The traditional path of e-commerce has largely failed during the dot-com crash in 2001, and organizations must learn to embrace the e-service paradigm approach to the electronic environment that can offer new forms of competitive advantage. Putting the firm in a position attending to the needs of the customer by providing software service in addition to selling products

Transformation of physical products to service products

The transformation of physical products to service products is enabled and hasten by electronic networks. For firms to garner long-term customer relationships they must take full advantage of the e-service opportunities that these electronic networks can offer. They predict that product-centered orientated firms that resists the call of the customers for control are not likely to survive in this electronic environment and give the example of record labels.