Analysis of E-business and Web-site of Starbucks's - Assignment Example

INTERNET AND E-BUSINESS ASSIGNMENT By Malik Mohammad Umair Khan IBAM Table of Contents Table of Contents 2 The Scope of E-Business 3 1.Difference between b2b and b2c transactions in relation to e-business within Starbucks. 3 1.2.The business benefits of Starbucks having its own website. 4 1.3.The nature of e-business communication within Starbucks. 6 How the internet works 7 2.1. How Starbucks transfers messages across the internet. 7 2.2. The main features of HTML 9 2.3. Differentiating between the internet, intranet and extranet with reference to Starbucks. 11 E-Business Model 12 3.1. How Starbucks could use the internet to sell its products. 12 3.2. Other business models for generating revenues from the internet that Starbucks could deploy. 13 3.3. Other uses of the internet for Starbucks 14 Features of a Good Website 15 4.1. Elements of Starbucks web page that may be used by search engines. 15 4.2. The design features of Starbucks web page that make it attractive to visitors. 17 4.3. Why Starbucks website is easy for visitors to use. 18 4.4. The legal requirements of website design. 19 References 20 The Scope of E-Business 1.1. Difference between b2b and b2c transactions in relation to e-business within Starbucks. E-business is the transformation of key business processes through the use of Internet technologies (Chaffey, 2009). One key business process that e-business has enhanced is with regards to the selling of goods and services to one’s consumers. Business to business (b2b) is the exchange of products, services, or information between two or more businesses rather than between businesses and consumers. In e-business, b2b can broadly be provisioned through six categories of web sites: company website, purchasing and supply exchanges, information sites, brokering sites, and specialized industry portals (Jones, 2000). On the other hand, in e-business, business to consumer (b2c) refers to the retailing portion of ecommerce. Starbucks’ is a company website that incorporates both b2c and b2b on the same platform. The website is similar to a mini-exhibition in that it has been designed to inform businesses, customers and other parties of Starbucks’ six P’s of marketing (product, price, place, people, promotions and physical evidence). The main website is largely focused on providing both businesses and customers with information that will enable them make the best product choice. The b2b and b2c are separated from the main company website using links. The b2b section is accessed via the link labeled “For Business”. Following from this “For Business” link, the b2b section is categorized into five groups: office coffee, Starbucks coffee international, foodservice, licensed stores and Starbucks card corporate sales (Starbucks.com, 2011). The b2c section is accessed by clicking on the “Shop” tab and is referred to as Starbucks store. At the b2c there is a shopping cart for customers to place their orders and payment is done by using credit cards. In contrast, the b2b does not have a direct product check-off system. At the b2b the businesses fill in forms to register their interest of procuring Starbucks’ services and products and wait for Starbucks to get back to them because b2b transactions involve lot of negotiations over price, delivery and product specifications. This means that whereas customers are provided with an online platform for making monetary transactions, businesses do not have this option. Instead, Starbucks prefers to engage businesses on a one-on-one basis to offer them customized solutions. 1.2. The business benefits of Starbucks having its own website. There are several business benefits that Starbucks derives from having a website. However, here we shall broadly categorise these benefits into the following five areas: operational effectiveness, market research, market expansion, convenience, value addition and marketing. The Internet is one of the most powerful tools that a business could use to enhance its operational effectiveness (Porter, 2001). Information asymmetry used to be a major challenge in the pre-Internet era. By having a website, Starbucks can with little investment speed the exchange of information with both its retail and business customers. This information could aid the organisation devise better business practices across its value chain for example from online store data Starbucks can be in a better position to predict its market distribution and as such increase its presence or delivery schedules. Websites can at fairly minimal costs be enriched with additional features such as online surveys, visitor polls and other web analytics tools to provide Starbucks with cheap market research data. Website statistics show volume of traffic visiting the website per given time duration, the geographic location of the visitor and the visitors behaviour within the website. Such statistics provide Starbucks with rich data to tell what its customers like and also assess new areas for growth. The website also offers a platform where a diverse set of market research tools can be used ranging from the ‘increasingly’ disliked popups to the discreet cookies and web-bots, from the costly and adaptable to the low cost and simple. As seen earlier, the rich statistics that can be derived from the website could be used to inform Starbucks management of any need for market expansion. For example from the website analytic tools Starbucks can see if it has a critical number of customers to justify it to expand to a new region. On the other hand, the website – which resides in the Internet – can be accessed from areas where Starbucks does not have a physical presence and as such can still be used to serve customers in such places and this attribute could easily propel the organization into foreign market expansion (Petersen et al., 2002). One of the commonly cited reasons for the growth of web-based businesses is convenience. Whereas in the past consumers had to move from one shop to another to compare prices, the Internet has provided consumers with a platform where they can spend less time in looking for a good deal. Moreover the establishment of comparison websites such as gocompare.com have made it easier for customers. Having a website makes it easy for customers to (1) search for and find Starbucks, (2) compare Starbucks offerings with others using online tools and (3) purchase Starbucks products from the comfort of their homes, offices or elsewhere without having to travel to the physical store. Websites also enable companies such as Starbucks to increase their customer value proposition for example by providing customers with recipes, nutritional information and so on. Also, Starbucks could use the online platform to provide unique customer offers such as bundling products, free delivery for purchases made above a certain amount and so on. Furthermore where a customer creates an account within the Starbucks website the organization could use the information to profile the client. This allows for a creation of a market of one in the sense that highly personalized products can be sold at a highly personalized price, a phenomenon that is commonly referred to as ‘mass customization’ or ‘personalization’ (Varian, 2003). Finally, websites are good marketing tools. Most consumers today begin the process of shopping by using search engines. If a company does not have a website it will lose out on this critical mass of consumers. Secondly, the website acts as an excellent branding tool especially in cases where it may be the first and only shot the organization has to make the right impression to potential clients, business partners, investors, and employees. 1.3. The nature of e-business communication within Starbucks. Communication is the most popular use of the Internet (Ackermann & Hartman, 2000). There are several technologies that a business can deploy over the internet to communicate with its customers, suppliers, competitors and other stakeholders. From the website Starbucks.com one can find evidence of the following communication technologies being used by the company: e-mail, social media – Facebook, Twitter, and YouTube – and an online forum. E-mails are the most popular way of communicating in the Internet (Macura, n.d.). Starbucks could use the e-mail for personal (one-to-one) or group (one-to-many) communication. Social media tools such as Facebook, Twitter and YouTube modern and semi-informal platform for Starbucks to deliver its message especially to the youths. Currently, in the two biggest social media communication platforms, Starbucks has got 25 million followers on Facebook and 1.7 million followers on Twitter. Nevertheless, Starbucks most innovative communication platform is the forum called My Starbucks Idea. This forum offers Starbucks customers a platform to suggest improvement for the organization to make. The company categorises the ideas into three sections: product ideas, experience ideas and involvement ideas (Starbucks.com, 2011). Users make suggestions and also vote to select those improvements that they would want the company to undertake. Within the forum customers can also tell at which stage the company is with the suggested ideas. My Starbucks Idea offers an enriched communication platform for the company. The Starbucks’ website manifests integration of e-business communication strategy with design. How the internet works 2.1. How Starbucks transfers messages across the internet. The Internet is a worldwide network of computers where each computer is connected to via a unique address. The most commonly used service in the Internet is the World Wide Web (WWW) (Shuler, 2005). In the World Wide Web, each resource is identified through its unique global address that is referred to as the uniform resource locator (URL). The URL consists of two parts: the protocol identifier which indicates what protocol to use and the resource name which specifies the IP address where the resource is located. For example http://www.starbucks.com/business/international-stores implies a web page that is fetched using the HTTP protocol. HTTP refers to HyperText Transfer Protocol, an application level protocol that web servers and browsers use to talk to each other. To communicate through the Internet computers use the