E-Commerce Sales Jump in 2011 - Research Paper Example

E-Commerce Sales Jump in 2011 Executive Summary The business world of today’s highly competitive and dynamic era is extremely volatile in nature. The emergence of high enhanced communication technology and devices has triggered a communication powered revolution all over the world. The power of this revolution is more centered on the arena of digitization. And it also is of high importance to mention the fact that the digital powered communication revolution is increasingly finding a lot of takers and supporters in all segments of the society of the developed as well as developing world. The digital revolution that is happening all over the world has been highly instrumental in bringing a massive change in the lifestyle trends of the masses of the world over. While talking on these lines, it has to be increasingly acknowledged that one of the prime needs of today’s fast emerging and competitive modern day society is the need for education for the young members of the society. In order to empower the minds of the young masses of the society, merging of education offerings on the lines of digitization will prove to be highly effectively. Developing a significant business venture, which merges the digitization factor with education, will help in enormous amount of value generation for the entire society. This particular project talks about a particular and potential business proposition which helps in building the integration of digital and communication technology along with the needs of education for the society of the future. Introduction With rise in the income level there has been huge disparities with the adoption of e-commerce across the developing and developed nations. The total online retail sales in the first half of 2011 are higher by 19% as compared to last year online sales. As per IMRG Capgemini e-retail sales index, total e-retail sale had reached £31.5billion in the six month of the year (Whiteaker, 2011). In the US e-commerce stood at $194.3billion in 2011 an increase of about 7.9% and totaled e-commerce sales amounted to 4.2 trillion (Enright, 2012). As a result of recession, consumers are focused on finding the best price and thus e-commerce firm’s offers high value product with relative low price. Business have realized and importance of e-commerce and is powerful and different as compared to other technologies which had played major role in transforming the 21 century but internet along with other information technology tend to shape up the 21st century (Tassabehji, 2003, p. 3). Shopping online has become a norm for customers as they find it much easier and convenient to shop online leading to further growth in e-commerce. A recurrent trend observed among customers is shift towards online retailers. The online retailers are no shyer and are creating e-commerce sites offering in various languages. “Go Local” is the strategy adopted by the online retailers. Localization tends to pave way for personalization and the users continue to enjoy one to one customer’s experience. Next trend is “Go Mobile.” The online businesses have realized the need of deeper mobile integration and continue to create customized and better apps for mobile. In addition social media also plays an important role for online retailers in providing effectives information about the product and services. Stereotypically, the older people have not yet embraced the technology as compared to the younger generation. But studies have suggested are becoming interested and slowly adopting the trends of e-commerce and use it in future (Wein, 2013). Situational Analysis The situational analysis is a method to analyze both internal and external environment to understand the capabilities, customer and the business environment of the firm. The situational analysis takes into consideration tools such as the SWOT analysis, porters five force, 5Cs analysis. The business plan will however focus mainly on SWOT analysis and Porters five force. SWOT analysis is considered an internal factor and Porters as external factor used to analyze the environment. Porters Five force Porters five force takes into consideration five forces which tend to shape the industry. The five forces are as follows, Bargaining power of customers: In case of e-commerce service industry, the power of customer is high. The customers have the power to switch from one brand to another depending on their convenience and latest trend. In this business also, if the library service are not effective enough students and other target customers might not be interested in using the website. Bargaining power of suppliers: The suppliers power can be categorized from low to moderate in case of ecommerce service industry. As with the evolution of ecommerce the suppliers have also shifted in providing technology services to a certain extend. Threat of substitute: Threat of substitute is moderate and the only threat to ecommerce service can be the brick by motor libraries. Apart from students, there still exists individual who prefers using the libraries instead of the website. Threat of new entrant: Threat of new entrant, in case of e-commerce industry is low as it is in the booming stage and is expected to grow increasingly in the near future. In case of the new business of setting up website to provide students with library services and also other professionals, the threat of new entrant is high. This is because every business is making the optimum use of e-commerce and trying to influence the customers and have been successful in doing so. Rivalry: The rivalry would be moderate as the competition has no risen up to a high level in case of ecommerce providing service to library. As a result “United Student” would take this opportunity of moderate rivalry and established itself in the library service sector and can become the market leader. SWOT Analysis In addition to Porters five force analyses which forms a part of external environment, the SWOT analysis will be analyze to determine the internal factors of “United Student.” SWOT analysis deals with strength, weakness referred to as internal factors and opportunities and threats referred to as external factors. Strength: The “United Student” has entered the e-commerce industry which is at a booming stage and is expected to grow at a steady rate in the future. There is a strong prediction that the e-commerce service industry will also grow and customers have accepted the trend which acts as strength for the company. Weakness: Students who do not belong to the University of New Brunswick’s will not be able to avail the service and such the company might lose out on some of its customers. In addition, students might not like to refer to used books. Since