Week 3 - How E-commerce can reduce cycle time, improve employees' empowerment and facilitate customer support

E-commerce is buying and selling of product or services made over the electronic system such as internet and computer networks. E-commerce is getting common, when computer started to enter to our everyday life such as making payment over e-banking and shopping over internet. With the appearance of internet, e-commerce enable businesses reduce cycle time, improve employees’ empowerment and facilitate customer support.

Cycle time is defined as the amount of time needed to complete a transaction which consist of receiving an order from customer preparing invoices or receipts , preparing product, delivering process and transaction. Normally, cycle time is a recurring process. Businesses trying to cycle time to make revenue generated faster. It can be reduce by eliminate the non-value add activities such as product repair, machine set-up, inspection, testing and schedule delays. In e-commerce, paperless environment has speed up the cycle time normally taken for a traditional transaction. By using Electronic Data Interchange (EDI), cycle time could be reduced in the part of reimbursement of stock. When the stock level is low in the retailer’s warehouse, without order of retailer, the supplier able to view stock status of retailer and deliver stock to retailer’s warehouse. A good example will be Finney Automotive Inc. in Cadiz, Ohio. Eric Sheets, the office manager of Finney Automotive said they able to reduce cycle times and better overall efficiency on the shop floor via e-commerce by get connected to their supplier. They get their damaged rental vehicles back on the road and generating revenue. It’s proven that with mean of e-commerce, transaction done faster for an average of one full day.

Employees’ empowerment refers to the authority given to make decision without consulting the manager. With the new way of running business, e-commerce, employees must respond promptly to the inquiry of customers, otherwise, the customers will shift to others competitors. Particular in customer service, resolving complaint is crucial to businesses to retain customer and complete sales. A good example will be Ford Motor Co. It had just been awarded ‘Best internal corporate website ever’ in year 2001. Its intranet support over 175,000 users across 92 countries, which also allow employee to customize their site and view to get information and tools they need for their job.

Lastly, how exactly e-commerce facilitate customer support? With the features of websites, businesses can operate 24 hours 7 days non-stop throughout the year. Customers can reach a seller whenever wherever they are via internet. Without the human facilitation, businesses can list frequently asked questions by customers together with the appropriate answers. This can save time as similar questions won’t be answered over and over. When customer service personnel not around, email support is useful whenever customers have problems. If the site is very large and complicated, putting an internal search engine will able to assist customers to find what they want without having to navigate their way through the site. For example, Ebay and Amazon.

Week 3 - An example of an E-Commerce failure and its causes

The example of an E-Commerce failure that we choose is the DrKoop.com.

DrKoop.com was launched in July 1998 by Donald W. Hackett and John F. Zaccaro with $6 million from Superior Consultant Company Inc., a healthcare IT firm in Bloomfield, Michigan. Drkoop.com was a leading global healthcare Network providing measurable value to individuals worldwide. Its mission was to empower consumers with the information and resources they need to become active participants in the management of their own health. He is unlike most dot-com celebrities of the era; Koop owned a famous face before co-founding an Internet company and, indeed, before the Web even existed. As President Ronald Reagan’s surgeon general from 1981 to 1989, Koop and his iconic beard led a well-known anti-smoking campaign.

During the 1998 which in the operating revenues, It notched just $43,000, but that didn’t keep the company from going public in June 1999 and achieving, briefly, a peak market with capitalization of $1 billion. Subsequently, DrKoop.com’s business plan rested on advertising, and in 1999 there weren’t enough healthcare advertisers to support it and the many other healthcare dot-coms trolling for ad buyers.

However, the DrKoop.com fail to achieve complete success and are not able to face the challenges in market via Internet. Due to their unimpressive and non-persuaded marketing capacity as well as other weaknesses, they became bankrupt and failed to achieve success. Later, DrKoop.com, the medical information Web site that was once valued at over $1 billion, was sold to a Florida company for $186,000 in cash.

Moreover, their shares, sold to the public in June 1999, rose as high as $45.75 three years ago, before falling with the collapse of the Internet stock bubble. Andrew Zipern (NYT)

There are several points that DrKoop.com fail:

· E-commerce has perceived by the management as important to achieve the goals of the company. However, the DrKoop.com stills an unrealized goal of the health-care industry.

· The Company sank into a cash crisis for the trademark, website and others.

· It is difficult to build the trust and brand value associated with his name to the consumer via internet. Moreover, it is related the health, so the consumer need more approval and confidence.

· Drkoop.com also is the target of several class-action lawsuits.

· The DrKoop.com project has to be building around an important competence of the company.

Week 3 - History and Evolution of E-commerce

Electronic commerce or more known as E-commerce or eCommerce bring the meaning as selling and buying products or services through electronic systems such as internet or other computer network. The definition of e-commerce is different compare its first introduce and now. At the beginning of the introduction, the definition of e-commerce meant the process of execution of commercial transactions electronically with the help of leading technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These two technologies were introduced in the late of 1970s, which allow businesses to send commercial documents like purchase orders or invoice electronically. In 1980s, the introduction of credit cards, automated teller machine (ATM), and telephone banking are a form of e-commerce. Another form of e-commerce was the airline reservation system introduced by Sabre in USA and Travicom in UK.

Internet became popular in 1994 but it takes about four years to develop security protocol (for example, HTTP) and DSL which allow rapid access and persistent connection to the internet. In the year 2000, many organizations in the United States and Western Europe put their business on the internet. At this time, the meaning of e-commerce was changed to the definition we know today. Although there are company that collapse but there are some companies that recognize the advantage of e-commerce and continue invest on the application transferring traditional selling method to virtue selling method. For example two supermarket chains, Albertsons and Safeway, used e-commerce to enable their customer to buy groceries online. At the end of 2001, it is stated that the largest form of e-commerce transaction, Business-to-business (B2B) model had around $700 billion in transactions. E-commerce sales continue to grow and many creative and innovative ways of doing business had been developed till nowadays.

Week3 - sucessful e-commerce and its causes

An example of successful E-Commerce company is Dell Computer. Dell Computer was founded by Michael Dell in 1984, while he was a student at the University. From the beginning, Dell operated on the direct sales model, taking orders over the phone and building PCs to the customers’ specifications. Dell was an early and enthusiastic convert to the Internet, creating its first web site in 1994 and moving many of its business activities to the Internet ahead of its competitors. Dell Computer focused on the relationship with the customer. With its build-to-order model, Dell viewed final assembly as a core competency which was kept in house, but it outsourced components, pre-assembly and logistics. Service and support were also viewed as a key part of relationship selling, so Dell kept control of the function but outsourced some service delivery functions to business partners. IT could allow Dell to achieve coordination of the system and keep its control over the customer relationship. To do so, Dell focused on using IT and the Internet to improve internal processes such as ordering, assembly, delivery and support, to coordinate its broader value web, and to enhance the customer relationship. Thus, Dell’s ability to extend its successful IT and Internet-enabled business model beyond its core market of large U.S.