E-Commerce of Light in The Box - Essay Example

E-commerce: Lightinthebox Introduction As an online shopping store, Light in The Box is concerned with avariety products that are on high demand and not only sell such products at a discount, but also facilitate the shipment of products that they sell globally. As an online store, it is important for customers to always go through the store’s FAQs and other policy issues. This is important in ensuring that customers understand how the store operates in terms of making orders, cancellations, returns or exchanges. The website has been designing in such a way that it is easier for customers to explore and place orders for the products that they prefer. However, prior to placing orders, it is important for customers to thoroughly review the store’s return policies. The products that this online shopping centre deals in include women’s clothing, dresses, electronics, and shoes among other product categories that may interest customers. Online shopping mainly denotes purchasing products or other services via the internet. This type of shopping is now popular across the globe as a result of advancement in the use of ICT, it is considered to be convenient and also attract lower prices. This is more so during the holiday season where shoppers are able to avoid the hectic process of visiting several stores physically or standing in long queues in order to purchase a certain item (.Jifeng, Sulin & Han 2012, p.1131). This paper provides a critical discussion of the business of Lightinthebox.com, an online shopping store. The current business environment of Lightinthebox.com This online shopping store mainly sells goods produced in China to other parts of the world. The products that this online store retail are considered to be affordable and targets every hobby or lifestyle by customers across the globe. At the moment, the products that the store retails include home improvement, fashion, beauty products and electronics among other products that are on high demand globally. Lightinthebox.com provides customers with an easy way of shopping; thus, allowing customers to cut on unnecessary costs for purchasing a product in the conventional stores. The store has different payment options that provide convenience to customers across the world. This includes the use of credit cards, wire transfers, PayPal or debit cards to make payment (Panda & Narayan 2013, p.52). As a strategy the availability of a wide range of payment options is meant to allow customers to select the method that they prefer. Further, the online store relies on a technology offers maximum security for customer information related to payment details. The product that the store retails online often undergoes proper testing and other quality control procedures to ensure that these products conform to the global quality standards. The customer service is comprehensive throughout the process of shopping at the online store. For instance, prior to placing an order, customers have the opportunity to make inquiries in real time through the use of the store’s live chat. The moment a prospective customer has made a purchase, the customer service team is always ready to answer questions through the online store’s ticket system that is easy to use (Panda & Narayan 2013, p.55). With regard to the prices, the products attract reasonable price because this online retailer has established a concrete relationship with factories, the distributors and warehouses across the Chinese wholesale community. This has helped to minimize additional costs; thus, the products attract low cost compared to other online stores across the world. In addition, the delivery process is fast as a result of doing business with genuine logistic service providers that include EMS and DHL. At the moment, this online store ships to more than 200 countries across the world. On the other hand, the online store operates in such a way that, there is limited time between receiving payment confirmation and cancelling the order. In most cases the short time frame often lead to a hefty penalty prior to cancellation of an order after the receipt of payment confirmation. This is a problem for Lightthebox.com because it is slow in sending payment confirmation. The reason could be the distance between China and other destinations for instances from China to the U.S. As such, by the time a customer receives payment confirmation, the deadline for cancellation may have passed. This process may impact negatively on the business prospect of the online store. The other drawback for the online store relate to complaints from customers regarding delay tactics that they use on customers such as excuses regarding shipment delays. This means that if customers try to cancel the delivery, they still end up paying the cancellation fee. As a result of being an online store that operates from China, it is impossible for customers abroad to visit the local store and try to exchange products in case of a wrong shipment (Faqih 2013, p.67). Porter’s five forces model and Lightinthebox.com Threat of new entrant As a result of advancement in technology, most firms are embracing the internet as an avenue to market their products or services. Internet today provides a faster and cheaper means of attracting customers compared to the mainstream media platforms that are more expensive to use. Lightinthebox.com faces a threat of new entrant in the sense that across the globe, there are numerous stores