Article for Innsbrook Today, October 1999 Edition

The Business Impact of E-Commerce
Today’s e-commerce technology revolutionizes traditional business processes.

By Brian Browning

E-commerce. You hear about it everywhere – the news, on television and in the media. But what exactly is e-commerce? Put simply, the term “e-commerce” refers to taking the traditional business processes that focus on sales transactions and making them available to customers and business partners through an Internet-based interface. In order to gain a better understanding of what e-commerce is, we will look at how e-commerce technology is revolutionizing the way companies conduct business with their customers and business partners.

Business – to – Customer Transactions
From the perspective of business – to – customer transactions, e-commerce technology benefits everyone by adding value to the typical sales transaction, primarily by enhancing the traditional sales process with efficient automation. The main benefit afforded to customers of e-commerce web sites is convenience. They are able to shop online catalogs and research products with independent online resources. They have access to special Internet-only deals and low pricing. And of course, they have the ability to instantly purchase their products online and to track the order as it is delivered to their door.

The main advantage afforded to companies employing e-commerce technology is efficiency. Companies that integrate their e-commerce abilities with a personalized interface to sell to customers have the benefit of real-time information about what products or services their customers are interested in. Using this information, they are better able to target the right products, pricing strategy and marketing plan to the right customers, while ensuring profitability.

Companies gain an additional advantage by leveraging e-commerce technology to efficiently automate the fulfillment stage of a typical sales transaction. By doing this, they save money and are still able to provide detailed customer service information regarding the order’s status to the customer. This technology has enabled the “virtual corporation”, which is a company that sells it’s products exclusively on the Internet and maintains little or no inventory itself. As orders are placed, the company uses e-commerce links to drop-ship the product directly from the manufacturer or a distributor to the customer.

Business – to – Business Transactions
E-commerce technology that focuses on business – to – business transactions typically take place using an e-commerce-enabled business application that is accessed through a secured extranet or through a corporate Intranet with a standard web browser. Companies are able to leverage this e-commerce technology to improve the efficiency of several common business functions, including supplier management, inventory management and payment management.

Using e-commerce enabled business applications, companies are able to better control their supplier costs by reducing PO (purchase order) processing costs and cycle times. This has the added benefit of being able to process more POs at a lesser cost in the same amount of time. E-commerce technology can also serve to shorten the order-ship-bill cycle of inventory management by linking business partners together with the company to provide faster data access. Businesses can improve their inventory auditing capabilities by tracking order shipments electronically, which results in reduced inventory levels and improves upon the ability of the company to provide “just-in-time” service.

E-commerce technology is also being used to improve the efficiency of managing payments between a business and it’s partners and distributors. By processing payments electronically, companies are able to lower the number of clerical errors and increase the speed of processing invoices, which results in lowered transaction fees.

The Next Evolution: Intra-Organizational Transactions
The next evolution of e-commerce technology focuses on intra-organizational transactions, or transactions between different areas of a single company. The primary goal of applying e-commerce technology to intra-organizational business applications is to leverage information within the company. Critical information about sales statistics, inventory levels and marketing information are made available to employees, which in turn enables better strategic-thinking and quicker reactions to a constantly changing marketplace. Disseminating this information electronically has the added benefits of reducing publishing costs and ensuring that the latest information is always available.

E-commerce-enabled business applications can also serve to increase a company’s sales force productivity by improving the flow of information between the sales force and the production areas of the company. In addition, e-commerce technology can enhance sales by shortening the sales cycle and enabling collaborative selling strategies. The key advantages supplied by these applications are improved market intelligence about the company’s customers and competitors and a more productive sales force.

It is clear that we have moved to a new way of conducting business between companies and their customers, between companies and their suppliers and distributors and even within a company. The technology that powers all of these innovative new applications is called e-commerce.Included picture: Amazon.com home page

Caption: Amazon.com is an example of a “virtual corporation” that effectively utilizes e-commerce in a variety of ways.