Page 406 - Introduction to Electronic Commerce and Social Commerce

394 12 Implementation Issues: From Globalization to Justification, Privacy, and Regulation

Table 12.3 Critical success factors: old economy and EC
Old economy CSFs EC CSFs
Vertically integrate or do it yourself Create new partnerships and alliances; stay with core competency
Deliver high-value products Deliver high-value service offerings that encompass products
Build market share to establish economies of scale Optimize natural scale and scope of business; look at mass customization
Analyze carefully to avoid missteps Approach with urgency to avoid being left out; use proactive strategies
Leverage physical assets Leverage intangible assets, capabilities, and relationships—unleash dormant assets
Compete to sell product Compete to control access to markets, and build relationships with customers; compete
with other websites

Depot (homedepot.com), Walmart (walmart.com), FIS At this still-early stage of the EC revolution, success can-
(fisglobal.com/Solutions/Payments/Digital-Payments), not be guaranteed, and failure rates remain high. However, if
1-800-Flowers.com (1800flowers.com), and Southwest companies learn from the mistakes of others and follow the
Airlines (southwest.com). A group of Asian CEOs recom- guidelines offered by experts and researchers, their chances
mend the following EC CSFs: select proper business for success are greatly enhanced.
models, project, predict, and prepare for the EC company,
encourage e-innovation, co-brand marketing, and focus on
younger customers (e.g., see alloy.com and bolt3.com). Cultural Differences in EC Successes
• For an EC exchange to be successful, it has to create value and Failures
for all participants. A vivid example is Alibaba.com.
• Pricing in EC has continued to be a challenge for sellers Here, we add the issue of cultural differences so that
because of shipping and handling costs. Often, the seller and appropriate strategies can be developed when doing busi-
market maker will see the potential for profits and ignore the ness globally.
fact that the buyers will subscribe to EC only if they see a One of the strengths of EC is the ease with which sellers
benefit in price or product variety. For example, free ship- and buyers can reach a global population of consumers or
ping is available at Dell, Newegg, and many other e-tailers. suppliers. However, they must recognize existing cultural
• New technologies can boost the success of EC. For exam- differences and act upon them. Even the content of online
ple, RFID has great potential for improving the supply ads can mean different things in different cultures. Due to
chain; however, it will take a large investment in EC infra- these differences, the transaction costs, including coordina-
structure and applications to realize its full potential. tion costs, may vary among the consumer base.
• Digital partnerships can drive business success (McCafferty EC success factors as well as adoption strategies differ
2016b). among countries (see Online File W12.2).

Additional Guidelines for EC Success Can EC Succeed in Developing Economies?
A number of experts and consultants have proposed many
more keys to success. Several studies identified success fac- Similar to cultural differences, developed and developing
tors such as: economies vary in how EC is used and whether the economics
favor electronic commerce. Developing economies struggle
with various issues taken for granted in developed economies
• Effective marketing and advertising (e.g., use of credit cards).
• User-friendly website Developing economies often face power blackouts, unre-
• Good relationships between customers and merchants liable shipments, unstable political and social environments,
• Proper supply chain management and order fulfillment lack of regulations that protect customers, and insufficient
• Integration with internal and external information payment options. Such limitations make it difficult for firms
systems to predict whether EC investments will pay off, and when.
• Use of appropriate business models (including rev- However, developing economies, such as in China and India,
enue models) represent a significant opportunity for EC to connect busi-
• Effective and efficient infrastructure nesses to customers, as well as other businesses. The poten-
• Organization culture regarding becoming an e-busi- tial volume of transactions in developed countries can make
ness and social business EC investments more attractive for established firms. This is
• Effective leadership of the digital business team because much of the cost of EC systems development would
(Raskino and Waller 2016) have already been recovered because EC initiatives frequently
can use existing IT infrastructures.