E-business - Literature Review
Recent advances in the technology have created a surge in “technology-based self service” (Dabhokar et al. 2003). Such developments are changing the way that service firms and consumers interact and are raising a host of research and practice issues relating to the delivery of e-service. Further, Information technology (IT) made a tremendous impact on the business world. Business processes and operations that used to take days or weeks can now be done in a matter of seconds with the help of IT. This makes individuals and customers to be better served than in the past (Rodgers et al. 2002). Different people have different understanding for the purpose as in order to have a common uniform understanding author will like to define the terminology of e-business, e-service and e-commerce, the following section will discuss about definition, distinction and the differences between these three in order to have a better understanding.
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E-business probably began with electronic data interchange in the 1960s (Zwass, 1996; Wigang, 1997). However, it was only in the 1990s, primarily via the internet, that e-business has emerged as a core feature of many organisations (Melao, 2009). E-business has become an inescapable fact of life, nearly as essential to commerce as the telephone (Waters, 2000). With the technological advancement e-business has a huge impact on day to day operation of the businesses. Furthermore, e-business expands the connectivity of the organization to include its suppliers, employees, and the business partners. E-business is the next wave in the technological revolution created by the Internet (Biggs, 2000).
E-business is defined as ‘The use of electronic networks for business (usually with web technology’ by Deloitte and Touché Consulting Group further IBM defined e-business as the transformation of key business through the use of Internet technologies (Chaffey and Smith, 2008). According to Turban et al. (2006), E-business refers to a broader definition of e-commerce, not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organisation. E-business provides a global platform where individuals and organizations interact, communicate, collaborate and obtain information. Further, Currie and Parikh, (2006) stated that e-business web based systems increasingly represent a competitive advantage for companies and have undergone great organizational changes. Businesses online provide an information-rich environment by which competitors can identify, match and improve product innovation (singh, 2002)B2C
E-business is growing at an explosive rate. As a means of growing existing market share, entering new markets, forging alliances with business partners and taking the all important customer relationship to a new and unprecedented level, e-business is an unparalleled tool (Deise et al.2000).E-business is revolutionizing the way business is conducted. Similarly it does more than e-commerce as it interconnects the whole and extended organization thus allowing for improved communication among suppliers, employees and customers. In addition to this e-business allows for the extended organization to be connected which means that all the employees, customers or clients, suppliers, and other stakeholders, regardless of the geographic region are interconnected ( Rodgers et al. 2002) . It involves attracting and retaining the right customers and business partners and it includes digital communication, e-commerce, online research and it is used by every business discipline (Strauss and Frost, 2001, p: 6). E-business allows service providers to interact with their suppliers and customers as this improved relationship causes and potentially could lead to loyalty and then results in increased profits and competitive advantage for the firm (Follit, 2000).
The immense popularity of the internet in recent years has been fuelled largely by the prospect of performing business online. With the rapid global growth in electronic commerce, businesses are attempting to gain a competitive advantage by using e-commerce to interact with customers (Lee and Lin, 2005). E-commerce refers primarily to the buying and selling activities over the Internet, which includes transactions such as placing orders, making payments, and tracking delivery of orders on the Internet (Rodgers, 2002). The e-commerce is defined as buying and selling of product service or information through computer networks mainly the internet (Wen et al., 2001) and people immediately think of consumer retail purchases from companies such as Amazon (Chaffey et al, 2006). However, e-commerce refers to both financial and informational electronically mediated transactions between an organization and any third party it deals with (Chaffey, 2006). Further, Singh (2001) supported the definition by referring e-commerce to an online service offered to customer to support their shopping experience over the internet. E-commerce is exponentially increasing the availability of information, giving customers access to more knowledge, of better quality and faster than before. Technological advancement led an explosive development in electronic commerce, the causes of that are the internet end the World Wide Web (WWW), which are making electronic commerce much more accessible. Internet e-commerce includes electronic trading of physical goods and of intangibles such as information. This encompasses all the trading steps such as online marketing, ordering, payment and support for delivery (Trimmers, 2000.p.4).
