An example of an E-Commerce failure and its causes

E-Commerce had been known for its successfulness, but early of 1999 there are a huge number of E-Commerce companies start to fail. They are mainly e-tailing, B2B and B2C companies.

eToys.com was an example of B2C company which failed during the dot.com era. The company launched in 1997 and was co-founded by CEO Toby Lenk, COO Frank Han and Bill Gross. eToys is a retail website which sells toys through the internet. It seemed to be the perfect idea for parents who are busy around the clock. It offers thousands of toys in every category from the comfort of their homes. The side had interesting features as well, where it includes gift recommendations by according age and background of popular cartoon characters, from Madeline to Barney.

eToys had a successful IPO on May 20th, 1999. The offer price was at $20 and it closed at $76 on the opening day which helped to generate praises for the online toy category around the world.

Besides the positives, the company suffered a black eye after it failed to deliver number of orders in time for the Christmas 1999. This resulted many wary customers for not using the site again and ruined the first impressions for new customers during that holiday season. Then eToys was put into danger after Toys``R``Us and Amazon.com formed a partership in August 2000, a major competitive blow to eToys towards the 2000 shopping season.

In effort to avoid the shipping of 1999, it spent a lot to built two huge warehouses to handle its inventories and deliveries. Having running out of money and other funding options exhausted. Later on, in March 2001 eToys filed for a bankruptcy and sold its Babycenter and Parentcenter units to Johnson & Johnson for about $10 million. In the following months, it sold its inventories worth $5.4 million to KB Toys. KB Toys also bought its trade name, logos, trademarks and URL’s for $3.35 million.

The reasons eToys failed are similar to those of the other online retailers who own plans for world domination. eToys is also an immediate need for a large infrastructure and plenty of cash to support the untested business model.

“The bottom line is that eToys had the potential to be a great $500 million company but it was masquerading as a $5 billion company," Phil Polishook, vice president of marketing at eToys, tells The Standard. "I think that overall it was a well-run company, but in hindsight it built too big an infrastructure and spent too much money to quickly. Had the company grown more slowly, perhaps it could have survived the market downturn and grown into a nice $300 to $500 million company.”

The company was reborn in October 2001 as a subsidiary of the KB Toys. However in 2004, it was separated from KB Toys, and then owned and operated by The Parent Company.

References:

• http://www.cnet.com/4520-11136_1-6278387-1.html?tag=feat.2
  
• http://www.etoys.com
  

Prepared by: CHOI LAI YEET

An example of an E-Commerce success and its causes

An E-Commerce based company is a type of company where it actually buys and sells its products or even services over electronic systems and other computer networks. Many of the E-Commerce companies were established without a solid outlet where every transaction is done online. However, despite the lacking of physical outlet, these E-Commerce based companies can still become very successful and survive well in the market nowadays.

A very good example of a successful company using E-Commerce is the Amazon.com. Amazon.com was founded in 1994 by Jeff Bezos. When the company was first established, it sold books online, but then diversified to selling CDs, computer software and games, even furniture and toys, and many more. This online based company remained competitive in the market against those click-and-mortar bookstores and other competitors in the industry.

Amazon.com really earned its profit in the year of 2002 with U.S $ 5 million. The company continued to become profitable, where it gained a net income of U.S $35.3 million in 2003, U.S.$588.50 million in 2004, U.S.$359 million in 2005, and U.S.$190 million in 2006.

There are several reasons why Amazon.com has been such successful as an E-Commerce based company. Firstly, this company owns the best marketing techniques and expertise to help promoting its products. This is crucial to make sure that every product is well and effectively managed until it reaches the customer’s hand.

Secondly, Amazon.com does not only sell books online, but also offering a huge variety of products such as electronic items, kitchen utensils and others as mentioned above. The varieties of the products sold are meant to target different segments in the market, ranging from housewives to working classes.

Moreover, the efficiency of this E-Commerce based company in handling customer requests is yet another advantage and important criteria for its steady increase in sales. Every customers demand is answered in the fastest manner to make sure satisfaction guaranteed and customers can get their items in the shortest time after they pay for it.

In short, Amazon.com has successfully retained its position in the E-Commerce based industry. Not only that it has a strong management, but also the ways it defines every customer request that has made a different between itself and its competitors.

• http://www.termpapergenie.com/success.html
• http://en.wikipedia.org/wiki/E_commerce

Prepared by: WONG CHEE WAI

How E-commerce can reduce cycle time, improve employees' empowerment and facilitate customer support

Implementation of E-commerce provides strategic and operational benefits. It includes reducing the cycle time, improving employees’ empowerment as well as to facilitate customer supports. But how does it work?

How E-commerce helps to reduce the cycle time?

