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3.2 The E-Commerce Opportunities, Barriers and Challenges

 

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The E-Business, the E-Customer, their Relationship and Interactivity

 

 

KunnskapskildenE-Business –
E-Business, E-Customer, Relationship and Interactivity

 

Dissertation
The E-Business, the E-Customer,
their Relationship and Interactivity 

Jan Vig 

Dissertation  av Jan Vig om E.Business, E-Customer, Relationship and Interactivity  (286 sider) i forbindelse med Masterstudie i Information Technology and Communication Juni 2000.

 

The E-Retailer Business, the E-Customer,
their Relationship and Interactivity

Table of Contents

Chapter One Introduction to the study

Chapter Two Business in Cyberspace

Chapter Three E- Retailer Commerce

Chapter Four E-Customer, Relationship and Interactivity

Chapter Five A Successful Case study – Amazon.com

Chapter Six The Future, Critical Success Factors, E-Business Strategy, Results and Conclusion

Appendix

 

 

Chapter 3

The E-Retailer Commerce 

 

 

Chapter Three E- Retailer Commerce

3.1 Introduction
3.2 The E-Commerce Opportunities, Barriers and Challenges
3.2.1 SWOT
3.2.2 Opportunities and benefits
3.2.3 Barriers and Treats
3.2.4 Challenges
3.3 E-Retailing
3.3.1 Online Retailing
3.3.2 Requirements and elements for E-Retailer commerce
3.4 Agents, intelligence agents and technology
3.5 The Customer led E-Business
3.6 The E-Retailer site development process and project management
3.6.1 The E-Retailer Web development process
3.6.2 Team and skills
3.7 The E-Retailer and Promotion
3.8 Competitive Intelligence and Market Research on the Internet
3.9 Summary

 

3.2

The E-Commerce Opportunities, Barriers and Challenges

 

 

3.2.1 SWOT

The E-retailer success in business depends on knowing the customer, the industry and the competitors inside out. The E-retailer has to do a SWOT analysis to identify the strengths, weaknesses, opportunities and treats.

Strengths are those things the E-retailer is doing well and set the E-retailer apart from competitors. Weaknesses are those areas the E-retailer has to improve upon, especially if the E-retailer do not want the competitors to capitalize on them. Opportunities include everything that can benefit the E-retailer, such as increased customer base, other businesses closing the doors, shift in customers attitude or special services that only the E-retailer can offer. Threats are those things that can hurt the E-retailer. Like a major shift in trends, other Industries opening similar services, a price increase from suppliers, new privacy policy or demand of skilled people can not be met

 

This dissertation will cover the opportunities and benefits and barriers and threats and point out the challenges an E-retailer has by doing business online.

 

3.2.2 Opportunities and benefits

The Web offers Businesses the opportunity and benefits to extend commerce into cyberspace, using direct marketing to sell their products directly to the customer.
The retailer industries that have grown up with print, radio and television in the past five decades have only just started to shape the Web. As professional businesses study what the E-Customer and users want, innovative strategies will evolve and make today’s success stories seem small compared to tomorrow’s E-retailing breakthroughs.

 

The goals of reducing costs, speeding time to market, and improving customer satisfaction is at the core of business today. Customers demand lower prices, greater options and customisation, higher levels of service, and more personalisation. To meet those needs, companies are reconsidering all aspects of their operations in light of E-Business opportunities.

 

A lot of companies seem to think that the key to success on the Internet is learning how to sell things with some type of online credit transaction. But the Internet is much more than simple a tool to sell products online. The real key is that the Internet is a marketing tool, not just a tool for selling. That means the Internet opens a lot of different opportunities, which the companies have to be aware of to succeed.

 

Opportunities and benefits could be seen both from the demand side and supply side. Here in this chapter we see it from the E-retailer’s point of view.

 

Below some of the differences in the “real world” and the virtual world, which shows how the advantages the  E-Retailers have in the digital world.

 

IMG_6343cr

 

Source: Birch, Gerbert and Schneider (2000: 56)

Figure 3.1 Advantages of an established retailer in the virtual world

 

It is five things a business can do to capitalize on the opportunities for business in cyberspace: (Deloitte Research, n.d.)

  • Establishing direct channels with customers, suppliers, trading partners and others in their value chain.
  • Create new value and deliver new products and services that have not been feasible before.
  • Extend boundaries enabling businesses of all kinds and sizes to widen their horizons.
  • Become a community magnet and dominate the information and access channels within an industry or community of common interest.
  • Short- circuit the value chain and make it possible for businesses to bypass others in the value chain, either eliminating intermediaries or capturing their businesses.

 

 

 

PwC (n.d.) argues that “E-business enables companies to create more dynamic and efficient processes by improving the way they operate today and preparing the organisation for the marketplace of tomorrow”

 

A Company can:

  • Improving product development and launch
  • Integrating and streamlining business processes
  • Strengthening partner relationships
  • Enhancing responsiveness to and interaction with customers
  • Capturing and sharing real-time and comprehensive data

 

 

 

Behind in the Appendix 4 a table with the opportunities and benefits for the E-Retailer are mentioned.

