E-Commerce Basics Technology Foundations and E-Business Applications - Essay Example

?INTRODUCTION Businesses today are moving in the river of technology and business innovation that is transforming the global business landscape because of increasing globalisation (Beck, 2000). An entirely new internet business culture is emerging which has profound implications on the methods of doing a business. High-speed internet connections, portable computers, wireless networks, cellular telephones having internet facility, and hybrid handheld devices delivering phone, internet and computing power to an increasingly mobile and global workforce. All these mentioned innovations in the technological front have shifted the entire paradigm of business. (Chaffey, 2004) This internet culture has resulted in the germination of certain expectations amongst customers. Customers’, due to the evolution of internet technology have come to expect online services for purchasing goods and services, connecting with colleagues and even maintain business relationship with vendors, customers, and employees. This new internet culture is global and is even connecting business partners which are situated across the globe (Chaffey and Smith, 2008). This age of information is propelled by the information technology. Information technology refers to all of the computer-based information systems used by an organisation, along with their underlying technologies. These information technologies and systems are slowly but gradually revolutionising the operations of the firms, industries and markets. In order for a business to keep pace with this information age, it needs to understand the transformation process and identify the opportunities which this process is creating (Darby, Jones, and AL Madani, 2003). Since the emergence of this information age, information technology has become the largest component of capital investment for many firms. In many industries survival and existence without extensive use of information systems has become totally impossible. Businesses like Amazon, eBay, Google and E*Trade or even universities, cannot exist with substantial information technology investment. Today’s service industry encompassing travel, finance, insurance and real estate are vulnerable without information technology. Retail firms like Wall mart and Sears and manufacturing firms like General Motors and General Electric are totally Information technology dependent to survive (Davis, and Benamati, 2002). Experts believe that in this information age, there is a growing interdependence between a firm’s ability to use information technology and its ability to implement corporate strategies and achieve corporate goals. Corporate objectives are heavily dependent upon the depth of their systems. In order for a business to increase its market share, become a high quality or low-cost producer, developing new products and increasing employee productivity is now heavily dependent upon the variety and performance capabilities of the information systems of the organisation (Souder and Sherman, 1994). The more the firm understands this relationship the more valuable it will be in its industry. This information age has also created the utility for the information systems to cope with governmental regulations or other environmental changes (Deitel, Deitel, and Steinbuhler, 2001). A substantial and growing body of research is supporting the fact that information technology is playing a vital role in increasing organisational productivity and providing a fertile ground for cultivating an innovative environment. If a firm needs to take advantage of an opportunity in its marketplace, create new product, and come up with new services, than it needs to commit itself to make a substantial investment in information technology (Stair and Reynolds, 2009). Also, if a firm needs to differentiate itself from its competitors’ in the domain of business practices and management than it needs to employ information systems which enable it to indentify these minute opportunities (Fillis, Johannson, and Wagner, 2004). Having realised the importance of information technology, business firms are heavily investing in information technology and systems because they provide real economic value to the business. Firms’ believe that the investment they make in information technology will generate a higher return as compared to buildings, machines and other assets (Turban and King, 2003). These returns will express themselves in increased productivity, increased revenue (which will increase the firm’s stock market value), and a superior long-term strategic position (Flavian and Guinaliu, 2006). Firms are also sometimes forced to invest in information technology simply because the dynamics of the industry require them to make such investment. Many proponents consider investment in information systems as an important instrument for creating value for the firm. An information system enables a firm to increase its revenue or decrease its cost by providing pertinent information. Thereby helping a firm to take better business decisions and improve the execution of business processes (Knight, 1999). Since every business has information value chain, which acquires raw information in a systematic way and transform this raw data through various refining stages thereby adding value to the information. The fundamental importance of information systems to the value chain of a firm lies in the facts that it enables a business firm to take better management decisions, redesign business processes to bring efficiency into these processes and last but not the least build a nourishing ground for higher profits (Turban, King, Lee, and Viehland, 2006). So, after looking at the business perspective of the information systems it is clear that these systems are a part of a series of value-adding activities involving the acquisition, transformation and distribution of information to different organisational functions, in order for them to improve decision making, enhance organisational performance and increase a business’ profitability (Laudon and Laudon, 2002). As mentioned above information systems and technologies play a vital role in the implementation of corporate strategy and company’s strategic plans. Information systems have been designed for the various functions of the business, looking at each function’s strategic role. In this regard supply chain system, customer relationship system and etch has come up. Since the installation of information system converts the traditional business into a digital firm, which is the kind of structure that is required in this information age to manage effectively the firm’s supply chain, build long term relationship with customers and play a vital role in the value web that brings new products into the marketplace (Lucey, 2005). As supply chain constitutes various activities