Innovation in Business: Ecommerce

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    Management
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    Assignment
  • Level:
    Undergraduate
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3Innovation in Business

Innovation in Business: Ecommerce

Innovation in Business: Ecommerce

Introduction

The management processes and activities of organisations have evolved significantly over the past few decades. Innovation, alongside creativity, has become the current critical skills that almost all organisations are employing towards the pursuit of success. The developed economies also rely on the abilities to improve the usefulness and values of services and products through innovations and creativity. Therefore, innovation is considered one of the key factors towards the success of an organisation. As competition nationally and internationally keep on widening, different firms have established new ideas to keep their operations, products, and services fresh on the selection boards of their intended consumers. The majority of business professionals and researchers agree that innovation is critical in the contemporary markets where quality and the ability to remain competitive are vital. According to Brooks (2013), most of the recent studies have revealed that the success of an organisation depends majorly, if not entirely, on its ability to create and implement new ideas. This paper explores the important milestones and impacts of ecommerce on an organisation. It also outlines the recommendations for successful application and future development of ecommerce an innovation in business.

Ecommerce

Electronic commerce is defined as any business transaction or activity that is conducted through the internet. El Gawady (2005) defines it as a way of doing business through the internet based on the electronic processing and transmission of business data and the use of technology to conduct financial transactions. Swass (2003) describes the e-commerce as the innovation that employ the use of internet and as well as other digital tools to convey messages that enable successful and effective conduction of business activities.

It has been over a decade now since the wide application of ecommerce in business. This innovation has been possible following the invention of World Wide Web and field browsers combined with the capabilities of the internet that already existed to offers platform for the generation of new ideas (Swass 2003; Mohamed et al. 2008; El Gawady 2005). This innovated business makes use of various online business market models. One of the electronic commerce market models is business-to-business, also known as B2B. This model refers to the ecommerce activities and processes that happen between businesses (Tan et al. 2007; Chan & Swatman 2004). According to Tan et al. (2007), business-to-business one of the common electronic commerce models that various organisations employ, especially in the developing countries such as China. This model was adopted in China in the 1993 when the foreign business in the country started to use EDI to enhance efficiency in trading processes. The innovation then later took a new phase in 1997 when many organisations started using internet-based ecommerce.

The other ecommerce market models include business-to-customer (B2C), customer-to-business (C2B) and customer-to-customer (C2C). El Gawady (2005) explains that B2C refers to the electronic business activities that are customer-oriented rather than the organisation. While the C2B employs the reversed prising models where a customer determines the prices of the products of services that the organisations offer, C2C ecommerce models describes all the activities that uses auction style consisting of «person-to-person» transaction that does not consider the organisation completely (Gadawy n.d., p.3). Therefore, ecommerce is a type of innovation in business that impacts the processes of conducting business and, hence, simplifies trade.

Milestones of Ecommerce

The history of ecommerce as a type of innovation in business has had various milestones. Since the concept of ecommerce mainly concerns the business activities and processes that occur electronically; it implies buying and selling products and services online. Therefore, this innovation in business is only possible if there are tools that enable online activities and provide a platform on which people can communicate and conduct businesses. The leaders in this type of innovation have made good use of the following milestones to perfect their organisational business operations.

  1. World Wide Web (WWW)

The commercial lucrative characteristic of B2B business model emerged and rapidly grew due to the introduction of WWW. According to the Centre for Education and Research in Retailing (CERR) (n.d.) and Augment (n.d.), the National Science Foundation (NFS) introduced a new phase of business following the invention of the WWW, which later enabled and facilitated online businesses. Business transactions between organisations and their consumers become relatively easy, and trade was simplified since the customers do not have to visit the stores to conduct transactions. Companies such as Amazon became the pioneers of the innovated business.

  1. Payment gateways

Decades ago, payment processing was a major challenge and was overlooked until the establishment of facilitators such as Square and PayPal into the business industry. The ability to process payments through the internet following the introduction of payment gateways was a major breakthrough milestone for the development of ecommerce. Currently, people can make payment without necessarily having to visit the bank as well as the stores. Through payment processing ways, customers can just instruct the back to make payment on their behalf through the use of credit and debit cards (Augment n.d.; Mohamed 2008; Gunasekaran 2002). Therefore, payment processing has been one of the major milestones of ecommerce.

  1. The widespread introduction of smartphones

The introduction of smartphones is also another milestone that has enabled the successful ecommerce business innovation. Many smartphones allow browsing the internet and downloading applications that people use to buy and sell various products. According to Augment (n.d.), Apple Incorporations launched a smartphone in 2007 that allows downloads of business apps from their iOS store. Through such services amongst many other features of smartphones, mobile retail has trended the business industry with ecommerce being one of its major success factors. Therefore, the ability to establish communication and transact over the internet through the introduction the WWW, payment processing ways, and smartphones, amongst others, have been the major milestones for this type of innovation.