the company is new it might face financial issues until the company breakevens and start incurring profits. Opportunity: e-commerce itself is a box of opportunity for all the business and utilizing it accurately and effectively will lead business to flourish and become successful in the long run. In this case, the company can cater similar need for all other universities. In addition “United Student” can also offer various other services which will be helpful for the students. The growth of e-commerce in the industry is very optimistic and promises opportunities for business along with severe competition. The taste of online consumers became much more elaborate and proper service with in-time delivery is just not enough to retain the customers. Threats: Threats might be the rising competition associated with e-commerce in the service sector. There are many company which offers similar kind of needs leading to stiff competition. The business managers in the current market scenario are experiencing the most challenging times ever and this is because of intense competition. The success and failure of organization and business highly depends upon the flexibility and their capacity to response towards the external changing market environment. Business which has the flexibility to adapt to changes and adopt the new technology is able to compete in the competitive market Competitive Analysis Competitive analysis usually refers to the strategic evaluation of the internal and external factors of the potential and current competitors for a local SBU. The key reasons of competitive analysis are to widen business along with marketing strategies and are based on sustainable competitive advantage (Wiley, 2013). In the online business world, new ways of interacting with the customers and providing them with services have greatly changed and emerged over the years. There are already companies which provide library services to the students and to others who are in need for the information. The competitors in the same industry provide access to the library one the students are registered members of the university. There are library services which help to connect companies to various multiple libraries apart from their own through software formats. The competitors of “United Students” such as BITE, Innovate offers services with an ease and with cost effective solutions (Innovate, n.d). Therefore, in the current economic scenario, libraries are highly occupied in stiff competition. They tend to compete directly with the internet cafes and provide public access towards the internet with the help of computer workstations. In order to continue offering services and relevant amount of data in the information sector, libraries are thus consolidating and offering a complete packages online which is inclusive of concepts like text journals, e-reserve, e-texts; Since the company is new in this sector, it should follow competitor’s strategy to gain market share and make way for future opportunities. Business Model Overview It is of significant interest to mention the fact that the living environment of the modern day is highly integrated and synchronized with technology. The factor of easy access to the internet because of the high level of penetration of various sophisticated communication devices has resulted in the evolution of tech savvy masses all over the world. Because of the faster and rapid popularity gained by the various social networking sites existing in the virtual mediums, a lot of people which include a large number of youngsters prefer to stay connected in the virtual environment using their Smartphones, I-phones and tablets. It is a natural trend that is observed all over the world, that young people in order to stay connected with their friends as well as to maintain their own status in the social sphere among their own set of peers prefers to keep themselves accessible and engaged by using various forms of technology enabled connectivity. Apart from discussing the high level of popularity gained by the various regional and global social networking sites, it has to be said that the internet powered virtual medium plays a tremendous role in diffusing the trends of globalization to various emerging as well as developed corners of the world at a very rapid rate. Many multinational companies and organizations in order to create a demand for their products and services amongst the young tech savvy consumers located in various parts of the world often focus on the communicating and interacting with them using the online social platform as well as other web enabled platforms. Idea Because of the high level of acceptance of the online medium, by the youngsters in the developed as well as developing markets all over the world, it can be said that engaging in the process of communicating the values of various products and services to the young consumers can transform into a unique model of business. Talking on this note, a new kind of online and ecommerce based business model under the name ‘United Student’ is being conceptualized. The main idea behind this business model is to build a website, which will specifically focus on providing student services using the online medium. The business model will be based on student membership and will comprise of three main components. The first component will provide the students access to various e-books on a host of subjects which are in line with the course offering of University of New Brunswick. Both paid member as well as free members of this educational website will have access to the e-books of these courses. However, only paid members will have access to various classified research journals, periodicals, seminars as well as exclusive training videos for various specialist and training courses. The second component comprises of providing a service to the students in regards to their tuition needs. The website will create a bridge to paid members of the website to connect with various private tutors for requesting academic help, support and guidance. It is interesting to mention that this particular feature will also act in a two way manner. This simply means that a student with significant amount of grasp on a particular subject can look forward to providing tuition services to a group of students and juniors and thereby earn some extra income. The third component of this website is that it will act as a platform for providing translation services, helping people with researches, assignments etc. It can be said that the third component of the website will be exclusively available to the paid members of the website and will provide them with a unique opportunity to generate side income by enabling them to generate money by working on these academic kinds of