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BIJ
9,2
182
Benchmarking: An International
Journal, Vol. 9 No. 2, 2002,
pp. 182-189. # MCB UP Limited,
1463-5771
DOI 10.1108/14635770210421845
http://www.emeraldinsight.com/1463-5771.htm
Electronic commerce
A comparative study of organizational
experiences
Majed Al-Mashari
Information Systems Department, College of Computer & Information
Sciences, King Saud University, Saudi Arabia
Keywords Internet, Business development, Case studies, Success, Methodology
Abstract The significant growth of electronic commerce (EC) application is notable. More and
more organizations are switching to online business to achieve better positions in the digital-based
competitive market. The process of EC is complex in nature and involves changes to business
models and procedures. It is therefore worthy to study this new business phenomenon based on
the experience of the organizations that have embarked on EC-induced business change
initiatives. This paper analyses several reported case studies of successful EC application to
uncover the driving forces behind EC application, the approaches and methods adopted and the
key critical factors that contribute to the success of the initiatives.
Introduction
Today, the Internet and electronic commerce (EC) technologies have become a
strategic necessity for many business organizations (Kim, 1999). EC is defined
by Greenstein and Feinman (2000, p. 2) as:
The use of electronic transmission mediums (telecommunications) to engage in the exchange,
including buying and selling, of products and services requiring transportation, either
physically or digitally, from location to location.
A growing number of organizations have implemented EC in the hope of
improving decision making, lowering costs and improving customer
satisfaction levels (Kalakota and Whinston, 1996). However, a survey of
reported organizational experience shows that different approaches have been
adopted in implementing EC. This paper studies a representative sample of
organizations adopting EC. It highlights the driving forces behind EC
application, the approaches and methodologies followed, the overall outcomes,
and the key factors of success in these initiatives.
Cases description
This paper describe the e-commerce experience of eight major business
organizations, namely Transtec, BHP Steel, Ford, Barnes and Nobel, West
Marine, Dell, Amazon and FedEx. Transtec is a medium-sized manufacturing
company founded in Germany in 1980 which organizes the distribution of
computer systems, storage solutions and computer accessories, and also
supplies system upgrades for UNIX and network components. Transtec has a
17,000 customer base throughout Europe and a product list of over 6,000 IT
items. As an example of successful electronic commerce, Transtec could be
considered ``best practice'' (Claudia and Stefan, 2001).
 BHP Steel manufactures a wide range of steel products and is a world leader Electronic
in coating steel technologies. It is also ranked the thirteenth largest steel commerce
producer in the world and produces in excess of 8.2 million tones of steel per
year. BHP Steel employs 30,000 people in 240 offices in 27 countries. Annual
sales are $7.6 billion and it trades with over 2,500 suppliers. The company's
customer base totals 8,000, with clients ranging from small firms with just a
few employees to large corporations employing over 20,000 people (Caroline 183
and Paula, 2000).
Ford is the second largest car and truck manufacturer in the world, Ford
Motor Company sells in over 200 markets and employs nearly 400,000 people
worldwide. The company produces eight of the world's most recognizable
automotive brands (Ford Case, 2001).
According to Media Matrix, Barnes and Nobel has the largest in-stock
inventory of any online bookseller and is ranked one of the four most popular
shopping sites on the Web (Microsoft case studies, 2001).
Since its beginning 30 years ago as a rope supplier, West Marine now
provides recreational and commercial boating supplies globally, with more
than 220 stores in over 150 countries, a catalogue and a Web site. It offers
nearly 50,000 products and has a steady growth of satisfied customers due to
its ``no hassle guarantee'', on a repair, replace, or money back basis, no
questions asked (IBM case studies, 2001).
Launched in 1994, Dell grew to become one of the world's largest computer
manufacturers, especially after it incorporated e-commerce capabilities. Its
customers, which include major corporations, government agencies, medical
and educational institutions, small businesses and individuals, are based in
more than 140 countries worldwide (Dell Case, 2001).
At the end of 1998, Amazon had a catalogue of three million titles, making it
the largest online bookstore in the world. Amazon's growth has been
extraordinary; its number of customers grew from 0.34 million early in 1997 to
1.5 million at the end of 1997, but then increased to 4.5 million by the end of
1998 and passed the 10 million mark by 1999. Included in the company's
services are book search, payment by credit card, international shipping of
books by normal mail or express delivery, and online checking of order and
shipment status.
Additional features of its multimedia catalogue information service include
information supplied by authors, readers' feedback and reviews, and statistics
produced by Amazon staff. Customers can, at their request, be kept informed of
new books relating to their own specified areas of interest (Timmers, 1999;
Blankenhorn, 1997; Amazon, n.d.).
Federal Express is a worldwide express shipper of packages with operation
points in 211 countries and more than 500 cargo aircraft. The company has
122,000 employees who deliver over 2.5 million packages every working day
(Timmers, 1999; Blankenhorn, 1997; FedEx, n.d.).
BIJ Case analysis
9,2 The following sections analyses the eight cases by investigating the driving
forces for e-commerce application, adoption approach and methodology,
overall outcomes and the factors of success.

