Electronic Commerce: Disruptive or Continuous?

Electronic commerce is disruptive to merchants by driving some kind of radical development that changes their business so severely they suffer setbacks. This problem was faced most dramatically by traditional, brick-and-mortar businesses that couldn’t adapt or didn’t adapt fast enough to the emergence of disruptive technology. Companies naturally play to their strengths, but many have suffered decreased market share or even bankruptcy when their strengths suddenly faced obsolescence.

International Business Machines (IBM) is such a company. Busy playing to the large corporations, IBM missed the boat with the introduction of the personal computer (PC). Although IBM eventually reacted effectively to the rise of the PC, its strength was to play to the heavy-hitters. In doing so, they missed a huge opportunity, and a significant opportunity to lead the market, because the tremendous growth in PC sales lay outside the big companies IBM played to. Therefore, IBM’s market share, once 80%, plummeted to the single digits. This is an example of a disrupted merchant, what about the disrupter?

While IBM and like-minded companies play from a position of strength, disruptive innovators play from a position of weakness. Sun Tzu said, “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” A disruptive innovator knows he or she can’t compete with an established business, with established customers, so they have to create a new strength from their competitors’ weaknesses. Jeff Bezos, founder of Amazon.com is just such an innovator.

In 1995, Amazon.com debuted as an online bookstore that maintained about 2,000 titles in its Seattle warehouse. Most of Amazon’s orders were placed directly through wholesalers and book publishers, so no warehouse was necessary. Amazon would simply receive a book from the source and then ship it to the customer. At any one time, Amazon would only have about 2,000 titles in its warehouse. Amazon had virtually no overhead, and maintained no inventory. This became Amazon’s strength and traditional brick-and-mortar stores like Barnes and Noble and Borders couldn’t compete. In fact, had they not entered the electronic marketplace themselves, they might be nothing more than a memory today. While electronic commerce is often disruptive to merchants who don’t recognize the waves of change, it is continuous to consumers who are willing to ride the wave.

Electronic commerce is continuous to consumers who change with the growing technology. I began working with computers in the mid-80s. My first computer was the floppy-based IBM PC Portable. To use this computer, I had to learn DOS commands and eventually became quite productive using Enable OA. Now, over 20 years later, I’m a dedicated Mac-user at home and a reluctant PC-user at work. Over the years, electronic commerce was continuous for me, as I grew with the technology.