AGW724

SEMINAR IN MANAGING TECHNOLOGY

AND DECISION MAKING

RESEARCH PROPOSAL
The Evolution of E-commerce:
A Case Study on AMAZON
(18-Dec-2016)

MAHENDRAN KIRUBAKARAN | S-GSD0006/16 | mahen_k@hotmail.com

WARREN LOO PUAI KEONG | S-GSD 0014/15 | puaikeong@gmail.com
ONG EU CHIN | P-GSD0007/15 | euchinong@gmail.com
JIGNYASU A/L PRAFULLA JOSHI | P-GSD 0011/16 | jignyasu@yahoo.com
 Table of Contents

Abstract ........................................................................................................................................... 1
1. Background of E-Commerce ................................................................................................... 2
2. Review of Literature ................................................................................................................ 3
2.1 E-Commerce Evolution .................................................................................................... 3
2.2 Case Study – Amazon ...................................................................................................... 5
2.2.1 Amazon Progression ................................................................................................. 5
2.2.2 Amazon's Competitor ............................................................................................... 7
2.2.3 PESTEL Framework Analysis .................................................................................. 8
2.2.3.1 Political.................................................................................................................. 8
2.2.3.2 Environment ........................................................................................................ 10
2.2.3.3 Social ................................................................................................................... 11
2.2.3.4 Technology .......................................................................................................... 11
2.2.3.5 Economic............................................................................................................. 13
2.2.3.6 Legal .................................................................................................................... 14
3. Conclusions and Future Trend ............................................................................................... 15
3.1 Conclusion on PESTEL affecting Amazon .................................................................... 15
3.2 Challenges of E-commerce ............................................................................................ 16
3.3 Future Trend ................................................................................................................... 16
4. References ............................................................................................................................. 19
4.1 Articles References ........................................................................................................ 19
4.2 Website References ........................................................................................................ 20
 Table of Figures

Figure 1: Online Sales by Product Category................................................................................... 5

Figure 2: Amazon Revenues Growth 2004-2015 ........................................................................... 6

Figure 3: PESTEL Framework Analysis ........................................................................................ 8

Figure 4: Forecast of Worldwide Retail E-Commerce Sales ........................................................ 17

 Abstract

Electronic commerce or E-commerce allows consumers to electronically exchange goods and

services with no barriers of time or distance. More customers moved from traditional purchase to
e-commerce because it is often faster and cheaper. Besides, e-commerce offers more
convenience and flexible for customization option of products and services.

Amazon began as a small startup with a big vision and has revolutionized its present in e-
commerce business over the past 20 years more than any other company. Amazon was chosen as
a case study since it has changed the way people shop online with its e-commerce evolution over
the decades.

In Amazon case study, like any other businesses regardless of traditional or online, are often
affected by external factors. These factors are changing the way businesses operate and how the
industry evolves. Political, Environment, Social, Technology, Economic and Legal (PESTEL)
framework is a tool that is used to identify these external factors that affects the condition of a
business organization or industry’s macro-environment.

Amazon sells a great deal of consumer goods, the other main feature that puts the company on
another level is the multi-leveled e-commerce strategy it employs. It provides services to four
primary customer sets: consumers, sellers, enterprises, and content creators. The company also
provides other marketing and promotional services, such as online advertising and co-branded
credit card agreements.

Selling goods isn't the only way the company makes money, its web site's affiliate program is
one of the most famous on the Web. The level of integration that occurs on Amazon is a
programming feat that few (if any) online sales sites can match, Amazon makes every possible
attempt to customize the buyer experience. The massive technology core that keeps Amazon
running is a major challenge, next to facing up growing competitors like Walmart, Alibaba,
Google in the online business.

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1. Background of E-Commerce

In e-commerce (electronic commerce) the trading business is done through the internet and it
involves commercial transactions that include transfer of information. E-commerce simply
means buying and selling products and services through the internet and is commonly associated
with online shopping. It covers a range of different type of businesses, from consumer based
retail sites to business exchange trading goods and services between corporations.

There are four principal categories of e-commerce, namely B2B (Business to Business), B2C
(Business to Consumer), C2B (Consumer to Business) and C2C (Consumer to Consumer).

