Evaluating Model for B2C E- commerce Enterprise Development Based on DEA

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Evaluating Model for B2C E- commerce Enterprise

Development Based on DEA

Wenli Geng, Jing Tan

Computer and information engineering Institute, Harbin University of Commerce

Harbin, 150028, China

Abstract. With the rapid development of network, e-commerce is the main way for B2C enterprise to get competitiveness. An import problem in the development of B2C enterprises is that with the increasing of the investment, the efficiency of enterprises is not increase in the same pace. The reason is that the efficiency between input and output can’t be evaluated exactly. So, in order to solve this problem with quantitative methods, a DEA model is established based on input data and output data of 7 B2C e- commerce enterprises from 2011 to 2013. Input data includes marketing costs and the total assets. Output data includes the number of network member and operating incomes. BCC model is established based on VRS. The development status of each enterprise in three years and the overall development trends of all enterprise are analyzed. Finally, in view of the change trend of different enterprises in three years, developing shortcomings are pointed out, reason are analyzed, further enterprise development strategy and methods are put forward.

Keywords: B2C, E-commerce, Relative efficiency, Data envelopment analysis

1 Introduction

In recent years, with the rapid development of network, such as Internet, more and more enterprises want to get income on Internet [1]. So, B2C e-commerce became the main way for small enterprises to sell their goods. At the same time, e-commerce enterprises met with the problem, such as, input costs which invest to the computer and network continued increasing but the profits can’t increased at the same time [2]. So How to improve the operating efficiency of e-commerce enterprises is an important issue.

Identify relative efficient business by analyzing the enterprise's operating efficiency. This not only allows enterprises to find themselves' inadequate to promptly improve it, but also can provide a reference sample for other enterprise when they make decisions.

2 Main Model of DEA-BCC

Advanced Science and Technology Letters Vol.53 (ISI 2014), pp.180-184 http://dx.doi.org/10.14257/astl.2014.53.39

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In 1984, Banker, Charnes and Cooper conducted a BCC model [3]. Based on the CCR model, adding an assumption terms which is

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  n j j 1 1  [4]__{Output-Orientated} model is shown as follows:

constants of vector 1 N a is ) , , , ( ) , , , ( 1, j s, , 1, r m, , 1, i 0, 1 st max j 2 1 2 1 j 1 1 1 ,                                      

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        T sj j j rj T m j j j ij n j j n j rjo rj j n j ijo ij j y y y Y x x x X n λ αY Y λ X X λ

Assumption of BCC model is changed from constant returns to scale to variable returns to scale[5]. So "pure" technical efficiency(PTE) can be calculated by BCC. Many studies decomposed the technical efficiency (TE) obtained from a CCR into two components, one is the scale efficiency (SE) and another one is PTE[6]. The difference between these two TE is that TE in BCC is put down the scale efficiency. That is TE=PTE×SE[7].

3 Case Analysis Based on DEA

3.1 Indicators and data selection

7 B2C e-commerce enterprises are selected, they are Suning, Guomei , Amazon, Jingdong , Vipshop, Dangdang, Mcox. All selected enterprises are the performed better, which basically represent the development of B2C e-commerce industry.

Combines the characteristics of B2C e-commerce businesses[8], " turnover " ( thousand) and " member " ( one hundred thousand ) are selected as output indicators and " Marketing costs " (thousand) , "Technology and content " (thousand) , are selected as the inputs of the model.

The members means registered member, their data comes from the 7 listed enterprises in 2011-2013 annual report from Baidu，Google and other search engines.

Advanced Science and Technology Letters Vol.53 (ISI 2014)

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3.2 Efficiency Analysis

3.2.1 Calculated Result by DEA Software: With DEAP 2.1 software tool, the BCC(VRS) model based on output (under the same circumstances, how to expand output and maximize the output) is selected to obtain the efficiency of specific circumstances of seven B2C e-commerce enterprises in 2011 -2013[9]. Model results are shown in Table 1.

