Creating comparative advantages in the E-commerce industry

A myriad of electronic retailers are contending in a battle to guard their established territories in cyberspace. Many of them are desperately searching for the key to sustainable growth and profitability as the struggle continues and intensifies. This study finds that one powerful way to attract customers in the e-commerce industry is to create "stickiness" through virtual communities and personalization. Virtual communities and personalization have become necessary elements for a successful e-business as they provide extended customer relations. The two cannot be easily imitated by rivals, creating sustainable competitive advantages. This paper substantiates the above claims in many approaches. First, the literature review will provide information to understand the importance of virtual communities and personalization. A dynamic feedback model is then presented to show how the two factors interact to develop a solid loyal customer base. Next, results of multivariate regression analysis using General Social Surveys 1972-2000 further justify the claim that virtual communities and personalization have significant positive effects on individuals' online purchase behavior. This empirical work also show that demographic variables are not correlated with the probability of making online purchases. Finally, case studies of leading e-commerce firms are presented to confirm that electronic retailers effectively managing virtual communities and offering personalized services are rewarded with customer loyalty, impressive growth, and above industry-average profit returns.

Department dc:contributor.department

Massachusetts Institute of Technology. Engineering Systems Division.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2004

Author dc:creator

• Um, Young Beom, 1981-

Advisor dc:contributor.advisor

• Joseph F. Coughlin.

• Engineering Systems Division.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

en_US

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/28516

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/28516