MKT3018 E-retailing - Assignment Example

?MKT3018 E-retailing Table of Contents MKT3018 E-retailing Table of Contents 2 Introduction 3 Feasibility Of Developing Expanded Internet Shopping Capability Of eBay 4 Resource Capability of eBay 4 Technical Capability 4 Product Development Capability (PDC) 5 Products and Services Capability 6 System Capability 7 Brand Reputation Capability 7 Notion For Transforming The Website Into A More Effective Vehicle 10 E–Store Design 10 Branding on Website 11 E–Retail Opportunity 14 E – Retail Model 15 Advertising based e–retailing 16 Market Segment 18 Consumer Behavior Trends In On-Line Shopping 19 Customer Relationship Management (CRM) and Data Mining 19 Conclusion 21 References 22 Introduction The e–commerce and internet shopping has generated potential areas of success for the retailing industry. Internet shopping consists of purchasing as well as trading products of services over the digital system via internet and other networks. The volume of business that is performed through e-shopping has increased extremely with the extensive habit of internet. As e–commerce persists to develop, several companies will move their emphasis to incorporate internet shopping in their compound channel. Internet shopping provides much higher expansion rate than any other marketing method. In internet shopping, a wide variety of business is carried out such as encouraging and illustrating on modernisation of electronic money transmit, supply chain management, selling through internet, online business dealing, Electronic Data Interchange (EDI), greater stock management and computerised data collection method. The demand of internet shopping is palpable because it provides much advanced returns on investments because of reasonable marketplace (Dickson & Et. Al., 2009). Feasibility Of Developing Expanded Internet Shopping Capability Of eBay eBay is known as one of the leading international online marketplaces where people can shop almost anything. It provides a stage for trading products or services by various communities and businesses. eBay has the capability to provide expanded internet shopping (eBay Inc, 2011). eBay had started its operations in the year 1995. It had good capability in marketing and thus it successfully adjusted with the exceptional growth in the e–retailing industry. The number of users of eBay had increased considerably. In the year 2000, the total views of eBay sites were almost 120–130 m on a daily basis and the figure rose to 325 m per day in 2003 (Frost & Et. Al., 2003). Resource Capability of eBay From the inception of eBay, it had outsourced the administration and prerequisites of the core constituents of the technical capability, for example, bandwidth prerequisite, website hosting, and data axis hosting at the same time owing to the authentic server controlled in the hosting hubs. Technical Capability For a company to become more feasible in internet shopping the most important factor is the technical capability. It is important for a company to have strong technical capacity in order to survive in the business. The technical capability signifies adequate capability to serve web pages, stock listings, customer details and sales transaction procedures. These features play vital part for drawing fresh customers as well as maintaining existing customers. With regard to eBay, its technical capability is made up of several modules which are bandwidth, inventory capability, and processing capability. These modules are administered independently in eBay. eBay has ‘system availability’ which works as a substitute for capacity, since it replicates the part of customer requirements that are supplied successfully by eBay. It is the crucial objective of eBay’s capability planning (Frost & Et. Al., 2003). Product Development Capability (PDC) Through Product Development Capability (PDC), eBay had made itself a strong competitor in the internet shopping segment. In the perspective of eBay, PDC is not only the improvement to the core site utility but also the accumulation of additional services such as payment approval and dispensation, seller assessment and authorisation, expansion of new marketplace e.g. real estate industry and B2B apparatus transactions. In eBay, the PDC includes numerous interior and external resources i.e. practical skills needed to construct and organise pioneering software services that are employed by PDC procedure. The PDC procedure heavily depends on existing shoppers’ contribution to create and authenticate ideas for new services along with interior business expansion and feasible expansion of the brand & operational capabilities. Source: (Frost & Et. Al., 2003). The above graph depicts that eBay has already devoted a great deal of money for PDC. Thus, it has the capability for developing the internet shopping. Products and Services Capability From the early period (before 2000), eBay had successfully initiated new products and services for the customers. The products and services provided by eBay add value to the service quality as well as enhance the brand reputation which in turn increases the number of customers. From the year 1997, the innovation and product development of eBay had increased for