In the early 1990s global communication networks and information technology (IT), especially the Internet, have lead to a deconstruction and reconfiguration of traditional value chains1. In consequence, branch boundaries faded and new business models emerged. 2 Opportunities to expand into reshaped business segments and to develop innovative products and services in order to attract valuable customers appeared. By considering the case of Amazon. com Inc. , we will show how dedicated strategies helped to acquire market leadership in these new business environments.
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The rest of this paper is organized as follows: In section 2, we will explore value chains and actors in EC. Principles of success are discussed, and based on Porter’s Branch Structure Analysis, we will define strategic context factors and carve out value creation potentials in Electronic Markets. In section 3, we will analyze how these theoretically derived principles apply to the case of Amazon. com. Market Leadership as a Strategic Goal in Electronic Commerce 2. 1 Value Chains and Actors in EC Influenced by rapid technological progress, the terms Electronic Business (EB) and Electronic Commerce (EC) have evolved over time to include all aspects of “internetworked technologies”. 5 A canonical definition is still missing.
Today, EC is a part of EB. 6 For this paper we will adopt Wirtz’s definition: EB describes the “preparation as well as the partial, respective total support, processing and maintenance of performance exchange processes via electronic networks”. EC focuses on the transaction processes on the distribution side and their support.
The Electronic Market (EM) electronically maps information and communication processes between market players in computer networks. 9 This process is called mediation and enables the coordination of business interactions between the players in all transaction phases;10 information phase, negotiation phase and execution phase, form the transaction process (see Exhibit I). 11 EMs represent a virtualization of the location where supply and demand meet.
Characteristics of electronic markets are: (1) the “anytime and anyplace”-principle, i. e. he ubiquity of market access, which enables trading and selling without spatiotemporal restrictions;13 (2) augmented market transparency14 which results in (3) reduced transaction costs for example through search facilities;15 and (4) increased speed of transaction processes. 16 DEMAND SIDE Consumer Consumer Consumer-toConsumer g. e. small advertisements on the Internet Business Consumer-toBusiness g. e. job market with ads from jobseekers Administration Consumer-toAdministration g. e. tax handling for private individuals (income tax etc. ) SUPPLY SIDE Business Business-toConsumer g. e.
Electronic Retailing Business-toBusiness g. e. company orders via EDI from suppliers Business-toAdministration g. e. tax handling for enterprises Administr. Administration-toConsumer Administration-toBusiness Administration-toAdministration g. e. transactions between inter/national public administrations g. e. handling of support services g. e. procurement of public admini(social welfare, unemployment aid) strations via Internet.
The market players take the role of either the customer or the merchant during the transaction process18: for the demand-side as well as for the supply side, one distinguishes Consumers (abbreviated by C), Businesses (B) and governmental agencies or Administrations (A), resulting in the nine-field matrix presented in Table 1. 2. 2 Principles for Success in Electronic Commerce Similarly to the marketing principles identified by Bruhn19, Wamser emphasizes seven prerequisites for successful operation and goal-oriented design in EC:20 Market Orientation as one of the most important characteristics of modern management. 1 All activities should target the relevant market.
The particularities of electronic markets have to be captured, arising chances and upcoming risks must be assessed. 22 User Orientation as the maximization of the customers’ subjectively perceived utility. Instead of focusing on a technology driven approach, the relevant market’s needs should be targeted. 23 Nonetheless, new technologies can serve as a hint how to offer substantial surplus value to customers, for example through automated recommender systems. 24 This, in turn can translate into a competitive advantage.
