Performance Measurement in the eCommerce Industry.

The eCommerce industry introduced new business principles, as well as new strategies for achieving these principles, and as a result some traditional measures of success are no longer valid. We classified and ranked the performance of twenty business-to-consumer eCommerce companies by developing critical benchmarks using the Balanced scorecard methodology. We applied a Latent class model, a statistical model along the Bayesian framework, to facilitate the determination of the best and worst performing companies. An eCommerce site’s greatest asset is its customers, which is why some of the most valued and sophisticated metrics used today evolve around customer behavior. The results from our classification and ranking procedure showed that companies that ranked high overall also ranked comparatively well in the customer analysis ranking, For example, Amazon.com, one of the highest rated eCommerce companies with a large customer base ranked second in the critical benchmark developed towards measuring customer analysis. The results from our simulation also showed that the Latent class model is a good fit for the classification procedure, and it has a high classification rate for the worst and best performing companies. The resulting work offers a practical tool with the ability to identify profitable investment opportunities for financial managers and analysts.