Advent of E-Commerce in Australia - Case Study Example

Electronic Retailing Name: Professor: Institution: Course: Date: Introduction E-retailing was first used by small and big companies from as earlier as 1997. During this time dell computers were commonly used for managing multi-million projects owned by different companies. Orders were being purchased and sent online. The success of e-retailing was enhanced by the introduction of the Barnes and the Noble’s e-retail site by the Amazon.com. Following great and continuous advancements in technology, the generation of more secure orders through the internet has been enhanced. During the same year, there was a press release which revealed that Auto-by-Tel had managed to surpass its one million sales by use of the internet. This was a landmark in the evolution of the e-commerce (Evers 2006). The Nielson Media continued to report that by the end of 1997 the cumulative number of people who were using the internet to make business transactions had reached 10 million. The Jupiter report in 1998 had predicted that the amount that was generated in the world by the end of 1998 through e-retailing was to reach 318 billion dollars. Through e-retailing, the e-tailware has been developed (Mello 2011). The e-tailware refer to the software tools are used in business transactions to develop and generate different business documents such as catalogs and the orders. Research has shown that the software can now be used by businesses to avail commodity prices for comparison by different customers. The primary objective of this report is to critically discuss the concept of e-retailing commonly known as the e-commerce. The report will look at the trends in which the use of the internet has influenced the business industry and the benefits it carries for its users. The report will particularly use the case of Australia to discuss this concept. Advent of e-commerce in Australia In Australia, use of internet has seen many achievements in the business sector. Computer networks are used to help fasten the production processes alongside the distribution, disposal and dispatch of goods and services. In extension the internet is now used in many homes in Australia for transacting and making online purchases. The internet has also enhanced the international e-retailing whereby sales from foreign countries through the internet. Access for global household goods is very easy. The commonly e-retailed commodities in Australia include the purchase of books, music, computers, movies and other allied products such as the DVDs and the 3G networks (Baker 2010). In Australia e-tail appears to have gained substantially over years even though the e-tail market locally is perceived to still immature s opposed to the United Kingdom, the United States, Japan and Korea as well as China. Currently, the e-retail sales in these countries are approximated to more than 6% of the total retail sales as opposed to Australian e-retail sales at 3%. In general, the benefits that the internet users get are presumed to be more than the costs associated (IBIS World 2010). It is also assumed that e-retailing is expected to shift the market and the consumption of local products to those that are produced in the global market. Currently, more research is being done to investigate into the trends of e-retailing in the country. The Access Economics has been commissioned by the Department of Broadband, Communications and Digital Economy to study the e-retail trends in the market more especially with regard to household goods and the impacts of the trends on the consumption patterns and the general policy implication. Advantages of e-retailing Reduced search expenses Before the customer makes an informed purchase choice, he is expected to do an extensive analysis about the product by looking at its qualities, price, and origin as well as quality standards. Before the advent of the internet much of the information on different products could only be sourced through physical market surveys. Traditional retailing was tedious and time consuming especially when someone staying far from the market place. Product comparisons are important in determining the most appropriate choice that can serve the need that already exists. The internet has allowed the consumers to easily access the commodities of their choice with a lot of easy with necessarily having to travel to the market place to search for information something that could be very expensive. Important point to note is that in Australia even though many households tend to use the internet to search for what they want, they only end up making independent decisions on the purchases they want. This is guided by the quality and delivery time of the product. Variety of choices Through the e-commerce, the consumers have the opportunity choose whatever they want from a variety. This gives the consumer an upper hand in the bargaining power as opposed to the producer. As discussed earlier, reduced product search costs allow the consumer to save more and consequently having something to search for more information. This enables the consumer to access different products from which to choose from and thus high level of customer satisfaction. The internet has helped the consumer search for certain products that may not be available at home across the boundaries (AusIndustry 2010). This is well demonstrated by the removal of the barriers by the internet. The internet is also perceived to be a very important tool for reaching those markets that are far and difficult to reach physically. This is particularly important for the company that wants to globalize without necessarily opening physical offices in certain geographical location. Market competition Many companies given the circumstances they operate in, it is now becoming very clear that competition is growing based on the economic integration. It is estimated that averagely multinational companies spend about 4% of their revenue in advertising and promotion. This has led to collapse of those young companies that want to venture into the foreign