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(2005),"B2C e-commerce web site quality: an empirical examination", Industrial Management & Data Systems, Vol. 105
Iss 5 pp. 645-661 http://dx.doi.org/10.1108/02635570510600000
(2001),"An analytical framework for evaluating e-commerce business models and strategies", Internet Research, Vol. 11 Iss
4 pp. 349-359 http://dx.doi.org/10.1108/10662240110402803
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H. Joseph Wen
New Jersey Institute of Technology, Newark, New Jersey, USA
Houn-Gee Chen
National Chung-Cheng University, Chia-Yi, Taiwan
Hsin-Ginn Hwang
National Chung-Cheng University, Chia-Yi, Taiwan
technologies that changes the business electronic markets have the potential to be
Abstract environment and has a dramatic impact on more efficient in developing new
The rapid adoption of the Web as a
the future of electronic commerce (EC). The information-based goods and services,
commercial medium has caused
firms to experiment with future of EC will accelerate the shift of the finding global customers and trading
innovative ways of doing business. power toward the consumer, which will lead partners to conduct business. Electronic
Those firms that effectively to fundamental changes in the way commerce via the Internet or the next
market themselves on the Web
companies relate to their customers and generation Internet Protocol, IPv6, will
have a distinct advantage. This
paper presents two e-commerce compete with one another (Slywotzky, 2000). change business institutions, operations and
Web site design strategies and 12 The immense popularity of the Internet in products/services as we know today, just as
e-commerce models for gaining recent years has been fueled largely by the the telephone, TV, fax, and e-mail changed
that advantage.
prospect of performing business on-line. the way businesses and consumers
More and more companies set up their own communicate. Electronic commerce has
corporate LANs by Intranet, apply Extranet become very popular because of the benefits
and Internet to work collaboratively with and the convenience it brings along. As
their customers, suppliers, and partners. shown in Table I, the benefits include
The Internet can bring down physical
product promotion, cost saving, timely
barriers to commerce, almost immediately
information, shortened remittance time,
giving even the smallest business access to
information consistency, better customer
untapped markets around the world. At the
service, better customer relationship,
same time, consumers can conduct business
customization of products, competitive
and make purchases from companies
advantages, and convenience of doing
previously unavailable to them.
business.
Furthermore, companies are able to place
Electronic commerce is no longer an
marketing material on Internet servers
alternative, it is an imperative. The only
ranging from simple advertising to
choice open is whether to start quickly or
comprehensive virtual brochures. In today's
slowly. Many companies are still struggling
global marketplace, fast reliable information
is a necessity for most companies to attain with the most basic problem: what is the best
some kind of competitive advantage. For EC model? Unfortunately, there is no simple
instance, companies can create a virtual answer for this question. Even companies in
marketplace in which to sell their products. the same industry, of the same size, or with
This virtual market is untapped and could similar cultures are finding that one EC
reach millions of users on the Internet 24 model does not fit all. Companies are
hours a day. required to review their EC models and
Electronic commerce is defined as buying rethink strategy in order to capitalize on the
and selling of product, services or changing dynamics of the marketplace. The
information via computer networks, mainly purpose of this article is to examine the
the Internet. As the fastest growing facet of currently available EC models and help
the Internet and other information readers to figure out the best way to make
Information Management & technologies, EC offers functionality and new money in the EC era.
Computer Security
9/1 [2001] 5±12
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[5 ]
H. Joseph Wen, Table I
Houn-Gee Chen and The benefits of electronic commerce
Hsin-Ginn Hwang
E-commerce Web site design: Benefit Description
strategies and models
Information Management & Product promotion Through a direct, information-rich and interactive contact with customers, EC
Computer Security enhances the promotion of products. Electronic medium also allows interactivity and
9/1 [2001] 5±12 customization for advertising content, based on the customer profile or input. EC
thus offers an opportunity for new promotion strategies, enhancing the branding of
products
Cost saving By using a public shared infrastructure such as the Internet and digitally
transmitting and reusing information, EC systems lower the cost of delivering
information to customers, including personnel, phone, postage, and printing costs
Timely information Due to their instantaneous nature, EC systems allow a reduction of the cycle time
required to produce and deliver information and services.
