Editor’s Introduction 10(1)

Vladimir Zwass
International Journal of Electronic Commerce,
Volume 10, Number 1, Fall 2005, pp. 5.

As the International Journal of Electronic Commerce publishes its tenth-anniversary volume, e-commerce is flourishing or gaining ground in most of the world’s regions. Three fundamental levels of its infrastructure, identified in [5], are enabling the global redistribution of business processes and work-and of welfare. Business-centered e-commerce remains the primary component.

Business-to-business e-commerce has led to the emergence of rapid-response customer-driven supply chains and of process specialists, and undergirds rapid reconfiguration of transnational business networks. Intraorganizational e-commerce has influenced the structure, the place, and the content of work, with actionable knowledge available to increase the knowledge content of jobs. At the same time, e-tail has risen from the ashes, now largely on a sound basis of profit-seeking, as opposed to eyeball-gathering; not only the forecasts, but the realities are now increasingly impressive and sound [2]. Innovation communities and processes transcend the borders of corporations [4]. Individuals have acquired a forum where their voices can be heard around the world.

E-commerce is becoming ever deeper embedded in the processes of business and government, in the very fabric of everyday life. All this allows us to refer to the past (remembered by some as the bubble) as the years of learning from experience. The contributors to IJEC have indeed contributed to our understanding of some of these phenomena-and have made it the leading journal in the field. Search engine marketing has moved to center stage over the last year or two as the means of reaching potential customers just when they appear to search for a product. Buying for the vendor an advantageous position in the paid-placement, promotional section of the search-results page is a marketing strategy that looks attractive to the seller. Yet the buyer is inclined to trust the “editorial,” or algorithmically generated search results, because they are not biased by a payment from the seller. In the latter case, the listing position can be influenced by a labor-intensive search engine optimization-and it would seem to be the proper way to spend marketing funds.

In the first paper of this issue, Ravi Sen shows analytically that for most sellers, no optimal marketing strategy would include search engine optimization. This (and the simplicity) justifies paying for search engine placement. The result is not obvious and will certainly be of interest to marketers. The absence of the face-to-face encounter has always produced a trust deficit in e-commerce. It may also be expected to lead to an increase in the number of disputes resulting from transactions. Ian MacInnes, Yifan Li, and William Yurcik develop and test a model that relates disputes to factors inhering in the transaction as well as to the experience and reputation of the transacting individuals. Among other factors, reputational systems in e-marketplaces emerge as the principal means to dispute deterrence. Serving as the test bed for the model (as well as for a significant segment of e-commerce), eBay has accumulated an extensive information base of reputations. This base is certainly not perfect and is subject to a variety of gaming tactics. Yet it is a principal component of eBay’s business capital.

As the preceding study investigates the role of longitudinal factors in compensating for the lack of face-to-face interaction, the study by William Hampton-Sosa and Marios Koufaris examines the effect of the first impression. The authors investigate empirically the properties of Web sites that lead the first-time visitor to form initial trust in the owner company. Among other results, the Web site’s appeal leads to initial trust, according to this work. To aim for the hedonic value of their Web sites is certainly a pointer for firms trying to establish themselves in the field. Equally clearly, the trust so formed may be misplaced.

Developing countries are very much unequal in their take-up of e-commerce. “While the international digital divide seems to be closing, this is happening only at a slow rate . . . while those in the most difficult situation are not seeing much progress” [1, p. xvii]. Alemayehu Molla and Paul S. Licker empirically study the factors, generally known as e-readiness, of e-commerce adoption by businesses in the context of South Africa. The country has an overall 2004 e-readiness score of 5.79 in the ratings by the Economist Intelligence Unit, which places it squarely in the middle of a country line-up ranging from Denmark (8.28) to Azerbaijan (2.43) [3]. In other words, in macroterms, its country score is high for a developing country. The authors find that in such a developing country, the factors that determine the perceived readiness of a specific organization outweigh those of the perceived readiness of the business and governmental environment in the initial adoption of e-commerce. However, environmental factors come more strongly into play in its institutionalization. The study has important policy implications for countries that need to create a business climate conducive to their development. Equally important is, of course, the role of the business community. There is no substitute for the quality of a firm’s management, though.

Pricing in e-tailing has turned out to be a far more complex affair than first thought. Indeed, if the first thoughts of some decade ago had been realized, there would be no commerce at all here, as profits would have been squeezed out of close-to-perfectly-competitive markets. Two pricing studies that conclude the issue are very diverse. Cenk Koças* offers a game-theoretic model that explains price competition-and the coexistence of a wide range of prices -in the on-line markets for homogeneous goods. The model explains why the wider ranges are limited to a subset of the vendor firms, and identifies the characteristics of this subset as conditioned by the behavior they induce in their customer population. Customer loyalty again emerges as a prize beyond compare, and worth investing in with customer relationship management. In an empirical study, Antonis C. Stylianou, Ram L. Kumar, and Stephanie S. Robbins investigate the pricing behavior of e-tailers in the present “post-bubble,” multichannel environment. Focusing on over-the-counter pharmaceuticals, the authors find higher total cost of purchase on the Web, more limited price changes, and greater cost dispersion-exactly what was not expected in the days of the “frictionless commerce” narratives.

REFERENCES

  1. E-Commerce and Development Report 2004. New York and Geneva: United Nations Conference on Trade and Development, 2005 (www.unctad.org/en/docs/ecdr20040verview_en.pdf).
  2. Johnson, C.A. US eCommerce Overview: 2004-2010, Forrester Research, Cambridge, MA, August 2004.
  3. 2004 e-Readiness Rankings. London: Economist Intelligence Unit, 2004 (www.netcaucus.org/statistics/2005/eready2004.pdf).
  4. von Hippel, E. Democratizing Innovation. Cambridge, MA: MIT Press, 2005 (http://web.mit.edu/evhippel/www/democ.htm).
  5. Zwass, V. Electronic commerce: Structures and issues. International Journal of Electronic Commerce, 1, 1 (fall 1996), 3-23 (www.gvsu.edu/business/ijec/v1n1/p003full.html).