dealing in the same products and which may turn to online shopping to attract more customers from a wide geographical area. The internet provide convenience to shoppers and this means that more retail store dealing in the same products as Lightinthebox.com are bound to embrace the internet to market and sell their products to prospective customers. This is a threat for Lightinthebox.com because in case of poor services, customers may shift to other online stores where the services offered are more efficient (Eppright & Hawkins 2009, p.118). Bargaining power of supplies Lightinthebox.com seems to enjoy a cordial relationship with suppliers and this plays a critical role in ensuring that the online store does not buy products from suppliers at higher prices. This allows Lightinthebox.com to continue selling its products to customers at affordable prices compared to other online stores globally. In essence, the cordial relationship that Lightinthebox.com enjoys with the Chinese wholesale community has assisted in improving profits. However, the number of suppliers in China is also high and this may impact negatively on the quality of products supplied to Lightinthebox.com because these suppliers may be in a rush to make quick cash. This in turn may lead to losses for Lightinthebox.com as a result of delivering low quality products to customers. While there could be a rush to supply products to Lightinthebox.com by the many supply, the existence of many suppliers could be an advantage for Lightinthebox.com in terms of lowering costs. This is because the existence of one supplier creates monopoly and arbitrary raise of supply costs by the one supplier existing in the market. This means that Lightinthebox.com will have to transfer these additional costs to the customers and may affect profit as a result of customers looking for other retailers offering affordable prices for products (Eppright & Hawkins 2009, p.121). Threat of substitute products While Lighinthebox.com is a genuine online store dealing in quality products, it has to contend with the threat of substitute products emanating from the Chinese market. There are firms in China who may engage in the production of substitute products to take advantage of the high demand for such products in the market. The substitute products often cash in because they sell at a lower price compared to the original products. As such, when the original products attract higher prices, customers often shift to these substitute products. In China, for every original product, there is often a counterfeit. Lightinthebox.com sell its products to customers at a lower price, but the existence of many substitute products may force the online store to lower prices for its products further and this can affect the profits generated by the online store (Smith & Rupp 2003, p.422). Bargaining power of the buyers Online shopping has become the latest trend for most customers across the world; for instance, this trend is common during holiday season when consumers are visiting websites to search and purchase products online. As such, Lightinthebox.com should take notice of the seasons when more customers are visiting websites to search and purchase or order for various products. When the demand for products is high, and there are numerous online stores to visit then consumers are able to influence price and quality of products in the market. Lightinthebox.com is in a better position to take advantage of the bargaining power of consumer because it permits bargaining or sell its product at a discount compared to other online stores. On the other hand, the buying power of consumers may be low when there are no other competitors, this can allow Lightinthebox.com to maintain fixed prices for products not sold by competitors (Smith & Rupp 2003, p.427). Rivalry among competitors Today, Lightinthebox.com is not the only website dealing in online shopping there are rival competitors that include DHgate. As a result of Lightinthebox.com facing competition form mainly DHgate, the rivalry appears to be fierce, but since Lightinthebox.com deals in variety of products, it still emerges top in terms of competitive advantage. This rivalry also results in price wars where the website tries to come up with reasonable prices in order to attract more customers to their side. However, the lowering of price tends to affect the bottom line of these online stores (Paul & Pota 2000, p.26). SWOT analysis of Lightinthebox.com Strength Lightinthebox.com is better placed in terms of operating from a region where the cost of production is low compared to other parts. As such, Lightinthebox.com can manage to sell its products at a lower price compared to other online stores across the world that do not enjoy economies of scale. In addition, Lightinthebox.com deals in a number of products and this satisfies the needs of customers shopping for products online. Compared to other websites, Lightinthebox.com is better placed to attract more customers by providing free shipment to different countries across the world. The online store also accepts transaction in different currencies and this allows customers from different parts of the world to place their orders with Lightinthebox.com. The process of placing an order is easier because there are no middle men involved which is a plus for Lightinthebox.com to attract more customers who prefer dealing direct with the seller (Valentin 2001, p.54). Weaknesses The customer service at Lightinthebox.com