Measuring e-commerce efficiency: a data envelopment analysis (DEA) approach

Abstract

As a result of the dot-com collapse and the slowdown in the economy, the flood of venture capital dollars for e-commerce has evaporated. E-commerce companies have been enforced to review their business performance. E-commerce efficiency has been touted to be a critical component that can assist a company in its strategies to become successful. This study proposes a model for evaluating e-commerce efficiency using data envelopment analysis (DEA) approach. The model includes not only financial and operational measures, but also e-commerce specific measures. An illustrative example demonstrates that the DEA model can not only effectively reflect the relative efficiency of e-commerce firms but also identify their potential efficiency problems. Management can, therefore, take the right remedial actions.