• B2B: Involves companies doing business with each other. One example is
manufacturers selling to distributors and wholesalers selling to retailers.
• B2C: Comprises of businesses selling to the overall public through shopping cart
software, without needing any human interface. An example of this would be
Amazon.
• C2B: Consumers post a project with a set budget online, and companies bid on the
project. The consumer reviews the bids and selects the company. Elance is an
example of this.
• C2C: Takes place within online classified ads, forums or marketplaces where
individuals can buy and sell their goods. Examples of this include Craigslist, eBay
and Etsy.

Following the tech-savvy consumer demands, e-commerce has evolved over the years as one of
the main facets of the internet to emerge. Companies like Amazon began over a simple platform
of B2C by merely selling goods and books and transformed to the biggest online retailer in the
United States. Its operation is now serving multinational consumer markets including Europe,
India and China. Nowadays the e-commerce giant provides a range of services ranging from
retail to cloud computing to book publishing. In year 2015, Amazon hit $107 billion revenue as
compare to $6.9 billion in year 2004.

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2. Review of Literature
2.1 E-Commerce Evolution

Early development of e-commerce can be traced back to the 1960s, when companies started
using Electronic Data Interchange (EDI) to share business documents with other companies. E-
commerce was defined by IBM in 1972 when the first electronic transaction happened. As the
number of individual users sharing electronic documents with each other grew in the 1980s, in
the 1990s, the rise of eBay and Amazon transformed the e-commerce industry. The development
of e-commerce has also led to rapid increase of internet sales as consumers begin to appreciate
benefits of:

• Discounted price offered by sellers as they operate with less margin

• Convenience to have a product delivered rather than the cost of time and transport
and parking of going to a store
• Sourcing low-priced product from overseas vendors
• More variety of catalogue offered by online stores
• Review engines that compare and recommend product
• Uncommon goods sold for cheaper offer at auction sites

The wide use of the internet globally has substantially contributed to the increase of online
transactions. As mobile devices became more popular, mobile commerce has become its own
market. With the rise of sites like Facebook and Pinterest, social media has become an important
driver of e-commerce. Source from Internet Live Stats (2015) showed that 201 countries around
the world have internet access. The accessibility to internet help to grow E-commerce over the
virtual platform, below are the major milestones for the E-commerce evolution:

 1979- Michael Aldrich is credited with inventing online shopping by connecting a

modified domestic TV to a real-time transaction processing computer via a domestic
telephone line.
 1982- Minitel was introduced in France and was used for online ordering.
 1991 – The World Wide Web is created

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  1994- Netscape releases the Navigator browser. Pizza Hut offers online ordering on
its web page, and the first online bank opens.
 1995 – eBay is founded & Amazon makes its first sale
 1996 – Over 40 million people have Internet access, and online sales surpass $1
billion for the year
 1998- PayPal comes into existence.
 2000 – Revenue from U.S. online shopping totals over $25 billion
 2002- eBay acquires PayPal for $1.5 billion and changes the scope of online shopping
forever.
 2003- After eight years, Amazon posts its first yearly profit and Apple launches
iTunes, the first major digital music store.
 2005 – The term “Cyber Monday” is coined and becomes one of the biggest online
shopping days of the year
 2006 – Facebook begins selling advertisements
 2008 – Online purchases are made on mobile phones for the first time
 2009 - Alibaba held the first Double Eleven (Single’s Day) Shopping Festival online
 2012- US E-commerce and online retail sales are projected to reach $226 billion (an
increase of 12% over 2011).
 2016 - Alibaba Singles' Day festival posted a record $17.73 billion sales in 1 day

Today, 78% of US adults have made a purchase online, and 69% of adults with Internet access
shop online at least once a month and the most commonly purchased items online are electronics
(22%) and clothing (17%).

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 Figure 1: Online Sales by Product Category

2.2 Case Study – Amazon

2.2.1 Amazon Progression

Amazon startup began with its founder’s own savings, loan from bank and family. It began as a
destination to buy books, and eventually other media. It then offered marketplace services for
online retailers and/or individuals, while simultaneously selling other physical goods for homes,
offices, cars, and beyond. The company is a giant in the online retails with tremendous product
range and they make every possible attempt to customize the buyer experience.