services for various clients. Challenges The idea of engaging in business by designing a complete ecommerce based model is filled with challenges. While it can be said that the setup is cost is very low, it has to be acknowledged that it essentially acts as a strong negative point. Because of the ease of setting up the business as well as low requirements of capital investments, it can be said that the business model can be easily replicable in nature. This also outlines the fact that this kind of a business model promotes a very high risk of new entrants entering the same market place and targeting the same set of consumers. Value Proposition The value proposition of this online business model is multi dimensional in nature. The first dimension will comprise of providing academic services to students by empowering them with access to infinite knowledge sources. The second focus is to provide academic assistance to the students for providing them with a better learning opportunity. The final focus is on the process of value generation for the students by providing them with the opportunity to implement their academic knowledge into practical application and thereby providing them with a source of income for themselves. Segmentation Targeting Positioning The company has segmented the business into providing library services and entered the e-commerce industry. Based on geographic segmentation, “United Students” have segmented the business in New Brunswick region mainly for the universities, students and other professionals in that area. The “United Business” has targeted mainly the UNBSJ students of the University of New Brunswick and aims to provide the used books to the students to refer for current and further studies. Second target market of the company is the professionals who provides tutorial in related courses. The website will enable the tutorials to provide the students with variety of information from across the sites and provide them with accurate and relevant materials. The third target of “United Students” is the researchers or the translators to help them sort with their assignment from the huge stock of books from their websites. “United Students” would position itself as Service Company providing services in the academic sector for all students, professors and the researcher. Positioning statement tends to describe the company and helps to create a brand image in the minds of the customers. In short the positioning statement of “United Statement” will be to ‘provide relevant and accurate information online to the target customers.’ Implementation Plan It has to be said that the business model will be put into action in a step by step process. The first step will comprise of providing the students with the ability to sign up in the website by paying the membership fees. During this period, only access to various e-books, articles, periodicals, journals will be provided. The second move will be to roll out the services for the second components of the website. Talking in a little elaborate manner about the second component, it can be said that this step will comprise of the rollout of tutoring services to be provided to students for providing them with academic guidance and assistance. The final move will be to roll out the service based offerings to the students which will help the students to put their academic skills into real life application. It is of high importance to mention the fact that during this period a lot of collaboration with various clients will happen for the purpose of streamlining the demand for research work for the students. Financial and Marketing Model The objective United Students is to create an online research library community where users will have unrestricted access to all kinds of e-books. It aims to achieve this purpose by collecting a huge database of priceless e-books and at the same time arranging voluntary e-book pooling website in collaboration with other e-commerce businesses that offer online library. The above table shows aggregate volume of United Student for three years. Year 1 represents the most recent year while Year 2 and Year 3 represents past two consecutive years respectively. The company’s long term web development strategy has identified the need to implement new plans by redeveloping the online library web site. The company redesigned their home page after the moderate response from visitors to existing design. It was aimed to improve the user interaction. The library’s catalog was replaced with explorer bar that navigates the user to any place according to keywords specified. The unique visits to United Students websites is calculated by counting the number of browsing access to the company’s website excluding the faculty and other internal staffs. It also includes the total number of pages officially accessed from the website excluding the staff access. The figure obtained in the monographs is based on relevant catalogues of the company. It is an estimation of the items covered by online catalogues. The serials titles are based on the number of records and any changes in serials are counted as new title. Storage includes growth in spaces without which the collection could not be appended. The company has been able to successfully digitize the priceless manuscript collection. All new manuscript added are immediately converted into electronic format and is published in United Students website the member to access. The manuscripts are available in singles and volumes format. The company also offers digital audio and video to its members for better understanding and experience. The online books are available as e-books in PDF formats. Various photographs are also posted for better understanding of the subject by the users. Every time a new user is registered with the company, the central database automatically adds the user and updates the automatically after any status changes in future. The company’s main source of revenue is the membership fee collected from the users for accessing the United Students library online. The United Students initial member base includes permanent memberships which also includes the alumnus group of “United Business”, UNBSJ students of the University of New Brunswick. The visits per month include the number of unique visitors that access the United Student online library. The page per visit represents the number of pages view by one unique customer every time that user logs into the United Students Online Library System. The company also promotes products and services of third party who target the students and faculties as their market segment. The company generally achieves marketing and advertising activities by online advertisements which are ad banners. The Ad click rate is the number of