The Yin and Yang of Electronic Commerce
Dr. Dennis P. Geller
Understanding E-Commerce Requires A Framework
What is E-Commerce? Today, it's almost better to ask, What isn't E-Commerce? Pervasive and
problematic, E-Commerce penetrates into every corner of the modern business - with good
reason. It promises reduced costs, higher margins, more efficient operations and higher profits.
Who could fail to embrace it?
But embracing it doesn't mean we always know what it is. Remember the fable of the blind
scholars encountering an elephant? One grasps the tail; he says, "This is very like a rope."
Another, feeling the leg, opines "This is very like a tree." The third, by the trunk, thinks she's
found a snake. What the story doesn't tell is that the third scholar has always wanted a pet snake,
and takes the elephant home. "I never knew a snake could eat so much, or make such a big
mess," she told her friends.
Bringing E-Commerce into an organization is a bigger step than it usually appears. All the
complexities of selecting a new technology apply, but by the way it slashes through departments
and communication channels E-Commerce tends to take on a life of its own. Even with wellunderstood applications, where the vendor products are stable and the alternatives are easy to
evaluate, E-Commerce may have unexpected side effects because of what it promises. "Our
company home page (or product catalog, or procurement application) is just great, but wouldn't it
be better if we could pass the data to Corporate Communications (or Market Analysis or
Resource Planning) as soon as we get it?" It's not the tie-ins to other divisions and applications
that make E-Commerce like the pachyderm in the story - it's the expectation that everything can
be brought to a browser now!
There's no simple answer to the "What is" question. Something along the lines of:
E-commerce is the collection of tools and practices involving Internet technologies that
allow a company to create, maintain and optimize business relations with consumers and
other businesses
will do well enough. But we have to drill deeper to understand both the promise and the pitfalls.
Bellow is a picture of E-Commerce that captures many of the issues and complexities. It shows
the information flow between a business and a customer. The model is not limited to consumer
commerce, however. Here's where the Yin and Yang come in. In Daoist philosophy, the Yin and
Yang symbol represents the two different forces within the life force, which pervades everything in
the universe.Neither can exist without the other.
The parallel for E-Commerce isn't that customers and providers are complementary. Rather, it's
that in E-Commerce each party can be either, and is sometimes both at the same time. The web
is a marketplace in which, largely because of advertising and the tracking of behavior and
identity, each party has something to sell. The model in this figure reflects this by showing the
view at two different levels. To see both partners at the same level, place a two-sided mirror
going from top to bottom at the middle of the figure. The left gives a surface-level view of the
transactions, while the right exposes the anatomy.
There are two useful ways to use the Figure as a guide to E-Commerce: Focus on the
components or focus on the data flows. We'll do each, briefly.
The components are the functional pieces of the business. Of course, each business is different,
and any business is more complex that what the figure indicates. We've simply identified some
basic functions at a high level, to indicate the ways that E-Commerce and its information flows
affect the divisions of a business.
Web Management: This grouping is responsible for creating the web pages. It typically has
artistic, editorial and software responsibilities. To put up the very first web page, one as simple as
a blurb about the company's product offerings, will require artists to do the design, editorial
people to convert the text produced by Marketing into web format, and software people to create
a web infrastructure. Even if they don't form a single administrative unit, these people will function
as a team. Note that we've left out the operational component. While obviously critical to the
success of any E-Commerce initiative, and often working closely with this team, we prefer to
place the Web Operations function with the "Back Office" component.
Strategic Customer Relationship: Sales and Marketing here represent not so much the specific
divisions of the company as the complementary functions of creating relationships and creating
transactions. For example, Corporate Communications may have a direct hand in creating
material that describes the company, but to the extent that the purpose of such material is to help
build and cement a relationship we consider it here as a marketing function.
Note that we've identified Advertisers as a separate function. Despite the continual predictions of
the collapse of Internet, advertising as a revenue source, continues to be an important source of
revenue, and the relationship with advertisers is one that typically exists only because of ECommerce. (A significant exception coming with some media operations, typically magazine
publishers). Advertisers are placed behind the Strategic Customer Relationship function because
their interactions with the web site are typically mediated through this group. In some cases all of
a site's revenues are derived from advertising, which may then be the tail that wags the dog.
