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

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.