Positive and negative aspects of e-business for traditional retailing and whole-selling organisations - Essay Example

?E-Business Table of Contents Table of Contents 2 Introduction 3 E-Business in Traditional Retail Stores and Wholesale Organisations 3 Impact of E-Business on Traditional Retail Stores and Wholesale Organisations 4 Positive Impact E-Business in Traditional Retail Store and Wholesale Organisations 5 Negative Impact of E-Business on Traditional Retail Store and Wholesale Organisations 6 Opportunities and Threats Faced by E- business to Traditional Retail Stores and Wholesale Organisations 7 Threats Due to E-Business 7 Opportunities Due to E-Business 8 Discussion 10 Conclusion 12 References 13 Introduction E-business or e-commerce is a significant trend in today’s business environment which is fundamentally facilitating change in the method of conducting commercial activities. E-business forces organisations to find new ways for enlarging the market, enticing the customers and maintaining good relationship with them by customising the products and the services according to their requirements. In most of the times, e-business proves to be useful for traditional retailing and whole-selling businesses. Several retail and wholesale organisations choose to conduct numerous business activities through internet. Majority of retailing and whole-selling enterprises, which exploit the benefits of e-business use blend of traditional as well as evolving e-business strategies. However, besides the opportunities associated with e-business, retail and wholesale organisations also face threats due to the surfacing of e-business. The essay will describe whether e-business presents a threat or an opportunity for traditional retail stores and wholesale organisations. The purpose of the essay is to provide insights on both the positive as well as negative aspects of e-business for traditional retailing and whole-selling organisations. The essay is structured in developing the understanding about e-business and how organisations are applying it in their business to take advantages from it. E-Business in Traditional Retail Stores and Wholesale Organisations E-business provides exceptional opportunities for retail and wholesale organisations by helping to overcome the geographic limitations. Small and medium enterprises (SMEs) can mainly benefit from e-business through collecting valuable information easily, promoting themselves through the internet and serving consumers in new markets with comparatively little cost than traditional business practices. E-business refers utilisation of information and communication technology (ICT) in the business environment which comprises knowledge and data exchange, web advertisements, online ordering and real–time delivery information among others (Fletcher et. al., 2004). E-business implementation makes retail and wholesale organisations to rearrange the business procedures and to distribute goods and services more competently and effectually. However, despite rapid and sustained development of e-business several retail stores and wholesale organisations are still in the investment and brand development stage and have not utilised the benefits properly. E-businesses usually concentrate on the visual appearance and ease of use of their portals as a primary way for enlarging the customer base (Shin, 2001). Impact of E-Business on Traditional Retail Stores and Wholesale Organisations The impact of e-business on retail stores and wholesale organisations is determined by the level to which they match the present retailing as a substitute channel or swaps existing networks. Environmental forces such as demographical, cultural, lifestyle, fashions, economic and political pressures and other commercial expansions impact the future possibility and practice of e-business in retail and whole-sale organisations. E-business is simply an enabler which results in retail or wholesale procedure innovation, where the products and the goods remain same. E-business acts as a replacement network which has resulted in fundamental alterations in shopping practices (Burt & Sparks, 2003). Positive Impact E-Business in Traditional Retail Store and Wholesale Organisations E-business provides numerous advantages for retail and wholesale organisations for extensive varieties of business procedures. At the organisational level, e-business helps in quicker internal communication and makes administration tasks and utilisation of resources more effectual. Seamless transfer of information by shared network through e-business raises the affectivity of business procedures such as better documentation, better data handling and better back-office activities (such as categorising incoming orders, formulating accounts and restoring purchasing information regarding customers). Thus, e-business has positive impact on retail and wholesale organisations to react more efficiently with the customers’ preferences. An e-business system aims to spread the professional experience of employees throughout organisation (OECD, 2004). The other positive impact of e-business on traditional retail stores and wholesale organisations is lessening of operational expenses and acceleration of the consistency of business. By reducing the inefficiency causing from low coordination, organisations can increase the value of supply chain. E-business leads to instantaneous communication among purchasers and dealers which also generate closer associations among trading partners. In reality, implementation of e-business tends to decrease transaction expenses, increase transaction speed and raise dependability, therefore add value to the business (OECD, 2004). E-business can also enhance the brand image of retail and wholesale organisations. With the development of a corporate website, organisations can deliver information about particular products, goods, skills and facilities which augment the quality of organisation’s services towards the customers and draw