Building Customer Relationships in an Electronic Age: The Role of E-Commerce Website

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

Purpose of the Study3

Research questions4

Organization of the Remainder of the Study4

CHAPTER 2: LITERATURE REVIEW5

Defining Electronic Commerce5

The Internet Role in E-Commerce6

CHAPTER 3: METHODOLOGY9

REFERENCES10

CHAPTER 1: INTRODUCTION

E-Commerce and digital technology have changed sales and marketing strategies. The amazing speed at which e-commerce has grown globally has attracted the attention of many investors, firms and consumers as well.

There has been a rush by many organizations to establish an electronic commerce presence on the Internet (Kowtha and Choon, 2001). The reason for this rush is that an effective electronic commerce Web site can streamline business operations, shorten response time to customer requests, gather market data, increase geographical reach, and sell more (Savin and Silberg, 2000; Litan, 2001), thus offering business organizations new opportunities (Tobias, 2002; Iyer, 2002). In addition to ensuring that they remain competitive, organizations must utilize the Internet (Clyde, 2000), because it provides a channel to reach existing and potential customers (Jackson, 2001; Webster, 2002).

Unfortunately, these business closures were not isolated cases, and many other e-tailers soon faced a similar fate. It has become clear that additional research on e-tailing is needed to understand and interpret related phenomena, and to provide guidance concerning its implementation. As a result the dot- com crash triggered a shift in research focus. Early assumptions and strategies were challenged. Schlauch and Laposa (2001), for example, found that e-tailers were not realizing real estate-related cost savings over their retailing competitors. Lee (1998) found that the efficiency of electronic means for commerce was sometimes countered by increased product costs. More importantly, price is not the first consideration when people buy products online. Depending on the shopping context, consumers may place more emphasis on convenience, control, or other aspects of online shopping. Many researchers have reflected on the reasons for e-tailer failures. Senn (2000) concluded that e-tailer failures stemmed from neglect of sound business strategies, intellectual capital, brand, market size, and business processes. It was discovered that marketing costs for online businesses could actually be much higher than for traditional firms. Customer retention has also been seen as a large problem for etailers. Steve Johnson, a partner at Andersen Consulting commented on the importance to e-tailers' survival of retaining consumers.

Evidence suggests that RM can benefit firms in an online context in that it may help reduce marketing costs, develop loyal consumers, and thus generate profitable sales. For example, competing with the core offering may not satisfy customers. Competing with the total offering, where the core product becomes only one element or one service of the total service offering is what counts (Groogrkroos, 1996). With such a large potential, e-tailing has attracted tremendous attention and investment in the past few years as well as a great deal of interest in developing new strategies and focused research of this new phenomena. It must be clarified, however, that early research on e-tailing focused on the effects of the Web on product ...