The Ethics of Online Retailing - Case Study Example

? Selling Sunglasses in an Online World Over View of the Business: The online business under consideration is the retailer Sunglasses Shop UK - an online retailer of high luxury and designer sun glasses. A start up business established in 2004 with just two employees, the shop followed the unique strategy of establishing an online presence before a physical one. Accessed from the domain: http://www.sunglasses-shop.co.uk, the retailers provide a wide range of products and an involving shopping experience to the seekers of high fashion sunglasses. The mission of the shop is to deliver the most highly sought after brand names with the top costumer service, in a mix which delights customers and has enabled the retailer to become one of the most successful examples of e-business in UK. On their website you get an on outlay which is at once catchy and informative. The brands are prominently displayed and range from premium to the ‘purse friendly’. There is a wide selection available and the shop team carefully monitors fashion trends and new arrivals to constantly update the products. They are registered dealers of all the brands they sell and some of the brands link back to their website as Oakley and Rayban. Technical eyewear such as goggles and designer spectacles are also two of the categories available for their customers. One of the main focus of the business is their strong inter relations within the employees and the suppliers. Training sessions and discussions with the suppliers keep the staff knowledgeable about the demand and supply of the sunglasses sector and they can further use this knowledge for the convenience of the customers. They act as experts on the latest and most desired products and the range of sunglasses available as well as provide quality control checks for the products which they deliver. Like other online retailers some of the perks offered by the retailer are the ability to compare and contrast the different products and prices available from the comfort of their home and free delivery of their shopping. The company goes to great lengths to ensure potential customers of their security and refund policies which work out to their benefit. The FAQ and about us page lets them know about the policies in a transparent way and provides the email address and contact number of customer service in order to answer any queries or provide any more information that the customer requires. The retailers do have a physical store in Highstreet, Essex. Fifteen employees in total manage both the online and retail business. The retail outlet was built to give their customers the opportunity to come and experience the products for themselves, as well as to attract those who were not very fond of online shopping. The outlet acts as a center for the transitional and accounting activities, they currently use the Wasp Quickstore solution to manage their check-out, stock levels, vendors and purchase orders. The emphasis is on replicating the same kind of efficiency in their outlet that exists in their online business. Possible E business models “Although “e-business” is a relatively new concept, there already exists a substantial base of experience in designing and implementing e-business initiatives and measuring their impact. As firms seek to go beyond the initial and often Imitated online store examples to the less obvious areas of their business that could be transformed with e-business technologies, there is a need for benchmarking the existing base of e-business experiences (Bagchi and Tulskie, 2000, 1) An E business can be defined as a company that has an online presence; these businesses sell merchandise, services and interact with customers through the internet. The model of conducting business that they follow is usually a combination of the different technology they use, website layout, company goals, marketing and selling strategies of that particular business. While every business is free to choose a model at their own advantage, the specific models have been defined and developed by the market leaders in the online world, that is, companies such as Amazon, Ebay, Yahoo! These companies have each followed unique ebusiness models during the years they have been operating and for any new enterprise their success provides a source of guidance in establishing their preferred model- which they can utilize to differentiate themselves and create value for their customers. There are three business E models which are relevant to the kind of businesses that we are analyzing: A. StoreFront model. The standard model of conducting business over the internet, it is the one most online shoppers are familiar with. Developed from the decade old system of using networks to connect clients to the businesses such as that used by banks for electronic funds transfer, the StoreFront model simply brings together the different processes of shopping from browsing for a product, getting information about price, making the payment and then receiving the product in one place. Business sells directly to their consumers. Companies have to design an online Catalogue of their products, a direct modification from the print catalogues still in use, which give the customers the choice in products. The customers can then use the website to select the product, which automatically notifies the merchant of the purchase made and make the payment through online transactions. The product is then