The concept of e-commerce has been confused with the e-business so it is important to distinguish the difference between the two concepts even though they are both adopted by companies for their daily operations and making revenues. E-commerce basically involves business activities that make use of the internet technologies like the World Wide Web, wireless transmissions on mobile phones. Etc. while E-business is 'the digital enabling of transactions and processes within a firm, involving information systems under the control of the firm' (Laudon & Traver, 2009).
There are basically five categories of e-commerce which are B2C, B2B, C2C, business processes and B2G. For the purpose of this essay, the B2C would be adopted because of the fictitious company that would be described. DEVANTE is a large sized retail company that is involved in fashion and it retails clothes, shoes and other accessories to men and women. The objective of this company is to deliver quality service by identifying, customizing, understanding and meeting the needs of its customers. DEVANTE operates on the high streets through its retail outlets to sell its products ('brick and mortar' business). The company intends to expand its sales by going into online business as fast as possible ('click and mortar' business) by building its own web site but it has to be done by a vendor because the company lacks the required high skilled technical staff. The idea of this is to allow its customers examine the products they want order and make purchases via the website and also to meet up with the competition just has its competitors have done. The idea of DEVANTE going into the e-commerce would be beneficial in helping to increase sales and decrease costs and also to promote its products by reaching out to a target market (Schneider, 2007).
DEVANTE has to consider the four principal and interconnected value drivers of e-business postulated by Amit & Zott if it has to create value for its products. These four drivers (novelty, lock-in, complementarities, and efficiency) are important if an organisation is to compete (shown in figure 1). DEVANTE will focus more on the efficiency source because the higher the transaction efficiency, the lower the transaction cost which makes it more valuable. In order to achieve this, DEVANTE will have to provide comprehensive and up-to-date information about its products (both existing and new/upcoming) and doing this over the internet makes it faster and convenient. Furthermore, applying complementarities would be a good strategy and this will be achieved by offering after-sales service to the customers given them the opportunity to return or exchange the products purchased at the retail outlets. The Lock-in source is to encourage the customers to engage in repeat transactions which favour strategic third parties (e.g. issuing banks or card companies). This will be achieved through loyalty programs (e.g. special offers or bonuses) and also offering transaction safety and reliability assured by highly trustworthy third parties. Finally, the novelty source will facilitate DEVANTE to create more traffic to certain appropriate participating third parties through the initiation of affiliate programs with them. These third parties will be compensated for enabling the implementation of the transactions from their own websites (Amit & Zott, 2001). These four factors will allow DEVANTE to create value from its business model and generate revenue.
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Figure 1: Sources of value creation in e-business (Amit & Zott, 2001).
Focusing on the development of this web site is beneficial for the company in terms of reduction in cost of advertising, cheaper and eases of update, lack of need to maintain a shop front, the ease of crossing geographical boundaries and the absence of middleman (Curtis & Cobham, 2005). Due to the kind of business DEVANT operates (which is selling products and services); it relies on advertising to a market place through the media (newspapers, magazines, radios, etc.)which is considerably costly and the development of the website will help reduce such cost. Similarly, product range, list of services, list of prices and any other information can easily be updated on the website and this will reduce the cost of resending catalogues and other paper-based information via post (Curtis & Cobham, 2005). This new improvement will also be convenient for the web user because they don't need to go to the company's premises to purchase and the company also does not need to maintain an expensive shop front.
In order to build an effective website, DEVANTE will have to create an attractive web presence that meets the objectives of the company. These objectives are; 1) Attracting visitors to the website, 2) Making the site interesting enough that visitors stay and explore, 3) Convincing visitors to follow the site's links to obtain information, 4) Creating an impression consistent with the company's desired image, 5) Building a trusting relationship with visitors, 6) Reinforcing positive images that the visitor might already have about the company, 7) Encouraging visitors to return to the site (Schneider, 2007).
