Emerging Issues in E-Commerce

The popularity and success of e-commerce as a medium for facilitating and processing commercial relationships between consumers and businesses have grown exponentially since 1995. Financially speaking, retail e-commerce has bloomed to generate roughly 5.5 billion dollars (USD) in 2016 (Laudon, Laudon, & Brabston, 2014), following its inception in 1995. This significant progression can be directly linked to the influential trends information systems have imposed on businesses, with the notion of a digital firm.

Implementing information systems as a part of a business’ value proposition has become a necessity for survival in this age of technology-oriented conduction of business-consumer relationships. More specifically, the adoption of internet utilization, and e-commerce has become the foundation of a strong majority of today’s businesses. For many, it has served as a difficult challenge in altering a traditional business model into one that is able to incorporate the internet and use e-commerce as its method of connecting with consumers. It has also resulted in enabling businesses to improve various areas of their operations such as increases in efficiency, reduced time to market, provided a platform for enhanced customer service, and improved the delivery of order fulfillment (Anvari & Norouzi, 2016). This in turn has benefited consumers greatly, by offering high quality products due to increased competition, as well as allowing customers to gain bargaining power with a bevy of choices that can be selected based on lowest-cost, or other unique offerings. E-commerce in itself has a large variety of unique characteristics that are able to input in effectively identifying itself as a viable method for conduction interactions between businesses and consumers. There are eight features of e-commerce that comprise its capacities, such as ubiquity, global reach, universal standards, interactivity, richness, and information density to name some examples. These features each carry their own significance to business with borderless functionality being able to reach billions of consumers, enhanced customer experience and convenience, all based on one set of internet standards (Laudon, Laudon, & Brabston, 2014).

Amazon is able to serve as an example of the culmination exemplifying the emergence of e-commerce. Starting as a modest online book-selling website in 1997, it has grown to be two times as large ($465 billion) as Walmart ($225 billion) per value of outstanding shares as of 2017 (Newcomb, 2017). Through continuous addition of product categories, Amazon has completed a nearly exhaustive list of desirable goods that can be purchased via their online marketplace. To supplement the substantial amount of choices it offers to customers, the company has been consistently innovative in finding new methods to enhance its value proposition and drawing customers away from traditional brick and mortar businesses and into its vast e-commerce platform. Shortly after becoming publicly traded, the company aimed for improving customer experience by constructing a one-click shop for customer allowing them to check out quickly from the convenience of their house. In keeping up with the trend reducing time and costs to fulfill orders and have products in the hands of consumers, Amazon has gone to great lengths and made significant developments in doing so. It has drastically lowered shipping costs, offered two-hour shipping, and well as introduced delivery via drone (Newcomb, 2017). However, all of the strides Amazon has made via the internet and e-commerce have carried negative implications for many traditional industries who had yet to adopt digital tactics. Amazon’s growing popularity for selling books online as well as building e-readers was damaging to traditional book stores. Firstly, independently owned book stores whose operations were had become obsolete and too costly for consumers succumbed. Even brick and mortar giants such as Indigo and Chapters had to implement their own e-commerce platforms as well as create a more viable product line that went beyond solely books. Clothing retailers experienced a loss in customers walking through doors, as Amazon too incorporated clothing categories, forcing massive companies like the Hudson Bay Company to integrate e-commerce, whereas Sears was unable to adjust accordingly and has been closing stores around North America frequently (Star Business Staff, 2015). With Amazon exemplifying statistical proof of the prominence of e-commerce as it currently stands, in-depth challenges and opportunities can be derived its emergence and applied into management, organizational, and technological dimensions.

From an organizational perspective, the adoption of e-commerce can provide plentiful opportunities in keeping pace with environmental change. However, the continuing application of e-commerce may pose as challenges for organizations as well. Organizations encompass several levels of individuals, who are tasked with varying responsibilities, which all contribute into taking resources from external environments and producing outputs from those resources (Laudon, Laudon, & Brabston, 2014). As all forms of organizations are unique and different based on the people within the organization, the processes for work, and relationships, cultures are established that can present resistance to change. Leavitt’s (1965) diamond diagram showcases the organizational change as whole as opposed to changing only one or two facets of the organization. If only one aspect is changed, the organization will absorb and deflect the change by existing tasks, structures, and people (Laudon, Laudon, & Brabston, 2014). 

