Saturday, June 14, 2008

E-Commerce reduces cycle time, improves employee's empowerment and facilitates customer support

E-commerce is short for electronic commerce, which is defined as the marketing of goods and services over the internet. Most of the large businesses typically have e-commerce websites, enabling customers and sellers to conduct business online. The websites established usually show details of their products and services, as well as related company information. Customers, sellers and interested parties can access to this information online.

Cycle time is defined as the amount of time the company takes to complete a business process. It is also defined as the time that elapses from the beginning to the end of a process. E-commerce reduces cycle time. It shortens the buying process. E-commerce does not only provide tangible products, but it includes a variety of products and services. E-commerce nowadays provides products and services like retail, finance, entertainment and media, and travel etc. With just few clicks, customers are able to find the stuff they desired. And these purchases can be done in few minutes online. E-commerce decreases and even eliminates the frustrations of locating and waiting for the product customers want by searching from mall to mall. The most well known e-commerce company is Dell Computers. Dell uses the Internet to enhance the advantages of direct marketing and hosts one of the world’s largest volume e-commerce Web sites. Customers can configure and price computers, order systems, and track their orders online. Its websites also provides simple interface for smooth transactions. Therefore, customers can purchase the desired Dell computers in beneficial and comfortable ways. This simple interface increases the sales and customer satisfactions in the same time.

Employee empowerment is the practice of giving non-managerial employees the obligations and the power to make decisions regarding their jobs or tasks. Large businesses nowadays need e-commerce to diversify their services. They do not only provide their products and services in shops, they provide such services online as well. With the establishment of e-commerce, employees can be empowered by delegating e-commerce responsibilities to them, such as allowing their employee to design the web sites and process, control and ensure the smoothness of transactions online, respond to complaints and suggestions of customer online, as well as updating company web site’s information, such as products details and news.

E-commerce websites are always equipped with Frequently Asked Questions (FAQ) section to facilitate customer support. This section contains frequently asked questions, together with the answers. Therefore, whenever customers have any doubts on the products or services provided in e-commerce website, they can first check at FAQ section. Alternatively, if the mentioned section still does not answer customers’ doubts and questions, they can write complaints via e-mail and e-mail them to the e-mail address provided. The contact details are usually listed in ‘customer service’ section provided in e-commerce website. For example, Dell e-commerce website is equipped with ‘customer service’ under ‘support section. Therefore, if the customers have further questions, they can contact Dell via e-mail or phone call, as provided in Dell’s website.

As a result, e-commerce nowadays has been improved continuously and it starts to gain confidence of consumers increasingly. Therefore, e-commerce has a promising future and it can be a great success if it is used and implemented in a smart way.

The Failure of Webvan.com and Its Causes

Webvan.com was an online grocery business that delivered products to customers’ homes within 30-minutes after their choosing. It was started in early of year 1999 and offered its services in 9 different cities in United State. Within a short period, the company grew very fast and it attracted many funding and managed to raise its capital to $375 million USD in an IPO (Initial Public Offering). This raise gave Webvan.com confidence to continue expand its business to other 26 cities in a short period. However, in early of year 2001, Webvan.com started to close down its business over the country and the CEO, George Shaheen, had stepped down. In a few months time, Webvan.com had run out of money and its stock price had dropped from $30 USD to $0.06 USD. In July 2001, the company’s shareholders voted to approve a 25-to-1 reverse stock split in a last ditch effort to keep the company afloat. Unfortunately, it was too late. A week later, Webvan.com shut down its operations.

The failure of Webvan.com had a few causes. Although the Webvan.com spokesman Bud Grebey said that the shut down of Webvan.com is caused by the company changed its delivery fees, bad press over former CEO George Shaheen stepping down and a critical auditor's report, but it isn’t so. One main factor that causes Webvan.com to shut down was the company grew too big in too short period. The company focus on short-term profit rather than long-term. Webvan.com had ignored the growth and market share which were important component to success in long-term. Other than that, it was too soon for the company to grow and expend to 26 cities coverage market within a two to three year time. It had not attracted enough customers to justify its spending.

Other than that, the second factor that leads to Webvan.com’s failure was too much spending in infrastructure. Webvan.com spend too much than its earning. For example, it signed a $1 billion USD contract to build a string of high-tech warehouses worth about $30 million each. It is way too much for the company’s income. The investment is greater than its sales growth. The plan of expanding in short period also had made a big impact in losing their income quickly.