Given the quick development of the internet, information technology is nowadays a critical business driver that has to be firmly aligned, properly managed and highly efficient. This simply implies that DEVANTE has to consider both the technology (hardware elements) and applications (software elements) infrastructures if it wants to control its e-business infrastructure. This also means that the e-business operations of the company should be able to handle more users doing more things (scalability), available 24/7 (availability), secure (security) and good management of the system, network, applications and website performance monitoring (manageability). (Phillips, 2003)
In considering the building of the website, DEVANTE will contract the job to an external web site developer because of the company's intention to quickly get into the online market and this is due to the fact that the internal development of the web site will take more time and there are risks associated with complication of features like shopping carts, credit card authentication and processing, inventory management and order processing (Laudon & Traver, 2009). Besides DEVANTE lacks the internal technical skills for building the web site and moreover the softwares going to be used by the vendor are well tested. Based on DEVANTE's goals, web site development is not a core competency, but the focus of the online business is to promote its product, increase sales and build customer relationship (Turban, King, Viehland & Lee, 2006). The limitation associated with the outsourcing of building the web site is the high cost due to the modifications that would be required to suit the company's business needs and choosing to adopt the template route would only restrict the company to the functionalities already built into the templates (Laudon & Traver, 2009).
Another factor to consider when trying going into online business is whether to outsource the hosting of the website or host in house. The option best applicable to Demola is outsourcing the hosting but with a co-location agreement. The co-location agreement requires the company to purchase or lease a Web server from the host company and the benefit of this is that Demola gets to have total control over its operation and the technical aspect and maintenance of the site is handled by the host company (Laudon & Traver, 2009). The limitation to this fact is the guarantee of the security provisions offered by the vendor.
In progression, the hardware and software required for this web development must complement each other to deliver adequate capacity at any given point in time if DEVANTE is to achieve great efficiency. These softwares will take care of issues like security, ordering processes, payment processes, supply management, inventory management and basically the general functions to run and maintain the Web site. The Web site required for this company is the transaction-process site. This is because it is a commerce site that must be accessible 24 hours a day, seven days a week and it must ensure that there are extra server computers for controlling high traffic volumes that arise intermittently. This simply implies that a fast and reliable hardware is required and the site must also run a Web and commerce software that is effective and can be easily upgraded when there is a rise in the site traffic (Schneider, 2007).
First and foremost, it is important to choose the hardware when trying to build an e-commerce site. The hardware platform has to do with all the fundamental computing equipment required to for the system to function. Having enough platform capacity to meet peak demand is favourable to DEVANTE to avoid overloading condition (Laudon & Traver, 2009). When choosing the hardware platform, it is important to consider the number of concurrent users who are probably going to visit the site, the number of pages the customers would request and the kind of service needed the nature of content presented by the site and the link between the site and telecommunications (Laudon & Traver, 2009). Based on these considerations, the Web server computers will be suitable for DEVANTE because these server computers have more memory, faster and larger hard disk drives and faster processors (Schneider, 2007). These server computers can be purchased from companies like Gateway, Sun, Hewlett Packard and Dell and they all have configuration tools on their sites that allow visitors design their own Web servers.
In the same vein, much of what is able to be done on an e-commerce site is a function of the software. The site requires e-commerce merchant software. This software offers the basic functions needed for online sales, together with online catalogue, order taking process through the online shopping cart, and online credit card processing. This software allows the Web site display the list of its products, allow shoppers reserve their preferred purchases and finally make payments for the products (Laudon & Traver, 2009). Further, DEVANTE will require the Enterprise-Class Electronic Commerce software because it operates as a large company. This software "processes payments, computes shipping and taxes, and sends a message to the fulfilment department when it must ship goods to a purchaser" (Schneider, 2007). In addition, the software also has the capacity to track the path taken by a visitor identifying the pages that were viewed, the time frame the customer stayed on the page and the order in which the pages were viewed.