appealing to new customers. In the year 1997, eBay had only 10 product groups which had turned to 3000 in the year 1999 and in the year 2000 the product groups had raised to 18000. The marginal return of eBay had increased as the product groups increased. eBay also had made accumulation to other segments i.e. eBay Motors which clearly shows the capability of increasing the internet shopping. The capability to develop products and services has direct affect on brand reputation in relation to the rivals. Good brand reputation helps to increase the capability to entice and preserve skilled employees. The major driver in capability development is the aptitude to retain talent and knowledge within the product development task (Frost & Et. Al., 2003). System Capability The system capability is the amount of requests for service created by people. In case the system capability drops under the target, this can result in the portion of request served to drop as well. This can consecutively decrease the reputation of company and thus the number of request will be decreased. Through effective marketing, the demand of the infrastructure of internet business can be increased. New marketing promotion can help to persuade new customers into the e– business system and existing customers to do transaction regularly. Brand Reputation Capability Brand reputation is a vital asset of eBay which can impact on several aspects in the internet shopping system. The deficiency or diminution in the brand reputation is harmful for developing internet business for any company. In order to increase the internet business, it is important for eBay to refill the faith pool. The internet business can be harmed by several factors such as service downtime, fraud representation of product and terrorism which can affect the belief of customer with regard to safety. Downtime: Downtime is referred to that moment when the system is busy. The downtime has enormous impact on the brand reputation in case of internet shopping. Meanwhile, eBay’s services are ‘available in 24 hours in a day’ and ‘seven days in a week’. In the year 1999, eBay had confronted a series of annoyance because of system failure which had caused a bad reputation for the company, but it had successfully resolved the problems and rearranged the system by recompensing every payment that were outstanding. The downtime can only enhance the irritation level of customers. eBay had faced service disruptions for almost 22 hours which had decreased the income gained and placed pressure on the mechanical and customer services departments. The disruptions had caused diminution of the goodwill of customers and eventually this incident can lead them to switch to other online shopping provider companies which can provide a more established platform for internet shopping (Frost & Et. Al., 2003). Complaint Against Company: The complaints or objections against the services of a company are major factor for brand reputation. A high degree of objection with respect to purchaser’s incapability to pay or trader’s failure to deliver as mentioned in an appropriate way can have considerable impact on the company reputation. The mistreatment of purchaser or trader can lead to serious issue for any company in internet buying. There are certain methods to deal with the mistreatment incident in internet shopping, for example ‘SafeHarbour Plan’ and ‘Limited Buyer Protection Plan’, where the mistreated consumer can be suspended from internet activities. The extensive maltreatment can diminish the degree of trust among consumers. With regard to maltreatment, eBay has its own plan whereby in every business deal both the parties can rate each other according to truthfulness of description, appropriateness of the delivery and status of payment. This method helps to generate a status of purchaser and trader in segregation, and has wider affect on the status of purchaser pool and seller’s collection. Lot of trustworthy purchasers and traders can make sure that the e-retailing system can perform with least policing (Frost & Et. Al., 2003). Website Functions and Attributes: The competence to use and pilot a company website has great affect on the company reputation. A poorly designed portal which does not possess useful cataloguing, simplicity of use and functional search engine can decrease the status of a company. Having the above functionalities and characteristics may not enhance the company status but absence of these features can decrease the reputation of company. Customer Service Capability: With respect to customer service, eBay is quite careful about the internet community perception and thus it offers people with advanced technology and support to facilitate the users to hold public sale. According to eBay, it deeds to ‘turn around queries’ of customers within one day (Frost & Et. Al., 2003). Safety: Safety is one of the major issues in e–retailing which has an impact on customers’ willingness for online shopping with unknown people for whom they have not made a transaction earlier. For example, the case of 9/11 had generated fear among many customers for vicious terrorism such as ‘Anthrax Mailing’. Thus, there are certain external issues from which eBay can look