An example of an E-Commerce SUCCESS and its causes.

Amazon.com, Inc. is one example of an ecommerce success.

Amazon.com, Inc. is an American electronic commerce (ecommerce) company in Seattle, Washington. It is America's largest online retailer, with nearly three times the internet sales revenue of runner up Staples, Inc. The domain amazon.com attracted at least 615 million visitors annually by 2008 according to a Compete.com survey. This was twice the numbers of walmart.com.

Amazon.com, Inc. was founded by Jeff Bezos in 1994 and was launched online in 1995. It started as an on-line bookstore but soon diversified to product lines of VHS, DVD, music CDs and MP3s, computer software, video games, electronics, apparel, furniture, food, toys, etc. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, China and Japan. It also provides global shipping to certain countries for some of its products.

On 15 January 2009, a survey published by Verdict Research found that Amazon.com was the UK's favorite music and video retailer, and came third in overall retail rankings.

There are a number of causes for the success of Amazon.com. One of them is the continuous study of the buying pattern of consumer that results in continuing making their customers happy. Amazon.com attracts and retains their customers by offering various rewards to their customers. Besides, Amazon.com also provides the free of charge additional services such as gift-wrapping to their customers. Amazon.com has also managed to improve their shipping system throughout the year.

The second cause is an effective marketing process. Amazon communicates with their customer frequently and effectively. The punctuality of the product shipping also contributes to the effective marketing process. Amazon.com has increased their capabilities to quote the available product on the real time basis.

In addition, Amazon.com also acts as a middleman between the consumer and other retailer. Amazon.com will refer customers to other retailers if certain items are not available in theirs company. Customers can use the ‘shop the web’ search service to search for other retailers.

Finally, the strong public recognition enables amazon.com to earn a high margin profit and focus on the business expansion activities.

An example of an E-Commerce FAILURE and its causes.

ValueAmerica.com






Introduction
ValueAmerica.com, founded by Craig Winn, was created specifically to retail goods from caviar to computers directly to consumers without the need of conventional middleman via the Internet or so-called, business-to-consumer (B2C) company, supported by large sums of money from investors. The idea was not to buy from ValueAmerica.com directly but to use the firm as a conduit between the consumer and the manufacturer. This means that ValueAmerica.com would carry no inventory and the firm would be effectively “free” of overheads. It failed within a few years of its creation.

Just over a year after the stock market floatation in August 2000, ValueAmerica.com filed for Chapter 11 bankruptcy. Company filling for Chapter 11 are allowed to continue trading in hopes that they can solve their problems and become profitable as this is deemed to be better for the economy as a whole then the liquidation of the firm. However, ValueAmerica.com was unable to recover their loses and was sold to Merisel, a company specializing in distributing technology products in November 2000.



Causes
The failure of ValueAmerica.com was simply because it was unable to make sufficient revenues to exceed its costs and the company could not retain customer loyalty, so there were few repeat purchases.

The main cause was the company’s business plan, which relied upon the manufacturers to supply items to the customers whilst ValueAmerica.com itself simply passed on the orders and kept a premium for its services. Unfortunately, many of the manufacturers simply did not have the ability to ship items in small numbers to individual purchasers. This means that there were mistakes with orders and long delays between orders being made and the delivery of the goods. Few customers made repeat purchases, making it difficult for the company to establish a stable client base.

The reason of this company incapable of achieving a level of sales that would make it profitable is because the company could not retain customers. Besides that, the firm’s computer system proved to be incapable of handling such as a high volume of Internet traffic and there were problems with frequent crashes. As a result, a high number of orders were not filled.

Next is when orders were filled incorrectly. This is because this problem stemmed from the fact that many of the manufacturers that were involved with ValueAmerica.com are not capable of shipping a small number of items direct to the public and do not have the appropriate facilities. Their logistics are designed to ship large numbers of items retail outlets, which then distribute the products to the public. The incompatibility between the customer’s requirements and the manufacturer’s capabilities meant there were problems with incomplete orders, incorrect orders and long time delays before consumers received their goods.

ValueAmerica.com has problems controlling the rate at which it spends its available funds. This means ValueAmerica.com spent large amounts setting up their systems and funded generously by individual investors, it was able to pay for massive advertising campaigns before they began trading to publicize its website. Once trading began, however, this firm became notorious for lavish spending on unnecessary items.

Lastly, it is the change in board of directors, management and employees. There were some changes in the Board of Directors in the last few months before the company went into Chapter 11. Craig Winn, the company’s founder, stepped aside as CEO but retained the position of Chairman. Then a new Chief Executive Officer was appointed but resigned in November 1999, complaining that Winn interfered too much. The Board of Directors then said that they had lost confidence in Winn and he was forced to resign as Chairman, although he maintained a seat on the Board until both he and his co-founder, Rex Scantena, resigned in protest at the company’s restructuring plans.

