E-Commerce

Conceptual Overview

E-commerce business models are based on business being conducted 24 hours a day, 7 days a week. At the core of e-commerce is the technology required to operate it. In all business organizations, technology provides a functional supporting role. By contrast, e-commerce is not just the application of technology to an organization or a marketing issue but a strategic business model with a complex embedded information system. It is a system that integrates the internal management of an organization's activities in tandem with establishing the required interactive access with customers, business partners, and suppliers to facilitate real-time gathering and organizationwide generation and application of customer intelligence. Information gathered on clients can then be used to foster long-term customer management and value, adding to an organization's offerings.

In e-commerce, customer focus changes to the demand side rather than supply. Clients have a potential role in the development of enhancements to products and services through provision of feedback. This is seen as an opportunity to strengthen customer and business relations.

Capability for ongoing assessment of organizational performance is also enhanced through integrated information exchange, enabling better analysis of competitors and relevant market forces so that adjustments to strategy, efficiencies in processes, streamlining of the value chain, reconciling off-line and online channels, and cost reductions can be applied. For example, reusable online product information and advice can be provided very cost effectively so that self-service options replace skilled retailers.

True market orientation is dependent on organizational learning, and learning is advanced through versatile information and business exchanges across departments, business units, product groups, or geographically dispersed company divisions. This is vital as low market entry barriers mean that competitive advantage is sustainable only if it can counter competitor duplication by a strategic focus imbued throughout the organization to capitalize on an organization's strengths. For instance, Web sites are easily duplicated, and it is the value added to client offerings that will counter customers clicking to a competitor site.

Critical Commentary and Future Directions

For the future of e-commerce, security of payment transactions, privacy of personal information, and access to redress when transactions go wrong will continue to be a focus. Trust is the underlying element that will determine whether more consumers will evolve from gathering information online to actually ordering products or services and becoming long-term loyal customers.

E-commerce has changed the focus of marketing from a separate but necessary component to a fundamental driver of strategy. The level of sophistication required for market communications will continue to increase in order to match consumer insight. With every business competing for consumer attention, the volume of market communications will be invasive. Permission marketing will become more important, with customers exchanging personal [Page 416]information with organizations because they can trust that marketing messages will be delivered only if they are pertinent.

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