after by inspecting seller more strictly (Frost & Et. Al., 2003). Notion For Transforming The Website Into A More Effective Vehicle E–Store Design In present day, the design of e–store must be exciting and attractive. In order to attract potential viewers the experts are liable to design e-store based on the impression it has to create on consumers. For example, an e–store which deals with retro products is designed as retro appearance. In order to target young customer segment the website must be designed with energetic colour and up-to- date style. Now–a–days, interactive browsing in e–store is realised with numerous flash applications and JavaScript which help to make an e–store website more attractive and a business can gain more reputation. Fashionable design ingredients such as woodland environment, vibrant textures and grunge are fairly admired in e–store design (Lennartz, 2008). Forming and maintaining successful e–store is a constant procedure where a company first needs to generate a vision of website and than arrangement on how to employ the vision. The next stage is the expansion of the plan, operation and justification of the system. This procedure starts with the classification of the content and the practical requirement persists with the appearance design and the classification of navigation services of e–store. The e–store design completes with the improvement of user interface attributes and usability factors. For designing the e–store, a company focuses on vital characteristics and appearances that a functional e–store should offer. Source: (Chiozza, 2001). Branding on Website Every company is familiar with the power of website as an instrument for branding. The flexibility in using website as branding is that it can provide enormous vital information and can be expressed perfectly. It is the main reason for any company to develop website and endorse the brand. In order to transform a website into a more effective vehicle there is need to build a strong brand in e–retailing. Establishing a strong brand includes three stages. Firstly, there is need to know about the customer a particular brand will deal with. The same branding techniques are not beneficial for both conventional as well as internet retailing business. The second stage is to maintain the brand to be expedient. The customer needs to be appealed by attractive designed website which is simple to use and also provides sensitive site navigation. The website must poll the viewer to verify the usability of the site. If the website is not good, there is need to improve the website so as to develop the branding. There are several technologies which can help to increase the value of website. In order to take the e–business forward there is need to integrate functionalities such as back–end catalogs, real time store citation, stock selection tracking and flash content. Website can include technology enabled services such as personalising system, shopping index, online–sale room, conference room among others. The more a website is convenient for user the more it will increase the value of the company. Process of Making Strong Brand in Website Source: (Korper & Ellis, 2001). E–Retail Opportunity The economic condition of e–retailing industry has shown a strong progress. From the year 2000, people had spent almost ?300 billion in internet shopping in the UK. The growth of the UK’s e–retail market is almost ?0.8 billion per year. In the year 2010, the value of e–retail market was almost ?58.8 billion. According to IMRG, the e–retailing sector has immense opportunity for growth. The forecasted sales of e–retail in the year 2011 are almost ?69 billion USD. James Roper, the CEO of Interactive Media in Retail Group (IMRG) stated that the sales of online shopping will become double with respect to the current spending figure within four years. He also stated that the e–retail has good opportunity for growth in spite of bad economic performance. Almost 80% of the residents of the UK perform online shopping and the government is also trying to expand the velocity of e–retailing services and geological field of broadband services (Rigby, 2011). E–Retailing is becoming more popular for British people. They prefer to purchase any product from internet. Presently, there are almost 150,000 e–retail businesses and above 600,000 employments are related to e–retail business. In the year 2009, e–retail absorbed almost 7% of the retail business and it is expected to increase more (Arch, 2010). The amount of time spending on e–retail website has also risen by almost 35 minutes on a yearly basis. The following graph shows the growth rate in e–retail webpage visitors in the year 2007. Source: (Google, 2008). E – Retail Model Retailers accomplish the business through five retail contributors which are: Source: (Dennis & Et. Al., 2004). The e–retailing business which is based on customers often follows the revenue flow model. There are four kinds of revenue flow models in e–retailing businesses which are described below: Advertising based e–retailing In this model, the e–retailer earns simply by selling the advertising space in the website. An e– retail company such as Yahoo imposes customers a flat charge for giving