TCP/IP protocol which is inbuilt in the operating systems (Shuler, 2005). TCP/IP stands for Transmission Control Protocol and Internet Protocol. TCP is a connection-oriented, byte stream service that ensures that application protocols are routed to the correct application on the destination computer. TCP does this function by using port numbers. IP, on the other hand is an unreliable, connectionless service that is responsible for sending and routing packets to the destination computers. A simplistic representation of Starbucks Internet connection with its customers’ computers is as shown in the figure below. Starbucks uses its website to send messages to its customers’ computers and vice versa. Figure 1: Starbucks Website link to a customer computer To understand the message transmission from Starbuck to the Customers computers one has to understand the TCP/IP protocol architecture, which is defined by the Internet Engineering Task Force (IETF) as shown in the figure below. Figure 2: TCP/IP protocol architecture showing data moving from one computer to another via the Internet It is important to note two things about this mode of message transmission. Firstly, each layer of the TCP/IP has its own independent data structures and terminology. This means that each layer is unaware of the data structure of a layer either below it or above it (Peeters, 2011). Secondly, data sent over the Internet is sent in manageable chunks referred to as packets. Assuming that a message is being sent from Starbucks website to its customers’ computer, the message will follow the downward arrow at Starbucks server and the upward arrow at the customers’ computer. At the TCP layer of the Starbucks computer, each packet is assigned a port number which is used to inform the destination computer the program that needs to receive the sent message. At the IP layer each message packet is receives its destination address. This IP address identifies the destination network and the specific host on that network. Armed with both the port number and IP address, the message packets move to the network access layer where they are converted into electronic signals and transmitted over the Internet link through local area networks, and series of routers en route to the specific customer’s computer. When the message packets reach the customer’s computer they are received by the customer computer network access layer and move upwards through the TCP/IP stack. At each layer, the message packets are stripped off the IP address, then the port number (Shuler, 2005). Finally the message packets are re-assembled to their original form at the customer’s computer application layer. When sending e-mails to their clients, Starbucks uses a different internet service. E-mail is a different service because it uses a different application level protocol called Simple Mail Transfer Protocol (SMTP). SMTP differs from HTTP – which is used to send web pages – in its complexity and in that it is connection-oriented whereas HTTP is not. 2.2. The main features of HTML HTML which stands for Hyper Text Markup Language is a computer language that uses a specified set of markup tags to describe web pages. For this reason HTML is commonly referred to as a markup language (w3schools, 2011). A HTML document is in essence a web page because a web browser can interpret its contents and display the document without showing the markup tags. The main characteristics of HTML are as follows: it is made up of tags, it is a static language, and has a defined structure. HTML cannot be used alone to develop dynamic pages. However it can be used together with other technologies such as Javascript and cascading style style (CSS) to form dynamic HTML (DHTML). As a markup language, the key feature of HTML is the fact that one has to work with tags that are identified using carrots symbols (< >). HTML tags work in pairs meaning that each tag must have an opening and a closing (Rohde, 2011). An example depicting a new paragraph is shown below:

write content to be made visible on the browser here

The “/” before the last tag implies a closing tag. HTML document have a defined structure that is advisable to adhere to and that has mandatory tags. The structure is shown below: < ! DOCTYPE HTML PUBLIC “-//W3C//DTD HTML 3.2//EN”> The title of your website ... other head elements… ... document body The declaration is used to identify the version of HTML that has been used to write the document. The tags depict the document title and the tags represent the body of the HTML document. These three tag pairs are mandatory for all HTML documents. The HEAD tag and all the other tag pairs in HTML document are optional (w3.org, 2011). 