Shortened remittance time With electronic funds transfer (EFT), customers send their remittances
electronically to the company's bank. This arrangement eliminates the time delay
associated with the remittance in the mail system
Information consistency EC ensures the consistency and accuracy of information through sharing of
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[6 ]
H. Joseph Wen, characteristics. The marketing activities customer relationships are being
Houn-Gee Chen and used in the study to examine corporate Web incorporated into commercial Web site
Hsin-Ginn Hwang sites are: design. There are two generic Web site
E-commerce Web site design:
strategies and models . promotional activities; design strategies:
Information Management &
. sales; 1 informational/communicational strategy;
Computer Security . service; and and
9/1 [2001] 5±12 . support. 2 on-line/transactional strategy,
summarised in Table II.
From the seller's perspective, Angehrn (1997)
proposed the ICDT model for analyzing and
Informational/communicational strategy
classifying EC strategies. The model
In the informational/communicational
describes four virtual business spaces,
strategy, the Web is used to support but not to
namely:
replace a company's main business activities.
1 virtual information space;
Companies do not limit themselves to just
2 virtual communication space;
marketing on the Web. As a matter of fact, they
3 virtual distribution space; and
look at other traditional media of advertising
4 virtual transaction space.
and marketing study in order to meet their
Based on the model, the authors suggest four business goals and marketing objectives.
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EC strategies that are further refined by the Looking at Web marketing as another tool in
level of sophistication and customization of the company's marketing arsenal (Clark, 1997),
the Web site design. the informational/communicational design is
Watson et al. (1998) coined the concept of the most common use of Web marketing today.
``attractors.'' An attractor is a Web site with Liu et al. (1997) report that 93 per cent of
the potential to attract and interact with a Fortune 500 companies have publicly
relatively large number of visitors in a accessible sites, but fewer than
target stakeholder group. Authors visited 26 per cent of those sites support transactions.
many Web sites and use metaphors to label On the other hand, there is no doubt that
and group sites into eight potential informational/ communicational design on the
attactors: Web can also produce significant sales in other
1 the entertainment park; areas of business. For example, Insight Direct,
2 the archive; a discount computer cataloger selling mostly to
3 exclusive sponsorship; business, generates only 10 per cent of its sales
4 the town hall; from its on-line catalog, but more than 75 per
5 the club; cent of its new customers come from the site.
6 the gift shop;
7 the freeway intersection; and On-line/transactional strategy The on-
8 the customer service center. line/transactional strategy invariably
provides an electronic catalog of products
They argued that the strategic use of hard-to-
for sale. Visitors can browse through the
imitate attractors is a key factor in on-line
catalog and order products on- line.
marketing and creating an attractor will
Although the informational/
become a key component of the strategy of
communicational design often provides an
some companies.
electronic catalog as well as ordering
The EC models for commercial Web site
information (e.g. by phone, fax, or e-mail), it
design to be examined in this article are
does not support on-line transaction. Without
similar to some of the models in the previous
on-line ordering Web database capability, it
studies. However, we introduce a wider
hardly exploits the potential of the Web as an
range of available models, extracted from the
interactive medium.
current commercial Web sites, than any
The on-line/transactional strategy is what
previous studies. In addition, all models are
most proponents of marketing on the Web
discussed based on two different Web site
expect. Griffith and Krampf (1998) indicated
design strategies, informational/
that the ability to enhance a company's overall
communicational strategy and on-line/
sales was a significant decision factor to
transactional strategy.
establish a Web site. Although there are still
some hidden obstacles (e.g. transaction
security), it seems that most companies are
Web site design strategy likely to benefit directly from marketing on
Web design has evolved from static hypertext the Web, especially for small and medium-
publishing in the early days to dynamic sized enterprises. In fact, there have been a lot
multimedia, Web database application of successful on-line/transactional designs,
servers. More importantly, new business such as Amazon.com and Virtual Vineyards.