shipped out to the customer at extra costs or for in-house delivery, depending on the policy and strategy of the business The concept of Shopping Cart is a major part of this model. The shopping cart creates a space for the customer to keep a track of all the products that they are interested in and would consider buying. It keeps them from forgetting potential purchases and keeps a tab on future purchases. The cart is supported by the catalogue which is hosted on the merchant database (Baum, 2004, pg74). The shopping cart greatly increases the convenience and ease of transaction but there have been concerns about customer privacy and online security. One of the best examples of a business which uses this model is Amazon.com, the giant online retailer which was established in 1994 and currently serves around more than 17 million customers in 160 countries. B. Auction Model In the auction model, businesses are not directly involved in the selling and delivering of items, they might not even ever have access to the item being sold themselves. These businesses act as giant forums for potential buyers and sellers to meet, share information about items and then bid to purchase the interested item. The companies profit by making a commission on each product sold, for providing the technology and processes for the auction to take place and providing a place for the sellers to put a description, photograph or information about the product they want to sell. The business-to-business auctions are a much bigger percentage of this type of model than online person-to-person auction, generating almost 52$ in revenues in one year. The auctions can be of various different types; there are ones with time limits in which the highest bidder during a certain frame gets to purchase the item or it could be that the bid to match the reserve price wins out or in the case of a user defined maximum required bid, the company keeps the auction going on until it is met. The most famous auction website in the world at this time is Ebay.com. On ebay the owners urge you to sell and buy just about anything, providing customized auction options to meet your needs and using the best technology to optimize search options, control breakdowns in the system and manage their massive database to keep track of the many hundreds of auctions taking place at any one time. C. Dynamic pricing model This is the one model which greatly differentiates e business from the physical business. By making use of exclusive deals, bulk buying, bartering and other ventures to lower pricing, these businesses offer consumers the freedom to name and demand their own prices, which are often greatly reduced and sometimes even without any cost. This model is bargain hunters dream and comes in various subsets. Amongst the dynamic pricing model you would find Name-your-price model, in which consumers set their own prices and the company provides them with that via exclusive deals with the players in the industry they are catering for; Comparison pricing model that simply allows the consumers to compare the pricing of the same kind of products and look for the best possible bargain; demand sensitive pricing which is based on the fact that increased demand drives down prices, so offering lower prices gives an incentive for bulk purchasing or high individual demand of one kind of service or product and Bartering which refers to the exchange of services or products between online individuals or companies and the business provides the forum for them to interact and communicate (Baum, 2004, 82-83). This model works very well in the online world with the participation of consumers from around the globe making it a profitable one for the businesses. However, it mostly works for best either for the mass undifferentiated products, products which are widely distributed (technology which is in danger of becoming obsolete) or services which cater to one, loyal niche customer base 3. The best model for Sunglasses Shop: Keeping the value proposition and the internal structure of an e business in mind it becomes easier to find the best fit model for its functions. From the three models discussed, while each comes with its own advantages, unique points and methods of expansion, for a business like Sunglasses Shop that have already established their presence as the one stop shop for sunglasses, the classic StoreFront model is still the best choice. They cater to customers from all walks of life and their current set up is perfectly suited to meet the needs of those shoppers. StoreFront model allows them to fulfill their original mission, providing easy and fast access to sunglasses of different brands. Their value proposition is high fashion, excellent service ad a wide range of product availability. This can be best showcased by the use of a catalogue and shopping cart feature, which enables them to keep a check of the demand of their customers and offer suggestions and expert advice in return for the profit given provided customers. The auction model is completely irrelevant to the kind of business they are running. While a profitable model if handled correctly, the Shop deals with original and high quality ware; they are the sellers themselves and adopting an auction model to let customers sell directly to each other will neither improve their profitability nor let them uphold their standards of providing high quality product. They would also have to adopt completely different technology and processes. The Dynamic pricing model could provide an interesting direction for the business. They could certainly move towards bargain pricing and capture a bigger target audience, one which is price conscious. But it would be a complete step away from their established company strategy and might even damage or lower the brand equity they have built so far. Customers come to them expecting high quality at the market price, they might not appreciate lower quality for lower price. This model might be feasible if they want to expand their original business and move into a different type of selling but it will not work for their current setting. 