The third reason of Webvan.com failure is that the company did not attempt a partner which is a brick-and-mortar organization. The company did all things by themselves. But technically, the company did not have any experience or knowledge in supermarket industry. It developed its own infrastructure to deliver groceries. The company should have partnered with an existing supermarket chain or wholesalers for example.

As a conclusion, although Webvan.com was very successful for attracting investors, but it failed to attract partners to help them. These reasons had lead to the failure of this company in a short period.


References:

  1. Farmer, M.A., & Sandoval, Greg (2001). Webvan delivers its last word: Bankruptcy. Retrieved June 12, 2008, from http://news.cnet.com/Webvan-delivers-its-last-word-Bankruptcy/2100-1017_3-269594.html?tag=news.1

  2. German, Kent (n.d.). Top 10 dot-com flops. Retrieved June 12, 2008, from http://www.cnet.com/4520-11136_1-6278387-1.html

Thursday, June 12, 2008

History and Evolution of E-Commerce

E-Commerce was birth out from the World-Wide-Web (WWW). The first extended use of a form of electronic commerce appeared in the early 1970s, when system called Electronic Fund Transfer (EFT) was introduced. This enabled banks and financial institutions to transfer over secure networks large amounts of money either among themselves or with associated businesses.

In the late of 1970s, the introduction of the Electronic Data Interchange (EDI) made it possible for companies to interface and trade without any human contact and it enables inter-company exchanges of documents, such as order forms for suppliers, invoices, customs forms, reimbursement receipts, stock inventories and etc.

In the late 1980s, the new type of applications which is electronic mail (e-mail) was widely adopted in the business world. When it was first introduced, this system was considered a major breakthrough.

In year 1992, The National Science Foundation lifted restrictions on the Internet allowing commercial use. CompuServe offers online retail products to its customers. This gives people the first chance to buy things off their computer.

In year 1994, Netscape arrived which providing users a simple browser to surf the Internet and a safe online transaction technology called Secure Sockets Layer.

In year 1995, two of the biggest names in e-commerce are launched which is EBay and Amazon.com. Generally, B2C websites are the bridge that link customers to suppliers such as EBay, online auction. Beside that, the B2C concerns itself with selling to the end user such as Amazon, online book retailers. On the other hand, the e-commerce that is conducted between businesses is referred to as B2B such as Microsoft sell his software to other organization.

In the very beginning, many people will have doubt on e-commerce but now it is become a modern tool, not only e-commerce revolutionized the world of wholesale, but also retail. As a result of that, the businesses are now continually searching for new ways to meet the needs of the online market such as Wal-Mart, they target on integrating consumer relationship with e-commerce industry to increases their customer base.

The technology used for e-commerce is young, but it's expanding faster than any before it and will soon be the most advanced system the world has ever seen and e-commerce is still one of the leading forces of economic growth today.

The success of Amazon.com and its causes

Amazon.com is an American electronic commerce company in Seattle, Washington. Amazon was founded by Jeff Bezos in 1994 and launched it online in 1995, which is an e-commerce best known as the first online retailer of the Internet world. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, China and Japan.

Amazon.com does not only sale the book, it also sale variety of electronic items such as video, music, health and fitness, wireless cell phones, house holds, software, and many more stuff. Besides that, Amazon.com also offer more types of products, more conveniently, and at lower prices to fulfill the customers need.

Amazon.com has been success in the field of e- commerce because the effective management and consumer identification in the market. The strategy for Amazon.com for selling the product is different from other e-commerce organizations. Its prudential approach generated a marginal increase to the revenues as well as expanded its existing commercial activities. So, when the market is slow, Amazon.com also has the globally customer base with a steady increase from its sales products.

Values play an important role in Amazon.com’s succeeding. There are two values that are practiced by Amazon.com. These are customer satisfaction and operational frugality. Due to frugality value, Amazon,com paid the lower rate of salary to employees compare than other company. So, it can invest more on branding and business expansion. However, Amazon.com sustain employee loyalty through employees own the company’s share. Therefore, when Amazon.com earns the profit, their shares will profit too.

Another factor that causes it success is customer services. This success is based on customer-value proposition, such as leave a positive impression to the visitor when they visit the Amazon.com site, while also providing buyers with reasons to visit the store again. Besides that Amazon.com has to perform as their promised, such as punctual delivery.

In 2008 Amazon expanded into film production and is currently funding The Stolen Child with 20th Century Fox. The domain amazon.com attracted at least 615 million visitors annually by 2008 according to compete.com survey.