253SAM- Ecommerce Adit Bakkesh Shamanur

Module Leader Name: Mrs Brenda Hollyoak

3/1/2015

2

Executive Summary

The purpose of this particular report is discussion about the importance of the

Ecommerce and the use of ecommerce in our daily lives. This report also showcases

the challenges and drawbacks of the Ecommerce. It is also about converting brick and

mortar business into successful venture through Ecommerce. Therefore it also offers

viable opportunity to any organization to improve its operations and widen its

customer base. Ecommerce consists of platforms that enable the interaction of buyers

and sellers. It is also a platform for every individual to make profits through

Ecommerce by selling his products and making his/her services available to the

people. A business can choose to operate online entirely or partially. Coventry City

Books exists as a brick and mortal retail store hence consists of a physical business

premise where the customers make over the counter purchases and borrowing of the

books.

3

Contents:

1.0 Introduction .................................................................................................... 4

2.0 Main Report..................................................................................................... 5

2.1 Business-To-Business (B2B) ............................................................ 5

2.2 Business-To-Customer (B2C) ........................................................... 6

2.3 Opportunities of Ecommerce Strategy…………………………….8 2.4 Challenges of Ecommerce Strategy………………………………9

2.5 How Consumer Preferences can be satisfied using the World Wide Web? 11

3.0 Recommendations………………………………………………………………...13

4.0 Conclusion..………………………………………………………………………...13

5.0 Reference List……………………………………………………………………...14

4

1.0 Introduction:

Ecommerce involves the running of business with the help of computer

networks like the Internet. It facilitates the buying and selling of commodities as well

as services across the Internet. Modern ecommerce mainly utilizes the World Wide

Web in conducting business though it may also incorporate some technologies such as

the email. Ecommerce offers various services; online shopping enabling the direct

retail sales to customers, online marketplaces for the customer-to-customer or

business-to-customer transactions, business-to-business interactions, collection of

demographic data, electronic data interchange, and marketing platform through email

and fax. Ecommerce enhances the market presence and position of a business. This

enables the business attain its revenue targets and realize profit maximization. The

growth of a business may also result from adoption of ecommerce in the running of an

enterprise.

This system may pose challenges in meeting the customer’s expectations as

well as ensuring customer satisfaction. A customer may face challenges in physically

visiting the store hence preventing their access to the facilities. The bookstore must

therefore consider incorporating the Internet and other ecommerce facilities in

undertaking its operations. This begins with understanding ecommerce, its available

facilities, and choosing the most appropriate for the business. Various kinds of

ecommerce transactions exist with the major ones being business-to-business and

business to customer.

5

2.0 Main Report:

2.1 Business-To-Business (B2B)

This involves the transactions between two or more businesses. Such

transactions may include supplier- manufacturer transactions as well as manufacturer-

wholesaler transactions. These transactions cover approximately 80% of the overall

ecommerce transactions. A standard supply chain involves numerous B2B

transactions and just one B2C transaction through sale of the finished product. It

involves the relationship among various businesses in the operation of their

businesses. B2B market consists of two basic components; the e-frastructure and the

e-markets. E-frastructure covers the architectural framework consisting of logistics

i.e. warehousing, transportation, and distribution, service providers, outsourcing

functions such as web-hosting, customer care services and security solutions, auction

management software, content management software and web-based enablers.

(Investopedia n.d.)

E-markets consist of platforms that enable the interaction of buyers and

sellers. B2B incorporates applications that assist in inventory, supply, distribution,

channel, and payment management. Various websites facilitate B2B transactions such

as company websites, product supply and procurement exchanges, specialized portals,

brokering sites and information sites. Company websites target the audience of other

companies as well as the employees of the company. They disseminate information

concerning a company’s operations to attract potential clients. Product supply and

procurement exchanges assist a company in the placement of orders for supplies,

request proposals, as well as bidding to make purchases at desirable prices.

Specialized portals provide information, discussion platforms, and product listings

among other features. Brokering sites act as intermediaries between a company and

6

potential clients for services and commodities. Information sites offer information to a

company and its employees. It offers specialized search engines to facilitate this. For

the business to succeed on the online platform, it needs to maintain proper

relationships with other businesses that facilitate its operations. A breakdown in the

B2B transactions negatively affects B2C transactions and result in business failure. A

retailer needs to maintain a healthy relationship with the wholesaler who supplies

commodities in bulk and at a lower cost. A poor relationship will amount to shortages

for the retailer and tainting of the corporate image. (Investopedia n.d.)

