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11.8 Order Fulfillment and Logistics: An Overview 359

While individual cryptocurrencies (including Bitcoin) a new appliance. This can be done by including a paper
may fade away, the underlying platforms and algorithms will document with the product or by providing the instructions
likely morph to other uses similar to the types of shifts that on the Web. In addition, if the customer is dissatisfied with a
have occurred with Etherum and Ripple. For other potential product, an exchange or return must be arranged.
uses in banks, see Roberts (2016). Order fulfillment encompasses a number of back-office
operations, which are the activities that support the fulfill-
ment of orders, such as packing, delivery, accounting, inven-
SECTION 11.7 REVIEW QUESTIONS tory management, and shipping. It also is strongly related to
the front-office operations, or customer-facing activities,
1. Distinguish electronic money, virtual currency, and digi- such as advertising and order taking, that are visible to
tal currency. customers.
2. What is the difference between convertible and noncon- Obviously, the overall objective of order fulfillment is to
vertible virtual currency? deliver the right product, to the right customer in a timely,
3. What are the major product categories in the virtual cur- cost-effective, and profitable manner. The way these objec-
rency market? tives are achieved varies between e-tailing and off-line retail-
4. What characteristics does Bitcoin possess that make it a ing because e-tailers are focused on delivering smaller
currency? numbers of items directly to the individual consumer, while
5. What is a blockchain? many retailers are focused on delivering volumes of products
6. What is a bitcoin miner? to the store shelf. Of course, these days e-tailing and conven-
7. How are a Bitcoin private key, public key, and address tional retailing are intertwined because most retailers have
interrelated? multiple sales and services channels—Web, mobile, in store,
8. What are the key advantages of Bitcoin? Key disadvan- call center, etc. This requires them to integrate the various
tages? channels, enabling customers to order anywhere and pick up
9. Who are some of the main competitors of Bitcoin? or receive anywhere.

11.8 ORDER FULFILLMENT The EC Order Fulfillment Process
AND LOGISTICS: AN OVERVIEW
In order to understand why there are problems in order ful-
Comparatively speaking, taking orders and payments over fillment, it is beneficial to look at a typical EC fulfillment
the Internet may be the easy part of B2C. Fulfilling orders process, as shown in Figure 11.7. The process starts on the
and delivering the ordered items to the customers’ doors can left, when an order is received, and after verification that it is
be the tricky part. For example, consider Amazon.com that a real order, several activities take place, some of which can
initially started out as a totally virtual company accepting be done simultaneously; others must be done in sequence.
orders and payments but relying on third parties to fulfill and These activities include the following steps:
deliver the orders. Eventually, they came to realize that they
needed physical warehouses with thousands of employees in 1. Order and pay
order to expedite deliveries and substantially reduce order 2. Payment authorization
fulfillment costs. In order to understand the importance of 3. Check for in-stock availability. Notify if and when avail-
order fulfillment and delivery in EC, as well as the complexi- able
ties and problems associated with each, you first have to have 4. Determine whether inventory should be replenished (and
a general understanding of these concepts. whether additional production is required)
5. Locate warehouse where order can be handled. Transmit
order to warehouse
Basic Concepts of Order Fulfillment 6. Pick and pack order for shipment
and Logistics 7. Dispatch order
8. Receipt of goods
Regardless of the type of product and the type of commerce 9. Manage returns
involved—online or off, order fulfillment refers to all the
operations a company undertakes from the time it receives an Order fulfillment processes may vary, depending on the
order to the time the items are delivered to the customers, types product (e.g., by size, perishability), whether third par-
including all related customer services. For example, a cus- ties are involved in warehousing and shipping, whether the
tomer must receive assembly and operation instructions with business is primarily B2C or B2B, and on the company’s