3.2.2 Analysis Process: some efficiency changes will be found in Table 1.

In 2011, the efficiency of four enterprises business is effective; they are Suning, Amazon, Vips and Dangdang. The efficiency decline mostly because the lower efficiency of enterprise scale.

In 2012, the business efficiency of four enterprises is effective; they are Suning, Vips, Dangdang and Mcox. Remaining the efficiency of three enterpirses is invalid, among these 7 enterprises, all enterprises are keeping technical valid, and the scale of four enterprise is effective. Therefore, we can see that the scale efficiency is an important factor for the efficiency of enterprises.

Similarly, in 2013, four enterprises are effective, all enterprises are in technology effective and four enterprises are in scale effective.

From above, we can see that technical efficiency and scale efficiency were rising from 2011 to 2012. Overall average efficiency rise from 0.726 to 0.847 and scale efficiency rise from 0.793 to 0.847, while the pure technical efficiency increases rapidly from 0.846 to 1. From these data, we can see that from 2011 to 2012, E-commerce is developing rapidly. More and more customers want to buy goods from the network, so it’s the chance for B2C e-commerce enterprises expand market share to absorb customers and expand market share with profits.

But we also can see that from 2012 to 2013, the overall average efficiency and scale efficiency all decreased from 0.847 to 0.813 and vrste is remaining 1. The reason is that with the expansion of e-commerce, more and more enterprises became B2C enterprise and market competition increasing, most enterprise put lots of advertising for publicity and they use lower prices for price competition, all these result the inefficiency of enterprise.

In shortly, there are Suning, VIPS and Dang three enterprises remain overall efficiency effective. The reason is that these B2C enterprises efficiency scale can keep pace with the development of e-commerce. But there are four enterprise can’t have a steady efficiency, the reason is that with E-commerce transaction scale expanded, e-commerce enterprises want to expand the scale and achieve increased business efficiency, but due to the development of the enterprise scale is not match the business facilities, the larger the scale, the more cost in investment, and without corresponding output, which leads to the current status of e-commerce businesses overall efficiency is not high.

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Table 1. Analysis data by deap2.1

3.3 Development Strategy

From IResearch organizations, trade volume from 2011’s 7 trillion to 2013’s 9.9 trillion, and the average annual growth rate reaches 31.8%[10]. Online shopping market share has continued to climb. So B2C enterprises should adjust strategy, occupy the market, and increase the size of the enterprise effectively.

Guomei, Amazon and Jingdong should adjust the size of the construction. The present model does not match the e-commerce market. They have been in a state of diminishing returns, because they have lower efficiency; the direct reason is the low scale efficiency. Because of B2C enterprises can't monopoly markets, all enterprises can completed the transformation scale and diversify expansion. The enterprises should restructure, upgrade, maintain the original market position, and develop new models and improve market share based on existing core strengths of business to change this status.

4 Conclusion

Seven B2C e-commerce enterprises were selected as DUM and data of them was selected as input and output variables, with deap software, a BCC model is established to get analysis of the operational efficiency of B2C e-commerce enterprises. Analysis shows that, B2C enterprises’ "crste" is not high the reason is that overall "scale" is not high. B2C businesses’ overall "scale" grows for these three years but the efficiency of scale is not always increase, because of with continued increasing "vrste", the cost which used to remain the increased scale is more and more, the increased "scale" has been hampered. So if enterprise want to enhance B2C

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businesses’ "scale efficiency", enterprises should not expand blindly, they should adjust the size of the enterprise to match the enterprise's strength and market, besides, they should make rational use of existing resources, make use of advanced management and operating model, develop innovative models and the vertical category and ancillary services, develop core competitiveness, expand product categories, rich product line and strengthen the supply chain, improve logistics and distribution system, and continuously improve operational efficiency, overcome the bottleneck of e-commerce. Finally, the steady development of e-business enterprises can come true.

References

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