Development of the Online Shopping: of Woolworth - Case Study Example

Online Shopping -Woolworth 1 background A- Look at the development of the online shopping both in Australia & overseas World over use of internet has become a reality and it has continued to affect various aspects of human life and perhaps no single issue has been much addressed by the internet more than it has did in promoting and enhancing online shopping according to Nielsen Company report of 2010. According to the report, it has come to the market notice that online internet penetration is directly related to online shopping (Kale 2011). This is to imply that online shopping is very advanced in developed world economies such as the North America, Europe and Asian Pacific. Even though its evident that many buyers still can make stop-over at various stores to check on the choices, online cannot be underlet since it gives all the convenience the buyer wants. World over, many of the shoppers prefer using the internet to book for travel tickets, magazines, books and concert tickets. This method of buying is preferred because it is convenient and efficient. The trend is the same in Australia, whereby it’s estimated that over 62% of the adult buyers who are fond of the internet did buy online in 2011 (Asia Pulse 2011). Online shopping in Australia is becoming wide spread with over 67% of the users attribute the increasing use of the internet in the country to convenience and efficiency. Like the global system, in Australia, the products and services purchased online include clothing, books and magazines and travel tickets. Perhaps this is because the process is easier and cost effective (Varley M 2011). B- What impact has it had on traditional retail and wholesales market Use of the internet to do online shopping has come to integrate the whole global market into one. This is to mean that the internet has allowed for easy overseas buying. The implication of this trend is that competition is going to be tougher as many buyers are in access to various choices from various suppliers and markets. According to Walker Frank in the Tribune Business New of 2010, Australian wholesalers and retailers crying foul following the move by many of the country residents to buy many of the goods and services from foreign companies and manufacturers. This has been a worrying trend to many of the traditional retailers as they are losing a lot of business worthy billions of dollars to the rival global companies. This increased the cost of doing business in the country as many online shoppers continue to enjoy the opportunity presented to them by the internet (Access Economics 2010). C- Provide an overview of your industry, company & its online shopping site In the retailing industry and more especially in the supermarkets, online shopping is yet to gain momentum in the country. It is estimated that only less 25% of the total sales to these retail stores are attributed to online shopping. However, with the changing trend in the global market, it is becoming increasingly very necessary for this retail stores to reconsider their strategies in order to survive the great competition in the market (Access Economics 2010)t. Woolworth supermarket is one of the biggest supermarkets in Australia with branches in almost every state. The company has one of the most recognized and trusted brands in the industry. The company is also known for its ability to supply a variety of choices to the market at very affordable prices. The company product range includes liquor, food and grocery and general merchandise as well as other consumable goods like electronics. The company’s online shopping is structured in such away that each product has got its own link. This is to mean search is specialized and a customer can only be able to shop online is able to trace and identify the available links for various products (Kale 2011). 2 identify issues & challenge facing online shopping A- your industry The sector in which Woolworth operates is one of the oldest industries in the country. However, the online shopping has not been fully utilized and this is because of the numerous underlying issues and challenges. First and foremost is the market culture in which the retailers operate. It is notable that it has become very difficult to change the culture of the consumers from walking into the shopping malls and supermarkets to make their purchases to do it online (Walker FM 2010). The other issue that has real made it very difficult for the industry to fully participate in online selling, is because of the variety of products and services they stock. It is feared that by going online completely it will be very difficult for the market to identify and understand the company product profile. This in return will affect the company sales as those commodities that are not basic and not known by the customer are likely to remain in the selves for long time without making a sale. On the same line, it is expected extensive e-marketing and e-campaigns have to be carried out to inform the potential market of all products and services available. Ideally, this is likely to be a major cost to the business given its inability to change their prices because of other suppliers. This could impact negatively on the revenue generation. Further, the industry depends on various manufacturers and producers to get their products for resale. Take an example of flowers or horticultural produce which come from farmers. It is emerging that the reliability of the business in serving the customer needs is affected by the producers themselves and therefore may not be effective in serving orders (Asia Pulse, 2011). B- Your company Since the introduction of the online shopping into the business, it has emerged that the strategy has not worked out very well as expected. The sales generated from online shopping customers, still accounts for less than 25%. This is because many of the customers have not been able to choose on which mode to use in making their purchases. Perhaps, this is because many of the products that are being sold in the supermarket are mostly fast and the customers could not afford to wait for any late delivery (Ferguson 2011). This has remained a big challenge for the business it is not easy