models that bring savings, revenues, and The number of successful enterprises is
[7 ]
H. Joseph Wen, growing. There are reasons to believe that the After visiting many Web sites, a total of 12
Houn-Gee Chen and Web will become a significant money-making Web site design models for EC were found,
Hsin-Ginn Hwang shown in Figure 1. The first four models that
E-commerce Web site design: vehicle for electronic commerce. International
strategies and models Data Corp. forecasts that Internet purchase related to the informational/communicational
Information Management & volume will jump from $12.4 billion in 1997 to design are:
Computer Security $425.7 billion by 2002. The US share is 1 brand awareness and image building model;
9/1 [2001] 5±12 2 cost saving model;
projected to be $268.8 billion, the European
Union $55.5 billion, Japan $21.4 billion, and 3 promotion model; and
Asia $15.6 billion. 4 info-mediary model.
In the following section, available Web
design models are grouped and discussed Brand awareness and image building
based on the two design strategies. However, model
the models in each strategy group are not Web sites that apply this model provide
mutually exclusive. For instance, a company detailed, rational information about the firm
may build brand awareness on the Web (the and its offerings. They may also serve as a
informational/communicational design signal to current and prospective customers
strategy) and may do on-line retailing (the and competitors that the firm is on the cutting
on-line/transactional design strategy) at the edge. The model reaches motivated customers
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Table II
Web site design strategy
Web site design Definition/characteristic Promotion measures/ways Merits
Informational/ This approach is for companies to 1. Putting companies' catalog on-line 1. Providing large quantities of
communicational use the Web as a supplement to 2. Building broad awareness and image information to customers
design traditional marketing, delivering 3. Using the Web as a cost-effective way to 2. Giving a company an instant global
additional benefits to customers and augment their core products with related presence and attracting people to
building relationships with them information and service function one's ad, some of them are not the
4. Obtaining cost savings from automating company's target market, but
routine customer services potentially will be
3. Opening a new communication
channel allowing a company to
develop further relationships with
customers
4. All at a reasonable cost
On-line/transactional This approach is for companies to 1. Creating a retail presence larger than 1. Providing a larger or more specialized
design use the Web to construct ``virtual any physical store could selection of products than
business'' ± independent, profitable 2. Creating a virtual business providing competitors can offer
ventures that exist only on the extra information in a form competitors 2. Providing higher quality and higher
Internet cannot imitate quantity information, more economic
3. Creating a virtual business that takes a benefits, and more convenience than
specialty product or collectible and sells competitors can offer
it worldwide 3. Providing a sense of community for
4. Creating a virtual business that uses the customers
Internet to produce superior economic
benefits to customers that competitors
can not imitate
5. Creating a virtual business providing
convenience to customers that
competitors cannot match
[8 ]
H. Joseph Wen, . Reebok (www.reebok.com) lets visitors Promotion model
Houn-Gee Chen and read about sports and fitness, hear from The promotion model represents a unique
Hsin-Ginn Hwang
E-commerce Web site design: Reebok-sponsored athletes, and learn form of advertising that attracts a potential
strategies and models about Reebok's human-rights activities, customer to a site. The objective is to attract
Information Management & among other things. the user to the commercial site behind it. In
Computer Security many cases, Web sites provide free gifts to get
9/1 [2001] 5±12
Cost saving model users' attention. The gifts typically include
Saving from commercial activity on the Web digitized material such as software,
includes cost-effective savings and photographs, music, and consumer reports.
productivity savings. By directly meeting Examples of the promotion model include:
information needs, a Web site can be highly
. Auto-By-Tel (www.autobytel.com) offers a
cost-effective. Many companies now use their comprehensive consumer report for all
Web site to support the ownership phase of major manufacturers. It attracts
the customer service life cycle. Productivity consumers to visit the site to read the
report and compare the price. The Web
savings arise from reduction in order and
site produces significant sales for local car
processing costs and more efficient inventory
dealers.