 Particularly when change is as dramatic as what e-commerce imposes on organizations, it demands organizational cultures, structure, politics, and work processes to be altered. As mentioned regarding the digital firm, one that is unable to adapt to the technological climate is unlikely to survive. Naturally, this has created tremendous difficulties for many organizations who are unsuccessful in completing their organizational transformations entirely. An example exemplifying this organizational challenge is Blockbuster, which at the time of its video-rental marketplace dominance had an opportunity to take charge in the next step of innovation for the industry. The former traditional movie-rental box chain had a chance to acquire Netflix for $50 million but elected to pass on the opportunity (Davis & Higgins, 2013). Netflix subsequently began enjoying Blockbuster’s customer base, who quickly became adjusted to the convenience of in-house movie rentals, absent of late-fees and other unnecessary costs. Blockbuster filed for bankruptcy in 2010, and now maintains only one retail location within North America (Davis & Higgins, 2013). Blockbuster is an ultimate example of an organization that was presented with opportunities for being a pioneer in e-commerce for its respective industry but failed to overcome its restraint as an organization. It was evident that the people, tasks and work processes, and company structure deflected and defeated the proposition of technological change of e-commerce.

On the opposite end of the spectrum, e-commerce has and is able to present opportunities to organizations. The internet alone, is able to enhance an organizations ability to perform necessary business functions. It improves the value of information by increasing its accessibility, storage, distribution and knowledge, make it available anywhere and at any time (Laudon, Laudon, & Brabston, 2014). Organizations who incorporate the internet are presented with an opportunity to expand on the internet’s offerings with the implementation of e-commerce as a method for facilitating business transactions. Similar to the impact Internet has on organizations, some firms who adapt to e-commerce, and replace their outdated methodologies of business operations are able to remove levels of management that are no longer required. This in turn, assists in unifying organizational culture around what is current and most viable for existing in a growing e-commerce dominated climate (Molla & Licker, 2001).

 In a closer examination of an organization, the composition of the management are tasked inferring information of situations, and make critical decisions that influence an organizations trajectory of success. In addition to dealing with external factors, managers are also tasked with changing their organizations through innovation and invention (Laudon, Laudon, & Brabston, 2014). The era of internet-oriented businesses has presented a significant amount of challenges to managers, and it has not discriminated e-commerce. Many stores prior to adapting to an e-commerce interface heavily used showcasing tangible products and goods to its customers, enabling them to highlight why their products were ideal for purchase. Managers who look to translate their products in an e-commerce setting have to alter marketing strategies to retain customer bases and convey brand uniqueness to new customers. In addition to this, e-commerce has also been associated to the prominence of cyber-fraud, meaning managers must determine how to ensure customers are secure with online-purchasing. Naturally, cyber-fraud is prevalent in e-commerce as opposed to traditional retail, and in-turn managers must create strategies to erase doubt of existing customers about the transition to e-commerce (Morrisey, 2000). Additionally, as aforementioned, e-commerce has placed bargaining power into the hands of consumers, who have a large amount of businesses of which they can choose for their purchases. Therefore, managers have to infer data of consumer trends, decide what route will influence the “ultimate” consumer into picking their platform in majority perfect competition economy and retaining them against an influx of competition. While e-commerce is effective in removing dimensions of previous organizational structures, it can also create new departments within the organization that are all essential to the running of the platform. Managers must ensure that communications and collaboration is flowing smoothly between departments like data procurement and analysis, customer service, product logistics, technology, in addition to existing ones that round out the organization. With companies become more geographically dispersed, the need for effective collaboration becomes all but more apparent as consumers effect smooth transitions when interacting with respective departments (Morrisey, 2000). E-commerce has given managers plenty of opportunities and benefits when it comes to their responsibilities. Compared to traditional markets, digital markets have proven to be extremely advantageous for managers and justify its usage. To name a select few, network effects are intensified, lower operational costs, lower menu costs, and greater price discrimination provide managers with potential cost-relief when they’re making significant decisions regarding the organization (Laudon, Laudon, & Brabston, 2014). Managers for example, may initially perceive finding data and turning it into useful out on their platform to be a challenge, but it can be incredibly beneficial if done correctly. After gathering customer data, businesses can provide delivered content that meets the customer purchasing characteristics and may best lead to future purchases and customer loyalty.

