Small Business Use of Electronic Commerce - Assignment Example

Small Business use of Electronic Commerce Small business companies use e-commerce for selling purposes only. They create web-sites in order to popularize their brand and attract potential consumers. A good example of the use of the Internet in this way is to keep rapidly changing catalogues on-line like KOA MART or PeaPod. This enables, for the first time, the opportunity to bring grocery shopping out of the grocery store, supermarket and superstore. By uploading the daily catalogue of goods and prices that are available, stores can now enable consumers to buy their goods without having to go round the store to collect them. In an environment in which time is precious the advantage to the consumer is undeniable. Not only that, but the concept can reduce costs too. For instance, Pea Pod that stores the goods which a customer wants can sort and pack these goods considerably more efficiently than the store and can be located out of town in an industrial park or other area where cheap rents are available. Moreover, staffing requirements are lower, the incidence of in-store theft is reduced, and the hours of operation can be extended. For small business companies like KOA MART, the opportunities of Internet-based commerce seem considerable, but few companies have yet succeeded in exploiting them profitably. Such success is dependent on acquiring an in-depth understanding of the characteristics of the Internet and matching these with the characteristics of existing products or services. In contrast to Pea Pod, KOA MART proposes better catalogues and more vivid visual representation of its products. It is easy to find a product and its price. Pea Pod has poor design and simpler structure; it is difficult to navigate and use this site. The majority of sites linked to "small business +electronic commerce" are devoted to potential online resources and analysis of the market opportunities. Some of the sites propose technical assistance for small business while others highlight the main trends and e-news about developments within the industry. This information can also be used by small business organizations that want to sell as well as buy (Demery, 2007). Small business companies may see that competitor's price reduction appeals only to a certain type of customer (those, for example, who have easy access to the competitor's products; in other words, the discount is not sufficient to attract customers who do not have this access). In this case, proposal would be to restrict their own price reduction so that it applies only to those customers who have easy access to the competitor products. By doing this, they can minimize the impact of competitor's actions on overall margins (Demery, 2007). Thus companies may identify that if one of competitors reduces the price of a product, volume of sales will go down; if companies reduce price at the same time, volume of sales will remain static (assuming that companies also match competitor's price promotion or other marketing tactics). One of the key characteristics of the goods and services that are capable of being traded successfully on the Internet, therefore, is that they are recognized and understood by the consumer (Howlett, 2007). This means either that they must have a strong brand (so that the consumer knows what to expect) or that the goods must be of such a nature that the consumer knows what they will receive. There are many thousands of sites on the Internet, which makes it considerably more competitive than local shopping mall or high street. Getting people to enter a site is as difficult as, if not more difficult than, getting people to purchase goods from a retailer (Howlett, 2007). The Internet did not level the playing field between large and small businesses because large companies receive great opportunities to reduce prices and tattract global target audiences. While one of the major advantages offered by the Internet is that - as a manufacturer, for example - a small company no longer has to do battle with retailers and competitors to obtain the best shelf space in a physical outlet, the down-side is that many of its traditional tactics for being noticed have disappeared. A small company may have complete control of the sales process, but it also has a much more difficult task of persuading people to enter the site when there are thousands of other sites on the Internet. Once small companies have succeeded in getting customers to visit a website, they still have to get them to buy something (Howlett, 2007). This is the area in which the Internet, with its interactivity and versatility, starts to win over traditional sales methods. The virtual nature of the Internet means that small companies can use different methods for achieving sales, methods that cannot be applied effectively in a physical environment. Ironically, however, most websites fail to take advantage of these methods (Zahorsky, 2008). The key factor that differentiates the Internet from other forms of marketing is its interactivity: consumers are not passive recipients of a broadcast marketing message - they can interact with it. At its simplest, consumers can choose which areas of the message to explore. Sites created by small business companies can be laid out so that consumers can be led down a particular set of pathways depending on their particular interests. To a lesser or greater extent, the information that they have to run the business must have been filtered: they could not be expected to know everything about everything. This means that they must either fewer bits of detailed information or all information but in a summarized format (Mirchandani, 2001). In practice, there is no real choice: to be able to run a business on a few, very aggregated performance measurements, a small company needs to know which measurements will be important; small company has to be able to priorities. It is therefore easier and safer for the factory owners to adopt the second approach: because they can not be sure what information is important and what is not, they have to know a bit of everything. This situation limits opportunities of small companies and creates unfavorable position on the market. Most companies are attempting to overcome this issue by mass-marketing, but smaller companies are finding more inventive ways of using the nature of the Internet itself to help promote their services Bibliography 1. Demery, P. 2007, E-commerce: The Shape of Things to Come. [Online] Available at: http://www.internetretailer.com/article.aspid=22232 2. Howlett, G. 2007, "Death of the Small Buy". Marketing Pilgrim. [Online] Available at: http://www.marketingpilgrim.com/2007/05/the-death-of-the-small-guy.html 3. KOA MART. 2008, Available at: http://www.koamart.com/ 4. Mirchandani, D. A. 2001, Understanding small business electronic commerce adoption: An empirical analysis. [Online] Available at: http://www.allbusiness.com/technology/computer-software-customer-relation/975917-1.html 5. PeaPod. 2008, Available at: http://www.peapod.com/ 6. Zahorsky, D. 2008, What a Blog Can Do For Your Small Business. [Online] Available at: http://sbinformation.about.com/cs/ecommerce/a/bblogs.htm Read More