2.2 Business-To-Customer (B2C)

This form of transaction involves a business and its customers for the

exchange of physical goods, services, information goods among others. This became

the earliest form of ecommerce since it inspired the other forms of businesses. Its

establishment began in the 1990s with the sole purpose of enhancing online retailing.

It mainly emerged to assist e-tailing for the online direct sales to customers on

platforms like Amazon.com, E-trade, among others. It holds the second position in the

e-market after the B2B transactions. The most common examples of this form of

transaction involve the purchase of consumer products, information goods, and

financial management services. (DigitSmith n.d.)

B2C transactions have various categories; direct sellers, online intermediaries,

advertising based models, community based models, and fee based models. The

subdivision of direct sellers falls into two categories; manufacturers and e-tailers. The

manufacturers use the Internet as a platform to sell their finished products directly to

customers. This aims at eliminating intermediaries thus minimizing distribution costs.

Direct sales assure the manufacturer of establishing a loyal clientele since the

7

products reach the customers at low prices. E-tailers on the other hand make direct

sales to customers from their warehouses. This enlarges their customer base and

enhances the delivery channels. The online intermediaries take the brokerage role

between customers and the business. They facilitate the transactions by assisting the

customers in making the purchases. They help in assembling of attractive packages

for consumers to fasten the shopping process and minimize the costs incurred.

Facilitation of financial transactions also falls under their docket. The advertising-

based models utilize specialized sites as well as high-traffic sites to advertise for

various commodities. Placing of adverts on these sites ensures that information

reaches a large number of potential consumers. Advertising businesses therefore earn

income from the amount of traffic the direct to the respective adverts. Companies may

utilize these services to attract a niche market since people with certain characteristics

visit certain sites. Community- based model seek to disseminate product information

to various communities on the web such as chat groups. Fee-based models obtain

income depending on the value of content they post on the Internet. (InvestorWords

n.d.)

Customers form part of the most important stakeholders in any form of

business. Since a business requires customers to survive and grow, it must capitalize

on the opportunity to widen its market base. Ecommerce offers a perfect platform for

direct interactions with customers and elimination of the barriers posed by

intermediaries. B2C therefore becomes the most basic form of Ecommerce

transactions since every business requires selling of its products to consumers to raise

revenue income and make profits.

8

2.3 Opportunities:

Elimination of Geographic Limitations

Ecommerce enables a business to operate on the global platform. This

eliminates the geographic barrier placed by a brick and mortar business that can only

market its commodities to customers near its physical location. Ecommerce facilitates

transactions at any point in the global market. (Triua 2014)

Obtaining New Customers

The success of e-tailing largely depends on traffic from search engines.

Potential customers may find the ecommerce websites through following certain

links. This enables them to learn about a company and its products for the first time.

The information may further trigger them to make purchases of the products offered.

Costs Reduction

Conducting business on the online platform helps the business save on various

costs. A brick and mortar business requires a large initial investment to cater for the

establishment of physical premises. This entails the cost of building the offices,

warehouses as well as the production plant. A business operating entirely on the

Internet platform does not require a physical office hence saving on establishment

costs. Ecommerce also saves the business marketing costs since the Internet offers a

cheaper advertising platform. It eliminates costs incurred in hiring sales persons to

undertake door-to-door sales promotions. The cost reduction enhances the pricing

system by offering discounts to customers.

Time Saving

Running an online business saves on time since the Internet enables the

stakeholders visit the business premises at the click of the mouse. The customers do

9

not need to make physical visits to the premises to make enquiries or to purchase

products since they can do it from any location.

Communication Enhancement

The Internet facilitates communication between the business and its

stakeholders. Proper communication can ensure online delivery of products and

services to customers and timely delivery of raw materials for production purposes. It

also eliminates misunderstandings that may delay operations. The business can also

utilize the communication channels to communicate with its employees and offer

guidelines.

Information

The online platform offers valuable information to stakeholders of the

business at the click of a button. An investor may require information on the financial

performance of the business to make decisions regarding financing. A customer may

also obtain information concerning the available products and their respective prices

from the Internet. The business provides information on their offers, new

commodities and other facilities. (ESalesTrack n.d.)

