BEHAVIORAL ASPECTS OF ELECTRONIC COMMERCE

By | February 9, 2018

When examining the relevant literature related to success of both SCM and eCRM, one must also examine some of the behavioral aspects of online marketing and purchasing. Although the busi- ness-to-consumer (B2C) electronic commerce and information exchange that takes place in eCRM involves a somewhat different dynamic than the business-to-business (B2B) purchasing that oc- curs in SCM, it is still a worthwhile exercise to examine its nature and potential impact on success for both of them.

For the case of SCM, Steinfield et al. (1995) investigated the effects of such interorganizational data networks on buyer–seller relationships. One of their important conclusions was that the more firms used interorganizational networks, the greater the tendency to develop hierarchical relationships with their trading partners. This result shows that SCM develops naturally in an electronic environment. Their conclusion concerning smaller trading partners, however, appears to mitigate the effectiveness of this online trading environment. Electronic marketplaces may therefore be necessary to bring these smaller companies into the electronic trading arena. This result is also found in collaboration-oriented online systems. Small suppliers may not have the resources to implement the technology needed to share information in their supply chains, and so special consideration is often needed for smaller training partners.

Other work focuses on factors that influence consumer online behavior and applies to both SCM and eCRM (Steinfield et al. 1995; Hoffman et al. 1996; Novack et al. 2000). The concept of “flow,” which originates in the field of organizational psychology, has been extended to an online environment and defined in this context as “a cognitive state experienced during online naviga- tion that is determined by: (1) high levels of skill and control; (2) high levels of challenge and arousal; (3) focused attention; and (4) is enhanced by interactivity and ‘telepresence.’” Novack et al. (2000) state that consumers who achieve ‘flow’ on the Web are so acutely involved in the act of online navigation that thoughts and perceptions not relevant to navigation are screened out. This allows the consumer to focus entirely on the interaction. Concentration on the navigation experience is so intense that little attention can be given to anything else, and other events occur- ring in the consumer’s physical environment lose significance. As self-consciousness disappears, the consumer’s sense of time becomes distorted, and the state of mind arising as a result of achieving flow on the Web is extremely gratifying. This phenomenon illustrates a key aspect of the online experience: that in the right circumstances a customer can brought into a unique state of high online interaction. Successful eCRM, and to a lesser extent SCM, might hinge upon gathering information when a current or potential customer is in such a state.

When discussing the behavioral aspects of eCRM and SCM, we must consider seller/customer relationships. As described earlier, eCRM represents a form of relationship marketing (Gronroos, 1994). The building of such relationships involves not only the supporting business processes, but also the elusive aspect known as “customer satisfaction.” Gronroos (1994) points out that the temporal nature of customer satisfaction often is not known or is very weakly determined through surveys. In order to build a relationship, satisfaction must be monitored. Preis (2003) implies that customers compare prepurchase expectations with perceived actual performance, and make judg- ments about consumption experiences based on such comparisons. Satisfaction is portrayed as a

nonlinear step function where small changes in perceived performance create little effect either way. Relationship building thus hinges upon a preconceived positive notion of performance to be fully or almost fully realized from the onset.

The ultimate success of both eCRM and SCM thus requires that all parties involved take action based on perceived benefits from the system being utilized. For instance, a supplier would not enter into a supply chain relationship with a customer via SCM if it did not envision efficiencies to be gained or additional sales revenues/profits. Work by Zank and Vokurka (2003) points out the positive influence that SCM has on the relationships between members of a supply chain. They utilized a survey of members of two specific industry associations, the International Asso- ciation of Plastics Distributors and the Power Transmission Distributors Association, to deter- mine the importance and impact of SCM conducted online. According to their survey, distributors, manufacturers, and customers all perceive benefits from e-business. As might be expected, the customer respondents, which included respondents from the purchasing area, rated issues tied to reducing costs as relatively more important.

Torkzadeh and Dhillon (2002) also utilize a survey to obtain empirical data on factors that influence the success of electronic commerce. Again, although this work was targeted at con- sumer behavior and the marketing aspects of B2C, it points out legitimate concerns for SCM and eCRM. The “fundamental objectives” that they point out, such as “It is important to minimize time to gather information,” “It is important to maximize privacy,” and “It is important to mini- mize the risk of product use,” all have relevance in B2C and help to ultimately determine the success or failure of SCM and eCRM. Additional factors that potentially influence effectiveness are data gathering efficiency and security.

SUMMARY

Online customer relationship management (eCRM) and online supply chain management both involve the use of the Internet for managing relationships. eCRM focuses on the customer rela- tionship, while online SCM further deals with suppliers and the transfer of goods between in- volved parties. SCM enables CRM through customization of goods and services needed when fulfilling orders for specific unique customers in a CRM-environment. Also, SCM planners are users of eCRM knowledge in the production and delivery processes required to tailor products and services.

Both online SCM and eCRM rely for their success on the underlying technology, the correct exchange of information, and the nature of the online experience/customer’s online behavior. They both must overcome the problem of “technological drift,” the gap between the intended use of technology and its implementation. This gap creates systems that are both underutilized and lacking in strategic advantage. One can certainly argue that both online SCM and eCRM, if prop- erly designed and implemented, are systems of strategic importance. Both online SCM and eCRM also require a commitment from top management to be successful. In these ways, success for both eCRM and SCM is interrelated.

The information in this chapter is useful in pointing to key areas for management focus, since many firms are implementing both types of systems. Examination of the use of data mining and similar techniques for revealing interesting relationships between customers’ buying patterns and suppliers’ behavior (such as unexpected increases in lead times from suppliers during certain periods of heavy customer demand) would be a fruitful area for further work. The most important point for practitioners of both eCRM and online SCM is the need for integration between the respective systems.

Current software applications, whether in-house developed or commercial off-the-shelf, al- most always focus on one or the other type of system. Such applications do not take into account the crucial CRM information that can be gleaned as an organization conducts its day-to-day SCM. Customer buying trends, at the very least, could be gleaned from SCM operations to aid production planning as well as marketing/customer relationship-building activities. Likewise, a CRM system would allow changes in customer preferences to be reflected in overall product forecasts, thereby affecting the aggregate planning and logistics that make up the keystone of the supply chain. Although Enterprise Resource Planning (ERP) application vendors have taken steps to develop modules for both eCRM and online SCM, a gap in availability still exists, since the bulk of applications supporting one or the other organizational function are from independent, vertical market-oriented software vendors.

 

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