Customer Service:Like Web Management, the departmental location of this function is less
important than its unique nature. Its uniqueness reflects its dual role as a technical help desk and
the first line of customer relation management. It has strong ties to Web Management, Strategic
Customer Relationship and Operations, but its function is separate from each.
Back Office: Certainly not a single function, but grouped together in this chart to reflect that its
functions are typically the furthest from the web boundary. We mean this in the sense that, for
example, the data representing web sales will be in a concise form by the time it gets to the Back
Office Finance function; actual transactions are handled automatically, and Finance will be
dealing with summary reports from the website and from the external payments processor.
However, some Back Office functions may have more direct relationship to the web; HR, as an
example, may receive résumés via E-mail or a web form.
It's tempting to ask about the many ways in which the real "Back Office" participates in ECommerce. Should we have placed an information flow going rightward from the Back Office to
represent MRO or other procurement activities, now becoming important areas of web
commerce? We think not, because when the company is seeking vendors or making purchases
over the web it belongs on the left side of Figure 1. In that scenario, the Purchasing Department
is just some other company's web customer.
For the purposes of the figure, and for E-Commerce in general, the salient feature of any function
is the way it generates, transforms, and absorbs information. The figure calls out more than three
dozen-information flows, and we can't examine each one in detail here. Bellow, we present a
glossary of the types of information shown in the Figure. (Note that the table presents the
information flows in a different format, which makes it easier to see how far each travels and what
kinds of information touch each function. We'll look at these information types from the point of
view of the customer, because this makes for a more concise definition.
Inputs (to the Customer)
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Ads: Ads placed on the site by advertisers or departments of the company. They are typically
in fixed positions and separated visually from the "actual content" of the page.
Blurb: General material about the company. This will be frequently found in sections with
names like "About Us," "Press Releases," and "Contact Us."
Branded Content: Information that is part of the company's stock in trade. The clearest
example is intellectual property (like this report).
Catalog Information: Any information devoted specifically to the sales function, such as an
"Our Products" or "Where to Buy" section or full product listings.
Messaging: Start with E-mail, but add Fax and Voice over IP, although at present the most
significant is E-mail.. E-mail can serve a number of purposes, from a personalized newsletter
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with company information to a response from Customer Service. While quite drab compared
to the glitz of E-Commerce, E-Commerce without E-mail would be as handicapped as a
surgeon without her operating room nurse. Many kinds of information can be delivered by Email or through the browser, but the experience and technology are significantly different in
the two cases.
Service: Information from Customer Service, such as technical tips, Frequently Asked
Question lists, or individual responses.
Software: Software as an information flow may represent a product, a data file, a plug-in or
even a Blurb. Its unique mode of delivery (over the web) and production (by Web
Development) make it worth treating as a special class.
Transaction Data: This represents any formal feedback to the customer about commercial
interactions with the company. It ranges from order acknowledgement to a consumer after a
purchase to a detailed accounting report displayed on-screen to a business-to-business
partner.
Outputs (From the Customer)
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Behavior: This represents information about how people travel through the website. It
includes such typical traffic analysis data as what pages are visited and how many
clickthroughs an ad may have received, as well as more detailed path traces.
Messaging: As above, internet messages sent by the customer may carry almost any of the
information types.
Payments: This represents financial transactions, such as the name, credit card number and
expiration date that are required for a credit card purchase.
Personal Data: Any kind of personal data not directly related to payments. The most
common consumer example is registration data required before the customer can use some
features of a site. In a business-to-business case one example is contact information.
Selections: The product selections made by the customer.
Solicited Data: Non-personal information that is provided explicitly by the customer. Two
examples are requests for information or service that might be entered through a form on the
site, or responses to a survey form.
Given the size and impact of E-commerce, you know that a scheme like this won't be the last
word. Despite its inevitable imperfections, it is a useful tool for gauging your plans for Ecommerce and their likely effects on the organization.
The Author
Dennis P. Geller, Ph.D is a Research Director with TechnologyEvaluation.COM's E-Commerce
Practice. Dr. Geller's research activities span all of electronic commerce. Previously, he worked
as the Senior Manager of Cahners Business Information's Electronic Media group. At Cahners,
he was responsible for adapting and integrating web technologies to serve as platform
components for all corporate websites, including ad serving, traffic reporting and personalization.