Key factors in eCommerce: Insights into the third chapter!

Finally, the time has come! The 2nd edition of the successful “Key Factors in eCommerce” is now available. Get a small foretaste here already and gain first insights. If you don’t know the first chapters yet, click here for the first and here for the second.

3. Digital innovations in e-commerce

“Everything that can be digitized will be digitized” – this is a well-known slogan

of digitization. But digitization means nothing other than the use of computers, hardware and software. In this technology and in digital innovations lie the origin and perspective of digital trans- formation. These can be defined as follows:

Digital innovations structure, standardize and automate processes and individual process steps with the help of digital information technology. In the process, the costs of these processes are reduced, quality is standardized and, as a rule, even increased. As the processes are completed using hardware and software, data is generated that can be stored and analyzed.

Digital innovations as a central success factor of digitization are used by companies with a high propensity for innovation and a digital culture. These companies develop digital solutions for their customers and use new software solutions in their performance processes with high priority.

3.1 Fields of innovation

Some 25 years after the start of the digital transformation, the use of digital innovations in retail is visible in many areas, sometimes even already – also due to high dynamics – hardly to be surveyed. It is therefore all the more important to systematize existing and new innovations in order to provide a structure for the potential of further progress. The innovations in e-commerce that are decisive for the disruption of business models can be divided into front-end and back-end innovations. “Frontend” refers to the applications of the online store that are accessible and relevant to users and customers. However, presences in social media and applications for mobile devices are also part of the frontend.

The much more extensive e-commerce backend, on the other hand, comprises all administrative processes, which also includes corporate management, the control of online marketing and logistics processes. These innovations primarily work by simplifying and automating processes, such as the warehousing of products. As digital innovations, they also lead to economies of scale, which are described in chap. 4. Particularly interesting are those back-end innovations in which computer power increases the “intelligence of the systems.” Algorithms that calculate optimal storage locations, filter processes and personalization options in assortment design are examples of such innovations in which software optimizes operational processes.

In contrast to front-end innovations, back-end innovations have the decisive advantage that they cannot be easily identified and copied by competitors. Back-end innovations reduce process costs, while front-end innovations have a positive influence on customers’ purchasing decisions and thus increase variables such as conversions, i.e. orders and sales.

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