E-commerce is used everywhere in everyday life. Now a days it is utilized for everything from credit card authorization, travel reservation over a network, wire fund transfers across the world, point of sale (POS) transactions in retailing, electronic banking. It helps in generate demand for the products and services and improves order management, payment and other support functions (Awad, 2004.p.2). Similarly, e-commerce decreases the cost of creating, processing, distributing and retrieving paper based information. Further facilitates the benefits which include improved image, improved customer service, simplified processes, compressed cycle and delivery time, eliminating paper work and increased flexibility (Turban et al, 1999, pp.15).
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Moreover, e-commerce is not just about buying and selling as it is also about electronically communicating, collaborating and discovering information (Turban et al, 2004). It can involve the Internet, groupware programs, public e-mail networks (Adms,1994), technologies such as electronic data interchange (EDI) and electronic funds transfer (EFT) and more recently , services associated with mobile telephones and digital television (Voss, 1999). E –commerce has become very popular because of the benefits and convenience it brings along as it is no longer an alternative, it is an imperative (Wen et al, 2001).E-commerce is generally based on monetary transaction and e-services are the part of electronic commerce.
E-services are important in B2C e-commerce for managing customer relations and enhancing sales. Rapidly advancement of technology such as wireless, broadband, smart cards, data warehousing, data mining and agent technologies, are contribute toward the effective accessibility and servicing of the correctly targeted customers for business while providing more choices, options and ultimately power to customers in their transactions with business (Rust and Kannan, 2003). Further e-service provides a new business paradigm for the organizations operating in the electronic environment. Below figure show a paradigm shift from traditional e-commerce to e-service.
SOURCE: Rust, R, T and Kannan, P, k., 2003
There are three primary reasons for firms to develop e-services. Firstly, Shapiro and Varian (1999) argued that on margin, consumer acquisition and service costs are generally much lower in an online medium versus that in an offline medium. Secondly, e-service inexpensively and effectively delivers high-quality, timely and in-depth product information desired by consumers (Iqbal et al. 2003). E-services also provide consumers with benefits such as better price quality comparisons (Evans and Wurster, 1999) and customized search processes based on criteria of importance (Lynch and Ariely, 1999). Finally, the use of e-services enables firms to develop a deep understanding of consumer behaviour (Iqbal et al, 2003).
The view of e-service is much broader than the concepts of IT services, web services or infrastructure service as it e-service includes all these services further it also encompasses the service product, service environment and service delivery that comprise any business model, whether it belongs to a goods manufacturer or a pure service provider ( Rust et al, 1996). The customer’s interaction or contact with the organization is through the information and communication technology (ICT) in e-service. This remote service encounter subsequently has developed into a self-service experience (Dabholkar, 2000; Sara, 2000). However, experience of self service and e-service are quite different. In self service operations, a customer has to go to the information and communication technology centre while, in e-service, a customer can conveniently receive the service through the internet at home or other places. In other words, self service is less flexible than e-service due to constraints of location (Surjadjaja et al., 2003).
Similarly customer’s interaction or contact with the organization in the e-service is through the technology, such as web site. During an e-service encounter customer have to rely entirely on sight and sound while the traditional service experience can use all senses. In addition to this e-service unlike traditional service is not constrained by distance and opening hours, thus delivered delivers convenience. Linked with convenience is customer control. As customer can choose the channel through which they will acquire a product, the mode of delivery for the product, the extent of customization of the product and the extent to which they are involved in the design and delivery of the product (Rowley, 2006).
Advancement of technology led the transformation of physical products to pure e-service components and has significant implications for building customer relationships. Below chart shows the e-commerce path to profitability as how the traditional path and e-service path flow increase profit of the firm.
SOURCE: Rust, R, T and Kannan, P, k., 2003
Above chart shows traditional path services laid emphasis on automated service or self service operation, firms used to focus on increased efficiency and productivity of business and reduce the cost of the product or service in order to increase profit. On the other hand on e-service path firms are focus on enhanced service operations, provides greater conveniences and support services to customers. Further improved customer satisfaction and retention by providing best quality service for example grocery chains are looking to use loyalty cards and focus on one-to-one promotion and marketing efforts based on the information gathered using these cards allow the grocery chains to develop relationships with their customers. Moreover, they provide value to customers through focused information provision, reduced search time and increased convenience for the customers (Rust and Kannan, 2003).
