Strategies of E-Commerce Business Value Optimization

Abstract

The Internet economy is becoming an integral part of many countries’ economies, creating new jobs, giving rise to new companies like the dot coms and transforming traditional jobs and traditional companies. The Internet is increasingly becoming a part of the basic business model for many companies as organizations around the world are adopting new e-business models, integrated solutions to explore new ways of dealing with customers and business partners, new organizational structures and adaptable business strategies (Singh & Waddell, 2004). There are many definitions of electronic commerce (e.g., Wigand, 1997). Here, a classic definition by Kalakota and Whinston (1996) is adopted, where e-commerce is “the buying and selling of information, products and services via computer networks today and in the future via any one of the myriad of networks that make up the ‘Information Superhighway (I-way)’” (p.1). A distinction between physical and digital products can be made. A digital product is defined as a product whose complete value chain can be implemented with the use of electronic networks; for example, it can be produced and distributed electronically, and be paid for over digital networks. Examples of digital products are software, news, and journal articles. The companies selling these products are usually Internet-based “digital dot coms” such as Yahoo and America Online. On the contrary, a physical product cannot be distributed over electronic networks (e.g., a book, CDs, toys). These products can also be sold on Internet by “physical dot coms”, but they are shipped to the consumers. The corporations using electronic commerce are distinguished into “bricks and mortar” companies, hybrid “clicks and mortar” companies (such as Amazon.com) and pure dot coms (Barua & Mukhopadhyay, 2000).