After 1996, Amazon received extra investment of $1 million from venture capital. Amazon did
not rely solely on its internal strength to conquer the market. Eventually, Amazon went public on
NASDAQ in May 1997, Amazon acknowledged that only the stock market would be able to
provide the kind of financing it was looking for. Today the shares are valued at approximately

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$268. In 2001 the stock price plunged to just $5.97 with the dotcom crash. Amazon managed to
survive this industry challenge period, though had to close two warehouses and lay off 15% of
their staff in the process. The company finally turned a profit in late 2001 despite the dotcom
crisis. Even when profitable, Amazon have never declared or paid cash dividends on common
stock, opting instead to retain all future earnings to finance future growth.

Amazon’s revenue growing trend from year over year as shown in Figure 1 makes it a case study
worth analysing.

(source: Statista, 2016)

Figure 2: Amazon Revenues Growth 2004-2015

Amazon is simply the ultimate hub for selling merchandise on the Web, it lets almost anyone sell
almost anything using its platform. Since 2000, customer can also find goods listed by third-
party sellers to individuals or small companies and retailers like Target and Toys 'R Us, used
goods, refurbished goods and auctions.

The embedded marketing techniques that Amazon employs to personalize shopper experience
are probably the best example of the company's overall approach to sales by knowing its
consumers very well. Customer experience good deals when they visit Amazon.com, from
special offers and featured products to some customized recommendations to attract personal
shoppers.

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Amazon is also able to lead the industry as it has been sensitive to the macro environment
changes throughout the world, by trending of consumer buying behavior and keeping track with
fast development of technology in every business aspects.

2.2.2 Amazon's Competitor

Amazon operates in three general segments: media, electronics and other merchandise. As of
November 2014, the company became the largest internet company in the US and a
multinational consumer electronics company.

In the media segment, Amazon competes with auction site eBay, media game-changer Netflix,
Time Warner Cable, Apple, with iTunes; Google with its Play Store and media producer Liberty
Interactive.

Amazon has several competitors in the electronics and general merchandise segment, many of
which are brick and mortar rivals including Best Buy, Family Dollar, RadioShack, Staples,
Target, Walmart, Sears, Big Lots, Delia and Systemacs. Where else in the online electronics and
general merchandise segment the competitors includes Alibaba Group, LightInTheBox Holding
Co., Overstock.com, PCM, Vipshop Holdings, JD.com, Wayfair Inc. and Zulily.

In the other operating segment, Amazon competes with several of the world's largest companies
including CDW, PC Connection, Insight Enterprises, Google, Oracle; salesforce.com, Accenture
and Citrix Systems, among others.

Amazon’s CEO realized that not only could Amazon sell products for less than its competitors
but could also make them much cheaper than its competitors. By streamlining manufacturing,
distribution and retail of products, Amazon has a significant competitive advantage due to the
scale it operates in.

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2.2.3 PESTEL Framework Analysis

We used the PESTEL framework, as displayed in Figure 2 to analyze the changes in macro
environment that affects Amazon. The PEST framework was first introduced by Harvard
Professor Francis Aguilar in 1967 as the tool to scan the business environment which is useful to
spot business opportunities, detect direction of change within business environment and avoid
unconscious assumptions when entering a new country, region, or market. In 1980’s, 2 more
factors were added to ensure the framework more comprehensive.

Political

Legal Economic

E-Commerce

Environmental Social

Technological

Figure 3: PESTEL Framework Analysis

2.2.3.1 Political

Political behavior refers to “intentional acts from a wide range that may include influence tactics,
self-presentation, impression management, voice and helping behavior to manage (create,

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maintain, modify or abandon) the shared meanings of organizational situations so as to produce
desired outcomes that would otherwise be unfeasible” (Kapoutsis, 2016). Therefore, politics is
tied to what is actively going on within the company, and in the society outside the company.
Where in previous years, the concern was for laws and regulations for security, false advertising,
fraud and anti-dumping, while this now the focus has been all about potential political election
risk.