markets (The Board of Taxation 2010). The use of the internet is important in ensuring that the reduced costs of online marketing and advertising are passed on the final consumer. Through the internet, a multinational company is able to advertise many of its products at ago. Customers have the time to interact with the seller virtually. This enhances the speed at which the customer needs are received and attended irrespective of the distance. When the seller chooses to go online then what matters most is not the size of the company but the innovativeness and creativity of the company in presenting itself on the web. Market expansion E-retailing is perceived to have increased the consumer activities in the market. The seller is the solely beneficially to the employer. This is because it helps create the bigger market through which the goods can pass through the customers. Through the internet, the companies are able to reach the wider as opposed to the traditional retailing methods. The internet in Australia according to the ABS report of 2009 had indicated that over 65% of the people aged 15 years and above and who were users of the internet actually used the internet to make their purchases online. Disadvantages of e-tailing Even though many businesses had hoped to be very profitable from the application of the e-tailing in their business activities that has not been the case for various numerous reasons. Security concerns The consumers who buy through the internet are challenged with the task of getting to trust the seller. This is because the two dealers in many occasions do not meet physically. The concern has been how to trust that the supplier is going to respond accordingly to the needs of the customer. Let us consider the customer in Australia who wants to buy computers from Japan. It is arguable that the manufacturer or rather the seller can demonstrate that the qualities are conforming to the customer expectations (Nielsen 2008a). The trust will be confirmed after delivering goods in time and good quality. In online buying, the customers are expected to provide their details to the seller for the transaction process. Research is showing lack of confidentiality in customer information has led to hacking by cyber criminals to cone people their money. Customer retention Online shopping is a one touch activity whereby the customer has the responsibility of searching for the seller who has the consignment he deserves. Once the family household has discovered the need that exists, the buyer is likely to make that purchase from a particular seller based on the circumstances that prevail during that time. Urgency, quality and price are some of the factors go for a certain seller. Once the transaction has been done, it is not easy for the business to keep track of the customer and thus online sellers for many years have not been able to retain their customers. This is so common since many of the purchasers make their purchases out of curiosity and once they are done that is it. The e-retailing industry in Australia At the moment the current the total value of the e-commerce activities in the country is not very clear. This is due to lack of regular and detailed data. Even though many research firms have embarked top study the industry data that might be useful for long-term planning, this data has merely remained proprietary. There is very little access to the data that is available about the industry and consequently making a little bit difficult to enhance the analysis of the e-commerce industry in Australia. In 2009, it was estimated that the country’s total value from e-retailing ranged from 18.6 and 24 billion dollars. This estimate was based on the survey report by the AC Nielson, the IBIS world and the Frost and the Sullivan. The three companies had based their surveys on different aspects of the economy which included the value of online purchases through the PayPal, the customers who anticipated doing online shopping and the amount they were willing to spend and the per capita expenditure per annum respectively. However, the most recent survey was done by the Frost and the Sullivan in 2010 which indicated that the e-commerce purchases were valued at 12 billion dollars even though had excluded such purchases as online airline ticketing, online financial transactions and the tickets purchase to enter different places of entertainment. Use of the mobile internet in the country, is seen as the most contributor to online retailing. According to the Communication Day (issue No. 3845, September 2010), reported that the research by the eBay had found that one person in every four Australians use their mobile phones to do online purchasing. International experience The 2010 report by Frost and Sullivan had indicated that e-commerce in Australia had remained relatively immature over years and that the e-commerce industry in Australia remains relatively low as opposed to the United States and the United Kingdom. This demonstrates exactly how the e-commerce industry in Australia is potential for e-retailing. The environment in Australia represents great opportunities with regard to e-retailing. The comparison with other countries is represented in the table shown below. For example in the United States it is estimated that the e-commerce sales in 2009 was 129 dollars. In the United Kingdom, the online sales had been estimated to be approximately 78.2 billion dollars. Even though the market size in the united sates and in the United Kingdom exceeds that of Australia, the e-commerce estimates in the country are estimated to be between 18.6 and 24 billion dollars based on expenditure per capita. When comparing on the number of people who participate in online purchasing, the potential population in the Australia economy is more apparent (Australian Communications and Media Authority 2010). The table below indicates the number of people who have used the internet to make purchases among the top ten internet users’ countries in the world. It is evident that Australia lags behind among the top ten internet users countries all of