In congruence with the goals of the company, the Customer Relationship Management (CRM) software fits into the criteria needed for the technology and infrastructures of DEVANTE. The goal of this software is to know the specific needs of each customer and the tailor a product to satisfy those needs in order to improve the relationship with existing customers .The rationale behind this is that customers are willing to pay more for products that specifically meet their needs. The function of this software is to gather data about individual customers and this will be of great help to the marketing especially for conducting marketing strategies to understand consumers' change of preference and responding to quickly to treat those changes (Schneider, 2007). Another advantage of the use of this software is to assist in retaining customers and reducing the need to spend money on marketing to search for new ones.
Supply Chain Management (SCM) software will also assist in planning and executing the operations involved in the organization. It helps is forecasting demands based on the information gotten from those participating in the supply chain. The use of the SCM would also benefit the company in the areas of inventory and transportation management (Schneider, 2007). Inventory management is important for every organization because it helps in the smooth running of operations and also helps to improve efficiency which would give any company a good competitive edge.
As a result of the dynamic change and complexity of technology, opportunity for invasion and attack has increased. The issue of security is now a major concern for company's running e-commerce sites and also the users (Turban et.al, 2006). Today people don't feel comfortable shopping online because they are worried about been vulnerable to cyber fraud. DEVANTE should be able to assure its customers of high level of security by meeting the following requirements for secure e-commerce. Prevention of unauthorized persons from obtaining certain information like card numbers (secrecy), enclose information in a digital envelope for computers to automatically spot messages that have been altered (integrity), provision of delivery assurance (availability), provision of undeniable proof of messages between the origin and recipient (nonrepudiation), securely identify clients and servers with digital certificates and signatures (authentication). All these requirements have to be met to have a secure e-commerce website (Schneider, 2007).
The limitation associated with the hardware and software application will be high expenses reason been that DEVANTE does not possess internal technical staff to maintain and sustain the operations of the site. The company is left with no choice but to outsource. Another limitation of the technology involved has to do with security because security is not 100% guaranteed and it can be broken if enough resources are used (Laudon & Traver, 2009).
Consequently, the creating of DEVANTE's website would have implications on the management activities. It would address issues of security, implementation and sustenance of the activities of the e-commerce operations which would have an effect on the Human resource (HR) department as regards to staffing.
As regards to security, DEVANTE would have to monitor its e-commerce operations by its own personnel due to the fact that the development of the website was outsourced to an outside consultant. The vendor's security policies and practices are important to DEVANTE because the company's information on customers, products, pricing and other data will be placed in the hands of the service provider (Schneider, 2007).
More also, the HR department would play a major role as regards to the staffing procedure considering the nature of the e-commerce operation regardless of the fact that it outsourced for the design of the website. The major areas of staffing that the HR department will consider for the success of the e-commerce operation include; business managers, applications specialists, customer service representative, network operators, database administrators (Schneider, 2007).
The function of the business manager is to make sure that the activities of the e-commerce operation is implemented and also developing specific proposals for plan modifications and supplementary funding presented to the top management if need be for review of the plan. Similarly, the application specialist maintains the softwares for running the e-commerce activities. For example, maintaining accounting, human resources, and logistic softwares and also softwares to handle catalogues, payment processing and so on. In addition, the customer service representative will handle the customer relationship function by designing and implementing customer relationship management activities as regards to the e-commerce operation so as to maintain a good customer relationship which is in line with the goal of the company. In addition to these functions, the network operator will focus on load estimation and load monitoring, resolving network problems as they arise, designing and implementing fault-resistant technologies, and managing any network operations that are outsourced to service providers. Finally, the use of a database administrator is essential to the company. The database administrator will deal with issues that have to do with transaction processing, order entry, inquiry management and shipment logistics (Schneider, 2007).
In conclusion, the business model, the technology required and the management activities for DEVANTE to start up its Web site has been discussed and various limitations that would hinder the future running of this operation have also been spotted.
It is recommended that more emphasis should be on recruiting highly skilled internal technical staff that can maintain the e-commerce system over the long run. This move will help in reducing the level of outsourcing and will also give DEVANTE full control of its database and operations. In addition, intensive investment should be put into security so as to prevent vulnerability from viruses and hackers.
