Friday, June 13, 2008

Example of e-commerce failure and its causes

Electronic commerce, commonly known as e-commerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Nowadays, many companies will prefer to convert their business into e-commerce system. Online retailers are sometimes known as e-tailer and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.

An Example of the E-commerce Failure…..
An example of the e-commerce failure is Toys R Us Company. This company is the leading retailers of toys, children's apparel and baby products. In order to provide the customers the products and services whenever and wherever they need, Toys R Us announced its plans to create an e-commerce subsidiary- In 1999, has established as a premier online toy, video game and baby store outlet. Failing to handle the orders flushed into its website, the company totally lost track of thousands of orders or failed to deliver them on time. The Federal Trade Commission fined Toys R Us $350,000. Although the company had pumped millions of dollars into setting up its own online operation and distribution network for order fulfillment it had to announced 75% slump in profit 2000.

The causes of the e-commerce failure…
I think part of the problem is when the big company jump into the e-commerce system, they forget some common factors that will affect their company during the holidays. Shipping product takes man power and during the holiday season, it tends to slow the process down simply by the sheer volume of orders of the mail service industry receives in that short period of time. Frankly, not all the companies have the capitol to invest in such a large expansion, if they are going into the e-commerce industry, they can't afford not to put in that investment.

On top of that, the other causes of the e-commerce failure in the Toyrus company is the inability of the customer to chose products that are more effectively sold online than in the real world. Clothing shopping online requires the customer to guess at what they had looked like in the garments presented on a Web site. Attempts to sell automobiles online without the test drive have been woefully unsuccessful. And even provisions are a hard sell, the people still want to pick out their own product that look for and prefer, in spite of the inconvenience of having to go to out to do it themselves.

On the other hands, the failure cause is delivery the stock to customer is not on time. As we should know that, getting customer to the site is one thing, while delivering is another thing. Bricks and mortar retailers have no such problems. Failure to deliver the ordered stock on time to customers caused eToys (Toyrus Company) to give away hundreds of $US100 vouchers to displeased consumers.


  1. Johnny Rook said...

    No, I think the Failure of E-Commerce is because the IT technology itself not appropriate at that time....

    Rivan Biya