces the fear sellers can have that setting a certain price point will drive away potential sales. However, if bidding in the auction is low, this can yield sales prices that are lower than if sellers would have used a fixed price. This is where a third method comes in, negotiation. Negotiation is a form of decision-making where two or more parties jointly explore possible solutions in order to reach a consensus (Rahwan, 2002).
Negotiation has become very interesting research issue (Fathey, 2005). A clear advantage when buying in a real world setting rather than online is the ability to negotiate. When buyers and sellers are face to face, negotiation can take place for a more mutually agreeable price. The potential advantages of which is the buyer gets a price they are more comfortable paying and the seller gets the opportunity to sell a product they might not of had the opportunity to sell if the price was fixed. Negotiation is becoming an emerging area in the evolution of electronic commerce (ecommerce) on the web. Having a system that can facilitate negotiations between sellers and buyers in the context of an e-commerce site would be very beneficial to both parties, as it would be a way to integrate the advantages of negotiation in real world marketplaces into online marketplaces.
Statement of Problem
Research into negotiation systems that serve to aid both buyers and sellers has been well documented, but research into systems designed only for sellers is lacking. Furthermore, research into a negotiation system designed to specifically aid eCommerce store owners in negotiating with potential customers is currently absent. When a customer enters a store and desires to negotiate for a lower price on a specific product, store owners may have had previous dealings with that specific customer. In real world negotiations, store owners can use information gathered from past negotiations to get better deals in future negotiations. For example, if the customers average goal within negotiations is known to the store owner e.g. the customer always agrees on any price that is 20% below the asking price or better, the store owner can use this information to both ensure they come to an agreement with the customer and sell the product to them for the highest price they can. As different customers negotiate in different ways, the negotiation strategy employed by the store owner when negotiating with one customer may be different when negotiating with another. Negotiation systems that use past negotiation results (Amgoud, 2005), customer data (Kulkami, 2017) and multiple negotiation strategies (Kexing, 2011) have already been researched. However, these have not been used in correlation with each other, not in a way that attempts to mimic real world negotiations more closely and not with the aim of trying to benefit ecommerce store owners exclusively.
The project will explore automated negotiation and will focus on application of the research to the specific setting of eCommerce. A negotiation system will be created to enable negotiation functionality for ecommerce store owners. The negotiation system will allow customers to negotiate on the price of products, and the system will negotiate with the customers directly, in place of the store owner. The system will negotiate in a way that mimics real world negotiations more closely than other existing negotiation systems. Using a dynamic negotiation strategy influenced by a combination of negotiation and customer data attained by examining past negotiations with each customer individually, the system will attempt to agree on a price with customers that benefits the store owners.
Research Objectives
The research objectives of this project are as follows:
Review existing literature to get an understanding on the current knowledge and sentiments held in the field of automated negotiation. Use this to aid in the design and development of a new and alternative system.
Design and develop a basic negotiation system. This system will be capable of automating negotiations with customers for ecommerce store owners. This system will use a simple, static strategy when negotiating with customers.
Improve on the basic negotiation system, enabling it to utilize a dynamic strategy through analysing and evaluating past negotiations with individual customers so to achieve better results in its future negotiations with those same customers.
Prepare an experiment to allow evaluation of the negotiation systems performance.
Prepare a second experiment to evaluate the usability of the negation system.
Evaluate the results of the experiments and the interview and provide analysis.
To accomplish the above objectives, the research question and hypothesis are defined as follows:
Null Hypothesis (H0): A negotiation system used in an ecommerce setting cannot use a negotiation strategy that mimics real life negotiations to provide better results for a store owner.
Alternate Hypothesis (H1): If a negotiation system can use a negotiation strategy that mimics real world negotiations to agree on prices with customers that are to the satisfaction of a store owner, then the system is an acceptable tool to enable negotiation in ecommerce.
Alternate Hypothesis (H2): If customers have positive experiences negotiating with the automated negotiations system, then the system is an acceptable tool to enable negotiation in ecommerce.
“Can a negotiation system implemented in the context of an eCommerce site, use a combination of customer and past negotiation data to negotiate pricing with customers to the satisfaction of the owner of the website?”
Research Methods
The project will start with secondary research of the existing literature to gain a better understanding of both the topic of negotiation in eCommerce and the existing state of the art approaches to providing solutions for it. The secondary research will be focused on areas that could help with the research problem and included: Negotiations in eCommerce, automated negotiation systems and non-automated negotiation systems. Primary research will follow which will be a combination of both qualitative and quantitative methods. Combining both methods allows for the analysis to cover both the effectiveness of the system and its usability. Interviews with volunteers who agree to negotiate with the system allows for the capture of data that could be used to measure the usability of the negotiation system. Focusing on its ability to successfully integrate with an eCommerce site. Quantitative methods will be used to compare the results attained by the basic negotiation system with those attained by the improved negotiation system.
Project Scope
The scope of the research will be to design, develop and evaluate a negotiation system that uses past negotiation data and customer negotiation patterns in its negotiations with customers in relation to a negotiation system that does not use the data in its negotiations. The proposed negotiation system will only ever be tasked with negotiating on a singular issue: product price.
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CHAPTER 2
LITERATURE REVIEW
Introduction
In this chapter, multiple areas of research are studied to form a foundation from which to begin the design and development on the proposed negotiation system. Firstly…