The role of e-business and the internet for Starbucks - Essay Example

?E-Business and Starbucks An examination of the roles that e-business and the internet play for Starbucks By:Ajiya Kamal Butt Stu 24620 Table of Contents Table of Contents 2 Introduction 3 The Scope of E-Business 4 Business to business and business to consumer transactions 4 Business benefits to having a website 4 Nature of e-business communication 6 How the Internet Works 8 Transferring messages across the internet 8 HTML and its uses 8 The internet, intranet and extranet 10 E-business Model 11 How could the internet be used to sell products? 11 Other business models 11 Non-revenue gaining uses for the internet 12 Features of a Good Website 13 Search engines 13 Design elements 13 Ease of use 14 Legal requirements 14 Conclusion 15 Bibliography 16 Introduction In the modern day and age, the use of the internet is ever increasing and more companies are getting involved in electronic business, often shortened to e-business. It now plays a major role in the economy at a global level . E-business consists of all the products and services that are offered in the online environment, including things such as online purchasing, customer service, communication of sales and new products . There are many advantages to e-business, not in the least because it can reach a different audience than traditional physical business. In addition, the two are not mutually exclusive; many businesses have a strong e-business component as well as a strong physical business component. One business that has incorporated e-business successfully into its business model is Starbucks. From starting as a single store, Starbucks is now a chain that spans the globe with more than 15,000 distinct stores worldwide. Part of their success is their ability to integrate new type of business into their model beyond the business of being a physical coffee shop. Starbucks offers franchising opportunities; sells coffee, tea, brewing items, food and a wide variety of drinks, with many of their products also being available in their online store. This study will review e-business in general, how the internet works, some e-business models and the features of good website design, relating these to Starbucks and their model of e-business. The Scope of E-Business Business to business and business to consumer transactions The term business-to-business (B2B) transactions refer to transactions between a manufacturer and a whole sale seller or a franchisee. As the product is sold in a bulk the cost per product is less for the buyer and the sales volume of Starbucks is improved as the selling quantity is large. Business-to-business transactions contribute to a major portion of transactions in any selling company as it is done in bulk. In the example of Starbucks, a B2B transaction would involve selling its products to a supermarket, which would then mark them up and sell them at a profit. In contrast, business-to-consumer (B2C) transactions are direct sales between one customer and the business . Generally an individual consumer will buy a much lower quantity than a business; however, Starbucks is able to sell their products at a higher price to consumers than it can to businesses. Business benefits to having a website Having a website allows a business to establish an online presence. This is particularly important in modern times as the internet is becoming increasingly important and many more people are making the decisions based on information they find online. There are many competitive benefits that having a website and e-business in general can give a company . Advertising – The internet can be used to advertise new products on the home web page and also on other related web pages in order to reach out to a greater mass . To communicate – Communicating online via chat windows to possible customers can help in easier ordering for the customer and bring more business to the company . Communication helps to maintain customer loyalty . To inform – Any special offers and discounts offered can be announced on the web page. This will lead to an increase in sales throughput when done properly. To sell – Selling goods is more easy and quicker if a proper handling and design strategy for the web page is adopted. Make sure all the products are displayed on the web page. Recruiting – Recruiting new team members on to the company is easier and the advertising cost is low when done using the internet in your very own web page. Also the number of people you reach out to is large. A potential employee is found out easily. For Starbucks in particular, all of these advantages are used, particularly the ability to communicate directly with customers. Starbucks offers 24 hour a day, 7 day a week customer service through its website as well as a comprehensive frequently asked questions section . This is highly advantageous, because in the current age of technology and impatience, many people will use another site or do something else if what they are trying to do appears too difficult. In addition, this level of customer service helps to build up customer loyalty with the brand as well as customer satisfaction, increasing the likelihood that the customer will buy from either the site or the store. Another aspect of the e-business of Starbucks is online ordering. Starbucks promotes almost all of its products online. Both B2B and B2C transactions are done online by Starbucks. The individual or the dealer can choose all the products they want and keep adding it to the cart, just like what one does physically in a shopping area. Then the taxes, prices of the various products chosen, shipping charges if any are displayed. Starbucks offers free shipping for a few of its products or for bulk orders exceeding a certain preset amount. Then the individual can buy these products using a credit card or debit card. All of their products from coffee, tea, drink ware and coffee brewing equipment like coffee makers are all displayed with appropriate pictures so that customers can look at what they are going to order online. Also a short description is made available for better explanation . They have special offers and discounts for internet ordering. There is also the facility of using Starbucks card online. The Starbucks card accumulates points every time a person buys products from Starbucks. When the points reach a certain level he can exchange the points for goods from Starbucks or get discounts. This makes one want to buy