Customers are now able to place an order via internet without having to be physically attended to particular shops, retailers or suppliers. They can place the order at anywhere and anytime as they want. A lot of steps is eliminated. It includes the elimination of queuing time and errors that will occur due to the mistakes of the paper works. Speed of order processing is enhanced with the existence of technology. Thus orders can be delivered faster.

As we know, cycle time is the interval of time between a customer placing an order and receiving the goods. When the cycle time is reduced, it helps to reduce time taken to perform an interactive task. Hence, efficiency of performing the work can be improved. Reducing cycle time can increase the competitive advantage, reduce carrying cost, reduce shrinkage cost and improve cash flow.

How E-commerce improves employees’ empowerment?

E-commerce allows the decentralization of decision making and authority. This has to be done via empowerment and distributed system with simultaneously supporting a decentralized control. Empowerment is the delegation of authority to the lower level employees. The existence of intranet enables the employees to communicate better within the organization. Hence, better information can be obtained as they are empowered. Employees are able to react to customer needs and problems in a faster and effective manner.

Company do not need to invest so much money in training and development with the existence of E-commerce. Nowadays, company do not need to send employees to go for training in overseas. They can train their employees by using computer software.This shows that E-commerce help in improving employees' empowerment.

How E-commerce facilitates customer support?

E-commerce allowed the company to respond to customer faster. With internet, companies are now able to provide assistance to customer in 24 hours per day. Besides, online transaction and processing give convenience to the customers as they can perform the transaction without delay. A company’s E-commerce website integrates marketing, service liable and posts sales support in order to meet customer needs. Customers can view the products and services through their websites. Information for the products and services which is offered by the company is available.

For the time being, it provides advanced searching capabilities and function for product and service inquiry. Customer Relationship Management is one of the E-commerce that help to facilitate customer support. It consists of customized sales transaction and one-to-one communication. For example, when an employee replies a customer’s email, they usually reply them according to the customer’s enquiry. Thus, it can be said that it is a one-to-one communication.

• http://www.thinkingmanagers.com/management/e-commerce.php
• http://www.dtrdi.qld.gov.au/dsdweb/v3/documents/objdirctrled/nonsecure/pdf/3037.pdf
• http://www.clickz.com/showPage.html?page=768711
• http://www.forfas.ie/publications/ecommerce/digecon.htm

Prepared by: HO PECK KEE

The history and evolution of E-commerce

E-commerce, means the process of buying, selling or exchanging products, services and information via computer networks according to Turban, 2006. In other words, E-commerce also means any business related transactions that either partially or totally carried out by electronic medium especially on internet using Open networks or Closed network. E-commerce allows people to buy or sell anything they want at anytime of the day or night 24 hours a day, 7 days a week. Many years back, all the business transactions were done face to face or by using letters, by telegraph, telephones and fax machines.

E-commerce applications were first developed in the early 1970s with innovations such as electronic funds transfer (EFT) and electronic data interchange (EDI).

In the early 1990’s, E-commerce started to evolve when the Internet was being introduced and opened for commercial use. This concepts of buying and selling, doing business using the computers and the Internet was then brought in. Ever since then, many companies started to be involved in E-commerce activities. One of the reasons for this rapid expansion is the development of new networks, protocols, and E-commerce software. Besides, the increase in the competition and other business pressures, has then contributed to the large numbers of so called dot-coms companies.

Year 1994: Netscape released the Navigator browser in October under the code name Mozilla. Pizza Hut offered pizza ordering on its Web page. The first online bank opened. Attempts to offer flower delivery and magazine subscriptions online. Adult materials were also commercially available, as were cars and bikes. Netscape 1.0 was also introduces in 1994.

In 1995: Jeff Bezos launched Amazon.com and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio started broadcasting. Dell and Cisco began to aggressively use Internet for commercial transactions. eBay was founded by computer programmer Pierre Omidyar as AuctionWeb(from wikipedia). Since 1995, a lot of innovation application has been developed, ranging from online direct sales to e-learning experiences. Almost everyday, medium and large sized organization in the world now has a Web site, and most large U.S corporations have comprehensive portals through which employees, business patners, and the public can acess corporate information. Many of these sites contain of thousand of pages and links.

In 1999, the emphasis of E-commerce shifted from B2C to B2B. In 2001, the emphasis is from B2B to B2E, c-commerce, e-government and e-learning. In 2005, social networks such as MySpace and Friendster started to receive attention.

Shopping online has also changed from the customer standpoint. Customer nowadays have a different mindset if were to compared to last time. Not only the amount of people shopping online increased; so do the ways they shop and buy items of their interest. The internet enables them to have a greater choice of selection. Apart than that, the advancement in the security system over the internet make customers feel more secure when they enter their personal information over the Web to buy items online. E-commerce provides a different mode of doing business and helps reduce labor cost and provide a much faster transaction and I personally believed that E-commerce will continue to change in the future..

http://www.youtube.com/watch?v=LW4X3b_j0eE

Prepared by: YEAP SUE YIE