4. E Marketing for Sunglasses Shop: “In general terms, an e-marketing strategy consists of the steps taken and procedures followed for marketing a brand through the web. The center of attraction in any e-marketing strategy is the website of the company to which Internet users are to be attracted for increasing sales” (Rampur, 2011) Historically speaking, there have not been many proper studies on the concept of E marketing; for academic purposes it is mostly considered an extension of the marketing concept which revolves around the 4 Ps – Product, Pricing, Placement and Promotion. However, for online businesses the marketing aspect also includes establishing their credibility in a world where concerns about security and customer privacy are very real. The E marketing strategy for a business would comprise of two components of moderating your own functions and letting potential consumers know of your business. Sunglasses Shop will have to focus on some basic strategies to market their products. These would include things like Personalization- on the internet it is essential that you get to know your customer on an individual level in order to attract their attention and delight them. This is possible through online surveys or convincing them to join a news letter, but goes into deeper technical level where a business can use the customers’ online identity to learn more about their habits and preferences. Sunglasses Shop should try to keep a customer database to better learn the trends of their customers. This would allow them to enhance their Customer Service, Website and Community value. These three factors combined would greatly the value of their service, by providing more efficient customer service and an interface which is designed according to what the customer needs, Shop would immediately differentiate itself and provide a better shopping experience. Community value refers to creating a place for your customers to gather and share experiences regarding shopping, they can compare and contrast designs, provide word-of-mouth promotion and feel included in a group, thus creating a deeper relationship with the business (Otlacan, 2005). Their Sales promotion can be done through routes like advertisements in online or physical magazines, through online newsletters on popular social networking websites and trendy blogs. 5. Issues in management of StoreFront model: In a foreword, there is just one glaring ethical issue in using this model- the issue of customer security. With the high concerns of decreasing customer privacy throughout the internet, the online retailers are seen as exceptionally guilty of this. Their own success is based on the fact that they understand their customers better than the customers themselves. From keeping a track of their additions to shopping cart, storing cookies on their pc, gathering data about them from networking sites- these are just some of the few grey areas that people worry about (Roman, 2007). But for the sales people their intention is to just provide what the customer needs and to delight them. And in an increasingly competitive environment they need all the edge they can get. One way to solve this ethical dilemma is to be very transparent in your activities. By informing your customers of exactly what you are storing about them and why, it is possible to gain their trust and maintain your credibility. Bibliography -Otlacan, O., 2005. e-Marketing Strategy: 7 Dimensions to Consider (the e-Marketing Mix), Internet and Businesses Online: Internet Marketing [online] Available at: < http://ezinearticles.com/?e-Marketing-Strategy:-7-Dimensions-to-Consider-(the-e-Marketing-Mix)&id=21976> [Accessed 21 April 2012] -Rampur, S., 2011. E-Marketing Strategy, Buzzle articles, [online] Available at: < http://www.buzzle.com/articles/e-marketing-strategy.html> [Accessed 21 April 2012] -Roman, S,. 2007. The Ethics of Online Retailing: A Scale Development and Validation from the Consumers Perspective, Journal of Business Ethics. V.72. -Bagchi, S., Tulskie, B., 2000. e-business Models: Integrating Learning from Strategy Development Experiences and Empirical Research. In: 20th Annual International Conference of the Strategic Management Society, Vancouver, October 15-18, 2000. -Baum, L.F., 2004, E-business models, Ch3, p71-99. [online] Available at: [Accessed 21 April 2012] -The shop team, 2012. Our company FAQs, sunglasses-shop.com.uk, [online] Available at: [Accessed 21 April 2012] -Case study, 2010. QuickStore Point-of-Sale fuels business growth at The Sunglasses Shop UK, Big Business Tools. Small Business Attitude. Waspbarcode, [online] Available at: < http://www.waspbarcode.com/pdf/Sunglasses_CaseStudy.pdf> [Accessed 21 April 2012] - IBM Global Services. e-business vision in the retail industry , [online] Available at: [Accessed 21 April 2012] Read More