more to get more points and thus helps promote business. Nature of e-business communication One important thing about being involved in e-business is security and privacy . To order anything through an online facility the customer has to enter personal information including credit card number or alternative means of payment such as PayPal, address information if the product is physical and to be shipped as well as information about them such as name. It is important that the information is kept secure and is not misused in any way. Starbucks privacy policy lists that it collects the following information : Name and address information (including email address) Financial account information Information used to create an account What you buy, where, the frequency and the rewards that you earn Internet service provider (ISP), operating system, internet protocol (IP) address, and other computer information when you visit their website However, their privacy policy states that they will not share personal information without your consent unless it is required as part of a legal proceeding. The security policy when it comes to sharing personal information makes the customer feel secure while shopping online. Starbucks uses its website for mass communication of information such as specials, the newest products and benefits related to joining its rewards program. In addition their website gives information about music, offering free weekly downloads, and has blog posts by various staff members on a wide range of topics, designed to keep consumers interested in their products. It is also used as a medium for advertising seasonal releases of drinks. Personal communication is also used through the availability to chat with staff while on their website, and the sending of emails detailing information about the store and about their specials. How the Internet Works Transferring messages across the internet The internet is a system of computer networks that span globally and are interconnected. All of these networks use the protocol known as the internet protocol suite (TCP/IP) . The various networks like those shown in figure 2.1 are connected via a gate way which is also a computer network. Billions of users access the internet, and it contains an almost infinite amount of information in the form of interlinked hypertext documents, also called web pages. Messages can be transferred across the internet in one of several ways. Firstly, the can be transferred through the use of web sites, with messages or information posted on web pages for visitors to see. An example of this is how Starbucks posts messages about its fall drinks on their website. The second type of communication is through email, and in the case of businesses this generally involves a mailing list. Here, the company will keep a list of information for anyone who signs up, emailing everyone on the list periodically with the latest updates, specials or information they think is relevant. Emails may also be sent individually, such as to individuals on their birthday if they have a Starbucks card, of if the balance on their card reaches a certain level. Finally, communication may occur through live chat, which Starbucks has the provision for on their website as a means of answering questions. HTML and its uses Hyper Text Mark Up language or HTML language in short, is a word processing language that is used to build web pages. Many programmers create websites directly using the HTML language, which is a coding language and is edited using a standard word processing document such as Microsoft Word or Notepad . For those that do not want to work with HTML or do not have the knowledge, most of the available website creation software automatically generates the code allowing the editing of the visual aspects of the website. However, knowledge of HTML can often give developers an advantage, allowing them to produce more complex and more appealing websites. Figure 2.1: Basic internet architecture There is no linear way of creating a web page using HTML. The term hyper in phrase means non-linear, text refers to the text that is being entered, and mark up refers to the process of using the HTML language to code the web page. The current version of HTML is HTML 5, which has many more advanced features. HTML is not the only coding language available for the creation of websites, PHP, SQL are also a few other web page building languages available. The types of networks are Wide Area Networks (WANs) and Local Area Networks (LANs) . Hyper Text Transfer Protocol (HTTP) is used for communication between web browsers and servers. TCP/IP protocol is the underlying internet protocol. The internet, intranet and extranet The internet specifically refers to computers that are able to connect with other computers through the IP/TCP protocol. Through this network people are able to access many millions of web pages, documents and information. The Starbucks website is on the internet, as long as you are on the internet you are able to connect to it. An intranet is a different type of network that may or may not be connected to the internet. Generally, an intranet is used to share information throughout an organization, and may refer to the company’s website, such as Starbucks website, or it may refer to the entire structure of their information technology. An extranet is a third type of network that allows controlled access from exterior to the network and is generally used for business or educational purposes. It can be considered part of the businesses intranet that users outside the company are given access to. For example, using the WiFi network at a Starbucks store allows you access to their extranet, where they have specific features including free access to a subscribed online newspaper, and free iTunes downloads each week. E-business Model How could the internet be used to sell products? Direct marketing is a fairly new concept making scores of business operators see huge sales profit by following it. The strategy is simple enough. As there are no intermediate agents involved, this cuts down all these costs from the original market price of the products . This brings down the overall cost of the product. Sell the products at this price for B2B customers who order in bulk. As the order is in bulk profit incurred using this method is very high. Also, as the cost for the buyer is less when the seller reduces on the agent costs, more and more will want to buy from the low costing