2.3. Differentiating between the internet, intranet and extranet with reference to Starbucks. The Internet is the shared global computing network that enables users to exchange data, information and opinions using standardized architecture the TCP/IP, SMTP and the Domain Name System (DNS) (Procullux Media, 2011). Starbucks.com deploys this architecture. An intranet is a business’s private network that employs an underlying structure and network protocols similar to that of the Internet (Business Link, 2011). The intranet differs from the Internet by virtue of its restricted availability to only a select group of persons known as company employees. This implies that it has to be made more secure than the Internet so as to enhance confidentiality of the business network while providing employees with easy access to company knowledge such as employee policies, customer lists, procedure manuals, current project details and so on. Starbucks’ intranet is accessed via the following link: http://www.starbucks.com/partners. There are two separate logins for Starbucks employees in the US and those in other parts of the world. Employees in other parts of the world are referred to as international partners. Intranets main benefits include: resource and best practice sharing, enhancing internal communications and reduction of paper work (Business Link, 2011). An extranet on the other hand resembles the intranet only that its focus is extending the scope of the network to selected strategic partners within the organizations value chain. It also uses the Internet architecture as its backbone. Starbucks.com’s “my account” option could arguably be viewed as an extranet given that the organization could use the accounts to provide specific information to its specific customers. E-Business Model 3.1. How Starbucks could use the internet to sell its products. A business model consists of two elements: (a) what the business does, and (b) how the business makes money doing those things (Weill et al., 2004). One of the great benefits of the Internet is that it offers businesses a platform that can be used to generate sales using a combination of strategies. Rappa (2010) categorized Internet business models into nine broad groups: merchant, direct manufacturer, brokerage, affiliate, advertising, community, subscription, infomediary and utility. Each of these models could be implemented in a different way. The most obvious model that Starbucks uses is the merchant business model. Here, Starbucks operates as a traditional brick-and-mortar company retailer with a web storefront. Products are showcased at Starbucks online store much like they would in a retail shop with distinct list prices (Turbman et al., 2006). Just like in a physical store, the customer browses through the range of products on offer, selects what he/she needs, puts the selected items in a virtual shopping basket and when he/she has finished selecting the items required he/she goes to the secure online checkout system to remit payment. Starbucks then ensures that the customer receives the purchased products within the shortest time possible or as per customer delivery needs which may be determined by the delivery mode selected. Starbucks has grown into a global brand such that it can now leverage on its market share, huge financial resources and other technical capacity to manufacture its own coffee from contract farming and proprietary coffee blending techniques. This means that we could view Starbucks as being a manufacturer that sells over the Internet. According to Rappa (2010) Starbucks as a direct manufacturer that sells its products online would fall under the direct manufacturer e-business model. Another business model that Starbucks could use to sell its products online is the affiliate model. Under this model, Starbucks could offer affiliated partner sites financial incentives to direct customers to the Starbucks online store. This is a pay-for-performance model where the affiliate partner receives a percentage of the sales when a buyer clicks through the affiliate, is transferred to Starbucks store and subsequently makes a purchase (Rappa, 2010). 3.2. Other business models for generating revenues from the internet that Starbucks could deploy. Above, three e-business models – merchant, manufacturer and affiliate – have been discussed. The other business models that Starbucks could use in its online strategy are brokerage, infomediary and community model. The brokerage model is where the business congregates buyers and sellers together and facilitates their transactions. As a recognized brand in the coffee business, Starbucks could leverage its reputation to set up a virtual marketplace to die-hard coffee buyers and sellers. Here Starbucks will have engaged in re-intermediation, which is the process whereby new intermediaries take on new intermediary roles (Turbman et al., 2006). Infomediary e-business model is realized where an organization owns data about a target set of consumers and their consumption habits that would be valuable to other companies. Such data could be used by organizations for targeted marketing campaigns. Starbucks encourages its customers to setup accounts own its website. From these accounts, Starbucks has the option of profiling its customers and extracting useful market knowledge. Under the infomediary model, Starbucks could sell this information to other companies. With 25 million followers on Facebook and 1.7 million followers on Twitter, Starbucks could be said to have a thriving online community. Most of all, the company’s online forum ‘My Starbucks Idea’ has been able to create huge customer loyalty