to order something worthy $3 and still have to wait for two or three days to be delivered. On the same line, more than 85% of our sales are made locally to those people who reside near our business premises who can walk in at any given time to make their purchases. The aspect that has also remained a thorny issue is the cost of selling to our customers online. The cost aspect comes in as a result of market demand to have people who will be engaged in delivering the products to various households. If this is the route, then it means that a supermarket, more people will have to be hired, trained and deployed to various centers to meet with the customers. On the same line, it is expected that by doing online selling several retail stores will be introduced at different sites not only in Australia but globally to cover for all customers (Woolworth 2012). C- Your suppliers & customer The company supplier includes farmers, manufacturing and processing companies while the customers majorly entail household who contribute to over 90% of our total sales. With online shopping, it is expected that both our customers and suppliers must be involved. In the case of the suppliers, it has emerged that several orders from various supermarkets and other retail outlets are always placed on their desks and economies of scale has therefore become an issue. It is emerging that through online shopping negotiations cannot be possible irrespective of the amount of products purchased and their value (Kale 2011). Further, the suppliers are known to deal with different wholesalers and retailers under what is called spatial convenience. In this case the suppliers decide to use several distribution channels to avail the products to the market at the convenience of all its customers. With this trend, it is not to rely on online shopping as same goods are supplied to the market through other channels. Irrespective of how much the supermarket has tried to link with its suppliers, it has become absolutely difficult to establish an integrated distribution channel that takes into account both the needs of the business and the supplier since the business has to work with other suppliers (Access Economics 2010). The customers, on the other hand, need to be aware of how the company operates the payment and delivery modes. The customer issues also need to be handled in well in online shopping something that has proved to be a very delicate issue to balance. Further, product quality and attributes have not been clear with online shopping thus prompting many of the customers to buy direct from the supermarket (Access Economics 2010). D- Discuss relevant channel dynamics i.e. the topics covered this quarter A market channel is very critical aspect of any business. This is because it entails all the process activities that have to be performed to ensure that products and services have been moved from the producer or the supplier to the market where they can be accessed by the end-user. The channel performs a number of functions which include stocking, brand marketing, delivering the product and gathering any intelligent information that can be used by the business. The existence and change of different marketing channels are affected by demand and supply issues (Varley M 2011). Marketing channels can be of different structures as shown in the diagram below. It is from this case that it has emerged that online shopping in supermarkets is hindered by the fact that it’s only a retailer and not a manufacturer. This in other words makes it difficult to filter any marketing information only for the customers as it will have to be affected by the producers and manufacturers who in this case have the power to dictate the structure of the marketing channel (Kale 2011). 3 Provide a strategic plan to address these issues & challenges identified above A- what target have you set, e.g. time frames , sales projections ( where is the growth if any coming from e.g. existing market, competitors , within your company Given the various issues that have been identified with regard to online shopping in Woolworth supermarket, it has become increasingly a clear framework in terms of targets both in timescales and sales increase have to be stated to guide online marketing strategy implementation process. This is what has necessitated the company to develop specific targets and timeframes. Currently the supermarket is experiencing less than 25% of the company’s total sales. The company target is to achieve 45% sales of the total sales through in the next five years. This growth is in online sales is expected to come from various sources which the company has identified as its targets and which include the existing customers, penetrating into new market segments, drawing some customers from the competitors as well as selling to the company staff (Greenblat 2011). This is kind of segmentation that will allow the company use different online marketing channels to reach them. Further, the 5 years timescale represents the company’s medium term strategy in boosting its online selling. The consideration of these quantitative methods is based on the fact they can be measured against the company objective. B-consider your company, suppliers and customer Consolidating the company, the supplier and the customer in the development and appraisal of the internet distribution channel will be a very important aspect of Woolworth’s strategic plan. This is because every player in the channel has a role to play. To start with, the company’s obligation is to serve the customer by ensuring that all his needs are met in a timely manner and at most appropriate prices. The work of the company is therefore to make sure that all times products are made available for the customer and that their prices are friendly and affordable by the market. But however, the most important aspect is to work on ensuring continuous supply of products to the market (Greenblat 2011). Ideally, in this case Woolworth is expected to play the role of the middleman between the producer and the customer. On the other hand, the work of the customer in the channel is to dictate what is to be provided on what is to be produced in terms of demand. In fact the customer is the key player in the internet channel. This is