E-Commerce and E-Business
Electronic business refers to the use of the Internet to conduct and support day-to-day business activities. IBM, the industry giant in technology, was the first to use the term in 1997, defining it as “the transformation, through the use of Internet technologies, of business activities involving information, collection, organization, and exchange” (Salazar and Sawyer 2007). In e-business, knowledge replaces inventory and machinery. Relationships with components of the value chain are more important than managing the infrastructure of sales and purchases.
The e-commerce – (conducting business over the Internet) – component of e-business began in 1995 when one of the first Internet portals, Netscape.com, accepted the first ads from major corporations and popularized the idea that the Web could be used as a new medium for advertising and sales. No one envisioned at the time what would turn out to be an exponential growth curve for e- commerce retail sales, which doubled and tripled in the early years. E-commerce grew at double- digit rates until the recession of 2008– 2009 when growth slowed to a crawl. In 2009, e-commerce revenues were flat–not bad considering that traditional retail sales were shrinking by 5% annually. In fact, e-commerce during the recession was the only stable segment in retail. Some online retailers forged ahead at a record pace: Amazon’s 2009 revenues were up 25 percent over 2008 sales (U. S. Census 2010).
Simply put, e-business attempts to improve existing business processes by replacing tedious, paper-based solutions with faster, most effective and efficient Internet-based applications. While many traditional organizations are currently jumping on the e-business bandwagon, the concept itself and its implementation is not new. Businesses have been using variants of e-business technologies and applications, such as EDI (electronic data interchange) for decades to exchange private business data, such as purchase orders, acknowledgements, bills of lading and invoices, over local networks. Recent advances in Internet technologies, however, have seen a vested interest in e-business owing to its tremendous potential for revenue generation.
The last ten years alone have witnessed e-business transition through four distinct generations: static web sites, interactive media, dynamic commerce and information integration. The first generation of e-business applications aimed to utilize static web pages to broadcast core business information. The second generation of interactive media went beyond static websites and began to support customer profiles and information requests. The third generation of dynamic commerce utilized the Internet as a novel sales channel and made websites generate revenue for their core businesses. These third generation e-business applications facilitated continuous, two-way interaction with customers and businesses and provided a new way to reach customers and exchange information that was independent of the “brick and mortar” structure of traditional storefronts.
The fourth generation of e-business, which we are witnessing in the contemporary era, aims to integrate information and transform business processes throughout the entire value chain, including competitors, distributors, suppliers and customers. Fourth generation e-business technologies include radio frequency identification (RFID) and e-services.
E-business technologies and framework improves the business value for an organization, positively affects key business activities, such as customer service, logistics, marketing, sales and production. Other advantages e-business components offer include:
- Speed: Customers can access information and facilities within two or three clicks.
- Convenience and Real Time Availability: Users prefer the online business because it is convenient and they have access to information at real-time. Users can access updated information regarding products, services, prices, promotions, events, maps, and weather. The process is private and secure.
- Lower Costs: Customers have access to saving deals on products and services without having to stand in queues or visiting travel agents offices. They can compare the lowest fares between competing travel firms and choose the one most suitable to their needs.
- Ability to Handle Complex Requirements: Online systems, such as those provided by e-business, can handle complex user requirements and can typically offer tailor-made products and services.
- Flexible: Online systems are designed to be flexible, allowing customers to easily customize their wants according to their needs and within their budgetary allowance.
- Wide: The Internet increases the reach and scope of a consumer’s efforts.
These and other advantages translate into increased revenue for the business as they allow the company to cut down on costs and offer quality services and products to customers, improving their brand loyalty and making them long-term buyers. Elaborating on this, e-business increases revenue by augmenting four variables that affect customer value (Vering et al 2001): e-business improves customer service; it enables prices to go down, with volume aggregation, auctions, price transparency, and pay-per-use, allowing customers to find prices of services and goods to continuously decrease; it improves quality of the good/service offered together with improving the quality of the transaction; and finally, it reduces fulfilment time, or the time between the order placed by the customer and the delivery.
Two core technologies that help businesses achieve their e-business objectives are e-CRM and e-marketing. Customer Relationship Management, or CRM, is when a company focuses on the needs of the customer in order to create loyalty, which then translates into the customer buying more products or purchasing more services from the company, thereby increasing its revenue stream. CRM is concerned with customer feedback and helping the business better profile its customer base.
e-CRM, or electronic Customer Relationship Management, is a concept directly derived from E-commerce. In the simplest terms, e-CRM is facilitating or conducting customer relationship management over the Internet. However, e-CRM is a comprehensive concept that includes E-commerce, E-mail activity and all/any other web-based customer touch points.
Chen and Chen (2004) define e-CRM as “technology-facilitated interfaces with customers in a broad e-business context, which goes beyond the web. E-CRM gives marketers the power to practice one-to-one customer relationships and undertake mass customization” (Chen and Chen 2004).
e-CRM has a lot of benefits to organizations. According to Bradshaw and Brash (2001), companies that have successfully applied e-CRM have been able to manage relationships efficiently. e-CRM allows companies to understand customer behaviour by using sophisticated IT systems that collect and analyze data easily and accurately. e-CRM also has social and strategic benefits to both organizations and customers. It can help organizations gain competitive advantage over their competitors by creating barriers to switching. Customers benefit as e-CRM allows them to enjoy better quality services and engage in a prosperous, long-term relationship with the organization.
e-CRM is cost-effective for organizations and its implementation costs considerably less than the cost, or salaries, of human customer service representatives. E-CRM is adaptable to new, constantly evolving Internet technologies. E-CRM is available on a 24/7 basis and provides services at all hours. One of the most significant advantages of e-CRM is its increased customer interaction. The technology allows a customer to interact with an organization at any time and receive immediate feedback. Today’s customer requires immediate gratification which is why e-CRM proves so useful, as it applies the immediacy of the Internet in its functionality. According to Matthewson (2002), e-CRM projects demonstrate an increase of 8 percent in revenues and a target growth of 16 percent in two years. Many of these revenues are due to e-CRM’s ability to help an organization save costs.
