Different Perspectives Compared Between Amazon And Taobao

Published Date: 02 Nov 2017

1. Introduction

As the whole world is experiencing the innovation and advancement of technology, which has become the most important factor of competitive advantages, an increasing number of companies make their first and foremost strategy in developing of E-Commerce. What is E-Commerce? E-Commerce, or electronic commerce, is the purchasing or selling products and services through internet. The needs for more timely information result in the development of internet. There is no wonder that people in the business saw the opportunities in using internet to promote sales. During the operations of E-Commerce, there is an indispensable step—web analytics. In this article, I will mainly focus on the importance of web analytics in business; the impact of web analytics on E-Commerce from three different perspectives, which are management, technology, and organizational; and the effects on both customers and business.

2. The importance of Web Analytics in business

2.1 The definition of Web Analytics

Avinash Kaushik, the most famous pioneer of web analytics, defines the this terms as (Web Analytics 2.0, 2009): the analysis of quantitative and qualitative data from your website and competition, to drive a continual improvement of the online experience that your customers, and potential customers have, which translates into your desired outcomes. That means, web analytics is a kind of software tool which can help the commerce companies and other website owners to collect the data about the activities they concerned about the website visitors and improve themselves.

2.2 The detailed data may be concerned

A large number of data is being analyzed by the website every second every day. Such as, the numbers of people visited the website, the links that visitors use most frequently to come to the page, the peak time of customers using the website, the time period visitors stayed on the site, the keywords that customers searched on their search engine, and examine whether the visitors can use their website properly. It is a process of collecting, analyzing and reporting the statistics of the web site usage from their visitors.

2.3 The benefits of Web Analytics

The success of the website operating is largely depended on the activity and experience of the visitors. From the examples of data information listed above, the website publishers can achieve the following benefits.

•Monitoring the visitors and users

From the analytics, it can be easily find the visitors performance, like how long they spend on browsing the site, how they come to this page and even where and who they are. It can also provide the information about the customers, for examples, the high frequency keywords and clickstreams, how many times the visitors return to this page and even the information about where they return from (2010). It can tell the managers of the commerce how well the website works for the customers, who are old customers and who are potentials. In this case, the managers can separate the visitors in different levels to provide them different services.

•Optimizing the web site

After analyzing the activities of the visitors, the managers are able to do a series of improvements based on the feedback statistics. Such as the best place of putting the ads and which is the most popular page, which can help the managers to adjust the needs. This brings the managers to a better position to control and assist the visitors.

•Formulating sales and e-marketing plans

Wed analytics are able to prepare the e-marketing plans. Because the web analytics provide the most accurate and fresh data, so the plans are all based on the actuality. The statistics show the needs and wants of the customers. By tracking the visitors search, the managers are able to conjecture the features of the products customers most prefer and make plans to promote the sales.

3. The impact of Web Analytics on E-Commerce

Web analytics influences and changes the way of E-Commerce existing. There are thousands of examples in the world. In this part, the report will mainly focus on the Amazon and Taobao as examples. Both of these two are online retailer companies. Amazon is the biggest online sales company in the world with headquarters in America. Taobao is a Chinese online shopping web site operated by Alibaba Group. Taobao was launched in 2003 which is much younger than Amazon (which was established in 1995). Both of these two companies are impacted by the Web Analytics. Following the report will discuss the impact on three different perspectives.

3.1 Management perspective

From the management perspective, the E-commerce is impact on the business scales, business structures, internal communication and the decision making processes. Firstly, web analytics has an effect on the business scales. For small business, they do not enough financial support to do the web analytics. Because the small companies, like sole traders, are not able to afford to employ a professional analyst. Sometimes, they need to do it by themselves which will cost them much more time and money because of the unfamiliar of the operation of the web analytics (McCoy, 2013). Secondly, the electronic commerce has the different business structure because of the web analytics. In the electronic commerce, the department of statistics analysis is important than any other departments. Departments like financial, risk assessment and media advertising are all determined by the data that is analyzed from the web site. Thirdly, web analytics increase the opportunities of the communication internal of the business. All the departments need the information from the web analysts, it not only increase the horizontal communications, but also the vertical communications. The efficient and effective communication in the business leads to a successful management. Lastly, the web analytics determines the decision makings of managers. From the web analytics, the managers can easily understand how well the company performs recently. In that case, the managers are able to make the right decisions immediately and reasonable strategic plans for the future.