advertisement on their webpage. eBay provides customers a great rate with the facility to provide advertising messages using eBay grouping and keyword targeting ability (eBay Inc, 2011). Merchandise Sales e–retailing: This model helps to generate revenue from the sale of retailer’s products in the internet. Transaction Fee e–retailing: This model is similar to the brokerage system where trader charges third party for trading of products to the customers. eBay uses this transaction fee e– retailing system where the auction catalyst receives a payment in case the victorious bidder has confirmed an internet auction using eBay’s e–retiling facility. Subscription e –retiling: It is a variation of direct marketing. In this model, a customer can access retail facility, generally in digital structure and by giving a subscription amount. For opening an e–shop, eBay takes subscription charge according to the requirement of retailer. For example, in case of opening basic e–shop, eBay puts charge of ?14.99 per month and for opening featured e–shop the subscription fee is ?49.99 per month. In case of basic e–shop, there are 5 bonus customisable web pages, but in featured e–shop, eBay offers 10 extra customisable web pages (eBay Inc, 2011) & (eBay Inc, 2011). Source: (Dennis & Et. Al., 2004). Market Segment In the internet shopping environment, the traditional segmentation and e–retailing model need to be extended and personalised to influence the exclusive relationship building potential. The usual segmentation concepts do not apply in the e–commerce world. The reason is that in e– commerce, customers become accustomed to products, services and data particularly according to their requirements. Thus, the market segmentation concept in e–commerce has been condensed to ‘segments of one’. For example, in case of eBay, the company draws an extremely wide selection of customers who consider purchasing criteria (viz. cheap cost, most suitable purchasing technique, finest online information & evaluation and broadcast assortment) in a different way. Thus, it is unwise to attempt for segmenting these extensively different customers. The customisation enables any company to uniquely fulfil the requirements of every customer (Rayport & Jaworski, 2003). . Consumer Behavior Trends In On-Line Shopping ‘Online shopping behaviour’ can be recognised as the course of buying products or services through internet. The course consists of five stages which are comparable to those connected with conventional shopping behaviour. In the usual online shopping when a consumer identifies the requirements for certain products, they search in the internet for associated information regarding the product. Nevertheless, while searching dynamically; at times several consumers are engrossed by the information regarding any product which is associated with the customers’ requirements. Then, a customer evaluates the substitutes and selects that product which best fit the criterion of the requirements. And finally, a business deal is performed and sales are made. There is positive association between demographics, individual personality and behaviour towards online shopping. It has been found that a person who follows an agitated lifestyle and is more time constrained prefers to purchase from internet more regularly. The knowledge about internet, income level and education level are also strong interpreter of online shopping trend among consumer (Li & Zhang, 2002). Customer Relationship Management (CRM) and Data Mining In order to differentiate in the e–retailing industry, a business must provide more comparison than to mere purchasing and selling activities. In e–commerce, the data is massive as it includes information regarding customer, product, transaction, supplier, management report, finance and safety. Thus, it is vital for every company which is engaged in e–business to efficiently systematise and control data. Thus, data mining method has become a strong Business Intelligence (BI) tool to fill the limitation between data collection and exploration. A successful company requires competitive BI and CRM equipment which can help to improve the customer relationship and develop intelligent business related strategies as well as grind the competitive advantage (Shi & Et. Al., n.d.). Conclusion Internet shopping has progressed considerably since eBay was established. Nowadays, customers expect a degree of service which is more convenient and safe. For taking business forward and to become more competitive, there is need to focus beyond existing marketing strategies and improve the internet shopping experience so that it does not harm the purchaser and the seller along with the reputation of the company. References Arch, Z., 2010. Retail: Overview. University of the Arts, London. [Online] Available at: http://www.prospects.ac.uk/industries_retail_overview.htm [Accessed August 02, 2011]. Chiozza, E., 2001. E-Work And E-Commerce: Novel Solutions And Practices For A Global Networked Economy, Volume 1. IOS Press. Dennis, C. E. & Et. Al., 2004. E-Retailing. Routledge. Dickson, K. & Et. Al., 2009. Strategic Analysis & Recommendation: eBay. Pacific Lutheran University. 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