There is no difference between e-commerce and traditional commerce in this respect within the
foreseeable future, as this year represents a sea change whereby external political factors
dominate almost all events worldwide, with the biggest factor being the US Presidential elections
culminating in November 2016. The uncertainty to business practices stems from the rhetoric,
fear mongering, sensationalistic statements, and victimizations of various parties, with either
Clinton or Trump both viewed as risky for business. E-commerce impact is not tied to scientific
literature, but to promises of political entities worldwide to erect barriers to trade in order to
protect local economies.

The e-commerce risk particularly on Amazon is clear, its founder Jeff Bezos purchased the
Washington Post newspaper more than 2 years ago, and has actively undermine the candidacy of
Donald Trump. The retaliation from Trump as the US President, can be detrimental to Amazon,
as this is the primary source of ownership income for Jeff Bezos. Therefore, the political
perspective is crucial as policies displayed by the US Presidency can post a spill over threat to
the e-commerce industry.

Overall governmental support for e-commerce is an opportunity especially for foreign countries
expansion, Amazon could continue expanding in India and China markets with governmental
support. However, the rising threat to Amazon also comes from the same factor, China
government allowed foreign e-commerce to operate in China, at the same time, they are also
strongly encouraging e-commerce startup with China companies. Competitors like Alibaba and
JD.com compete with Amazon fiercely in China online retail market.

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2.2.3.2 Environment

Environmental concerns have been recognized as part of sustainability and defined as

‘development that met the needs of the present generations without compromising the ability of
future generations to meet their needs’ WECD (1987). In other words by not compromising the 3
P’s which are the People, Planet and Profits, the entire e-commerce industry has grown towards
sustainability with Amazon leading the way as one of the prime movers.

Commercialisation of the internet has demonstrated a new working model with minimal usage of
resources, whether it is land, packaging, energy resources or others, while delivering the
maximum amount of savings to customers. During the shift to online retail, Amazon excelled by
harnessing web data to optimize price, locating warehouses to optimize logistics, and
experimenting with delivery models. Land space is minimized with marketing being virtual,
transportation are by means of Economic Order Quantity and Shipping, while packaging is often
times subdued with minimal layering, and transaction steps and traceability is cut to the
minimum or stored online.

The negative part of E-commerce to the environment stems from the need to use technological
interfaces, with its attendant obsolescence and need for energy usage for recycling. Bhutta et al
(2011) estimates that in year 2007 e-waste to landfills is at 81% and the situation has not
improved much. This is the single biggest detractor of E-commerce.

Rising in emphasis on business sustainability, and popularity of low carbon lifestyles are the
opportunities for Amazon to improve the impact to its business. Amazon improved its corporate
social responsibility strategies by addressing environmental issues as customers have strong
interest in this area and these will attract investors. As Amazon indulges into logistic business,
environment issues should be part of Amazon corporate strategy to address the ecological issues.
These strategies eventually turn into business sustainability and enhance the brand or corporate
image as e-commerce business entity that care about environment.

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2.2.3.3 Social

E-commerce has impacted society as it has changed the way businesses operate, with the latest
being developments being Web 2.0 which refers to a concept as well as a platform for harnessing
collective intelligence (Kaplan and Haenlein 2010). Social differences will exist where new
technology is introduced as it displaces traditional businesses setups. Also reflecting that social
structures get disturbed when longstanding jobs are replaced with new technology centered job
placements.

From social perspective, building on Big Data to push specific marketing by targeting potential
consumers. While new information exist to show the effectiveness of this approach, concerns of
privacy and security remain, and needs to be addressed moving forward to control public
backlash against deprived utilization of this technology.

In a much more visible trek into the unknown, Amazon has funded the A9 search engine. It has
full search capabilities, mapping functions, a toolbar with pop-up blocking and an easily
accessible personal search history. A9 also provides a "Diary" where user can make notes about
specific webpages and lists of recommended links for others to check out based on their previous
searches.

Beyond the e-commerce industry to keep up to the social needs of the IT community, Amazon
has introduced “Mechanical Turk Project” that seeks to combine community, technology and
compensation. Using the Mechanical Turk system, the IT community can post tasks they need
help with, like household service and maintenance with quickly caption a set of photos and the
person who completes it gets a small amount of money in return. Amazon gets a commission on
each completed transaction.