Amazon separates its management of their huge amount of data in four steps, generation, collection and storage, analytics and computing, collaboration and sharing (Wood, 2012). They make sure to manage each step at a low cost and high throughput. After managing the statistics in four steps, Amazon uses these data to create a customer segmentation management, built the mathematics financial modeling, and finally set goals to be business intelligence. The customer segmentation management is to separate different customers into different levels based on the power of consumptions, which can manage the customers well from the information to their activities. The mathematics financial modeling is using the mathematics graphics, such as pie chart and bar chart, to simply show the performance of the web site to the managers. Business intelligence is to make the managers of Amazon to be smart, which means the managers are able to make better decisions after gathering, analyzing, storing and providing access to data (Marr, 2013). In other words, the efforts of Amazon making on the web analytics are directly related to the performance of their management.

Taobao takes the similar management methods with Amazon to handle the web analytics. No matter mathematics graphics or business intelligence are all operated freely. However, Taobao still need to improve its customer segmentation management, if they want to catch up with the multinational electronic commerce company, like Amazon.

3.2 Technology perspective

Web analytics is the product of the development of the internet technology. On the other hand, web analytics has an effect on the technology of the electronic commerce. If the companies want to attract and keep their customers, an advanced wed analytics system is essential, which requires the company to choose a high tech and adequate capability web analytics system. According to the survey among the electronic commerce, 65% of the companies would like to switch to a new multi-functional analysis system, and 69% of them are concerned about the high-tech of the new system (from Figure1). Nowadays, the commercial competition is the competition between the technologies. High tech skills are the weapons of being competitive. Obviously, the weapon for an electronic commerce is the technology developed web analytics system, especially for those large enterprises. Large multinational companies have demonstrated that their competition levels are different with small business (Forrester, 2009). For the large enterprises, only high-tech skills are not enough to being competitive. They need some trump technologies, which means the unique technology.

Recently, Amazon Web Service (AWS) established a newly high-tech product named Amazon Elastic Compute Cloud (EC2), which increases the availability of using the high-memory cluster instances (Henschen, 2013). The EC2 is a specific workload cloud service which is aiming at memory-intensive uses, like databases. There are five main features about the Amazon EC2. The first point is time saving. After choosing preconfigured software, customers can quickly deploy their software into EC2 through a 1-click launch. The second one is low cost. It is easily stop and re-deploy, which will only cost the actual usage of the compute capacity at a very low rate. The third feature is the elastic. Amazon EC2 allows customers to increase and decrease the capacity with second which is controlled by their web service APIs. The fourth factor is the reliability. The rapid and predictable commissions of replacement instances can be made in a highly reliable environment offered by Amazon CE2. It also provides a high service level with the 99.95% accessibility for all of the Amazon EC2 Regions (2013). The last point is the security that people mostly concerned. All the information, uploaded by the customers, is secured by Amazon EC2 with conjunction of Amazon Virtual Private Cloud (VPC). The positive result is fairly intuitive. Amazon EC2 has become one of the most popular service platforms of running applications in the cloud.

However, Taobao still has not developed a unique high technology product of their web services, although they have already mastered the basic techniques. This is another reason Taobao cannot become an electronic commercial magnate and compete with Amazon.

3.3 Organizational perspective

Web analytics has already revolutionized the way of the commerce performed on an organizational perspective. The key feature of the web analytics, in any organizations in the electronic commerce, is starting with an assessment of the current position of this organization. To operate the organization in an effective way, the owners need to know clearly about the current performance and the gaps compared horizontally e vertically from implementing the web analytics. Furthermore, web analytics has the absolute priority to decide the goals and plans in the organization. After combining all the goals and plans from different department, the owner of the organization will quickly get the effective information to set the online business strategy (Tansug, 2011). However, those general organizations, which do not use the web analytics, will be much more difficult to analyze themselves. For example, if the managers in the general organizations want to measure the strategy of the business. They have to analyze the financial reports from last three years and predict the performance in the future. After discussing with other departments, they come up a strategy. But they still find it is difficult to make the strategy to be appropriate for. This is because they cannot realize the current position of their organization without using the web analytics to help them.