company with good quality. There are many successful companies already making a change. As Starbucks has already shown so much growth to take it to the next level such direct marketing strategies can be adopted. Also franchising can be considered. Now the company is not into franchising. Selected efficient people can be given the chance to go for a franchise with Starbucks. Online maintaining of account information for bulk ordering customers has to have more features than what is offered to individuals. Special discounts must be sent as an email to online account holders. Other business models There are a wide number of different models of e-business. One of the most common is e-shops, where customers are able to buy goods or services in real time directly over the internet. Often this resembles physical shopping letting users put the products they want in a shopping ‘bag’ or ‘basket’, and paying for these at the end when all decisions are made. This model is used in Starbucks case. E-procurement is another form of business model, which focuses on the sale and purchase of supplies. Starbucks is involved in this business model also, offering an alternative site where they sell items in bulk, specifically designed for sale to businesses. Another business model is e-auctions, where buyers bid electronically on items, creating a representative market in the process. A final example of a type of e-business model is virtual community. This involves the interaction of a wide range of individuals through a specific media, such as Facebook. Starbucks is not involved much in virtual communities; however they do maintain a Facebook page. The customers get to chat over these social networking sites and if they are satisfied with the Starbucks products they become good advertisers for the brand online. Non-revenue gaining uses for the internet One significant use for the internet that Starbucks has that does not directly gain revenue is the availability of free WiFi at many of their stores. To use the internet they request that you be a customer, but it is not uncommon to see people buy one drink and spend the full day sitting at Starbucks using the internet. While there is some revenue gained from the drink that the consumer does buy (when they do), this is generally outweighed by the cost of providing the internet to so many consumers . In addition, they keep a blog on the website, which may interest customers but does not directly generate revenue. Features of a Good Website Search engines Search engines look for key words and key phrases, and sort sites according to relevance. They search not just for words but also for context, meaning a string of keywords, while once effective, is now generally useless at attracting hits from a search engine. Both the blog and the news section of the website play a strong role here in attracting hits. While the search engines will look at any part of the site that contains text, the most relevant parts are those that contain large bodies of text, such as articles. This can be made effective if you ensure that the web page has a clear hierarchy and text links. Every page must be accessible from one static link at least . Keep the links from any given page to a reasonable number. Make sure the information available on all web pages has a rich content in them. Include words related to the products you are planning to sell in the web site so that it is pulled up by the search engine. A site map is also important for effective recognition by search engines. Design elements The Starbucks website contains a lot of useful information, but it is also simple to use and uncluttered. This makes the site visually appealing to visitors, making them more likely to examine the site further. The main page has a large number of links, which helps users to quickly see how to get to where they want to go. The ability to search the website for desired content is also a good design element, as it attracts those who are short on time. Finally, the presence of a site map is good for the same reason. Online customer support could be provided to better promote the products. The latest best available deals for both business and individual customers can be added to the website. Recipes for unique blends of coffee combining two great tastes into one can be suggested periodically. Ease of use The primary feature of the Starbucks website that makes it easy to use is its uncluttered layout. This allows for it to be browsed easily, and for people to be able to determine almost immediately where the links to the content they want are likely to be. This is important in encouraging consumers to use the site . Secondary, the presence of a large number of links on the home page makes the site easy to use and to navigate. There is the option to find a store near your location to make a personal visit to the Starbuck’s coffee shop easy one for all prospective customers. Searching the product by its name instead of following a whole bunch of links saves time when the customer knows what he need to purchase. There is an option of signing in for the Starbucks E news letter online in the official Starbucks website which can help the customer keep track of the latest news at Starbucks coffee. Legal requirements There are few legal requirements when designing a website, although you are required not to have misleading or incorrect information there. However, the presence of some policies for the website and disclaimers can often help to avoid difficulty in the future. For example, the use of a privacy policy helps to set forth your exact standards for collecting and holding data, although it does not change your obligations under the law. Likewise, if your site has content from other users, such as blog posts, it is often useful to place a disclaimer saying that you are not responsible for the content of others . Conclusion The overall web site design of Starbucks is good. It is a neat formatted web site with links to all of its products. Displaying the new releases, special discounts can be done using flashing images. Online chat customer support can be provided to help customers online itself instead of over the phone. Gifting online can be introduced where gifting items can be done online itself and sent as an email by the sender to the gift receiver. Business-to-business transactions can follow direct marketing strategies. HTML 5 web designing will give a new look to the web page with its advanced features. Bibliography Read More