Comprehensive Understanding Regarding an E-Commerce Venture - Textbook Palace - Case Study Example

Digital Business Plan Table of Contents The Plan 3 Background 3 Scoping 4 Competitor Analysis 4 SWOT Analysis 4 Justification of Choice of Business System Option 6 Outline Budget 7 Estimated Gross Profit Margins for Goods 8 Expected Break-Even Point 9 Legal Aspects 10 Marketing Strategy 12 ACCESS Model 12 Audience 12 Concept 12 Competition 13 Execution 13 Social Media Tools 14 Sales Visibility 14 Site Design 15 Review 17 References 19 The Plan This report intends to replicate a comprehensive understanding regarding an e-commerce venture. The main objective of this report is creating a digital business plan to develop an e-commerce website that would facilitate in selling second-hand educational textbooks. The unique selling propositions (USP) of this business venture are its unique business model and cheaper price of the available quality text books. Background In the present day milieu, e-commerce venture is a trend that has been followed by various businesses. E-commerce has been regarded as one of the best ways to provide superior and faster services to the customers, which add up to render an exceptional experience to them. The main rationale for starting the e-commerce venture i.e. Textbook Palace is to initiate the sale of educational second hand text books through an online portal in the United Kingdom (UK) that would be beneficial for the students to buy cheaper educational books. However, Textbook Palace might face certain challenges in the initial phase of the business as there are many online portals already available in the UK market such as Amazon and eBay that have a good track record of selling books. The main source of supply for Textbook Palace is the team members of the business venture group who came up with the plan to start up the e-commerce venture. Agile methodology as the project management methodology will be used which will facilitate to render efficient services at a faster pace. This methodology enables to make particular alterations within the created system based requirement of the users. There should be an effective project management methodology to ensure that Textbook Palace sustain in the market. Scoping Competitor Analysis Amazon is the leading online portal in the UK for selling second hand books. Consequently, the major competitor of Textbook Palace in the UK would be Amazon. It is considered very important for the members of Textbook Palace to analyse the aspects of competitive advantage adhered by Amazon in the competitive market of the UK. It is very vital for this new online portal to understand its competitor’s objectives. It has been viewed that the consumers’ ‘ease of access’ in Amazon.com is the primary strategy that must be highly considered by Textbook Palace (Amazon.com, Inc, 2014). Amazon provides the customers to select the best books according to the price and has used consumer-centric approach to meet the demands of the customers. It functions with its core strategy in place i.e. to provide an assortment of offering from one destination. Waterstones can also be considered as the other major competitor of Textbook Palace as it is one of the largest book stores functioning in the UK (Chaffey, 2012). SWOT Analysis Strengths The key strength of Textbook Palace in the initial phase is to develop a strong website which is visible and interactive for the customers in the UK. The owners of this site i.e. the members are very keen on selling used books that will provide multiple advantages both to the sellers and the customers as the price of the books will be quite low. The e-commerce website will have limited risk as selling second-hand books would not require a greater proportion of investment. Weaknesses There are a number of websites selling books through e-commerce mode and have already established a good market presence. The e-commerce website i.e. Textbook Palace will not have much of flexibility in its pricing strategy. This is because it price will hover around a lower range wherein the level of profitability will not be extensive for each. Its competitors can also offer used books rapidly in the UK market as compared to Textbook Palace, which can cause inflexible approach related to price of the business to be a weakness. Opportunities Textbook Palace can provide its customers the best offers within a given price. As the initial start-up will not require much capital, it will be quite easy for the website to expand its business. The pricing range policy used by Textbook Palace can provide formidable advantage to its business (Amazon.com, Inc, 2014). Threats Change in the regulatory policies in the UK can have a major impact on the business. Competitors can introduce a new pricing strategy and resist Textbook Palace from entering the market of the UK. The books sold by Textbook Palace can also be sold by its competitors in a lesser price (Amazon.com, Inc, 2014). Justification of Choice of Business System Option The option chosen for selling used books of Textbook Palace is Shopify. The usability cost of Shopify is very low as it offers monthly subscription to the websites and takes a certain percentage of charge based upon the sales of these websites. The payment gateway for Shopify is PayPal wherein Textbook Palace will have to pay the charges to Shopify through PayPal. Textbook Palace’s option for selling these used books through Shopify is regarded as the best option. It would be worth mentioning that Shopify is one of the best platforms for e-commerce sites as it will enable Textbook Palace to create its own online store. However, in the upcoming future, Textbook Palace can have the possibility of changing its option of Shopify to other options such as Magento or Highwire as the cost incurred for using these platforms is relatively lower as compared to Shopify. These platforms can also facilitate Textbook Palace to sell through Ebay and Facebook. The payment that has to be done to these e-commerce platforms is considerably determined upon the number of products that has been sold. These platforms offer plans that include selling products of 1500 US Dollars just for 19 US Dollars subscription per month. Magento is highly recommended for Textbook Palace but it requires a designer or developer to use this e-commerce platform. Magento is regarded as a best domain for small businesses and most importantly it would be best for Textbook Palace as it intends to develop own site for selling used books (McNeil, 2013). Outline Budget The budget plan for the proposed digital business of selling second hand educational textbooks would primarily outline few major attributes in order to successfully perform each business operation. In order to gain significant insight of each operational step, the proposed business plan for Textbook Palace would focus on the key characteristics that can have major bearing upon the business functions to be performed by the organisation regarding its global consumers. The following table describes the major elements in order to estimate appropriate