Abstract—Virtual valuechain is the prolongation and development of traditional value chain and theeffective tool for analyzing and creatingcompetitiveadvantages in the contextof e-commerce. In this study,the shortagesof the theory of traditional physical value chain(PVC)based on marketplacewere discussed,and then the theory of virtual value chain (VVC)onthe marketspace is introduced. We developed a modelof firms’ virtual value chain in the contextof e-commerce, and addressed the information model of the VVC. Then we combined the VVC and Porter’s two types ofcompetitive advantages, andfound that a firm can achieve both cost-leading and differentiationadvantages by exploiting virtual value chain.

Keywords-competitive advantage; Physical value chain; virtualvalue chain; e-commerce
                                                                                                                                                             I.Introduction

With the quickdevelopment of information technology, IT has penetrated every value step ofvalue chain, playing a role in optimizing, controlling and intelligent judging;enables enterprises to capture more information while engaging in value chainactivities, and helps us analyze more complicated engineering technology andbusiness activities; makes us capture information that isn’t thought to becaptured previously, and becomes the main drive which can change the processesof physical operation; enhances the whole capability of coordinating activitiesin organization and between it and the outer world; enables the coordinationbetween the organization and the outer world and in the organization to span geographicalarea in order to create many new relationships and concerted models amongorganizations^[1]. The development of the Internet and World Wide Web,as B2B and B2Cservices’ communication vehicles, has created a new set of challenges forcompanies that want to realize the globalization of markets, real time deliveryand digital products/services across their extended    enterprise of customers, suppliers andpartners^[2]. Therefore, enterprises must look for new patterns ofcoordination between suppliers, trading partners and 

customers to successfully respond to thee-commerce demands. Traditional value chain developed by Michael E. Porter justtreats information as a supporting element in the value-adding process, not asa source of value itself. In fact, varieties of information in and out ofcompanies itself has become the source of creating new value for customers inthe context of electronic commerce (EC).