Research Proposal on "Financial E-Commerce"

Research Proposal 16 pages (4332 words) Sources: 6 Style: MLA

[EXCERPT] . . . .

e-Commerce

The Impact of e-Commerce on Mass Customization and Revenue Growth

The progression of e-commerce continues to result in more innovative concepts, frameworks, and models of process integration and improvement being developed. One of the most fascinating is the ability to use e-commerce as the basis for fulfilling unique, one-of-a-kind customer requirements for products through mass customization while at the same time attaining profitability across an entire organization. For e-commerce to make significant contributions to interprocess efficiencies there needs to be integration at the system and process levels. The success of e-commerce systems and their accompanying strategies also rely directly on the extent of knowledge management integration as well (Helms, Ahmadi, Jih, Ettkin, 351). As e-commerce strategies that include mass customization and product configurators increase in use and popularity companies are turning to data mining of their website traffic by product to better align product configuration options to customer's interests (Song, Shepperd, 622). This further underscores how critical it is to have a high degree of system and process integration throughout any e-commerce system, as it enables a much greater level of focus to the specific services, products and options for configuration offered. Product configuration is an enterprise-wide strategy that relies on the integration of e-commerce systems, processes and strategies with the enterprise-wide systems including Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), pricing, logistics and service (Aldanondo, Vareilles (et.al). When e-commerce is combined with mass customization and product configuration, supply chains benefit in the form of increased visibility of unique, customized orders (Sharif, Irani, Lloyd, 1239, 40). This is at times called demand visibility and has been shown to increase the efficiency and profitability of an organization's supply chain overall (1241).

The intent of this paper is to evaluate how e-commerce has enabled mass customization strategies, including product configuration and quote-to-order, to contribute a higher percentage of profitable growth to the companies relying on them. Creating an e-commerce strategy based on mass customization leads to significant gains in operational performance within companies that choose this strategy. In addition, by adding in product configuration and quote-to-order strategies to their e-commerce systems and go-to-market strategies, companies have been able to attract new customers they otherwise would not have. The intent of this paper is to evaluate and provide insights into how e-commerce systems and their resulting strategies are augmented and strengthened by mass customization's most prevalent implementations, product configuration and quote-to-order.

Introduction

To the early adopters of e-commerce, mass customization represented an opportunity to take their unique, highly differentiated business models and propagate them globally. From PC manufacturers including Dell, Gateway, IBM and others to consumer good producers including Nike with their NikeID project, to financial services firms (Turowski, 69) mass customization allowed companies to sell online while also tailoring products and services to the unique needs of their customers. Across these industries the lessons learned from using e-commerce as the strategic platform for launching mass customization strategies online globally form the foundation of this analysis. Mass customization as a strategic initiative has been implemented using the product configuration, quote-to-order and guided selling Web-based applications and techniques as defined in this paper. When these e-commerce strategies were combined with analytics and an analysis of clickstream data (Song, Shepperd, 622) it was possible to personalize the shopping experience online with cross-sell and up-sell strategies that often resulted in incremental sales over the specific item being customized and ordered online (Dellaert, Dabholkar, 43). In conjunction with this lesson learned as the recognition of how critical it is to devise e-commerce system integration strategies that could support multiple channels through multi-channel management portals and websites. In order for these e-commerce system integration strategies to be successful it was critical that Web-based e-commerce systems need to be integrated into legacy pricing, manufacturing, Enterprise Resource Planning (ERP), and customer service systems to be able to scale over the breadth of transaction complexities on the one hand, and the sheer number of transactions globally occurring simultaneously on the other. Scalability of e-commerce systems has continually been a counterbalancing factor relative to increased functionality in the applications and e-commerce platforms themselves.