of the firm, the management information system bring to the lime light those activities where competitive strategies can be applied to gain a competitive advantage (Mora-Monge, 2010). This helps a firm to refine its strategic position and sustain a long term competitive position. This perspective views a firm as comprising of a series or chain of basic activities that add a margin of value to the firms end offerings. A firm gains a competitive advantage when it provide more value to its customers or when they provide the same value as their competitors’ but at a lower price. An information system has a strategic impact as it enables a firm to provide its offerings at the same cost as their competitors but with greater value. This is done by linking the firm’s value chain with the value chain of its channel partners (customers, suppliers and distributors). This not only improves the firm’s internal value chain but also makes it adds sensitivity towards environmental changes across all the value chains’ (Oz, 2009). PROPOSED BUSINESS MODEL Kalahari.com can design its business model according to the business model of Amazon.com, keeping certain working features of www.olx.com portal. OLX operates around the world in nearly 120+ countries approximately. The website is an online trading web-store. OLX has an independent hosting server for each country that it serves. The payment method of OLX can be tailored to suit the business model of Kalahari.com. Under this model payments can be made to the vendor directly or through Kalahari. This method would ensure greater transparency and reliability in a given transaction. However, as mentioned above the website is a replica of the business model of Amazon. Both these websites started by selling books thereby being an online store, but with the passage of time these websites have become a selling platform for different of sellers. However, it would be suggested that the website also add an auctioning feature. Thereby it will also encompass the main feature of the business model of eBay. SUCCESS FACTORS OF THE FIRM: The decision to re-launch the website was complemented by major overhauling in the company. First of all a marketing person was hired, she was an expert in employing direct marketing channels which is the fundamental way of marketing in an online business. This change was augment by bring in experienced IT individuals who were employed to enhance the websites functionality. These three individuals brought major changes in the website and made it more user-friendly. Another important change in this re-launch was the creation of stronger ties with suppliers. This is important because in an online business, demand is basically pull based, in which customer order stimulates the various activities in the supply chain. Therefore in order to have a highly responsive supply chain a company needs to have strong supplier relationship. The company also focused on building a diverse product portfolio by focusing its efforts on new product development. The company also focused on increasing its customer base by successfully employing its direct marketing channels. CURRENT STRATEGY: Since the re-launch, the company is focused on basically the following three strategies: Product and Service differentiation: The company is using the data captured through its website and customer feedback to create new products and services. In this way the web is play the role of a strategic information system, enabling product differentiation which prevent the competition from responding. The company with its differentiated products does not need to compete with its competitors on the basis of cost. Focus on Niche: Through the data collected from its website, the company is able to identify specific targets for its products (Peterson, Koch, Grone, and Vo, 2010). The company has been able to implement “focused differentiation”, allowing it to provide specialised products to a narrow target market. This has been made possible by the website which is creating a competitive advantage for the company by capturing data that can be used to prepare a finely tuned sales and marketing programs for each targeted customer group. Customer Orientation: Changes which have been made on the website have allowed the company to become more customer-oriented. The fundamental reason behind this is the availability of a powerful business-level strategy to this company, this strategy links the value chains of vendors and suppliers to the value chain of the company. Since the company is a digital firm, therefore it can integrate the value chain of its customers with its value chain thereby creating an efficient customer response system. By creating this system the company can link its customers and suppliers, reduce its inventory holding cost and respond rapidly to its customers demand. The evaluation criteria for the website encompass the following parameters: Search Engine Ratings: It means how succinct is the description of the website that enables it to be ranked in the search engines. The description of the website should be re-written ergonomically so that it gets enlisted in the most ranked search engine websites. User-Friendly: How easy it is for the user to navigate through the product listings and search for any particular product. The more user-friendly the website is, the better chances are that customers would spend more time on the website and ultimately end his tour by purchasing some merchandise. Accuracy of Facts: The prices and packages should be quickly updated. By this it means that the price of a particular product should be an accurate illustration of its supply and demand. These prices should quickly adapt to the changes in pricing method. Not only quick adjustment to the prices is needed but also it needs to be insured that the prices are reliable. The company should also understand that by daily updating prices of its products, it is sending a negative message to the market that it has inadequate systems to cope with price pressures. Inventory and Stock: Sufficient stock level should be maintained in the warehouse. An efficient and effective logistic network should be developed to ensure timely and continuous dispatching of merchandise to the customers. Efficient delivery of goods: Kalahari.com should ensure faster dispatch and delivery of goods to its customers’. For this it needs to develop efficient and effective systems to support its pull based strategy. If it successfully manages this than it would not only increase its current market share but also increase its inventory turnover and subsequent profits. Access: The website should operate from multiple hosting sites co-related and synchronised so as to provide an alternative accessing path, in case one of the servers fails to work. This would ensure the functioning of website without any hurdle and would result in greater customer