Increasing popularity of ecommerce makes it become growingly important for website quality and
profitability evaluation in ecommerce firms. By decomposition ecommerce business process into website
quality and profitability, we get some interesting and suggestive findings.
First, in standard two-stage DEA (CCR and BCC) measure, both sub-stage and overall efficiency in
ecommerce are higher than that in KH model taken into account internal series relationship and linking
activities. In other words, efficiency score in standard two-stage DEA is overvalued in contrast to that in KH
model, which also reveals the poor coordination among business processes. From a managerial view, virtual
operation in ecommerce firms needs to focus on e-business application match with organization structure and
internet strategy so that it can take advantage of cost saving to increase overall operation efficiency.
Secondly, either in CCR, BCC or KH model, website quality is the main factor resulting in operation
inefficiency. As an important transaction and communication platform, a website needs to take better use of the
characteristics of attracting visitors and online marketing for the efficiency improvement. Of course,
profitability is as important as website quality, any change between the two will cause efficiency changes.
Thirdly, when it comes to how to optimize resource allocation by resizing the scale, return to scale
analysis in sub-stage and overall production process is done. The results indicate that there is decreasing return
to scale in the first stage and increasing return to scale in the second stage, and accordingly decreasing return to
scale in the whole production stage. It implicitly suggests it is more urgent to improve website quality in the
two sub-stages. In contrast, profitability plays a more important role in overall operation efficiency
improvement.
The above findings provide interesting insights to how to improve operation efficiency according to
website quality and profitability. However, there are also some limitations in this study. First, the total inputs of
operations cost, assets and employee can be shared with the two sub-stages. Secondly, the sample is very small
due to the nature of emerging industry. The above limitations can be further solved by the data and methods
improvement in the future works.