e Commerce

What Is E-Operations?
By Louis Columbus
Oct 30, 2000
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Your company wants to do e-commerce, but have you thought about e-operations? You can sell it, but your ability to fulfill orders can spell the difference between success and failure. E-commerce expert Louis Columbus talks about a critical facet of e-operations: procurement.

Your company wants to doe-commerce, but have you thought about e-operations? You can sell it, but your ability to fulfill orders can spell the difference between success and failure. E-commerce expert Louis Columbus talks about a critical facet of e-operations: procurement.

Collaboratively being able to share information throughout companies, streamlining the procurement and purchasing functions, and addressing thecontinual need for sharing information are just a few benefits of integrating e-operations into an e-business strategy. This is the area of an e-business strategy where the greatest benefits and quantifiable gains in financial returns will be generated. With the immediacy of information made possible by the Internet and the constant need for information in companies, e-operations is clearly going todominate the direction of e-business for years to come. The promise of the Internet in terms of its ability to increase communication is fulfilled in the areas of e-operations.
What Is E-Operations?

The area of e-operations encompasses the processes of how customer commitments get fulfilled through products and services within companies. This includes procuring products, arranging shippingand transport, and handling production—in short, developing fulfillment systems for handling the business that e-marketing and e-commerce generate. The ability to fulfill orders and having the e-operations tools in place to handle them can spell the difference between success or failure with online initiatives. One example of taking the e-operations approach first and then having the e-marketingand e-commerce areas reflect the fulfillment capabilities of a company is exemplified in the evolution of Amazon.com.
How Fulfillment Makes Book Orders Happen at Amazon.com

When Jeff Bezos read a statistic that online usage would grow at 2,300 percent in the last half of the 1990s, he started brainstorming about ideas for how he could build a business that would grow at a correspondingly rapidrate. He settled on books because, as a product category, more products are involved than in any other area of commerce, and because books are one of the more efficient goods for fulfilling orders. Bezos and his wife set out for Seattle to start their company, originally called Cadabra.com. When venture capitalists either mispronounced it or mistook it for another name, Bezos realized that hewanted a name which would appear at the top of lists—a name starting with an “A” was a consideration, as was a name that was easy to identify and spell. With these considerations in mind, the decision was made to take the world's largest river and build an allegory to what Bezos wanted to be the world's largest bookstore. The name Amazon.com was then born.

Seattle had been chosen for the strength oftechnical talent in the area and the fact that there was a major book distribution center to the south, in Oregon. The two factors, Bezos reasoned, would allow the fledgling company to get the necessary talent to build the fulfillment systems and also the ability to be responsive with orders. The first priority that Amazon.com focused on was building a scalable, robust fulfillment system thatwould work with the ordering needs of book distributors and the ability to attentively deal with a single customer's order. The fulfillment system would need to aggregate orders of comparable books and to place orders in minimum blocks of 10 to the distributors. It has often been said that book distributors can deliver any book that you want virtually overnight as long as you order a pallet of the...