because it’s through the customer orders that the company and supplier can have enough revenues to support their operations. It is also expected that the customer will influence, the packaging, promotional and advertising strategies to be applied. Finally, in this case the supplier is expected to be reliable and demonstrate high capabilities in standardizing its products in relation to customer specification and requirements (Kale 2011). C- What will your internet channel look like & how will it function within the overall distribution channel of your company Based on company, customer and producer analysis, the internet channel will be integrative to include the supplier who in this case is the manufacturer, the supermarket and the customer at the end. The internet channel will be structured in such away that it allows for clear communication and link among the three stakeholders (ACMA) 2010. However, the company in this case is expected to play a very crucial role in ensuring that the channel is stable, continuous and allows for smooth flow of products from the manufacturer to the customer. In this kind of arrangement, it’s expected that information in terms of orders and specifications will flow from the customer to the company who in turn will deliver on the requests and in case the products are not available, then he will be forced to make a direct order from the company. In this case therefore its expected that time taken to deliver is of essence. This internet channel is preferred in this scenario since its high in speed delivery and spatial convenience. This is because, ensure faster delivery and in the process high level of customer satisfaction (Greenblat 2011). D- how have the relevant channel dynamics, discussed above been address and what if any new channel dynamic will arise & how will they be managed Even though various internet channels can be applied in the context of Woolworth, it is not guaranteed that they will always remain stable for ever (Varley M 2011). This is because every part is out to benefit and create value for its money. It is therefore in order for the company to anticipate what is likely to happen and design appropriate strategy to deal with the new channel dynamic. It’s anticipated in this type of channel that issues such as cost, intensity, selective and exclusive factors have to come into play. For instance, the cost of delivering a certain product to market is expected to change perhaps because of the production cost at the manufacturing plant and as a result of the overall change in economic trends (ACMA) 2010. In such a situation the remedy to safeguard the customer and the business is to find out the other relative channels for accessing alternative products and drop the current one through the discounting process. In case of intensity, the company may decide to use different channels to access the brand to ensure convenience and reliability in supply to the market. In the case of selective and exclusive distribution methods, company will be forced to assess and appraise the most stable channel to supply the market (Greenblat 2011). Conclusion Online shopping, more than ever before it is being used by buyers to purchase the products of their choice from various markets irrespective of distance or geographical location. This is because with the use of internet the geographical boundaries do not exist. Online shopping world over is factor of internet penetration and it has been established that those economies that have level of internet penetration also experience high levels of online shopping activities. However, in the case of supermarkets, use of the internet has not been real common and it’s estimated that in Australia less 25% of total sales in supermarkets come from online shopping. The factors that have been attributed to this trend include the culture the customers are used, the influence of market channels which are never stable and the fact that many of the shoppers are actually local and can buy direct from the shops. What has also been established is that, risks do exist in implementing the internet marketing channel that need to be worked upon like change of the marketing channel structure. References Access Economics 2010, Household E-commerce Activity and Trends in Australia, Report by Access Economics Pty Limited for the Department of Broadband, Communications and the Digital Economy, Australia: Access Economics. Asia Pulse [Rhodes] 16 Nov 2011. Online Shopping Growing In Popularity In Australia: Report, viewed 5th June 2012 from http://search.proquest.com/abicomplete/docview/904025010/13695438C783A5413D6/7 ?accountid=36155 Asia Pulse [Rhodes] 16 Nov 2011. Aussie consumers more confident about online shopping, viewed 5th June 2012 from The full text may take 40-60 seconds to translate; larger documents may take longer. Cancel Jump to first hit http://search.proquest.com/abicomplete/docview/904025007/1369529222B2952BC64/4 ?accountid=36155 Australian Communications and Media Authority (ACMA) 2010, Australia in the digital economy: Consumer engagement in e-commerce, Melbourne, Australian Government. Ferguson, A 2011, ‘Retail going backwards but news not all bad as penny drops’, Sydney Morning Herald, 26 July. Viewed 5th June 2012 from http://www.smh.com.au/business/retail-going-backwards-but-news-not-all-bad-as- pennydrops-20110725-1hx0x.html?skin=text-only Greenblat, E 2011, ‘Shoppers opt for clicks over bricks’ The Age 29 July, viewed 5th June 2012 from http://www.theage.com.au/business/shoppers-opt-for-clicks-over-bricks-20110728- 1i2cy.html Kale N 2011, ‘CBA Report: Australians Under 21 the Most Prolific Online Shoppers’ Power Retail 28 July, viewed 5th June 2012 from http://www.powerretail.com.au/news/cba- report-australians-under-21-the-most-prolific-onlineshoppers/ Varley, M 2011, Energising Australian Ecommerce, B&T Magazine, Vol. 61, no. 2733, p.20- 25). Walker FM 2010, Australian retailers cry foul as shoppers go online, Tribune Business News [Washington] 19 Dec 2010, viewed 5th June 2012 from http://search.proquest.com/abicomplete/docview/821560620/13695438C783A5413D6 /6?accountid=36155 viewed 3May 2012 Woolworth 2012, Woolworth everyday gift cards, viewed 5th June 2012 from http://everydaygiftcards.com.au/Content/AboutUs# Read More