Factors influencing e-commerce implementation: analysis of survey results

Journal of the Academy of Business and Economics, March, 2004 by Zinovy Radovilsky, Vishwanath G. Hegde

ABSTRACT

Despite the evident increase in importance of e-commerce and effectiveness of its implementation, until recently little research has been undertaken to investigate the factors that influence the results of implementing e-commerce solutions. This paper presents a general assessment of e-commerce implementation results and analysis of factors that influence these results. The analyzed factors include: company size, comprehensiveness of implemented e-commerce solutions and specific solutions (sell-side, buy-side, exchanges and auctions). Through hypothesis testing we identified relationships between these factors and e-commerce implementation results (revenue growth and cost reduction). It was proven that a larger company size and comprehensiveness of e-commerce solutions positively influence e-commerce implementation results. Conversely, a small company size may negatively influence these results. Also, we concluded that sell-side e-commerce solutions improve revenue growth, whereas buy-side solutions reduce costs. At the same time, we identified that e-commerce exchanges/auctions did not have significant influence on implementation results.

1. INTRODUCTION

E-commerce is becoming a major element of competitive advantage in the modern business environment. Survey after survey conducted by a variety of companies (Gartner, 2003, Forrester/ISM, 2003, eMarketer, 2003) indicated an accelerating volume of transactions in business-to-consumer (B2C) and particularly in business-to-business (B2B) e-commerce. For example, eMarketer (2003) predicted that global B2B e-commerce revenues would grow to $1.41 trillion in 2003, with the United States accounting for half of the total. Worldwide B2B e-commerce revenues will reach $2.37 trillion in 2004 (eMarketer, 2003).

Although B2B sales continue to dwarf B2C sales, many retailers now see online sales as their best outlet for new growth. According to Forrester Research (2003), online retail sales in the United States are expected to hit $96 billion in 2003, which is around 25% of increase from the previous year. Forrester also predicted that U.S. e-commerce will grow at a 19% rate over the next five years, fueled by a steady stream of new online shoppers and new product category sales. Online retail will reach nearly $230 billion and account for 10% of total U.S. retail sales by 2008. The projected e-commerce growth raises the interest of researchers to understand how effective and efficient this e-commerce implementation has been and what influences e-commerce implementation results in manufacturing and service organizations. A number of surveys have been reported that examine the implementation of e-commerce solutions. These surveys are based on evaluating a specific industry, i.e., manufacturing, construction, services, etc. (Rae, 2003), or they are concerned with various groups of e-commerce solutions such as sell-side storefronts, buy-side e-procurement, electronic exchanges, auctions and others (ISM/Forrester, 2003; Garnter, 2002; eMarketer 2003).

A Forrester/ISM survey (Kioa and Mirphy, 2003) examined implementation of buy-side e-commerce solutions, i.e., reverse auction and e-procurement with catalogs, in both manufacturing and service organizations. The survey described a variety of implementation results associated with a proportion of companies using buy-side e-commerce solutions; volume of transactions; implementation results in terms of cost reduction; and perspectives on using buy-side e-commerce solutions. One interesting conclusion presented in the Forrester/ISM survey was that large corporations have had a higher rate of successful implementation of e-commerce solutions than that of small companies. However, the analysis of the survey results did not go further to present other factors that may influence e-commerce implementation results.

Desisto and Sarner (2003) from Gartner, Inc. have done a similar analysis of sell-side (store) e-commerce solutions. The survey results were associated with the growth of sell-side e-commerce, specifically B2C e-tailing; percentage of growth in different product categories, internal (with employees) and external (with customers) efficiency of implementing e-commerce solutions. However, this survey did not analyze what influenced implementation of sell-side e-commerce solutions in various organizations.

Despite the evident increase in importance of e-commerce and effectiveness of its implementation, until recently little research has been undertaken to investigate the factors that influence the results of implementing e-commerce solutions. Such a knowledge not only has potential benefits for organizations considering e-commerce implementation but also for those organizations that have already engaged in such implementations, because it can provide them with an understanding of how to facilitate and improve their implementation process.

Recent work by Begin and Boisvert (2003) analyzed strategic factors that influence e-commerce implementation. They have divided these factors into two main groups: organizational and individual. The organizational factors include: culture, structure and systems, technology, and expertise. The individual factors were associated with perception, training and competences, and leadership. This classification could serve as a good starting point to analyze these factors and identify their influence on e-commerce implementation results. However, this analysis has not been done in the paper.