 Technology, comprised of the physical tools used to complete certain tasks, software, data management, as well as networking and telecommunications are all effected by e-commerce. E-commerce can bring technological challenges upon an organization, such as testing a firms technology infrastructure and whether it is sufficient to properly operate an e-commerce platform with as little issues as possible. As alluded to, e-commerce can present security risks for companies as well as other technical issues. Examples like server issues, dynamic IP addresses can make data privacy susceptible to being seen by unintended users putting customer and business integral information at risk. Poor security risk management can endanger the likelihood of a customer purchasing via a business’ e-commerce platform in the future (Laudon, Laudon, & Brabston, 2014). Additionally, firms may not have the essential technological assets or employees skillsets required to establish a strong e-commerce platform. This may force businesses to outsource, expand their organization and take in additional costs they did not previously have to consider under a traditional format. However, outsourcing isn’t always a challenge, and can present firms with opportunities to make difficult changes. As example is by hiring application solution providers who can take on the task of managing a firm’s IT infrastructure. This allows firms to focus on internal tasks as opposed to having to add the additional task of managing technology that may not be a strength of the company, or from hiring employees at additional costs (Morrisey, 2000). E-commerce also creates and expands upon many forms of business and is able to offer firms with many different routes in which to conduct business. For example, it enables business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C), which enables individuals who typically would not be able to conduct business for themselves to have an automated option of selling goods. The ubiquity of e-commerce technology allows businesses to be open 24/7 across time zones available internationally as opposed to operating a 9-5 day within region the business is located in. Another opportunity that is growing in prominence is personalization for consumers when shopping online. Significant innovations in personalization are seeing companies implementing tools that match user images with user’s interests to recommend products that they are more likely to purchase (Laudon, Laudon, & Brabston, 2014).

 In conclusion, e-commerce’s rise in usage and demand is unquestionable, and will no doubt continue growing exponentially as information systems continue to expand and improve. Experts predict that e-commerce sales will reach $27 trillion globally by 2020 (eMarketer, 2016). It truly represents the age of the digital firm, and the need for firms to adapt or falter in this era of technology-facilitated lifestyles. While challenging for many firms, who have to experience great organizational change, the opportunities are plentiful with the methods of converting also available.

References

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• Anvari, R. D., & Norouzi, D. (2016). The Impact of E-commerce and R&D on Economic Development in Some Selected Countries. Procedia – Social and Behavioral Sciences,229, 354-362. doi:10.1016/j.sbspro.2016.07.146
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• Laudon, K., Laudon, J., & Brabston, M. (2014). MANAGEMENT INFORMATION SYSTEMS: Managing the digital firm. S.l.: PEARSON.
• Molla, A., & Licker, P. (2004). Measuring e-Commerce Success: Applying the DeLone & McLean Information Systems Success Model. International Journal of Electronic Commerce,9(1), 31-47. doi:10.1080/10864415.2004.11044317
• Morrissey, C. A. (2017, October 29). E-Business: The New Management Challenge – A Peer-Reviewed Academic Articles | GBR. Retrieved from https://gbr.pepperdine.edu/2010/08/e-business-the-new-management-challenge/
• Newcomb, A. (2017, May 15). 20 Years After Its IPO, How Amazon Changed the Way We Shop. Retrieved from https://www.nbcnews.com/tech/tech-news/20-years-after-its-ipo-how-amazon-changed-way-we-n759546
• Staff, S. (2015, July 15). Amazon celebrates 20 years: How the online giant has changed the retail world. Retrieved from https://www.thestar.com/business/2015/07/15/amazon-              -20-years-how-the-online-giant-has-changed-the-retail-world.html Retrieved from https://www.emarketer.com/Article/Worldwide-Retail-Ecommerce-Sales-Will-Reach-1915-Trillion-This-Year/1014369