Matakuliah
Tahun
: A0814/Investment Analysis
: 2009
ELECTRONIC COMMERCE : CHALLENGES
AND OPPORTUNITIES IN ASSESSING IT
PAYOFF
Pertemuan 21-22
Data, Information and Knowledge
• The capabilities of the e-commerce environment have
facilitated data mining by combining mathematical and
artifical intelligence alforithms with the rich data
collection.
• While data mining is a the front-end and a technology to
extract information from data, customer relationship
management (CRM) is involved with making business
decisions with this information.
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• E-commerce has also brought to the forefront the issue
of payoff as a consequence of consumer loyalty. Does
the e-commerce channel amplify or erode consumer
loyalty? Does the medium have anything at all to do with
consumer loyalty?
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E-Loyalty: Your Payoff in Online Commerce
• In business-to-consumer (B2C) e-commerce, does a
traditional virtue like loyalty still stand on the high
pedestal in the online world?
• The unique economics of e-business make loyalty more
important than ever. What are the metrics for loyalty?
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A Model For E-Loyalty
Efficiency
Time
Ease of use
Effort
Value
Price
Quality
Payoff = Loyalty
Satisfaction
With Purchase
Repeat customers
Market share
Interaction
Information
Safety
Load Time
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Novigation
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• Information technology in general has impacted
businesses on any of the following metrics:
– Productivity
– Profitability
– Consumer surplus
• In the case of electronic B2C commerce, the value to the
customer may be derived from time savings, price,
preference, and ease of transaction.
• Satistaction with purchases, experienced repeatedly,
eventually leads to customer loyalty.
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• Three factors contribute to satisfaction with the
purchase:
(1) the efficiency of the transaction as measured by
metrics for ease of use, the effort required to search for
the best product and complete the purchase, and the
time involved in making a purchase
(2) the value to the customer realized either as a better
price or better quality, or both, of the product or services
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(3) the nature of the interaction that might largerly be a
function of the design of the web sit.
Customer loyalty is eventually what defines a sustained
competitive advantage.
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• The metrics for loyalty are increased market share,
retention of customers, repeat purchases, and sales
from retained customers versus new customers.
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E-Commerce Payoff
• Any technology can be viewed as yielding a payoff if it
provides value.
• Value, in the electronic marketplace, can have varied
connotations and oftentimes in ways that are very
different from conventional marketplaces.
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5 Grid E-Commerce Value
•
•
•
•
•
Time
Distance or geography
Relationships
Interactions
Product or services
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3 payoff criteria to provide value:
• Efficiency
• Effectiveness
• Strategic advantage
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EFFICIENCY
EFFECTIVENESS
INNOVATION/
STRATEGIC
TIME
• More taks
• Less erro
• Number of clicks to
access information
• Less load with a 24x7
service
• Enhancement
customer satisfaction
GEOGRAPHY
• Access to wider
markets
• Search costs reduced
with a single gateway
access
• International sales
• International
customers
RELATIONSHIPS
• Time savings
through use of
intermediaries
• Cost saving
• Customer response to
micro – marketing
• Customer retention
by creating
dependency to lock-in
users
INTERACTONS
• Product
improvements
resulting from user
feedback
• Click stream
• Time
•COIN users
PRODUCT/
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SERVICE
• Through use of
agents
• Better price
• Less time
• Enhancement
customer satisfaction
through online decision
support tools
•New products,
services
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Looking To The Future: Challenges in IT
Payoff Assessment
Digital dotcomes versus physical dotcom
digital dotcoms are internet-based companies whose
products or services are digintal in nature and therefore
delivered over the internet
physical dotcoms are companies whose products are
physical but yet the company has a web-front for
customers to buy products.
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• IT capital (computer software, hardware, and networkin
gequipment) contributed significantly to revenues and
margins for digital dotcoms but not for physical dotcoms.
• Thus the physical dotcoms neet to work extra hard to
translate IT investment into business results
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• New Metrics
– The e-commerce era has brought a plethora of new metrics.
Some of these are a function of the conscious technology
investment decisions by the company as well as the customer
interaction with the company.
– Examples include :
• Bandwith
• Traffic
• Number of hits
• Number of unique visitors
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• Management of change
– The challenge of implementing new technologies and managing
this change has become an everyday reality in companies.
– Change management skils coupled with objective metrics will
help in the realization of payoff in this changing environment
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• Balance of power
– Electronic commerce has played the part of a disruptive
technology on changing the balance of power in many business
relationships
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• Cascading effects
– The most promising projections in terms of the use of ecommerce are in the area of business-to-business (B2B)
commerce.
– Form a payoff perspective, use of B2B offers numerous direct
benefits such as increased efficiency and speed.
– One of the challenge in B2B situation is to implment and
evaluate metrics to measure forecast errors that might be
reduced as a result of B2B commerce or work in process
inventory that might be reduced due to more timely orders and
supplies
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• Value of collaboration
– One of the paradoxes of electronic commerce is that one area
that it has the biggest impact in is improving coordination, yet it
is this coordination that has been the most difficult to evaluate.
What were coordination costs before the advent of e-commerce?
This is a difficult and challenging question and might be key to
justifying the payoff from e-commerce.
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