2.2.3.4 Technology

Over 20 years, the mobile internet speed has increased from 100kbps to 30Mbps, a 300% speed
increment. Dirk (2012) mentioned that fast forwarding of mobile technology happened in the last
two decades, from simple wireless analog-based (1G) in late 1990’s to 2G GSM networks, 3G
HSDPA network in 2005 to 4G LTE in 2010.

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Technology transformed business from specific operating hours and location to being available
anytime and anywhere. Changing trends in the technology provides more convenience to the
consumer and revolutionize the business operation as what Amazon did with the “Supply Chain
System”. In year 2000, Amazon hugely invested over USD$2.1 billion to build automated
warehouse and automated supply chain management. To improve the delivery time and cost,
Amazon is exploring to improve its delivery method by deploying drones, (Jenkinson 2005,
Business Week 2003).

Castelluccia (2012) elaborated about Consumer Tracking on the Internet and there are three
types of tracking namely behavioral tracking, website tracking and location tracking. Behavioral
tracking is based on the consumer’s interest when they search for certain products or services
online, the finding history eventually converts to consumer behavioral profile and behavioral
profiling involves collecting data and searching for patterns. Amazon has gained a lot of
advantages using the tracking technology by having huge database with added marketing
information such as consumer demographics and their spending interests with ratings of the
products purchased.

Website tracking is another major source for data collection, mainly focused on the IP address of
the user through techniques such as cookies and JavaScript. Location tracking is primarily from
mobile devices. Smart phones are equipped with multiple sensors like camera, microphone, GPS
and accelerometers which enables applications such as Facebook, Foursquare and Google Map
to collect consumer’s location and push the advertisement such as “place of interest” to the user.
Data collected from consumer tracking is a gold mine for the online businesses as it will enable
them to provide more personalized service and product information to attract more consumers to
shop online.

Amazon has also evolved to provide comprehensive cloud computing platform which is Amazon
Web Services (AWS) as part of service to handle big data. The first AWS offering was launched
in 2006 to provide online services for websites and client-side applications. AWS service is
diversified geographically to minimize the impact of outages and ensure robustness of the
system.

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2.2.3.5 Economic

Rising of inflation drives the demand and consumption for goods and services down. Economic
forces such as inflation, interest rate, labor and government monetary policies can affect cross-
boundary e-commerce businesses. Ingait (2014) indicated that economic factors are important to
e-commerce. Thus government’s ability to maintain the inflation at a reasonable level is critical.
Malaysian currency dropped 25% in 2016 compared to 2015, driving the inflation for imported
goods. Such scenario drives the consumers to seek affordable goods overseas especially for non-
essentials and luxury items.

Interest rate is another monetary tool used critically by the government. Low interest rate
encourages borrowing and high interest rate discourages it. While interest rate is low, the cheaper
cost enables businessmen to extend their businesses online and consumer will have additional
money to spend since they have more disposal income. Money circulation in the market will
increase due to this.

Cost is the main factor in operating any business, the ability to drive the cost down eventually
contributes to higher profit margin. OCED (1999) researched that e-commerce has economic
impact to the business for the ability to extend to cross-boundary without the need for physical
setup, thus this encourages global marketing and has lesser variable cost. Merchants need to
maintain only one online store instead of many physical branches and enables duplicated
inventory cost to be reduced.

Employment rate is also a main factor that encourages e-commerce. Low employment rate
causes more people wanting to be entrepreneur by doing business online as the cost to start up
online business is relatively low as compare to setting a physical shop. On the contrary, high
employment rate stimulate e-commerce transactions as more people can afford to spend more.

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2.2.3.6 Legal

The internet transcends geographic borders, there are no laws or borders on the Internet -
therefore a term ‘Lex Internet’ has been used as synonym to no law internet. Thus, it has raised
concern on privacy and security, copyright and trademarks. It can impact e-commerce when
attempting to relate which country’s legal system should be referenced, especially when disputes
arise. Trust and fraud is another serious concern relating to e-commerce, in the cyber business
world, cash transactions or payment on delivery is not really an option. In most of the case, buyer
will need pay first and wait for the goods to be delivered, if the seller decided to cheat the buyer,
then the buyer will have a hard time to trace and retrieve the payment made. Another potential
fraud includes the phantom business opportunity and bogus investment.

