E-Business Systems and
Competitive Advantage
To have a successful e-business, an organization needs to
use efficient and effective e-business systems. E-business is using technology
to improve and support business processes (What is eBusiness?). It is a term
that refers to information technologies, the internet, and other networks used
by organizations to support e-commerce, enterprise communications and
collaboration, and Web-enabled business processes, both within a networked
enterprise and with customers and business partners (O’Brien & Marakas, 2011).
E-business systems are the combination of technologies, equipment, and tools
that businesses use to conduct business via the Internet, intranet, or other
networks to help them connect with customers, process orders, and manage
information (Balle). These systems are numerous and can give a company a
competitive advantage.
According
to Louise Balle, the base of an e-business system is formed by a website
(domain and web hosting account), email account (which commonly comes with the
web hosting account), and an Internet connection, which together allow for the
integration of all other e-business tools.
These tools enable users to connect to the web and publish information. If managed effectively, this information can
influence the competitive position of a company
The ways companies use
e-business systems to influence competitive position.
E-business
has changed many of the dynamics of how businesses are run in the United
States. There are numerous uses for
e-business within any industry and very often companies are engaging themselves
in more than one use. The widespread use
of e-commerce has shifted the competitive position of many companies and it
continues to do so based on the ways the company uses e-business systems. The increase in e-business has been fueled by
the growing availability no matter where you are. E-business is no longer based on appealing to
the customer on their one home desktop.
Now e-business has the ability to target people via their mobile devices
using digital tools, which means, for many people, one can appeal to customers
on multiple streams throughout the day. According
to a study presented by RetailingToday, over 81% of shoppers research online
before they make a purchase. This alone
gives businesses another chance to appeal and try to gain the business of an
undecided consumer. The graphic below
from GE shows how customers are researching before they buy.
This means that companies can gain a competitive advantage
over their competitors by having a superior website with the information that
the consumers want. Also, within this,
the companies need to advertise on the internet and with search engines so that
the customers can find their website.
This study found that 60% of consumers started off their research on a
search engine. Meaning, if a company’s
site was not being promoted on the search engine then it could be further down
the list of sites and may never be seen by the consumer (RetailingToday).
Business to consumer (or B2C) is only one of the types of
e-business. The other two are business
to business (B2B) and business to government (B2G). The chart below shows a breakdown of the
three.
(Source: InnovationPEI)
However, there are other resources that point that there
being many more categories in the breakdown of e-business. In his case study, Dien Phan believes that
based on the various types of trading partners, there are more categories like:
consumer to business, consumer to consumer, people to people, government to
citizen, citizen to government, exchange to exchange, and intra-business.
The influence on competitive advantages by using e-business
systems come from three things: efficiency, marketing, and ease of access. This increase in efficiency is because, by
using e-business, the user can save money on sales expenses, marketing, buying
from producers, and communication.
Within marketing, e-business systems allow for advertising at very low
prices compared to the possible views one can gain from each advertisement they
put out. With ease of access, this
allows the customer to find the company and then have a chance to actually look
through the items available from said company.
For users that incorporate an online store, they are also allowing the
customers to browse their items and buy them without the consumer having to
spend money on travel and without the business having to spend as much money on
salary expenses. This ease of access can
also increase the sales within a company by not only catering to current
customers but by providing the needed services to new customers as well.
No matter which position one is as a trading partner, the
most effective strategy will have the strongest competitive influence from
e-business systems (Porter. Harvard
Business Review). InnovationPEI gives their top ten
benefits gained by investing in e-business.
They believe it can make the business more efficient, reduce costs,
allow for competition with larger competitors, enables quicker distribution of
information, enhances availability of customer service, helps the company reach
new markets, enables the company to improve marketing strategies, can increase
sales, help find better business deals, and the number one benefit being that
businesses cannot afford not to. With
the low costs of having simple e-business systems and the majority of customers
that rely on e-business as well as saving money on business deals, it makes for
a bad outlook for companies without this amenity for themselves and their
customers. On the other side there are
costs associated with implementing e-business systems (Shin, Pace University). The following is a chart from InnovationPEI that outlines the costs of
certain e-business systems:
(Source: InnovationPEI)
This simply shows that setting up e-business systems can
often times cost $0 down and so it is not worth the missed opportunities by not
being represented on the internet. With
introductory prices this low, the company cannot help but jump into the
e-business game. From there, the
influence of e-business on their competitive advantages revolves closely around
the amount they decide to spend on their e-business systems.