2.4 Challenges:

Lack of Personal Touch

Ecommerce eliminates the need for personal interaction between the service

provider and the customer. This may cost the business customer loyalty due to the

lack of customer satisfaction. Personal touch complements the customer service and

ensures customer satisfaction. (Triua 2014)

10

Virtual Existence

A business whose existence appears only online may face extinction in cases

where its websites becomes dysfunctional. This may cause drastic loss of customers

that the business may not recover. Online existence may deter customers from having

faith in the business since it may collapse and cease to exist any minute.

Low Security Level

The rising trend of cyber crimes has lowered the confidence of customers and

businesses on online transactions. Online transactions have posed a great risk in the

financial transaction hence negatively affecting ecommerce. Some customers as well

as businesses have become sceptical about electronic payments due to the risk of

giving their financial information to malicious people.

11

2.5 How Consumer Preferences can be satisfied using the

World Wide Web?

With the operation of a brick and mortar business, the customers must make

physical visits to the bookstore to borrow books, make enquiries, and make purchases.

The bookstore maintains records that facilitate the buying process and the customers

obtain evidence of purchase or borrowing of books. The use of the Internet in running

the business will enable the customers make book purchases at lower costs. They can

therefore increase the number of their orders, which consequently raises the revenue

of the business. Initially, the customers had to consider the travelling costs, which

cease to become an issue with the introduction of online transactions. The customers

redirect the amount spent on travelling into buying more units of the commodity.

Elimination of the queuing system improves the corporate image and attracts more

customers who perceive the bookstore’s operations as efficient. The minimal effort

offered by electronic transactions encourages repeated purchases.

Ecommerce offers the consumers a wide variety of commodities to choose

from hence the consumer obtains maximum satisfaction from the commodities

purchased. The World Wide Web offers search engines that facilitate obtaining

information concerning a business’ operations, prices, brand names, available services

and general information on a company’s products. The extensive information offered

attracts more customers who learn about the commodities offered by the company.

The effective communication ensures customer loyalty since it enables personalized

customer attention. The World Wide Web offers the bookstore information on the

highly demanded books and the emerging trends of bookselling. This offers the

bookstore competitive advantage and ensures it stays ahead of its competitors. The

elements of ecommerce also facilitate the translation of physical books into eBooks

12

that facilitate the transacting process. EBooks facilitate book storage and management

of the inventory. Tracing of books becomes easier hence, customers receive quick

services and can access books at their own convenience.

13

Recommendations and Conclusions

The adoption of ecommerce by a brick and mortar business therefore offers it a viable

opportunity to improve its operations and widen its customer base. Ecommerce helps

the achievement of the major goals of every business entity, which involve revenue,

and profit maximization. The benefits obtained and gained from ecommerce

overshadow its downside making it a crucial facility for a business to consider.

Elements of ecommerce help in enhancing internal relations among the employees,

which translate in the production of quality goods and services to end-users.

Ecommerce enhances transaction between a business and its stakeholders such as the

customers, other businesses, and the government, among others. Business-to-business

transactions dominate the ecommerce platform due to interactions with raw material

suppliers, manufactures, and wholesalers. Business-to-customer transactions

dominated the original ecommerce market at the initial introduction of the World

Wide Web. The World Wide Web continues to facilitate the transactions on the online

market hence improving the global economic environment.

14

Reference List

1. Investopedia (n.d) Business-To-Business [online] available from

http://www.investopedia.com/terms/b/btob.asp (n.d.) 2. Investopedia (n.d) Business-To-Business [online] available from

http://www.investopedia.com/terms/b/btob.asp (n.d.) 3. DigitSmith (n.d) Ecommerce Definition [online] available from

http://www.digitsmith.com/ecommerce-definition.html (n.d.) 4. InvestorWords (n.d) B2C [online] available from

http://www.investorwords.com/5410/B2C.html (n.d.) 5. Triua (2014) Advantages of E-Commerce [online] available from

http://www.triua.com/100/5-advantages-and-disadvantages-of-e-commerce.html (25 December 2014)

6. ESalesTrack (n.d) Advantages of Ecommerce [online] available from http://www.esalestrack.com/blog/2008/09/advantages-and-disadvantages-

of.html (n.d.) 7. Triua (2014) Disadvantages of E-Commerce [online] available from

http://www.triua.com/100/5-advantages-and-disadvantages-of-e-commerce.html (25 December 2014)