whom have more than 95% of the internet usage as opposed to the country’s 80%. This is irrespective of the high internet usage in the country as opposed to these countries. Country Year Total sales (dollars) Per capita sales Australia 2009 and 2010 19-24 billion A$534-$1,068 United kingdom 2009 78.2 billion US$1,266 United States 2008-2009 129 billion US$420 Source: ABS (2009c). In terms of domestic and international share, e-commerce is very important activity to consider. This is because it the government determine its impact on the economy. However, since there are sufficient data, this has been difficult to breakdown. The report by the ACMA in 2010 had indicted that 68% of the respondents use the Australian website while 80% of the total online sales would be sent through the PayPal. Another report by the Sydney Morning Herald in 2010 had indicated that 70% of the people that do online shopping do it from overseas as indicated in the table below. Commonly online shopped goods According to the ACMA report, different goods are shopped online in Australia. However, the commonly online products include ticketing and accommodation. 56% of those interviewed indicated that they normally use the internet to buy ticket for travelling and accommodation. The goods that are not commonly purchased through online include the financial shares, food, groceries and drinks. Perhaps this is because many of these products are readily available in the retail shops and agents’ shops. Table 3 below lists different products that are purchased through the internet according to the percentages. Product or service Purchase level (%) Travel tickets and accommodation 56 Event tickets, movie tickets and concert tickets 43 Clothing and shoes 37 Music 36 Computer software 31 CDs and DVDs 26 Government services 26 Health or beauty items 25 Communication and technology 19 Food, groceries and alcohol 11 Shares and financial products 11 Others 9 Source: ACMA Commissioned Research. N=922 Attributes of an effective website First and foremost characteristic of an effective website is the ability to be user friendly. It must be the one that allows individuals to surf different sites just with the user of the mouser. The links to the other sites need to easy to follow and to apply. In simple terms, the website must be customer based of easy usage. This is an important requirement for any website that intends to serve the online buyer well. The effective website is also expected to have the ability to express itself before the customer. The contents need to be clear and precise and in a simple language for easier understanding by the customer (Frost and Sullivan 2010). The visual characteristics presented by the company in the web should always be easy to interpret and comprehend by the customer. Websites are used to provide a variety and very important content for the customer. The site must be dynamic and appealing to the customer. In other words the site must place more emphasis in building product images that relevant to the customers’ needs in order to attract their attention. Generally, the website ought to be user interactive in order to help the customer have an insight understanding about a particular product. Conclusion E-retiling is very important discovery in the world of business. According to this article, it has been found that small and big companies had started using computers as earlier as 1997 immediately after the arrival of the dell computers. In Australia, use of internet has seen many achievements in the business sector. Computer networks are used to help fasten the production processes alongside the distribution, disposal and dispatch of goods and services. Online shopping is used in purchasing different products. According to this review, purchase of tickets and accommodation rooms is one important service that is purchased online. In general terms, e-retailing has opened the world of business by creating a one large global market which is borderless. References AusIndustry. (2010). Small business online vodcast transcript, http://www.ausindustry.gov.au/SmallBusiness/SmallBusinessOnline/Documents/Valiant Drycleaners.pdf, accessed Oct 2010. Australian Bureau of Statistics (ABS). (2009a). Household Use of Information Technology, Australia, 2008-09, ABS Cat No. 8146.0. Australian Communications and Media Authority. (2010). Australia in the digital economy – Consumer engagement in e-commerce, strategic research project, November 2010. Baker, M. (2010). Internet bites - but how hard?, Sydney Morning Herald, http://www.theage.com.au/small-business/trends/internet-bites--but-how-hard-20101013- 16iq1.html, accessed 1 Feb, 2012. Evers, J. (2006, November 15). Billions of dollars spent on security. Retrieved 1 Feb, 2012, from http://news.cnet.com/Study-Billions-of-dollars-spent-on-security/2110-7350_3- 6135989.html#ixzz1XvhTa4zs. Frost and Sullivan (2010). A$12 Billion Australian Consumer eCommerce Market Underdeveloped and Lags US and UK by Three Years, Retrieved 1 Feb, 2012, from http://www.frost.com/prod/servlet/press-release.pag?docid=207380860. IBISWorld (2010). Online Shopping and Mail-Order Houses in Australia, July. Household E- Commerce Activity and Trends in Australia 27 Commercial-in-Confidence. Mello, J. P. (2011, August 9). Cybercrime fight costing companies more this year. Retrieved December 18, 2011, from http://www.computerworld.com.au/article/395789/cybercrime_fight_costing_companies_ more_year Mello, J. P. (2011, August 9). Cybercrime fight costing companies more this year. Retrieved 1 Feb, 2012, from http://www.computerworld.com.au/article/395789/cybercrime_fight_costing_companies_ more_year. Nielsen C (2008a). Four in five Australian internet users now shopping online news release October 3 2008, http://au.nielsen.com/site/documents/AustralianOnlineSpending1H08final.pdf, accessed 1 Feb, 2012. Nielsen, C. (2008b). Trends in Online Shopping: a global Nielsen consumer report. The Board of Taxation (2010). Review of the application of GST to cross -border transactions, A report to the Assistant Treasurer, February 2010. Read More