Challenges in e-commerce businesses

For teaching advanced courses on e-commerce businesses I identified five major challenges:

  • Development of a (real) value proposition: There are so many e-commerce sites nowadays, why (and how) add another one? The answer lies in a convincing value proposition. The best theory to apply here is Christensen’s „Jobs to be done“.
  • Selection of the right business model: The main decision is whether to build a (multi-sided) platform or to go for the reseller model. Most executives think the platform model is the only reasonable choice in the huge e-commerce market. However, platforms do have some disadvantages and the reseller model with its better focus on customer experience may be the better option.
  • Usage of Artificial Intelligence (AI): AI is more and more used by the big players in e-commerce. How and where does AI really make sense and what does it mean for the business model?
  • Creation of new markets: In digital business, innovations are often disruptive. But there are also non-disruptive ways of creating markets and innovations; the Blue-Ocean Strategy can show you how.
  • Learning from Amazon’s strategies: Amazon is the dominant player in e-commerce globally – and it is successful. So what can you learn from it?

Usage of Artificial Intelligence

When discussing Artificial Intelligence (AI) and its potential areas of usage, several authors use a classification of known and unknown events. Known knowns present an area in which AI can be widely used. With known unknowns and unknown unknowns (e.g. „black swan“), however, AI cannot help at all.

While this classification certainly is useful to further analyze AI usage, it is attributed to Donald Rumsfeld. Interestingly, the authors do not recollect that there is a scientific source as well: the Johari Window (see figure).

Johari Window