new customers. Collection of information about the requirement of customers can be used for product or service innovation. According to the study of ‘Eurostat’ on E-business, it can be observed that the motives of SMEs for applying e-business comprise reaching more customers, increasing the market and improving the service quality (OECD, 2004). Negative Impact of E-Business on Traditional Retail Store and Wholesale Organisations Although application of e-business can provide several positive impacts on traditional retail stores and wholesale organisations, it can have certain negative impacts as well. The key negative impact of e-business is inappropriateness. E-business is not suitable for all kinds of business segments. Besides, e-business implementation requires employees with good ICT skills. Thus, it can generate concern over the high expense and inadequate access to customers. For example, in construction retail business or transporting business, implementation of e-business is unsuitable (OECD, 2004). The other negative aspect of e-business for traditional retail stores and wholesale organisations is loss of intermediaries. With e-business, manufacturing organisations can directly involve with the ultimate users of the products by bypassing the traditional retailers or wholesalers. Shift towards e-business has resulted in on-going removal of intermediaries (such as traditional retailers and wholesalers) from the supply chain system. It can lead towards loss of market for traditional retailers and wholesalers (Giaglis et. al., n.d.). However, e-business proved to be quite challenging for traditional retailing stores for finding appropriate e-business system for the business. In addition to this, e-business restricts the personal relationships with customers. Thus, it becomes hard for traditional retail stores and wholesalers to recognise their requirements and wishes. Opportunities and Threats Faced by E- business to Traditional Retail Stores and Wholesale Organisations The diffusion of e-business carries both opportunities as well threats for traditional retail stores and wholesale organisations. E-business adoption can be considered from two different viewpoints, one is threat viewpoint and the other is opportunity viewpoint. Opportunity in case of e-business denotes the situation where implementing IT can make it possible for organisations to accomplish progression. On the other hand, threats refer to the way a business can be harmfully affected. Threats Due to E-Business It is believed that, progressively pervasive e-business can have substantial impact on traditional retail stores and wholesale organisations. For instance, ICT is triggering essential transformation in management functions, viewpoints and industrial structures. However, the most critical issue for traditional stores and wholesale organisations for e-business is their removal from the supply chain. Thus, it had threatened the traditional retail and wholesale stores, because e-business allows manufacturers to internalise their business functions which was previously undertaken by intermediaries. Traditionally, intermediaries such as retail stores and wholesalers are used for minimising the transaction expenses. Due to emergence of e-business, the transaction expenses have been reduced significantly and thus many retail stores and wholesale organisations have become insignificant. For example, WH Smith, one of the most popular e-business organisations in the United Kingdom which sells books online has become a major threat for traditional book retailing organisations, because WH Smith can provide books with cheap cost and offer great service which forces other traditional retailing stores and wholesaling organisations to transform their business structures and implement e-business in their organisational systems (OECD, 2004). With the introduction of e-business, organisations are facing the other threat of defending themselves and win the battle to retain the existing market share while expanding to new market. The traditional system of business is not applicable for e-business. Besides, e-business possesses the threats of security of information and threat of loss of trust between customers and organisations. Opportunities Due to E-Business The impact of e-business on traditional retailers and wholesalers depends on the characteristics of the products or services. For instance, retailers that involve products with high level of standardisation and low density of dissimilarity are clearly more suitable for e-business. Although e-business possesses a threat for many traditional retail stores and wholesale organisations, it can also promote the growth of new group of retailers. E-business provides the likelihood to reach to highly segmented customer groups in nationwide scale. For traditional retail stores and wholesale organisations, internet might not be a significant source for extra sales, but it can prove to be a valuable tool for preserving customer relationship by providing more broad information regarding the organisation and its products and services. A significant example for opportunity of e-business can be New Look. E-business provides the retail company (i.e. New Look) equivalent channel to traditional stores and catalogue sales. E-business is used by New Look for motivating customers to use their chosen channel (New Look Retail Group Limited, 2012). Through e-business, organisations can increase the brand awareness because it can help traditional retail stores and wholesale organisations to reach countless customers. E-business helps to create easier way to purchase items and provide retail stores the opportunity to show and describe the products or the services in an explanatory, pictorial and cooperative way. In case customers are satisfied with the e-business services of traditional retail stores and wholesale organisation, they become loyal clients. Through e-business, traditional retail stores and wholesale organisations can