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As in the electronic world the customer and the merchant do not meet face to face and the clients are more sensitive with increased options and solutions available to them online (Singh, 2002). Many companies are adopting Internet-based e-services for conducting business transactions and sharing business information with their customers and business partners (Torre and Moxon, 2001). E-service has been defined as web-based service or interactive service that is delivered on the internet (Reynolds, 2000). According to Rowley (2006) e-service is deeds, efforts or performances whose delivery is mediated by information technology that include the Web, information kiosks and mobile devices. Such e-service includes the service element of e-tailing, customer support and service and service delivery. Further, E-service is defined as the provision of service over electronic networks. This concept includes services provided by a typical service organization as well as the services provided by the goods manufacturers where the quality of customer care plays an important role (Rust and Kannan, 2002).
According to Ruyter et al. (2001, p. 186), “ an e-service is an interactive, content-centred and Internet-based customer service, driven by the customer and integrated with related organizational customer support processes and technologies with the goal of strengthening the customer-service provider relationship”. Further (Sahai and Machiraju, 2001) defined e-service as it is a service available via the internet that provides information, completes tasks or conducts transactions. It can be any electrically provided services offered directly or indirectly to customers, including direct as well as after sales services (Van Riel et al.,2001; Lagrosen, 2005). In addition to this e-service can deliver high quality, timely and extensive product information to consumer inexpensively and effectively. They can provide better price and quality comparisons (Shapiro and Varian, 1999). Furthermore, a company that can respond to the needs of the customer accommodate their requests promptly and support their buying decisions creates value and wins customer patronage and loyalty (Singh et al.2001). E-service operation include all the customer centric activities starting from pre-transaction, transaction and post transaction interactions through the internet in delivering products or services within service level agreement ( Surjadjaja et al., 2003).
Clearly, although the aforementioned author agree that providing personalized and accurate customer information with better tracking, delivery and payment details is an online service in B2C e-commerce generally appreciated by customers. Similarly e-service functions incorporated on e-commerce sites that can quickly provide online shoppers with decision-making support win e-customers and get them to make a purchase (Singh, 2002). Furthermore, e-service is becoming increasingly important not only in determining the success of failure of electronic commerce (Yang et al., 2001), but also in providing consumers with superior experience with respect to the interactive flow of information (Santos, 2003). E-service can be usefully conceptualised as an interactive information service. Such as information provided by or collected from and about the customers can be gathered and analysed by the e-service provider and used as the basis for the customization of the service that organization offers to the customers (Rowley, 2006). Examples of e-services are computer-related services such as personal, cultural, recreational, communication and financial services.
E-service concept is not simply a combination of words electric and service. As in true e-service operation part or all the interaction between the service provider and the customer is conducted through the Internet. Thus an automatic teller machine (ATM) transaction is an example of a simple electronic plus service experience, while buying a ticket on the Net is an example of e-service experience (Surjadjaja et al., 2003). E-service may be considered to be relatively new channel of service provision as well as new way of conducting business; research on e-service is still developing (Hung and Wong, 2009).
E-Service as self-service
There is an important conceptual relationship is that between e-service and self-service. As most authors have described the e-service experience as a self service experience (Dabholkar, 2000; Meuter et al., 2000; Zhu et al., 2002) although Surjadaja et al, (2003) differentiate between e-service and self service. Further they argue that in self-service operation customer has to go to the technology such as ATM to receive a service, while in e-service customer can receive the service through the Internet at home or in other places.
Self-service technologies are often used to enhance the overall service experience delivered to the customer by focussing human service agent intervention at the point at which intervention can make the most impact. As e-service firstly, reduce marginal consumer acquisition and service cost, due to the reduction in human intervention and ease of e-service scalability (Binter et al., 2002; Iqbal et al., 2003). Secondly, e-services deliver consumers high quality, anytime and in-depth product information, which reduce the consumer price sensitivity and finally e-services support the capture of information relating to the search, evaluation and purchasing activities of consumers (Iqbal et al., 2003).