Driving forces for e-commerce

184 Transtec AG's opinion is that the Internet is a tool which will radically change
and improve businesses in all industries (Claudia and Stefan, 2001). BHP Steel
expects that business-to-business (B2B) e-commerce will reach revenue levels
of $1.3 trillion by 2003 and these figures have forced it to consider integrating e-
commerce into its trading system (Caroline and Paula, 2000). Ford wanted to
transform from a very linear, top-down business to a Net-ready, flexible
company where customers, suppliers and employees are involved and
integrated, as well as integrating more closely with their suppliers by making
information simultaneously available to the entire supply chain (Ford Case,
2001). For West Marine the Internet is a key component in its current and
future plans which will enable customers to access product information and
place orders, employees to track information in its ever-increasing inventory of
50,000 products, and both customers and employees to gain knowledge on
boating and business-related issues (IBM case studies, 2001). Amazon's plans
are to be the largest online bookstore in the world. It wants to have the largest
catalogue, the largest distribution, largest access to customers, the best-known
brand, and it wants to increase profits and minimize the cost (Timmers, 1999;
Blankenhorn, 1997; Amazon, n.d.). FedEx's Web mission is to ``leverage its
global brand name while enabling locally relevant activities''. Its Internet
business model focuses on providing the best online use of fast and worldwide
package shipping: ``a single critical generic global business service''. FedEx
aims to enhance its customer service and save the customer costs in preparing
shipments, cut the costs of customer calls, generate added sales from its online
sales sites, create an image of being the logistics company and extend into
order-handling services (Timmers, 1999; Blankenhorn, 1997; FedEx, n.d.).