Nasir (2004) researched that some countries encourages the use of electronic business by
adopting legislation, for example Australia enacted Electronic Transaction Act (ETA) that
enables contractual dealings, such as offers, acceptances and invitations, to be conducted
electronically. Data protection and credit card data is another area to look into, Malaysia
implemented the Personal Data Protection Act in 2010, similarly in Singapore in 2012 which
aims to protect consumer’s data, therefore business entity cannot abuse the customer’s data that
they have access to. Likewise, in other countries in the European Union (EU) with the Data
Protection Act implementation, retailers are required to have privacy policy to explain how they
plan to use the customer’s data (Wilmart, 2014). EU has the most comprehensive consumer
protection in e-commerce as compared to the rest of the countries. Any online retailer operating
in EU and selling to consumers is subjected to regulations regarding distance selling (Wilmart
2014).

The online consumer information tracking deployed by Amazon has generated a fair amount of
controversy. There is argument about Amazon gathering too much information for ease of
marketing comfort. The Electronic Privacy Information Center reported that in 2000, Amazon
started sharing its customer data with its partners and subsidiaries. The concern has increased
with the tracking of "gift-giving habits," because the gift-giving information Amazon collects
could be about minors, which is against the law and the gift receivers are not aware that their
personal information is stored in Amazon's database.

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From legal aspect, the law coverage on e-commerce is crucial not only for consumer but also to
the retailers. Any dispute in the business, the legal system is required as arbitrator to decide the
best solution for the parties involved.

3. Conclusions and Future Trend

3.1 Conclusion on PESTEL affecting Amazon

Clearly using the PESTEL framework, we can conclude there are risks and as well as
opportunities to Amazon’s e-commerce interconnected businesses. The most immediate risk is
the uncertainty of Political change directives in governmental policies, the US Economic
situation, and societal perception of security and legal risks.

The opportunities which exist with Amazon’s current business strategy is the Environmental cost
savings, Social needs transformation, and Technological changes provides a clear systemic
advantage over rivals who have merely regional or special case benefits, and who does what
everyone else is doing. The risk taking attitude at Amazon indicates their clear direction in
business decisions, while willing to suffer temporary setbacks if they do not play out well at first.

Contenders within the e-commerce industry are commonly focused on expanding product and
service offerings on consistent growth strategies such as allowing customers to shop online as
well as physically, providing forwarding services for collecting shopping bundles and expanding
social marketing placements through electronic media. These efforts have yet to be positively
correlated with generating significant increases in revenue or net profits, and it has been
theorized that customer apathy to social media (Facebook engagement in 2013 and apathy 2016)
is a natural progression of over engagement.

Contrarily Amazon does it differently by leading to create an entirely new social market to which
previously did not exist in e-commerce. Amazon expanded its book market with the Kindle
reader in a time when physical book sales were plunging, creating an entire new market for
social ways to purchase and access books. Amazon introduced ALEXA (sold hardware as
ECHO) to marketplace a cloud based learning network which responds to user’s enquiries

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verbally, rather than visual-physical. This development has the potential to build entire new
social markets, again where none existed.

3.2 Challenges of E-commerce

The e-commerce businesses require integrating two kinds of activities – one that are embedded
into the physical value chains and the others that are built through information into the virtual
chain. Although the relative importance of these two kinds of chain depends on the
characteristics of the products and services, their integration, nevertheless, plays a critical role in
the success of e-commerce.

The road to creating a successful online business can be a difficult if owners are unaware of the
online operating principles and developments surrounding e-commerce industry. Researching
and understanding the guidelines required to properly implement an e-business plan is a crucial
part to becoming successful with online store building.

3.3 Future Trend

Source from Statista projected that by 2018, mobile user worldwide will reach 4.93 billion.
Fortune.com reported that Amazon’s mobile app saw its usage increase by 35% in Prime Day
Deals on July 12, 2016 that generated $565 million in sales, and Amazon’s mobile app users
have the highest median income compared to competitors.