Amazon.com – A Real Life Example
Amazon.com
is perhaps one of the most recognizable examples of an e-business engaging
strictly in e-commerce. This company
began in the 1990s as an online bookstore when creator Jeff Bezos recognized
the consumer need for such a resource, and converted his garage into a
warehouse to begin selling books from his home. As books began to sell, he
slowly began incorporating more and more products, allowing his company to
evolve with the needs and demands of consumers. Amazon has grown into one of the
largest e-businesses available to consumers today.
Amazon
has also helped itself to expand by offering incentives to its customers. For
example, consumers are able to sign up for Amazon Prime, which charges a yearly
fee for membership. With this membership, customers are eligible for free two
day shipping on all orders for the entire year, along with Amazon’s digital
media library, which is similar to Netflix or Hulu. Amazon is also a leader in
the eBook revolution, with the Kindle being a top selection among consumers. By
offering such a wide array of products, along with incentives for shopping,
Amazon has secured its position as a leader in the e-commerce world.
An
example of Amazon’s Business Model can be viewed below:
Amazon
offers the value of price and convenience in all of its product categories,
allowing it to extend itself into new markets and continuously extend its
customer relationships. The company has dominated online retail with a fairly
standard traditional retail
business model over the internet, dominating the market with its buying power
and financial resources. This supremacy will likely continue well into the
future as Amazon continues to explore new product and service categories
constantly. The company has developed clear expertise in e-commerce innovation.
One of the most interesting things about the Amazon business model is that it
is able to thrive in this new digital era by its expert execution of a more
traditional business model, rather than trying to invent a totally new one from
scratch.
Amazon
employs all kinds of e-business systems.
One of the best e-business systems Amazon uses is its customer tracking
system. Amazon makes good use of its
homepage, where it features special offers and products, as well as
recommendations that are all catered to the user. This is an embedded marketing
technique that uses cookies on the consumer’s hard drive to keep track of the
user’s interests (Layton). Another
system Amazon uses Amazon Light, which is a “mini-Amazons,” or a satellite
sites that does new things with Amazon data and sends people to the main site
when they are ready to make a purchase (Layton). Additionally, Amazon has a new project called
the Mechanical Turk project, which seeks to combine community, technology, and
compensation, allowing software and Web developers to post tasks they need help
with. Whoever completes this task
successfully gets s small amount of money and Amazon gets a commission on each
completed transaction (Layton).
There
are many e-business systems used by successful businesses. Each one can help the business gain a
competitive advantage over other businesses in the industry. Amazon.com is a great example of an
e-business that is constantly revolutionizing its e-business systems to stay
competitive.
References
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Business. Retrieved June 30, 2014, from http://smallbusiness.chron.com/e-business-systems-5270.html
Cosper,
A. (2014). Description of How Amazon Uses EBusiness and e Commerce for B2B and
B2C. Retrieved on June 29, 2014 from http://smallbusiness.chron.com/description-amazon-uses-ebusiness-ecommerce-b2b-b2c-36453.html
Ecommerce-Digest.com
(2012). Amazon, Inc. Retrieved on June 29, 2014 from http://www.ecommerce-digest.com/amazon-case-study.html
InnovationPEI. “How You Can Profit from
E-Business.” Accessed on June 30, 2014 http://www.gov.pe.ca/photos/original/IPEI_ebiz_book.pdf.
Layton, J. (n.d.). How Amazon Works. . Retrieved January 30,
2014, from http://money.howstuffworks.com/amazon3.htm
Noren,
E. (July 8, 2013). Analysis of the Amazon Business Model. Retrieved on June 29,
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O'Brien,
J., & Marakas, G. (2011). e-Business Systems. Management Informtion Systems
(272). New York: McGraw-Hill/Irwin.
Phan, Dien D.
“E-Business Development for Competitive Advantages: a Case Study”. Elsevier:
Information and Management. Accessed on
June 30, 2014 http://staffweb.hkbu.edu.hk/vwschow/Case-study.pdf.
Porter, Michael E.
“Strategy and the Internet.” Harvard Business Review. Accessed on June 30, 2014 http://hbr.org/2001/03/strategy-and-the-internet/ar/1.
Retailing Today. “Study: 81%
Research Online Before Making Big Purchases.”
Accessed on June 30, 2014 http://www.retailingtoday.com/article/study-81-research-online-making-big-purchases.
Shin, Namchul. “Strategies for Competitive Advantage in
Electronic Commerce.” Pace University. Accessed on June 30, 2014 http://www.csulb.edu/web/journals/jecr/issues/20014/paper4.pdf.
What is
eBusiness? (n.d.). Northern Territory Government Department of Business.
Retrieved June 30, 2014, from http://www.dob.nt.gov.au/business/starting-business/ebusiness/pages/ebusiness.aspx