is not up to standard as evident in the complaints by their customers. There are constant delays in shipment, wrong deliveries and hefty penalties for cancellation of orders whose receipt of payment have already been confirmed. This discourages consumers from placing orders with Lightinthebox.com out of fear of being disappointed or being charged unnecessary costs for failures form Lightinthebox.com. The online store needs to improve its customer service and fast track the shipment of goods to customer’s destinations (Valentin 2001, p.58). Opportunities Lightinthebox.com can take advantage of the discount it offers for the wide range of products it sells to attract more customers visiting websites to search for products. Further, Lightinthebox.com can also capitalize on the good relationship it enjoy with the wholesale community in China to have goods supplied on time. This would allow Lightinthebox.com to ship products to customers on time (Valentin 2001, p.63). Threats As an online store operating from China, Lightinthebox.com faces stiff competition from DHgate that also operates from China. This means that in case of poor service delivery, customers are likely to shift to DHgate; thus, affect the bottom line of Lightinthebox.com. On the other hand, most customers are also sceptic about products coming from the Chinese market. This means that Lightinthebox.com has to come clean and ensure customers get quality products for their money. Incompetency with regard to customer service is another threat for this site as evident in the complaints from customers. There are also hidden charges that may scare away most customers who consider such charges as unnecessary. The existence of substitute products is another threat for the site especially if such products are cheaper and can serve the same purpose regardless of the quality. Logistics with regard to shipment of products is another threat for Ligthinthebox.com due to the time taken or delay in delivering goods to customers (Simoneaux & Stroud 2011, p.77). Core competent in Lightinthebox.com business model As a strategy, Lightinthebox.com realizes that selling product at a discount to customers play an important role in attracting more customers. In turn, the site is able to enjoy economies of scale by dealing in a wide range of products compared to other similar websites. Further, the site operate in a region where the cost of production is lower and this provides it with competitive advantage in that the high prices that are as a result of high cost of production does not affect Lightinthebox.com. While the site offer lower prices for its customers, it does not compromise the quality of its products and this is important in retaining customers who are not only attracted to the lower price, but also quality of products (Scarpi, Pizzi & Visentin 2014, p.262). Ligthinthebox.com has also made the purchasing of its products easier by accepting various forms of payment that include the use of PayPal, Western union, credit and debit cards by customers. This makes the transaction more fast since customers placing orders come from different parts of the world. When it comes to shipment, the site relies on the best logistic firms that operate worldwide and incudes DHL and EMS. This ensures that the products ordered by customers reach their destination safely, and the shipment is often done free by Lightinthebox.com. This is an added value that provides the site with a competitive advantage over other websites operating online shopping across the world. Through Lightinthebox.com, the users have the opportunity to select from a wide variety of products at the comfort of their homes. This is because they can order for the products online and the advantage in this sense is that the customers do not need to visit a retail store and queue in order to buy a product (Scarpi, Pizzi & Visentin 2014, p.265). In addition, the products from Lightinthebox.com are generally cheaper compared to the products sold locally in the retail stores. However, the model used by Lightinthebox.com is only applicable when there are more customers buying wide range of products online and the production cost is lower, which allow Lightinthebox.com to acquire products from suppliers at a low price. This is the only way that the site can continue offering affordable prices for its products compared to other sites. This model is likely to succeed because more customers are embracing online shopping compared to the conventional retail stores. However, the site needs to be wary of additional costs from suppliers that may affect the prices of goods it sells to customers across the world (Sinha & Sigh 2014, p.48). Conclusion The sustainability of Lightinthebox.com will depend on the strategy it develops to gain competitive edge. This may involves dealing in unique products to attract a particular segment of customers cannot be accessed by competitors. It is also important for Lightinthebox.com to explore new markets for purposes of introducing new products demanded by such markets, this ensures the site stays ahead of other sites. Further, the site needs to engage in a constant update of its webpage to inform customers of the latest products in the market (Liu & Forsythe 2010, p.97). References Eppright, D.,& Hawkins, R 2009, ‘Determinants of Emerging e-Commerce Markets: A Developmental Perspective’, Journal of Internet Commerce, Vol. 8, no. 2, pp. 113-134. 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