3.2.3 Barriers and Treats

 

The vast growth potential of Internet-based commerce is tempered by legitimate concerns over the security of such a system. Despite the potential rewards of conducting business on the Internet, major corporations have been slow to embrace this technology–and with good reason. The number one rated concern for both businesses and customers in establishing and participating in e-commerce is the potential for loss of assets and privacy due to breaches in the security of commercial transactions and corporate computer systems. A single publicized security breach can erode confidence in the business and not only damage the reputation of the firm, but also hurt the e-commerce industry as a whole. (Ghos, 1998: 9)

 

According to Anderson Consulting the main barriers to E-Business is the following

 

 

IMG_6344cr

 

 

Figure 3.2 Main barriers to E-Business  (Cunningham & Friedrich, 1999: 101)

According to a study by PwC (n.d.) managers point out the following 5 barriers to success:

Huge and uncertain costs of implementation, more pressing corporate priorities, lack of proven benefits within the industry, lack of accepted standards, and the current low use of the Internet by customers and suppliers. Additionally, companies acknowledge that they are not up to speed on many of the key privacy, legal, taxation, and emerging intellectual property issues that their own E-Businesses are creating. It has to be warned that the cost of E-Commerce should not be underestimated as a lot of E-Commerce companies have experienced.

 

According to Amor (2000: 357) the threats on the Internet can be classified in one of the following four categories:

  • Loss of Data Integrity – Information is created, modified or deleted by an intruder.
  • Loss of Data Privacy – Information is made available to unauthorized persons.
  • Loss of Service – A service breaks down due to the action of a hacker.
  • Loss of Control – services are used by authorized persons in an uncontrolled way.”

 

 

 

Concern for going online is according to Amor (2000: 22-23)

·      Channel Conflict·      Competition·      Copyright·      Customer Acceptance·      Legal Issues ·      Loyalty·      Pricing·      Security·      Service·      Viability

 

Table 3.1 Concern for going online

 

In general the E-Retailer will experience:

  • That increased accessibility will help the user (customer) to find exactly the information they seek for, exactly when they want where in the world the information will be at the moment.
  • The customers will get direct accesses to the person or company who has a product or service to offer.
  • The customers expect a personal gain because much of the job will move from the person or company who is offering this product/service to the customer.

 

 

 According to a survey conducted by CommerceNet: (Weiss, 1999)

  • Shoppers don’t trust e-commerce, they can’t find what they’re looking for, and there’s no easy way to pay for things.
  • Customers are worried about credit card theft, the privacy of their personal information, and unacceptable network performance.

 

As seen above individuals and businesses have a number of concerns about using the Internet for commercial purposes as lack of a predictable legal environment, concerns that governments will overtax, overregulate, or censor the Internet and uncertainty about the Internet’s performance, reliability and security. Customers concerns are more about security of transactions and the privacy of electronic information. All this has a great impact on the selling in cyberspace and has to be taken very serious by the E-Retailers if they want to succeed.

 

3.2.4 Challenges

One of the common errors that companies make is to underestimate the challenges facing Internet commerce. The E-Retailer has a lot of different challenges. One differentiation in categories could be the following one:

 

  • The market challenge
  • The customer challenge
  • The organisation and processes challenge
  • The technology challenge
  • The people challenge
  • The transactions challenge
  • The value and performance challenge
  • The regulatory challenge
  • The risk and assurance challenge
  • The strategic and management challenge

 

 

Mougayar (1998: 51-81) suggests a company has to consider a number of general observations before approaching the challenges:

  • The challenges have to be divided into different categories
  • It’s not the technology
  • Internal versus external factors
  • A company has to know who they are and what role they have in the marketplace.

 

 

For most organisations, taking advantage of the opportunities of the E-Economy means facing some combination of the following challenges:

  • Supply chain integration
  • Integration of inventory and service management
  • Integration with legacy systems
  • Coordinated content management
  • Alignment with strategy
  • Managing channel conflict
  • Coordinated branding
  • Effective linkage with business partners
  • Customer acceptance
  • Employee skills and attitudes

 

 

 

According to Clarke (1998) we have do deal with four key issues in business to customer commerce:

  • Willingness To Pay
  • Trust
  • trust in the security of value
  • trust in the security of personal data
  • trust in the privacy of personal data
  • trust in the subsequent behavior of the other party to an electronic transaction
  • The Privacy of Personal Data
  • Identification, Anonymity and Pseudonymity
  • Customer Protections

 

 

 

Other things that are hard about E-Commerce and important for the E-Retailers to have a strategy on are:

  • Getting traffic to come to the E-Retailer web site
  • Getting traffic to return to the E-Retailer web site a second time
  • Differentiating from the competition
  • Getting people to buy something from the E-Retailer web site.
  • Integrating an E-Commerce web site with existing business data

 

Another real big challenge for the E-Retailer is not technological but in figuring out a home-delivery method that makes sense. As customers turn to the Internet for buying products and services for their homes, physical products must be delivered, and physical services must be performed.

 

In the Appendix 4 the challenges are divided into different categories.

Download Dissertation

 

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