In 2016, as illustrated in Figure 3, total retail sales across the globe will reach $22.049 trillion, up
6.0% from the previous year. eMarketer estimates sales will top $27 trillion in 2020, even as
annual growth rates slow over the next few years, as explored in a new eMarketer report,
“Worldwide Retail Ecommerce Sales: The eMarketer Forecast for 2016”.

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 (Source: eMarketer, August 2016)

Figure 4: Forecast of Worldwide Retail E-Commerce Sales

This unique combination of fast growth and low market share means that there is an enormous
opportunity for the sector to grow and for new dominant players to outpace industry leaders.
Enterprise retailers need to watch who’s emerging, track who’s loved, and research what’s
driving success. In addition, Amazon must continue to optimize their in-store experiences with
connections between online and offline worlds.

In e-commerce, more and more value chain activities are conducted electronically, therefore,
businesses should understand the implication of the virtual value chain activities. The virtual
chain offers a number of distinct advantages over the physical value chain. Some of these
advantages lie in forging alliances between customers and manufacturers, advertising products
and services selectively with effects of audio, video, and graphics, and saving time and money in
efficiently processing customer’s orders and enquiries.

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The next step for e-commerce will be the application of Artificial Intelligence (AI) systems and
running evolutionary algorithms designed to find the absolute optimum. By developing systems
using these algorithms, which are designed to effectively test, optimize and repeat on loop, e-
commerce will move into an even higher level of sophistication as this technology improves.

Perhaps one of the most exciting developments in e-commerce is one we are already starting to
see in testing - drone delivery. Drones will in the future allow companies to deliver packages
much more efficiently and quickly, with delivery times of just 60 or even 30 minutes from order
entirely plausible. Drones will be sent out from distribution centers and travel directly to the
delivery addresses provided, at significantly lower cost and logistical hassle than at present.
Amazon, among others, is already seriously close to making this a reality across the entirety of
their business, and it seems that others will follow suit as quickly as possible.

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4. References
4.1 Articles References

Ingait. Paul (2014). How Do Economic Forces Affect E-Commerce Organizations?, studioD
http://smallbusiness.chron.com/economic-forces-affect-ecommerce-organizations-76681.html

Castelluccia, C. (2012). Behavioural tracking on the internet: a technical perspective. In

European Data Protection: In Good Health? (pp. 21-33). Springer Netherlands.

OECD (1999). “Economic and Social Impact of Ecommerce: Preliminary Findings and Research
Agenda”. OECD Digital Economy Papers, No. 40, OECD Publishing.
http://dx.doi.org/10.1787/236588526334

Kapoutsis, I., & Thanos, I. (2016). Politics in organizations: Positive and negative aspects of
political behavior. European Management Journal, 34(31), 0e312.

Bhutta, M. K. S., Omar, A., & Yang, X. (2011). Electronic waste: a growing concern in today's
environment. Economics Research International, 2011.

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and
opportunities of Social Media. Business horizons, 53(1), 59-68.

Huang, Z., & Benyoucef, M. (2013). From e-commerce to social commerce: A close look at
design features. Electronic Commerce Research and Applications, 12(4), 246-259.

Bhatt, G. D., & Emdad, A. F. (2001). An analysis of the virtual value chain in electronic
commerce. Logistics Information Management, 14(1/2), 78-85.

Jopson, B. (2011). Amazon urges California referendum on online tax. The Financial Times.

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4.2 Website References

Wilson, Mel (2003). CORPORATE SUSTAINABILITY: WHAT IS IT AND WHERE DOES IT

COME FROM?.Ivey Business Journal. http://iveybusinessjournal.com/publication/corporate-
sustainability-what-is-it-and-where-does-it-come-from/

Paul Cole-Ingait (2015). How Do Economic Forces Affect E-Commerce Organizations?. studioD
http://smallbusiness.chron.com/economic-forces-affect-ecommerce-organizations-76681.html

Tobias Lütke (2014). Mobile Now Accounts for 50.3% of All Ecommerce Traffic. Shopify
https://www.shopify.com/blog/15206517-mobile-now-accounts-for-50-3-of-all-ecommerce-
traffic

Reagle, Dirk (2012). 10 Years of Mobile Industry History in 10 Minutes. Sitepoint.com

https://www.sitepoint.com/the-advancements-in-mobile-design-and-how-it-has-developed-into-
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