Conclusion
ValueAmerica.com should have improved on identifying the demand and need of the consumers as well as to understand the markets environment. An effective business strategies and a strategic management process should be implemented to companies that desires to achieve a long lasting success as an e-commerce company.

Discuss how E-Commerce can reduce cycle time, improve employees’ empowerment and facilitate customer support.

In the globalize business environment, a business needs to maintain its competitive edge in order to be successful. With the advancement of technologies, an organization can boost up its profit easily by applying E-commerce.



E-commerce is a system that allows an organization to communicate with its business partners, such as suppliers and customers by the use of electronic devices. With the use of electronic devices, it helps the organization to cut down the business cycle time. Cycle time refers to the length between a customer placing an order and the goods being sent to customer. By reducing cycle time, it can decrease cost, increase revenue and competitive advantage is obtained. For instance, when the stock has reached reorder level, Electronic Data Interchange (EDI) system will automatically send an E-mail to the supplier to make the necessary orders. E-commerce can reduce the time required to complete business processes and remove redundant steps in business processes. Moreover it can accelerate the processing time.

Besides that, E-commerce also helps the organization to facilitate better empowerment to employees. Employees’ empowerment is the ability to make decision for customers. By giving more flexibility to access information, employees are able to improve employees’ empowerment. With the front end system, no employees are needed to interact with the customer when the customer is making order. While the employees are empowered to work on back end activities such as inventory management, accounting and finance, payment processing, delivery, etc. By doing this, an organization can run a business with only few employees. Moreover employees’ morale can be increased.


The key factor for a business to be a success is the ability to retain its customers. E-commerce is able to provide a few “24/7” customer supports, such as a user friendly “step-by-step” guidance, frequently asked questions, search engines, etc. Besides that, the online system includes customer service center, which specifically solve customers’ queries and deal with customers’ complaints. Feedbacks from customers are very important and useful because it helps the company to identify their weaknesses and improve on it, as well as the customers’ needs. Nowadays, a wide range of technological solutions are available to facilitate customer support. E-commerce can reach customers anytime, anywhere as compared to traditional shops which are limited to customers during a certain time and day

Note: It costs ten times more to generate a new customer than to maintain an existing one!!!


In conclusion, E-commerce assists an organization in maintaining its competitiveness by reducing cycle time, improving employees’ empowerment, and facilitate better customer supports. Therefore, it is considerable to implement E-commerce in the business as the benefits are much greater than the costs.

History and Evolution of E-Commerce

I find it interesting that in just over a decade, online shopping has changed the concept of ecommerce. Ecommerce first became possible in 1991 when the Internet was open to commercial use. Thousands of businesses have taken up residence at web sites ever since, transforming business processes into how it is today.

Now, before I continue, let us define what e-commerce is. E-commerce is a process of the execution of commercial transactions electronically with the help of the leading technologies like Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for users to exchange business information and do electronic transactions.

E-commerce started to become popular in 1994. It started to become known as the process of purchasing available goods and services over the Internet using secure connections and electronic payment service, making it easy for customers to search through a large database of products and services, compare prices and buy the selected product at best prices with a click of the mouse.


I believe that the advantages and benefits of ecommerce have became so recognize and visible that even the collapse of dot.com in 2000, which resulted in disappearance of many ecommerce companies, did not discourage the “brick and mortar” retailers from adding such capabilities to their websites. In fact, vast numbers are doing so.

By the end of 2001, the largest form of ecommerce, Business-to-Business (B2B) model, had around $700 billion in transactions. Ecommerce sales continued to grow in the next few years and, by the end of 2007, according to all available data, ecommerce sales accounted for 3.4 percent of total sales.

Websites such as eBay and Amazon are synonymous with ecommerce. Currently the 5 largest and most famous worldwide Internet retailers are Amazon, Dell, Staples, Office Depot and Hewlett Packard. Dell was the first company to record a million dollars in online sales in 1997. The key factor of Dell’s success is that Dell.com enables customers to choose and to control online, i.e. visitors can browse the site and assemble PCs piece by piece choosing each single component based on their budget and requirements. According to statistics, approximately half of the company’s profit comes from the web site.

E-commerce today is still at its infancy and it is evolving according to the customer advantage. In my opinion, the evolution of this will never end. As long as technology breathes in the air, it will continue improving for the better.

Sources: http://newmedia.medill.northwestern.edu/courses/nmpspring01/brown/Revstream/history.htm