which Rappa (2010) states to be the basis of the community model. Starbucks can use its thriving social network sites together with the ‘My Starbucks Idea’ forum to sell ancillary products and services and thus generate extra revenue. The remaining three e-business models are advertising, subscription and utility. Advertising model extend from the traditional media broadcast model where the business provides free content mixed with banner advertisements as a major source of revenue or as an additional source of revenue. We would not advise Starbucks to pursue this e-business model because it would lower the value of their brand if their website starts having banner or pop-up advertisements. The subscription model is where users are charged a periodic fee to access premium content on the website. Pursuing this strategy may have a negative effect on Starbucks thriving online community that is already used to free content. Finally, the utility model is based on a pay-as-you go approach (Rappa, 2010). Here the users are not charged a periodic fee like in the subscription model, but are charged as per their actual usage in a manner similar to how customers pay to access utilities such as water, gas and electricity at their homes. 3.3. Other uses of the internet for Starbucks Communication is the most popular use of the Internet (Ackermann & Hartman, 2000) and Starbucks has realized that which is why the organization has continued to value its online community. From its website, Starbucks provides links to its social network sites – Facebook, Twitter and YouTube – and ‘My Starbucks Idea’. From its online community, Starbucks is able to harvest several ideas from its customers to enable it improve its customer experience, product range, and social involvement. The Internet therefore enhances Starbucks customer relationship and indirectly creates customer lock-in and barrier to entry for other competitors. Having an Internet presence also validates the company to the eyes of both buyers and sellers especially in the increasingly networked world. Internet branding allows buyers and sellers to see and hear about Starbucks in the comfort and privacy of their own environments. This implies that the Internet increases the branding potential of Starbucks. Finally, the Internet gives Starbucks greater flexibility in how broadly it would like to define its market, an attribute that Anderson (2008) asserted allows a company more freedom to give away some of its products or services to one set of customers for free while selling it to others. Under this strategy Starbucks could act as an infomediary. Features of a Good Website 4.1. Elements of Starbucks web page that may be used by search engines. The three different methods used to search the Web are: crawler-based search engines, directories and a hybrid service. However, since crawler-based search engines are the more popular, we shall focus more on how Starbucks web page has been optimized for these search engines. Crawler-based search engines use an automated software program referred to as a spider to follow hyperlinks throughout a website, retrieve and index pages in order to document the site for searching purposes. Spiders calculate relevancy based on four factors: repetition, prominence, emphasis, and link popularity (Reynolds, 2004). According to Clay (2010) the three foundations of search engine optimization are: title tag, body copy and navigation. The diagram below depicts the interaction of these three attributes. Figure 3: Diagram illustrating how Title Tags, Body Copy and Website Navigation interact with Inbound Hyperlinks to Effect SEO Success (Clay, 2010). When we look at Starbucks web page source code we find it having a simple and straight forward title. Most effective titles are short, simple and to the point. The title is as shown below: Starbucks Coffee Company The second foundation to SEO that Starbucks’ web page has is great keyword rich body text with links to deeper pages. And thirdly, as per Clay (2010), the Starbucks web page has a clear navigational hierarchy that is easy for both users and web-crawlers to follow and index. Other features that aid in SEO are use of Meta tags and keywords. Meta tags are indispensable tools in the battle for search engine ranking (Reynolds, 2004). From the Starbucks web page source code it is evident that the company selected a rich set of keywords and Meta tags. Another important feature is links reputation. According to seobook.com (2011) Google search algorithms determine link reputation by looking at the link source quality, click traffic on that link and so on. With regards to Starbucks web page, we find the links to social network to be of prime importance especially when we consider that it has huge following – 25 million in Facebook and 1.7 million in Twitter. This huge number of followers on the Internet increases their link reputation to Starbucks.com. 4.2. The design features of Starbucks web page that make it attractive to visitors. The first design feature that makes the Starbucks web page attractive is its simple and easy-to-understand navigational design (Reynolds, 2004). It is a fact of modern life