Many software companies today use the online sales channel and only maintain a namesake sales desk. People have also come to embrace it for its convenience factor. You can just do your shopping from the home or office and pay with your credit card. You can order hot pizzas and sandwiches or even a bottle of wine. In the United States, all major retailers have an e-order facility by which the customer can pay from home and the purchases are delivered by courier. In this model, the manufacturer of goods or services also saves a lot of money on the following fronts:
A conceptual example is a company 'a' who manufactures and sells dog biscuits. Conventional marketing means that the company should have offices in all the states, c&f agents, stockists and retailers in all parts of the country. The goods have to be transported over the road to all different stores in all the streets of the country. The company 'a' will also have to man a sales department that is several thousands strong. Apart from all this, they will also advertise on all the available media in the country in order to introduce it to the prospective buyers. All these costs add up to over 40 percent of the product cost. In certain cases, it will be even higher.
What if they implement an e-com model The company 'a' can set up a plant in a remote location where water, power and labour is cheap. They can send mailers to all the prospective buyers with enticing schemes and annual promotion plans. This is much cheaper than a conventional advertising model. Here the prospects are also going to be customers. The customers visit the company's website and orders for the goods. They pay instantly with a credit card. The company does not have to give any credit and can save on huge working capital interest costs. The products can be mailed all over the country from one single point and a lot of wasteful transportation costs can be saved. A successful sale in just a few days and with such little over-heads! They save about forty percentage of the costs. An important thing here though is whether the customer is happy with the product experience. That ultimately depends on the quality and value of the product which compels the customer to buy again. Without a good product, the company will soon go out of business. So the company 'a' will strive to do their best in terms of quality care and customer relationship management.
With such big savings, the company can also help to pass on a percentage of the savings to the end-user or customer. E-com models have reduced costs of many products by over fifty percentage. In fact it is the cheapest retailing model and it is easy to implement. It also amounts to saving huge amount of money in employee salary because the payrolls can be shorted by excluding your army of expensive sales men.
Airline Industry embraces IT
E commerce has come as a boon to the airline industry. No other industry was as interested and enthusiastic about