Having discussed the concept of e-business, e-commerce and e-services, it can be said that the above three has a significant influence in today’s any e-business activity. Further, in order to understand the relationship between these three terms; the following section will provide the brief discussion on relationship and similarities between each other.
RELATIONSHIP BETWEEN E-BUSINESS, E-CCOMMERCE and E-SERVICE
E-business is a broad term used to express the conduct of business such as buying and selling, servicing customers and collaborating with partners through the internet ( whatis.com, cited in Chen, 2001), under which e-service and e-commerce can be established as its two underlying dimensions (Surjadjaja et al., 2003). The scope of e-business is much broader than that of e-commerce. Extensive e-business embraces physical products and the distribution of the goods as an integral part of the overall transaction process (Greenstein and Feinman, 2000). Similarly, e-commerce mainly focus on the buying and selling of physical goods or products that results in monetary exchange whereas e-service refers to delivery of services through the internet either paid or free (Voss, 1999), For example, in the case of free e-mail subscription s and free online newspapers.These examples are actually part of e-business called e-service (Amor, 2000). However, (Voss, 1999) made the distinction between e-commerce and e-service, as being two ends of a continuum, pure e-commerce is the basic buying and selling of products, where as , at the other end pure e-service is offering service either unconditionally or with a service contract.
E-business and e-commerce are two separate concepts such as e-commerce uses the web to connect customers with firms whereas e-business includes the web as well as other means necessary to interconnect information systems and data streams, both internal and external further e-commerce requires human interaction for form filling during purchasing process however, e-business allows many processes to be fully automated thus improving the efficiency of business processes and removing the error of human interfaces (Chou et al, 2002). There are some similarities between the two. As e-business and e-commerce solutions include newly developed web technology into organizational and business processes. The use of web technology results in improved efficiency. Moreover, e-commerce is generally less complex than any e-business solution as firm must start with e-commerce initiatives before creating e-business tasks. Once a firm has successfully implemented its e-commerce functions, then it may begin to work on e-business with the e-commerce infrastructure, with out e-commerce infrastructure first, it will be difficult for firms to integrate all the e-business functions. (Rodgers et al, 2002). Moreover if a firm decide to skip the e-commerce part and jump directly to e-business, the project or work would be much more costly and time consuming. Therefore, it is necessary for a firm to create an e-commerce capability before it pursues e-business solutions.
The previous section sought to explore the inherent or pervasive characteristics of e-business, e-commerce and e-service. The following section explores the aspect of e-service experience that defined the elements, scope and context of e-service experience. As the nature of the service experience is likely to vary depending upon the activities or task being finished through the e-service engagement. Further users may be expected to take on different roles and exhibit different competences. The extent of customer customization or co-production varies between applications; this variation could have a significant effect on how customers engage with and evaluate the service interaction (Barnes and Vidgen, 2000).
In addition to this a related approach is to regard the service experience as consisting of a number of different partial performances or service components each of which can be evaluated separately by the web site visitors (Santos, 2003; Zeithaml et al; 2002). Using this approach, Bauer et al. (2005) identifies three service categories that are core services, additional services and problem solving services. Further, Chen and Chang (2003) identify three components in the online shopping experience that are interactivity (connection quality, web site design), transaction (value, convenience, assurance, entertainment and evaluation) and fulfilment (order processing, delivery, post sales service. The need to identify the scope and elements in the service experience is also acknowledged by Parasuraman et al. (2005) in their work in E-S-QUAL in which they distinguish between core service and recovery service.
On the contrary a number of authors discuss the web service experience in terms of its elements, but different authors have different notions of web elements and some elements are important of factors identified elsewhere as dimensions in e-service quality models. For example, Constantinides (2004) finds that the web experience and specifically the significance of the web experience elements depend on the buying situation, type of the customer and client’s intentions in visiting a site. He identifies the following web experience elements that influence consumer behaviour such as functionally factors (usability, interactivity), psychological factors (trust) and content factors (aesthetics and marketing mix). Later Zhang and Prybutok (2005) develop an e-service model in which web site service quality is one variable; the others are individual differences, e-service convenience, risk, e-satisfaction and intention.