Adoption approach and methodology

Transtec introduced several information systems based on Internet technology,
including a corporate intranet for communication and Internet/Extranet
connections which give their customers and suppliers access to their internal
databases. The objective was to integrate, as far as possible, their intranet,
extranet and Internet applications. The backbone for all applications is based
on eight Oracle relational databases distributed in six database servers. All
Transtec intranet and Internet applications are integrated and access the same
relational database. Reengineering efforts of all business processes were
developed and workflows within the company were analyzed, documented and
optimised. Transtec uses the Internet to communicate with business partners
and customers. In 1995 they began with a server which provided general
corporate information and an electronic product catalogue. In 1996 an order
``tracking and tracing'' function was added, and in 1997 online ordering and an Electronic
electronic shopping-basket were added. The company is currently testing a commerce
``virtual warehouse''. This system accesses warehouse systems and databases
belonging to all European warehouses operated by transtec partners (Claudia
and Stefan, 2001). BHP Steel followed three distinct implementation stages:
early implementation, the electronic trading gateway and the move toward
Internet commerce. The third stage incorporated a comprehensive Web site 185
containing information about the steel industry generally, its products and
services, planning for an Internet-based e-commerce implementation and
information such as steel test certificates, order status and detailed technical
data (Caroline and Paula, 2000).
Ford is collaborating with the other major automotive OEMs to design an
end-to-end infrastructure that enables an online, centralised marketplace
connecting the automotive industry supply chain (Ford Case, 2001). Barnes &
Noble chose Windows 2000 Server as the back-end for its product supply and
distribution services (Microsoft case studies, 2001). West Marine used IBM
Technology (Net Commerce, Net Data, DB2 Universal Database, Netfinity
Servers and AS/400) (IBM case studies, 2001). Dell's first phase was to launch
valuechain.dell.com in the middle of 1999. For performance and stability,
Dell.com uses a three-tier architecture: the presentation tier, implemented
logically rather than physically; the business tier, also implemented logically
rather than physically, and the database tier, which is implemented physically
(Dell Case, 2001).
Amazon's primary customers are the readers who order books and their
secondary customers are publishers supported by the Amazon Advantage
service and resellers, which are services by Amazon Associates. This section
focuses on those two B2B services, Advantage and Associates, which radically
break up the traditional book-publishing value chain (Timmers, 1999;
Blankenhorn, 1997; Amazon, n.d.). Amazon's value network/dynamic market
configuration enables the actors to assume multiple roles, depending on the
value functionality they offer, but important functionality remains with
Amazon:
(1) Community building: author- and customer-supplied information
relating to specific books. Amazon is the central information store in a
hub-and-spoke system, similar to what other electronic trading systems
strive for.
(2) Sales interface:
. direct customer order intake, shopping registration of individual
readers;
. indirect via Associates.
(3) Core information management:
. building and providing access to a very large catalogue, linked to
Advantage;
BIJ . building a large customer database and deriving added-value
9,2 information.
(4) Core handling and processing:
. payment processing between readers, authors, publishers, resellers
and Amazon;
186 . shipping and delivery administration.
In 1995 FedEx began to offer Internet services which allowed customers to
track their shipments by means of a reference number that they keyed into the
Web front end of the online tracking system. FedEx Internet Ship now offers
onscreen preparation and printing out of air-shipment documents to the
customer, storage of address books on the FedEx server and management of
shipping history information. FedEx Virtual Order helps businesses to get
online by giving them software which enables them to set up an online
catalogue that resides on a FedEx secure server. This user interface links into a
FedEx order-handling system that registers online customer orders and
assigns confirmation numbers, then passes the order to software at the
customer/merchant. The merchant then packs the order, possibly with
automatic inventory updating, and the merchant software generates shipping
labels for shipment by FedEx. The online tracking system allows both
customer and merchant to track orders online. FedEx Learning Lab is a service
that is ``dedicated to helping companies maximize their use of distribution as a
strategic weapon'' (Timmers, 1999; Blankenhorn, 1997; FedEx, n.d.).

Overall outcomes
With the application of e-commerce, Transtec has noticed an increase in
turnover, improvement in customer and supplier relationships and in
productivity. Other benefits have been that it attracts new customers and has
improved its image and market reputation. The Internet is now
comprehensively integrated into the company's business processes and
supports the employees in their daily activities. Transtec's offices are no longer
flooded with paper; these have been replaced by browser windows. In 1999, 50
percent of orders were linked to prior visits to Transtec's Web site and 60
percent of new customers are linked to the 2.5 million hits per month, and
rising. There has been a 30-40 percent reduction of processing time and 30-40
percent accelerated sales process (Claudia and Stefan, 2001).
Although it is still too early to identify the effects of implementing the Web-
based e-commerce, BHP says there have been several benefits, including a
reduction in the cost of obtaining test certificates from $2.50 ± $3.00 per
document down to 30c per document, and they expect further reductions in
transaction costs once the new ordering system is implemented (Caroline and
Paula, 2000). However, Ford claims benefits of increased customer satisfaction,
huge revenue opportunities for developing and retaining loyal product
advocates and the removal of both complexity and cost from the supply chain Electronic
(Ford Case, 2001). commerce
Barnes & Nobel have increased revenues by 300 percent, customers by 38
percent, delivery accuracy by 99 percent and, repeat customer rate by 66
percent and it has reduced cost per transaction by 25 percent (Microsoft case
studies, 2001). On the other hand, West Marine has seen its sales increase by
450 percent and a total sales increase of 550 percent. Other benefits have been 187
increased revenue from both domestic and international sales, increased
customer satisfaction (as proved by a higher order completion rate) and a
platform for building customer relationship systems (IBM case studies, 2001).
However, in 1999, Dell's sales via the Web reached $40 million per day and the
Web site now accounts for 50 percent of overall revenue. Dell now conducts
half of all its transactions online and the number of customers has increased
rapidly. Furthermore, its storage costs have decreased (Dell Case, 2001).