As the business cycles become shorter and shorter, a new type of organization is required. Amazon, one of the few winners survived from the dotcom bubble, sets a good example of using the web analytics to change the performance of the organization in order to adapt the environment. The first innovation, where Amazon made its first money, stimulated the drowsy book industry. Few years later, Amazon changed its business model because of the realization of the potential opportunities in IT community. Amazon launched its web service platform in 2002. They have made a big success in only six-year time, from $4 billion in 2002 to $20 billion in 2008 (Johnson, 2010). One victory followed another in quick succession. After building a strategy alliance with publishers, Amazon launched Kindles and sold out 500,000 units in the first year. Kindle is a high-tech product, which can display the reading material in a black base. All the successes of organization transitions Amazon has made are attributed to the usage of the web analytics.

Taobao, as the biggest organization of online marketplace in China, also made numbers of exploits of using well of the web analytics. For example, in order to celebrate the triple 11, Taobao made an offer of everything half price online on the 11th November in 2011 (11/11/2011). The sales revenue, only on that day, was 19.1 trillion RMB. However, recently the performance of Taobao is as cold as this winter. It should be the strong signal of organizational transition shown in their web analytics.

4. The effect on both customers and business

Web analytics is a double-edged sword for both customers and companies. It brings the benefits to people, but also the troubles.

4.1 For the commerce

•Advantages

As reported before, there are plenty of benefits gained by the business. Such as, it is easier to help the business monitor the visitors, optimize the web site, formulate the sales, correct the error on the site and attract the advertisement investors to increase the revenue.

•Disadvantages

Although there are lots of benefits for the company, some negative impacts on the commerce still need to be aware of. The time and staff cost should be the problem that most managers are worried about. Web analytics is quick and convenient, but only if the staff is familiar with how to interpret the data. Or it will cost much more time to acquire the skills and analyze the statistics. In that case, it would be a risk to sacrifice the time of building and contributing to the web site. For some of the small businesses, they even are not able to afford the expenditure of the salary of the professional analysts and the maintain cost of the web site.

4.2 For the customers and visitors

•Advantages

Web analytics improve the quality of the online shopping experience of customers. It provides the customers a more convenient experience of visiting the web site. They track and analyze the pages which customer most prefer and remember the keywords visitors searched. After inductive analysis, the web site will give different recommendations to different people. Customers are not only receiving the list of the products they need, but also the items they may have interests in. In this case, customers save most of their searching time online.

•Disadvantages

Web analytics is operated anytime anywhere on the internet. There are no private secrets for the visitors. The web site operators tracking and analyzing all the information they can collect from their customers without asking the permissions from the visitors. Although all the information is secured by the company, there are still numbers of risks for customers. Another point is that web site collects all the information and data of activities from customers, and put the advertisements of the products on the other site where the customers browse. People are reminded to consume all the time when you start the internet browser, which may cause the irrational consumptions.

5. Conclusion

To sum up, web analytics is an essential tool of analyzing the data collected from the web site visitors to help the electronic commerce to understand the current performance. The importance of the web analytics is because of the benefits that it brings into the business, such as monitoring the visitors and users, optimizing the web site and formulating sales and e-marketing plans. At the same time, web analytics has effects on electronic commerce. This report is mainly focused on the three perspectives (management, technology and organization), and take the comparison between Amazon and Taobao as examples. Amazon is a successful electronic commerce of using the web analytics from any perspectives. Compared with Amazon, although Taobao has already performed well, there are still some improvements need to be done. Finally is the discussion about the advantages and disadvantages that the web analytics has effect on both visitors and business. The people concerned most are about the privacy problems. In this case, the suggestion for the electronic commerce, in order to keep the harmonious relationships between the usage of web analytics and customers, they need to mark on the top of each page to tell the visitors that they are being tracked now.

.

Appendix

Figure1. Likelihood and Reasons for Considering a Vendor Switch