satisfaction. Payment Options: Kalahari.com should introduce more payment options to facilitate its customers. It should not limit itself to just credit card option or the local PayPal systems, but it should also receive payments through banks and cashier cheques. Aggressive Marketing: The marketing strategy adopted to spread the word of mouth for the site should be aggressive and encourage community participation. Use of social media networking such as Face book, twitter, MySpace and etch should be extended. E-MARKETING OBJECTIVES: When moving to e-marketing from traditional marketing means, a company wants to achieve the following objectives: Inform buyers of company’s offerings. Communicate to buyers the benefits that the company’s offering deliver. Promote this benefit among the target customers for maximum customer response. Enhanced customer response should be converted to definite sales of the offering (product or service). Having described the parameters which Kalahari.com needs to incorporate in its online business model, pure-click business, it is of utmost importance that this business of Naspers limited incorporate in its e-marketing mix these following dimensions: Personalisation: making sure that the website’s layout and its marketing activities are as relevant as possible to its online target customers. For this purpose a company can use the following e-marketing concepts (Rayport and Jaworski, 2002): Permission Marketing: this requires the company to seek consumers’ permission prior to sending him promotion material. Participatory Marketing: this requires the company to respect consumers’ wishes to give feedback about a product or service. If a consumer is gracious enough to give a feedback than the company should make sure that they use this information to enhance customer satisfaction with the company’s offerings. Anticipatory Marketing: this requires that the company asks its consumers’ their preference with regards to the time when they are free to receive promotional material from the company. Privacy: the company should honour customers’ individual preferences with regards to their personal information; information they want to share with your company. The customers’ should not be forced to give the company that information which they find to be very personal and thus sensitive. It is never a good idea for a company to place customers in uncomfortable situations. Security: this dimension prevents the company from passing customers’ private information to any other company or agency without customers’ consent. The personal information provided by the customer to the company should be used only for the purpose for which the company asked that information for. Site: the transaction medium, which in this case is the website, should be user-friendly and highly informative. The functionality of the website should make the navigating experience of the website a memorable one. Sales Promotion: the company should use the customer’s navigational history over the website to design a personalised, relevant and targeted sales promotion. This sales promotion should be built around the online buyer’s usual purchasing habits and preferences. Looking at these two sub-dimensions new items should be recommended to the customer. Community: the company should be socially responsible and understand the role it plays in the community, where it operates. TECHNICAL SOLUTIONS FOR THE WEBSITE: Although the website has been well adapted to be user-friendly but there are some features which can be added to the website. Firstly, the website can add an IP tracer to trace the origin of the prospective customer or the website viewer so that it can tailor its pages according to the customers’ cultural or regional preferences. This feature will allow the website viewer to look at product prices in his own regional currency and also he can change the website content to fit his regional language. The website can also add profile page for the seller, which displays the seller’s previous selling history. This measure is needed to prevent fraudulent selling. The website can farther diversify its product offering by adding items like clothing and apparels. The website also lacks in giving elaborate information about the products, for instance the product picture does not have zoom feature and it also does not have enough satisfying product pictures (product picture from multiple angels). STRATEGIC ALLIANCE: Kalahar.net is one of the four business ventures of Naspers Limited. As mentioned in the case, these business ventures were motivated by the Dotcom boom. Naspers Limited in order to reap the benefit produced by the Dotcom boom, decided to undertake through its various subsidiaries online businesses. In this regards Kalahar.net is very lucky as it is backed by two strong companies. These two companies have strong operational procedures to support the idea of going online. Since these companies are very serious to go online therefore they are re-launching this venture rather than scrapping it. These companies are not only transferring their expertise to this venture but also are backing this company up with financial resources. Since the parent and subsidiary companies are very popular in their markets therefore this company will have a strong equity to leverage to its own equity. However the negative impact of this would be that in case of the failure of the company, the stock prices of both the parent and subsidiary company will drop thereby harming the image of these companies. FUTURE E-COMMERCE STRATEGIES: The company should focus more on its customer service. It should add customer representatives on its website. These representatives should be clear about their role in this form of business and in what manner should they interact with customers. Since they would be the only means by which a customer can get the inside view of the company, therefore this fact alone makes their job very crucial and demanding. Along with this the company also needs to enhance its online intelligence gathering regarding the most searched products on the web. This intelligence can be used by the company to widen its product offering range. This is a very important activity when launching the website on the global landscape. List of References Beck, U 2000, What is Globalization? Blackwell Publishing Inc., Malden, MA, USA. Chaffey D, 2004, E-Business and E-Commerce Management 2nd ed., Prentice Hall, London. Chaffey, D., and Smith, P 2008, eMarketing excellence: Planning and optimizing your digital marketing, 3rd ed. Butterworth-Heinemann, Oxford. Darby, R., Jones, J. and AL Madani, G 2003, E-commerce marketing: fad or fiction? Management competency in mastering emerging technology. An international case analysis in the UAE. Logistics Information Management, vol. 16, no 2, pp. 106 - 113. 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