E-marketing, on the other hand, is marketing over the Internet, whether via interactive kiosks, opt-in-email, banner ads, web sites, mobile-commerce, or interactive TV. It entails getting close to, establishing, understanding and maintaining a dialogue with customers. E-marketing does not limit itself merely to transactions between stakeholders and an organization but spans farther and wider and includes all marketing related processes.
Smith and Chaffey (2008) state that e-marketing lies at the core of e-business. It is the way by which businesses get to understand their customers and get closer to them, add value to products and services, widen and extend existing distribution channels and augment sales and boost after sales services. E-marketing is a mind-shift or a way of thinking that puts customers at the core of all business activities.
Implementing e-CRM and e-Marketing requires investment in terms of communication, finances and technologies. The results of these investments re measured in terms of their return on investment (ROI). A company looking to apply e-CRM and e-marketing must start off with a website, which it will use for customer development. That website will be the starting point that provides information to encourage customer purchase. The website must provide online customer service options, such as Chat support (reactive chat, proactive chat, collaborative browsing, remote desktop control), call-back and Frequently Asked Questions (FAQ) that help achieve purchases. Other technologies that the website could incorporate would include web-forms and voice technology.
Other aspects of e-CRM and e-Marketing implementation include human capital, e-business infrastructure and customer information (data). Human capital would include all those specialists that are familiar with the processes and technology associated with e-business. A project manager, who will coordinate the daily operations and consult clients, is also a plus point.
Matthewson (2002) states the following as important for successful e-CRM and e-Marketing implementation:
- Define a strategy: Identify what the e-business components are expected to do. How they will benefit the business. What are the tangible and intangible advantages to be gained? The strategy should also be clear in terms of timelines.
- Set objectives: Detail the objectives of the implementation strategy.
- Choose the most feasible technology: What is the best technology the company can consider for the implementation. Is the technology financially feasible? If yes, does the company have the required human capital to implement the technology? If the technology is not feasible, are there other similar technologies in the market that can provide the same benefits?
- Implement the chosen technology: Implementation often proves to be the trickiest component of the process. This is when the devised plan is put into action. It is imperative that all the components of the process come together effectively to ensure the e-business solutions are implemented effectively.
- Redefine business processes: With the implementation of the e-business components, all existing or traditional business processes need to be redefined. New business processes have to be devised which can then work in accordance with the objectives of the e-business.
- Drive adoption: The last step of the implementation process requires the organization to drive adoption. The implemented e-business solutions are promoted throughout the organization, trainings are devised for employees to enable them to incorporate them in their daily functions.
Often barriers exist that inhibit the successful implementation of e-business components. The most common barriers include inter-departmental conflicts, resources (or the lack of) and system functionalities. Management must ensure that these, and other, barriers are effectively mitigated so the implementation process can proceed without hitch.
The e-business revolution is still unfolding. Individuals and businesses will increasingly use the Internet to conduct business online as more products and services come online and households switch to broadband telecommunications. More industries will be transformed by e-business, including travel reservations, music and entertainment, news, software, education, and finance. E-business components drive a business to achieve competitive advantage with their simple but effective theme: the customer rules. This is more than just a theme: it is a proved and tested philosophy that empowers organizations to provide their customers the best service and products and allows customers to have a say in the process, which increases their satisfaction and converts them into revenue generating sources for the company. However, the financial benefits of e-business are typically difficult to quantify and accurately determine because e-business itself is about constantly forming and establishing new relationships with components external to the business. While it is possible to quantify the savings provided by e-business applications, it is harder to determine how much a company can achieve in terms of customer-generated revenue.
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CHAFFEY, D., & SMITH, P. R. (2008). eMarketing eXcellence: planning and optimizing your digital marketing. Amsterdam, Butterworth-Heinemann. Bottom of Form
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CHEN, Q., & CHEN, H.-M. (2004). Exploring the success factors of eCRM strategies in practice. JOURNAL OF DATABASE MARKETING AND CUSTOMER STRATEGY MANAGEMENT. 11, 333-343.
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MATTHEWSON, J. A. (2002). E-Business: a jargon-free practical guide. Oxford, Butterworth-Heinemann.Bottom of Form
SALAZAR, A., & SAWYER, S. (2007). Handbook of information technology in organizations and electronic markets. Hackensack, NJ, World Scientific.
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U.S. CENSUS BUREAU. (2009). An introduction to the 2010 Census counting everyone once, and only once, and in the right place. [Washington, D.C.], U.S. Census Bureau. http://purl.access.gpo.gov/GPO/LPS117567.
VERING, M. (2001). The e-business workplace: discovering the power of enterprise portals. New York, Wiley.
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