Page 44 - Electronic Commerce

Introduction to Electronic Commerce

These investors expected that the right business model would lead to rapid sales growth
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and market dominance. If a company was successful using a new “dot-com” business
model, investors would clamor to copy that model or find a start-up company that
planned to use a similar business model. This strategy led the way to many business
failures, some of them quite dramatic.
In the wake of the dot-com debacle that ended the first wave of electronic commerce,
many business researchers analyzed the efficacy of this “copy a successful business model”
approach and began to question the advisability of focusing great attention on a company’s
business model. One of the main critics, Harvard Business School professor Michael Porter,
argued that business models not only did not matter, they also probably did not exist. (You
can read more about Porter’s criticisms of the business model approach in the articles cited
in the For Further Study and Research section at the end of this chapter.)
Today, most companies realize that copying or adapting someone else’sbusiness model
is neither an easy nor wise road map to success. Instead, companies should examine the
elements of their business; that is, they should identify business processes that they can
streamline, enhance, or replace with processes driven by Internet technologies.
Companies and investors do use the idea of a revenue model, which is a specific
collection of business processes used to identify customers, market to those customers,
and generate sales to those customers. The revenue model idea is helpful for classifying
revenue-generating activities for communication and analysis purposes. The details of
revenue models that are used on the Web are presented in Chapter 3.

Focus on Specific Business Processes
In addition to the revenue model grouping of business processes, companies think of the
rest of their operations as specific business processes. Those processes include purchasing
raw materials or goods for resale, converting materials and labor into finished goods,
managing transportation and logistics, hiring and training employees, managing the
finances of the business, and many other activities.
An important function of this book is to help you learn how to identify those business
processes that firms can accomplish more effectively by using electronic commerce
technologies. In some cases, business processes use traditional commerce activities very
effectively, and technology cannot improve them. Products that buyers prefer to touch,
smell, or examine closely can be difficult to sell using electronic commerce. For example,
customers might be reluctant to buy items that have an important element of tactile feel
or condition such as high-fashion clothing (you cannot touch it online, and subtle color
variations that are hard to distinguish on a computer monitor can make a large
difference) or antique jewelry (for which elements of condition that require close
inspection can be critical to value) if they cannot closely examine the products before
agreeing to purchase them.
This book will help you learn how to use Internet technologies to improve existing
business processes and identify new business opportunities. An important aspect of
electronic commerce is that firms can use it to help them adapt to change. The business
world is changing more rapidly than ever before. Although much of this book is devoted to
explaining technologies, the book’s focus is on the business of electronic commerce; the
technologies only enable the business processes.

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