On the basis of above statements it can be argued that the modelling and evaluation of e-service experience can undertaken at three different levels such as web site experience, online service experience and total multi-channel experience. As important contributing factor to the e-service experience is the ability of the organization to organize its supply and value chain to support the delivery of good quality goods and services (Rowley, 2006). Further, Voss (2003) reports on a study across retail banking, retailing, travel, utilities, content providers and computer hardware sectors that suggest that performance on responsiveness was substantially below customer expectation. Problem occurring in the e-service system can result in a failure of service (Zhang and Prybutok, 2005) and this may lead to the loss valuable opportunities to build loyalty (Watcher, 2002).
In order to have a holistic e-service experience one has to examine specific areas of service marketing, service design and service delivery. In the following section author will discuss these specific areas.
Services marketing deals with expected quality of services and involves matching market needs with a firm’s resources (Meredith, 1992). Since services cannot be produced without interaction with the customer, marketing activities need to manage the timing of demand rather than just build demand. As most services are experiences delivered by human performers, anything that a service organization does in relation to the customer becomes a marketing activity, for example bank teller’s smile, the waitperson’s courtesy or the physician’s bed side manner are all marketing activities (Fisk et al., 2000). Furthermore, marketing focuses on determining the marketing mix of product and service features such as price, brand image and accessibility of service (Palmer, 2001). Service marketing concepts and strategies have developed in response to the tremendous growth of services industries, resulting in their increased importance to the world economy (Wilson et al., 2008). Service marketing evolves on the front-end operation while service design focus on the back- end support of service operation (Surjadjaja et al, 2004).
Service design refers to the design of facilities, servers, equipment and other resources needed to produce services which includes a blue print of the service system, specifications, procedures and policies (Meredith, 1992). The design of services with a view to creating memorable and satisfying customer experiences is not new. However, the deliberate design and execution of service experiences as a distinctive management discipline with its own principles, tools, and techniques can be said to be a new approach. In easy terms service design considers services as product that need to be systematically developed with a clear focus on the customer value (Zehrer, 2009).Service design considers services as products that need to be systematically developed with a clear focus on customer value. In more precise terms Gummesson (1994) described service design as service design covers the hand-on activities to describe and detail a service, the service system and the service delivery process. Further, A major task of service design is to create, in line with service strategy, material evidence of a sensually perceivable service reality for the customer, which materializes the non-material message sent by the service provider (Zehrer, 2009).
However inadequate service design will cause continuous problems with service delivery. As to avoid such inadequacy, service design must be consistent with the service orientation and overall strategic orientation of the organization (Johnston, 1999; Doyle and Broadbridge, 1999). Similarly, service-design should be consistent with transparent service strategies, however, Mager (2004) has noted that many firms lack of such a defined service strategy. If one element of the service design is inconsistent with the overall strategy and service orientation of the provider therefore it is unlikely to be successful in providing satisfaction to the customer (Zehrer, 2009). As Doyle and Broadbridge (1999) noted that the importance of design as a composite in the strategic mix is often undervalued or ignored, the holistic nature of design and its informed status can achieve a more coherent offer to the customer.
In recent years, technology has plays an increasingly major role in service design to ensure memorable service experiences. Many service offerings have evolved to become multi-interface systems that create several opportunities for developing new offerings. However to take full advantage of these capabilities, the technology must be fully integrated into service design and management with an overarching customer orientation (Curran et al., 2003). As Patrı´cio et al. (2008, p.319) observed that In designing modern service offerings firms have to define their service interface mix, the technologies that support front-stage customer interactions and backstage support processes, and the service clues necessary to enable a satisfying customer experience.
Service delivery is concerned with delivery of the core products and services to the customers (Slack et al, 2001), including digital products. In addition, for e-service experience the introduction of e-service delivery has been associated with an increase in the number of channels through which businesses interact with their customer. Further, in such a multi channel contexts it is important not only to understand how consumers experience and evaluate the e-service delivery, but also how the delivery contributes to the total service experience and its evaluation (Rowley, 2006). Moreover, Muller-Lankenau and Wehmeyer (2005) indicate that self-service and e-service is often part of a wider service delivery. There is growing number of traditional companies use the Internet to enhance, support or by-pass their traditional marketing and sales channels and adopting multi-channel strategies.