Impacts and Recommendations

Ecommerce as a type of process innovation in business has impacted organisations in various ways. Besides the simplified trade services, electronic commerce has also provided new, more cost-effective and time-efficient ways of providing services to customers (Gunasekaran et al. 2002). Focusing on the marketing sector, this innovation has provided a vast range of benefits to organisations. Through the use of the internet to transact business, direct savings due to the reduced information delivery cost, reduced cycle time, improved customer through readily available information online, amongst many others, are the impacts of ecommerce on organisational marketing (Shepherd & Pope n.d.; Marri et al. 2006; Zou 2006). Besides the impact of the innovation on marketing abilities of companies, production, design, and purchases areas have also experienced the benefits of ecommerce. Gunasekaran et al. (2002) explain that the innovation has enhanced the ways that organisations employ to make purchases through B2B models and how they produce and deliver their products and services to customers. Therefore, this type of innovation has resulted in reduced cost of operations and has improved quality of business as well customer services. Ecommerce has, therefore, enhanced the processes and mechanisms of supply chain operations and management.

However, besides the challenges facing the successful adoption and application of ecommerce in an organisation, security, privacy, and stiff market competition are some of the hindrance to the success and future development of the innovation. El Gawady (2005), Molla & Licker (2001) and Love et al. (2001) argue that cybercrimes and the emergence of many players in the electronic business market have caused security and privacy issues, alongside the stiff competition, which hinders the success of ecommerce as an innovation in business. Therefore, it is imperative to consider the following recommendations for effective application and future development of this type of innovation.

  • The management of organisations should embrace this innovation. This decision is likely to reduce the resistance from the management and enhance adoption process and its development.

  • Involve stakeholders in the implementation of this innovation. This strategy prevents the cases of tight margins, which makes it difficult to install IT infrastructure to facilitate the development of the ecommerce.

  • IT awareness. Organisations should be aware of the issue that are related to the success of this innovation to prevent security and privacy threats.

Conclusion

Innovation is the trending phase in businesses currently. Through innovation and creativity, organisations develop new ideas and ways of meeting the expectations of their consumers. Amongst the innovation, ecommerce is already thriving globally through the assistance from various milestones. The impacts of this type of innovation on organisations are significant. However, despite the benefits, organisations still face challenges that only strategic amendments can resolve to ensure the future development of ecommerce.

Reference List

Augment, n.d. The biggest milestones of ecommerce history. Available from http://www.augment.com/blog/biggest-milestones-ecommerce-history/

Brooks, C, 2013. Innovation: Key to successful business. Business News Daily. Available from http://www.businessnewsdaily.com/5167-innovation.html

Centre of Education and Research in Retailing (CERR), n.d. A timeline of the internet and e-retailing: Milestones of influence and concurrent events. Kelly School of Business. Available from https://kelley.iu.edu/CERR/timeline/print/page14868.html

Chan, C. & Swatman, PMC, 2004. B2B e-commerce of growth: the strategic imperatives. Proceedings of the 37th Hawaii International Conference on System Science, 2004.

El Gawady, ZM, 2005. The impact of e-commerce on developed and developing countries case studies: Egypt and United States. International Conference of Globalisation, Technology and Sustainable Development, United Arab Emirates University, World Association for Sustainable Development, Al Ain, UAE, November 2005.

Gunasekaran, A, Marri, HB, McGaughey, R.E. & Nebhwani, MD, 2002. E-commerce and its impacts on operations management. International Journal of Production, Vol.75, 185-197.

Love, PED, Irani, Z, Cheng, EWL, Li, H., & Tse, RYC, 2001. An empirical analysis of barriers to implementing e-commerce in small-medium sized construction contractors in the state of Victoria, Australia. Construction Innovation, Vol. 1, 31-41.

Marri, HB, Irani, Z. & Gunasekeran, A. 2006. E-commerce and its impacts on logistic management: A state of Art. European and Mediterranean Conference on Information Systems (EMCTS) July 2006, Costa Blanca, Alicante, Spain.

Mohamed, IS, Marthandan, G, Daud, M.N. & Omar, N. 2008. E-commerce and value creation: Empirical evidence in Malaysia tourism sector. EABR & TLC Conference Proceedings, Rothenburg, Germany.

Molla, A. & Licker, P, 2001. E-commerce system success: An attempt to extend and specify the Delone and Maclean model of IS success. Journal of Electronic Commerce Research, Vol. 2, No. 4, 131-141.

Shepherd, I.J. & Pope, D, n.d. The impacts of e-commerce on book wholesale operations. Journal of Business Cases and Applications.

Tan, J, Tyler, K. & Manica, A, 2007. Business-to-business of ecommerce in China. Information & Management, Vol. 44, 332-351.

Zou, PXW, 2006. Effective applications of e-commerce technologies in construction supply chain: current practices and future improvement. IT Com, Vol. 11, 127-147.

Zwass, V, 2003. Electronic commerce and organisational innovation: Aspects and opportunities. International Journal of Electronic Commerce, Vol. 7, No. 3, 7-37.