shop from offered catalogue and know about any updates on new collection or discounts (OECD, 2004). Traditional retail stores which operate their business physically from a certain place are unacquainted with the revenue it can get by involving into e-business. Selling through internet creates numerous prospects for both new as well as present customers, especially with organisations which have physical outlets. E-business can provide the chance to target smaller customer segment and niche segment. A strong internet presence not only benefits the customers, but also makes easier for traditional stores and wholesale organisations to update the websites, which in turn saves time for planning modernisation of business (OECD, 2004). Through e-business, traditional retail stores and wholesale organisations can reduce the searching expense. Customers generally select their products from existing product offerings and consider aspects such as price and features of products before making purchasing decisions. Likewise, retail organisations also face cost of searching appropriate customers for their products. Thus, e-business can help to decrease the searching expenses though offering single point of agreement for information gathering and market deal (OECD, 2004). Discussion Generally, the main objective of e-business for traditional organisation is to systematise and digitise the commercial operations, decrease costs and increase the efficiency. E-business has forced many traditional retail stores and wholesale organisations to redefine their business models in order to improve the performance. The following framework will show the relationship between e-business and competitive advantage organisations can get through its adoption: Source: (Wang & Shi, 2007). According to the above framework, e-business technology is generally used for sensing the trend, learning about the market and coordinating with different parties. As a result, it can provide sustainable competitive advantage for organisations. Although e-business can provide numerous opportunities to the traditional retail stores and wholesale organisations, there are several restrictions for adopting e-business such as technical constraints, organisational limitations and security problems. E-business can provide opportunities by attracting more customers and intensifying the customer base. However, e-business can be expensive for several traditional stores. Besides, the success of e-business depends on the critical inception of the online shoppers. This denotes if more and more customers prefer to purchase online, the opportunities for e-business for traditional retail and wholesale organisations will increase significantly. Furthermore, whether e-business acts as a threat or opportunity depends on the belief of organisations. Traditional retail stores which seek to maintain their positions in the market and overcome the competition from other e-retailing businesses will definitely go for implementing e-commerce and take the benefits of it. The following model will depict the different options for technology selections for e-business in traditional retail and wholesale organisations: Source: (Wang & Shi, 2007). Conclusion Implementation of e-business on traditional retailing and wholesaling stores has generated new methods for conducting business. The impacts caused by e-business not only changed the traditional retailing experience but also provided new ways for retailers and wholesalers to concentrate on customers. Presently, retail stores such as book sellers, travelling organisations, retail apparel organisations, and computer wholesale shops are mostly affected by the introduction of e-business because it has reduced their trades. E-business is more likely to replace intermediaries because it has the capability to surpass geographical limitations. On the other hand, e-business has developed a new dimension for traditional retailers to conduct business. Thus, several traditional retailers have been inspired to develop their own websites and engage in online sales. However, the intermediaries cannot be substituted for e-business. Thus, in conclusion, it can be depicted that e-business brings both threats and opportunities for traditional retail stores and wholesale organisations. However, in order to overcome the threats and to exploit the opportunities, organisations need to start planning for using e-business because customers nowadays prefer convenience in purchasing, and sooner or later, traditional retail stores and wholesale organisations will be bound to use e-business due to twin pressure of competition and demand. References Burt, S., & Sparks, L. (2003). E-commerce and the Retail Process: A Review. Journal of Retailing and Consumer Services, 10, 275-286. Fletcher, R., Bell, J., & McNaughton, R. (2004). International E-business Marketing. Stamford: Cengage Learning EMEA. Giaglis, G. M., Klein, S., & O’Keefe, R. M. (n.d.). The Role of Intermediaries in Electronic Marketplaces: Assessing Alternative Hypotheses for the Future. Retrieved March 19, 2012, from http://www.eicstes.org/EICSTES_PDF/PAPERS/The%20Role%20of%20Intermediaries%20in%20Electronic%20Marketplaces%20(Giaglis).pdf New Look Retail Group Limited. (2012). Our Growth Strategy. Retrieved March 19, 2012, from http://www.newlookgroup.com/newlook/en/aboutus/ourgrowthstrategy OECD. (2004). ICT, E-business and SMEs. Retrieved March 19, 2012, from http://www.oecd.org/dataoecd/32/28/34228733.pdf Shin, N. (2001). Strategies for Competitive Advantage in Electronic Commerce. Journal of Electronic Commerce Research, 2(4), 164-171. Tuunainen, V. K., & Rossi, M. (2002). E-Business in Apparel Retailing Industry – Critical Issues. Retrieved March 19, 2012, from http://is2.lse.ac.uk/asp/aspecis/20020147.pdf Wang, Y., & Shi, X. (2007). Towards a Theoretical Framework of E-Business Value Creation: the Dynamic Capabilities Perspective. Retrieved March 19, 2012, from http://www.pacis-net.org/file/2007/1309.pdf Read More