management. Cost savings result through . Kodak (www.kodak.com) provides
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[9 ]
H. Joseph Wen, The following eight models that are based on Mall model
Houn-Gee Chen and the on-line/transactional design strategy An e-mall hosts many on-line merchants. The
Hsin-Ginn Hwang
E-commerce Web site design: include: mall typically charges setup, monthly listing,
strategies and models 1 brokerage model; and/or per transaction fees. The virtual mall
Information Management & 2 retail model; model may be most effectively realized when
Computer Security 3 mall model; combined with a generalized portal. Also,
9/1 [2001] 5±12 4 advertising model; more sophisticated malls will provide
5 subscription model; automated transaction services and
6 community model; relationship marketing opportunities.
7 manufacturer model; and Examples of the mall model include:
8 customization model. . Yahoo! Shopping (Shopping.Yahoo.com) is
a cyber shopping mall. It allows customers
These are popular models that provide
to visit just one site for all their shopping
on-line transaction services for companies to
needs. Since it is an attractive and well-
make profits on the Web.
promoted site, it attracts many more
visitors than any individual store could.
Brokerage model . zShops (zShops.com) is a virtual mall, but
Brokers are match-makers. They bring
one that will process the transaction,
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[ 10 ]
H. Joseph Wen, Web. A 1999 survey by Jupiter savings that may or may not be passed on to
Houn-Gee Chen and Communications found that 46 per cent of consumers), improved customer service, and
Hsin-Ginn Hwang Internet users would not pay to view content
E-commerce Web site design:
a better understanding of customer
strategies and models on the Web. Some businesses have combined preferences. The model has the potential for
Information Management & free content (to drive volume and ad revenue) channel conflict with a manufacturer's
Computer Security with premium content or services for established supply chain. Examples of the
9/1 [2001] 5±12 subscribers only. Examples of the manufacturer model include:
subscription model include: . Micron (www.micron.com), a computer
. Quote.com (www.Quote.com) is an manufacturer, sells its computer directly
example of a site profitably selling to customers on the Web. Since there is no
investment information. It creates a intermediary the distribution costs or
unique and ``must have'' content that cost-of-sales shrink to zero.
draws investors to pay a subscription fee . Flowerbud (www.Flowerbud.com) sells
for the information. fresh flowers directly to customers on the
. ESPN SportsZone (espnnet.sportszone.com) Web. Perishable products that benefit
attracts more than 250,000 visitors a day from fast distribution, like fresh flowers,
with free, frequently updated sports may prove advantageous by eliminating
information, while 50,000 subscribers pay $5 middlemen.
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[ 11 ]
H. Joseph Wen, transactional design strategy include Griffith, D.A. and Krampf, R.F. (1998), ``An
Houn-Gee Chen and brokerage, retail, mall, advertising, examination of the Web-based strategies of
Hsin-Ginn Hwang subscription, community, manufacturer, and the top 100 US retailers'', Journal of
E-commerce Web site design:
strategies and models customization. Marketing: Theory and Practice, Summer,
Information Management & Although a large number of companies use pp. 12-22.
Computer Security the Web as an advertising tool to build Hoffman, D.L., Novak, T.P. and Chatterjee, P.
9/1 [2001] 5±12 awareness or provide information rather (1995), ``Commercial scenarios for the Web:
than relying on the Web to do online opportunities and challenges'', Journal of
transactions, we present eight e-commerce Computer-Mediated Communication, Vol. 1
models that companies are using to make No. 3, pp. 1-20.
profits on the Internet. In fact, companies Ju-Pak, K.H. (1999), ``Content dimension of Web
usually use more than one model to advertising: a cross-national comparison'',
accomplish their e-commerce objectives. International Journal of Advertising, Vol. 18,
Although new models are beginning and are pp. 207-31.
continuing to appear on the Web, no one Kalakota, R. and Whinston, A.B. (1996), Frontiers
knows which, if any, of these models will of Electronic Commerce, Addison-Wesley,
finally succeed. Reading, MA.
Liu, C., Arnett, K., Capella, L. and Beatty, R.
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[ 12 ]
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