Developments in e-Commerce Systems as They Relate to Mass

Customization

The catalyst of e-commerce revenue in the context of mass customization and product configuration is transitioning away from purely a product focus to one based on delivering experiences and services as well (Pine, Gilmore, et.al). At the forefront of this shift is the development of more personalized shopping experiences and services online through more integrated e-commerce systems. As e-commerce sites transition away from being purely focused on product catalogs and enabling transactions to delivering experiences the need for fundamentally re-ordering mass customization to be more agile as a process is also critical (Salvador, de Holan, Piller, 71). The ability of companies to create e-commerce strategies that deliver experiences have also been shown to increase profitability over time as well (Dellaert, Dabholkar, 43). Factors that contribute to the growth of profitability based on e-commerce strategies that deliver experiences over merely transactions are the increase in customer loyalty, the support of a greater breadth of product lines, and increased process improvement over time.

All of these factors of profitability emanating from successful e-commerce systems are also directly attributable to how effective companies are at understanding the many variations in how their customers want to buy as well. The shift by customers as to their preferences for purchasing products or obtaining services through one channel or another is continually in a state of flux. Depending on the specific products, their lifecycles, and the experiences they deliver, the shift in channels relied on for purchasing them will shift accordingly. This is a critical point for any e-commerce strategist to keep in mind, as their served customers are continually shifting and changing their approaches to purchasing products or services. In fact part of the process of staying in alignment with customers' needs must begin with a thorough focus on how to best listen to them over time.

The growth of social networking is proving to be a catalyst for giving e-commerce strategists and their companies a better opportunity to stay in touch with their customers' changing needs and preferences over time. The growth of Web 2.0 technologies has been graphically represented by Tim O'Reilly, founder and CEO of O'Reilly Media. These Web 2.0 technologies are communicative and conversational in nature which is fundamentally re-ordering how e-commerce strategies are planned, implemented and evaluated. In effect Web 2.0 technologies are making it possible for e-commerce strategies and marketers to have a much more clear, concise and succinct conversation with customers as it relates to their present and future needs in online e-commerce. The use of Web 2.0 technologies is also serving as the basis for more effectively listening to customers' needs as it relates to the development of product configuration strategies as well.

The growth of Web 2.0 technologies defined by O'Reilly (2005) is re-ordering the dynamics of e-commerce globally. Figure 1 is the map O'Reilly and Battelle created showing how both market and user dynamics are defining Web 2.0 and social networking (O'Reilly, 2005. et.al.). Table 1 provides an analysis of each of the technologies that comprise Web 2.0 and serve as the foundation of social networking.

Figure 1: Web 2.0 Explained

Inherent in the user dynamics of the map completed by O'Reilly and Battelle are the theoretical foundations of how e-commerce is becoming more experiential (Pine, Gilmore, 37, 38) in addition to more socially oriented and interactive, and more communicative and collaborative in nature. There is a rapidly evolving level of transparency, trust and interactivity with e-commerce customers than has been the case in the past which is attributable directly to the en masse adoption of social networking as a means to communicate with them.

Table 1: Web 2.0 Applications

Applications

Descriptions

Blogs

Online diary or journal entry on the Internet, which primarily supports text, photo (photoblog), video (vlog), and audio (podcast) formats

• Google, AOL, and Yahoo offer free blogging platforms

Mashup

• Web service that gathers related content from more than one source

• IBM's mashup applications enable project managers to match team resources with a map to identify the geographical locations of the resources

Peer-to-Peer Networking

• A technique for effectively sharing music, audio, and text files

• Napster and Gnutella are popular peer-to-peer networks

Real Simple Syndication (RSS)

• Feed-based technology that, with the aid of an RSS reader, enables users to subscribe to newly released content such as text, Web pages, sound files, photos, and video

• RSS feed may contain the full content, for example a podcast, or simply a link to the content

Social Media

• Encompasses all online tools (blogs, podcasts, Wikis, social networks, vlogs) and Web sites enabling people to share content, such as text, audio, picture s, and videos

• Popular social media sites include YouTube (video) and Flickr (photos)

Social Networking

• Web sites that permit users to create online networks and communicate with friends and colleagues

• Social networking sites… READ MORE

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