Factors of success
Throughout the analysis of the presented case studies, a number of critical
success factors have been identified. These are listed below:
(1) Dell (Dell Case, 2001):
. User-friendly Web interface.
. Top management support.
. Maintaining strong links with customers and suppliers.
. Powering Web site with strong search engine.
. Ensuring customer acceptance.
. Providing up-to-date information, including price list.
. Presenting prices in many different currencies.
. When using the shopping cart, you can store its contents for later
use.
. Continuous promotions.
. When buying a computer, you can draw up and price your own
specification, with the facility to modify different elements according
to need and cost.
. Customers can browse the Dell site by country.
. When customers specify components in their selected computer
system, Dell enables them to print the report and an expanded report
for personal use.
. Customers can track orders via the order ID number at any time.
. Providing powerful support service via the Web site.
(2) Transtec (Claudia and Stefan, 2001):
BIJ . All information it provides comes from the same database or data
9,2 source.
. Short and fast decision processes at the enterprise, enabling new
developments to be implemented as soon as tests have confirmed
their reliability and benefit.
188 . Internet presence has been widely recognized and has been a
marketing success.
. Transparency of content presented, and user-friendly and
comfortable interaction features.
. Clear strategy on how pre-defined goals should be achieved.
. Good technical infrastructure for fast processing of customer
information and orders.
(3) Ford Motor Company (Ford Case, 2001):
. Providing computers to most of worldwide workforce.
. Ford's www.ownerconnection.com provides 24/7 connectivity between
the company and its customers, and Ford Online Store gives customers
the convenience of ordering selected parts and accessories from their
home PC.
(4) BHP Steel (Caroline and Paula, 2000):
. Top management support.
. Company-run staff training and awareness programmes.
. Maintaining good trading partner relationships.
. Assisting customers by providing technical help and cost/benefit
analysis for them.
(5) Barnes & Nobel (Microsoft case studies, 2001):
. Business growth.
. Increased customer satisfaction.
. Decreased costs.
(6) West Marine (IBM case studies, 2001):
. Top management commitment.
. Setting clear objectives.
. Dealing with excellent supplier (IBM).
(7) Amazon (Timmers, 1999; Blankenhorn, 1997; Amazon, n.d.):
. Easy set up, via the Internet itself, of online sales of books.
. Trouble-free ordering, payments and delivery.
. Revenue sharing (up to 15 percent to the online bookstore).
 No set-up or service fee.
.
Electronic
Low cost.
. commerce
. Easy to use.
(8) FedEx (Timmers, 1999; Blankenhorn, 1997; FedEx, n.d.):
. Trouble-free ordering, payments and delivery.
189
. No set-up or service fee.
. Low cost.
. Easy to use.

Conclusion
This paper has analysed eight cases of e-commerce application to several types
of business. The analysis has covered the driving forces for e-commerce
application, the adoption methodology and approach, the overall outcomes and
the critical factors of success. The diversity of the issues associated with the e-
commerce concept requires that several considerations have to be taken into
account. These might be of a technical nature, such as security, or
organisational, such as the scale of change to be made to current business
models. Other considerations include cultural issues that relate to the level of
employees acceptance of the new e-commerce technologies as well as
customers' ability to use these technologies.

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