Thus it will be important to consider e-service alongside other channels through which service can be delivered, which includes the ground that has attracted most attention, face- to- face but also extends to telephone, postal and other remote services (Rowley,2006).
Having discussed the overview of service marketing, service design and service delivery in the following section author will look into specific factors that will influence each of them. These factors are discussed in more detail below.
Trusted service can be defined as exact delivery of promised service. In e-business operations trusted service is considered to very important (Baker et al., 2006). Online trust concerns are especially challenging to the companies wanting to move to e-business (Luo, 2002). Lack of trust is one of the most often reasons for the consumers’ unwillingness to make online purchases as a result it hinders the formation of an online exchange relationship for many businesses and organization (Baker et al., 2006). Further, Gefen and Straub (2004) assert that trust is more important to e-commerce than traditional service since online environment offers limited opportunities to regulate rules and customs. For example, online transactions do not usually afford the same kind of tangible assurances that are present in traditional commerce. Since consumer are concerned about the level of security when surrendering personal or sensitive information online, Warrington and Caldwell (2000) suggest that e-business find a way to offer customers cues to encourage trust in their company. As trusted service can be designed and implemented within the service delivery process. Service providers therefore seek to achieve exact delivery of promised service and thus achieve customer satisfaction.
Responsiveness could refer to the speed of the company’s response to the customers (Zehrer, 2009). Sending timely response to e-mail requests or complaint and confirmations of orders has been recognized as an important factor when online customers evaluate a Web site (Long and McMellon, 2004; Zeithml, Parsuraman and Malhotra, 2002). To improve responsiveness a web based customer support interface requires special attention as to whether the interface is prompt, always available and provides information regarding the timeliness of service. Further many companies request customers to direct their queries to a particular person who has the best competence in answering that particular query. Electronic forms are designed to direct queries to the appropriate department.The responsiveness dimension can be defined as the willingness or readiness of customer support to provide timely service to the customer in a Web context (Park et al., 2007).
Personalization involves individualized attention, personal thank you from online stores and the availability of a message area for customer questions or comments (yang, 2001). Further personalization is refer as customer perception of the degree to which an online store provides differentiated service to satisfy specific individual needs (Lee, 2005). Most companies are building personalized web pages. Such web pages provide all the products and service, along with the navigation buttons for ease of access to various functionalities. In personalisation, service providers actively build personal profiles of customers and provide service offering tailored to customers’ individual needs. Personalization can also be a one-to-one interaction between a company representative and an individual customer. For example such as when a company service representative (CSR) helps an individual to find what he or she needs by using co-browsing facilities (Surjadjaja et al., 2003).
Privacy and Security
In the time of extensive use of internet communication, the maintenance of privacy and security has become subject of increasing concern. Various kinds of e-service, which are the services provided to customers through electronic media are now provided through internet and the issue of privacy has attracted much more attention (Zhu, 2004; Lagrosen, 2005). In spite of the convenience, many e-service users are becoming more alert about the threat of losing the personal information. There are quite a number of e-service marketers, who are willing to share their information with their customers, are being accused of their excessive eagerness and aggressiveness of invading the privacy of their customers (Culnan and Armstrong, 1999). As for the privacy of the customers e-service marketers need to inform potential customers about the variety and quality of their products and services. Security refers to the technical safety of the network against fraud or hackers. To improve the customers’ confidence and to mitigate psychological risks associated with security; more websites are advertising a secure transaction sign (Surjadjaja et al., 2003) Further Improvement is a pop-up window with a lock symbol indicating a secured encrypted information transfer. In contrast to the above mentioned improvements, developments in online transaction method are still much to be desired.
An example of up-to-date information is tracking facility giving information about the status of an order so that a customer can monitor and track the order (Surjadjaja et al, 2003). Further, E-mail service providers such as Yahoo and Gmail have indirectly assisted companies that do not have an automated response facility by sending back undelivered messages. Thus this facility helps to reduce uncertainty whether an e-mail has been delivered or lost somewhere in the network.
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