clicks per user per visit on these banners and the company charges to advertising companies $0.75 / clicks by users. The membership post includes all references, likes, dislikes, comments, posts, and messages by the users. Such post is can be viewed publicly on the company’s home page. It helps to express the visitor’s response after using the United Students online library. The active hours per day represents the total hours available to visitors and members to get all facilities of the online library. All facilities include online conferencing with the faculties, library member community, getting relevant feedbacks, and posting messages live. The total active hours per day is 20 hours. In the remaining four hours, the company spends updating the database regularly that ensures consistency and reliability of data. The company also launched some online educational courses for under and post graduate students who work during day hours and do not have the time to attend classes. This strategy took the United Student’s viewership to a new level. The students who have joined online courses have recommended their peers to apply for the same. The new financial model to include online educational course has given the company at 33% compounded annual growth rate. The online educational courses include learning in English, Business Administration, Business Management, Computer Science, Media studies, Religious education, and History. The United Students online educational sessions have no age restrictions. All users will have access to all workshops, seminars, online video conferences of teachers and faculties, and community activities. The number of participation is expected to increase with the rise in popularity of the website. United students also offer onsite maps and exhibitions for all users without having them to register. This model has increased the popularity of the website and also got a positive response from the members. The United Student items supplied include access to online reading room where the user will enter in secured virtual network and will be able to read any e-book of choice without any third party interruptions. However this facility is available to only those users who are the member. Any new member who would like to avail this option will have to register with United Students as member. Item supplied also includes access to remote documents, sharing thoughts and posts with online community, access to online supports and faculty, and free delivery of monthly United Student magazine to every member so that they get to know more about the company and its future plans. The online reading room includes electronic terminal which is connected to the central database of united Students as well as individual study rooms or portals. The various cost associate with the operations are discussed below: Servers are dedicated to manage the performance of centralized resources of United Students. The infrastructure cost of the server per month is $300. The storage capacity of United Students database of 500 Giga bytes and the maximum bandwidth available to the user is 150 Mb / sec. The rent of the server room per month is $250. The above table list the staff cost of United Students for both monthly and annual basis. The workstation needs attention of at least three staffs and the monthly cost associated with it is $900 and annual cost is $10800. The System Administration cost per month is $7000 and the cost of website development and integration is $4000. The cost of management is $8000 per month and the IT & support department costs $3000. The company’s other cost includes cost of hiring new employees, front end and back end data entry management, Ad click fee paid to third party, advertisement fee, office rent, and legal cost associated with the protection of authentication of website. The values of these items are shown in the above table named ‘Other Costs’. Based on the above costs and revenues, the United Students three year projection is shown below: The table show that with the growth in popularity of the online library and online education courses, the number of registered members of United Students will increase and with that the revenues are also expected to increase. The three year projection shows that based on the above cost and assumptions, the profit in three years are expected to exceed 300%. However, the staff cost and the other cost of the company is not expected to change during the course of time since it is fixed cost to company. Consequently, as the revenues increase the profit margin of the company will increase. The online reading satisfaction is calculated from the feedbacks given by the members and the new visitors. It represents the percentage of ratings given by readers after using the services provided by United Students. The rating scale is close ended and user response can be either ‘quite satisfied’, ‘very satisfied’ or ‘not satisfied’. The Exhibition visitors enjoy rating is the percentage of visitors enjoying their visit to United Students online library portal. It is measured in the scale of ‘excellent’, ‘good’, or ‘fair’. The Remote User Satisfaction represents the percentage of new users who are totally satisfied with United Students offerings and services and their feedbacks are documented and used to redesign and update the user interface of company’s website. The Web Usage Satisfaction represents the satisfied visitors of United Students and the rating scale available is either ‘excellent’, ‘very good’, or ‘good’. The above quality measuring parameters will be used to take feedbacks from United Students’ online library visitors. These feedbacks would then be used to further develop and modify the interface accordingly. Hence, the business model of United Students is based on the feedbacks given by its community and users. Reference Enright, A. (2012). E-commerce sales jump 16% in 2011. Retrieved from http://www.internetretailer.com/2012/02/16/e-commerce-sales-jump-16-2011 Innovate. No Date. Library service. Retrieved from http://www.innovateec.com/solutions_services/library_services.aspx Tassabehji, R. (2003). Applying E-Commerce in Business. SAGE. Wein, J. (2013). Trends In e-commerce: The Shift to Self-Service. Retrieved from http://www.examiner.com/article/trends-ecommerce-the-shift-to-self-service Whiteaker, J. (2011). Online sales in 2011 beat estimates to total £31.5bn. Retrieved from http://www.retailgazette.co.uk/articles/41303-online-sales-in-2011-beat-estimates-to-total-315bn Wiley. (2013). Competitor Analysis. Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/9781444316568.wiem01011/abstract Albrecher, H., Runggaldier, W. J., Schachermayer, W. (2009). Advanced Financial Modeling. Germany: Walter de Gruyter GmbH & Co. Read More