that individuals are in a hurry. People will quickly be dissuaded from visiting a website where they find difficulty in getting the information that they seek. The Starbucks website is offers access to different aspects of the organization through use of video, image and text links. Human beings are visual creatures therefore the visuals appeal to them the most. Secondly, the web page has an eye-catching design and layout that bears the Starbucks colors. The websites color scheme is a visual representation of the company’s image. Starbucks website uses mainly the green and white colors that easily remind the site visitor of a typical Starbucks setting. Matching the websites color scheme with the corporation’s helps assure customers that they are indeed visiting the correct web page. A third design feature that makes the Starbucks website attractive is its consistency in look, design and feel. According to Raamakant (2005) inconsistency in colors, themes and design when a customer navigates through the website makes them feel as if they have gone to another site. Such occurrences lower consumer confidence on the propositions of that given website. Finally, and most importantly, Starbucks ensured that its website has relevant content. Content is what conveys the organization’s message to its prospective customers and suppliers. At the end of the day the purpose of the website is to inform customers about a company and its offerings. Good content sells a product (Raamakant, 2005). Starbucks website provides brief and concise content with links to other pages for in-depth information in case the customers need greater details. All in all, the web page design is simple but not dull and generally could be said to positively influence the mood of one when he/she visits the site. 4.3. Why Starbucks website is easy for visitors to use. The Starbucks website is easy for visitors to use primarily through its design and layout. From this design the first items that a visitor encounters are Starbucks logo on the far left, and the keyword search option, and location on the far right. Flashmint.com (2008) refers to presence of a search option as a requisite for a perfect website. When a visitor inputs the Starbucks URL, the logo immediately assures the visitor that he/she has gone to the right website. The location indicator then enables the visitor to refer whether he/she is accessing the appropriate Starbucks area that he/she seeks. Finally, the keyword search option helps the visitor – who is in a hurry – to quickly find information without going through the whole site to look for the particular links and/or tabs. In addition to that, the Starbucks website also places the sign in, customer service and store finder at the very top of the web page make them easier for a visitor to encounters. These tools further assist visitors in finding specific information that could be on the website. Another attribute of the Starbucks website that makes it easy for visitors to use is the consistent layout, design and feel in each of the web pages. This consistency enables the visitor to know where to find what as he navigates through the numerous web pages that constitute the Starbucks website. Consistency of layout, design and feel also act as markers for a visitor in that he/she is better able to recognize when he/she navigates to an external site. Furthermore, the website has been designed to appear uniformly irrespective of the web browser that one is using. This was tested using the three popular browsers: Google Chrome, Mozilla Firefox and Internet Explorer. 4.4. The legal requirements of website design. The legal requirements of site design vary from one legal jurisdiction to another. In the United Kingdom there are three major acts which all ecommerce website owners have to adhere to: the E-commerce Directive 2002, the Distance Selling Act 2000 and the Data Protection Act 1998 (Comgem, 2011). Also as from October 2010 when the Equality Act came into force, websites need to be designed in advance with features that persons with a range of impairments might reasonably need in order to access the website (RNIB, 2011). Furthermore, as per the international copyright laws anything that one publishes on his/her website is regarded as his/her intellectual property. This means that likewise one should not infringe on other peoples copyright by publishing their material without consent or citation. Finally since the UK in within the EU, the Privacy and Electronic Communications (EC Directive) Regulations 2003 that direct that one has to inform users where one’s site uses cookies to track visitor behaviour also applies (DesignSpring, 2004). References Ackermann, E. & Hartman, K. (2000). Internet and Web Essentials: What You Need to Know. Wilsonville OR: Franklin, Beedle and Associates. Anderson, C. (2008). Free! Why $0.00 Is the Future of Business. [Online]. 2 February 2008. Wired Magazine. Available from: http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all. [Accessed: 25 September 2011]. Business Link (2011). What is an intranet? [Online]. 22 September 2011. Business Link. 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