budgetary plan for Textbook Palace. Estimated Gross Profit Margins for Goods As the primary goal of Textbook Palace is to keep lower margin of profit from each book sold therefore the expected profit margin for the first year would be considered to be a feasible rate with respect to the annual revenue and sales figure of the organisation. In this context, sales revenue for the organisation is estimated to reach £120,000 with total cost of goods projected at £85,000 in the initial year. Therefore, the annual gross profit margin for goods has been calculated as below: Gross Profit = Sales Revenue – Cost of Sold Goods = £120,000 - £85,000 = £35000 Therefore, Estimated Gross profit of Textbook Palace is £65000. Gross Profit Margin = (Annual Gross Profit ÷ Sales Revenue) X 100 = (£35000 ÷ £120,000) X 100 = 29.1 % Therefore, the estimated gross profit margin of Textbook Palace would be 29.1% during its initial stage of operations. Expected Break-Even Point The estimated BEP (Volume) for Textbook Palace is 3000 units, which signifies that the organisation would start to earn a feasible amount of profit after selling 3000 units of second-hand books. In order to achieve the expected profit, the estimated amount of £4500 would be considered as the required BEP (Sales) amount. Legal Aspects Business partnership is the rationale used for initiating Textbook Palace website. There are four members who have planned on developing the website therefore the business style used by this website is partnership style. This partnership has been started with a vision to share equal profits among partners. Partnership business can be started without any formal agreement when individuals have a common business goal. The legal binding factors of partnership include determining the capital required to start the business. It is also considered that there must be equal contribution of investment amid partners wherein they partake equal proportion of profit and losses derived from the business (Crown, 2011). The Data Protection Act (DPA) 1998 provides certain obligation to the partnership business and it is mandatory for the partners to register their business under DPA wherein any personal data must be administered lawfully and impartially. The data must be processed for an appropriate reason which has to be satisfactory and relevant. Under DPA, the data cannot be withheld after its purpose is fulfilled, these data must be processed in line considering individual’s rights, it must be kept safely and these data cannot be transferred to other countries until and unless the data is completely protected. Therefore, it is very important for Textbook Palace to comply with these rules in order to avoid non-compliance and unnecessary harm to the business (Pitmans LLP, n.d.). On the other hand, Value Added Tax (VAT) is also a legal binding that has to be considered by Textbook Palace because while supplying goods and services it will receive certain consideration i.e. the price in return. VAT is applied to each individual that includes the first supplier and the final customer. Consequently, these legal aspects must be considered by Textbook Palace in its business function (The Finance Hub, n.d.). Marketing Strategy ACCESS Model Audience Audience of a particular business organisation is determined to be one of the most essential components, which determines long-term sustainability within a particular market or industry. In this regard, audience has been considered as one of the major elements for Textbook Palace to establish its long-term sustainability in the growing UK market (Oates, 2011). In relation to the recent era of technological development, a majority of school and college or university students are likely to spend a large span of time through connecting with academic based websites with the aid of their personal devices. In the UK, it has been recognised that there are almost 83% of students who are witnessed to search for their preferred books through the advanced online media (NUS Services Research Team, 2012). Therefore, secondary school, A-level, College and University students have been selected as the key audience for the proposed venture i.e. Textbook Palace. Concept Concept can be regarded as one of the major components in terms of effectively addressing the needs and expectations of the potential audience of the venture. It generally defines detailed information about the products/services to be delivered to the potential users. In accordance with the proposed venture of Textbook Palace, the major aim of the business is to provide adequate support to the students through delivering second hand book at a considerably lower price. The customers of the organisation would also acquire an easy process of navigation through which they can easily find out their required products on the web store portal. Since the web store portal of the organisation would be designed with Shopify, the customers would get additional support to make their purchase in accordance with their needs and expectations. The integration of Shopify would enable the customers to assess relevant comments regarding the content and the quality of each book provided on the web store which in turn would be a key determinant in making their buying decision (Shopify Inc, 2014). Competition The critical assessment of the competitors’ strategies and actions is an essential step for the marketers to achieve sustainable position. With regard to the present competitive scenario in the UK online book selling environment, it is evident that Textbook Palace would face fierce competition as the market is congested owing to the presence of a number of dominant physical and online book stores such as WHSmith plc and Waterstones among others. In order to ensure a competitive presence, a competitive pricing strategy such as dynamic pricing would provide adequate support to Textbook Palace. Moreover, providing an easy payment mode through PayPal would also act as a competitive aspect for the web store to cope up with the competitive UK online book selling market (Blackwells, 2013). Execution Since the online business of Textbook Palace would be registered under the .co.uk domain, the strategy would enable to collect a large group of potential buyers as the domain is used by a majority of UK customers. Moreover, the execution of Pay-Per-Click (PPC) in the online business will also enable Textbook Palace to keep a track of the numbers of visitors to the web store site, which might further help the organisation to provide various types of retention programs (Webfusion Ltd, 2014). Moreover, the online marketing strategy of the venture will also integrate Search-Engine-Optimisation tools such as Webmaster, which can enable the web store to investigate the efficiency of SEO. Social Media Tools The promotion of product/service through social media tools has been considered as one of the most effective strategies for the online retailers. In relation to the proposed venture plan, Textbook Palace will highly focus on using two major social media tools namely Facebook and Twitter as these tools attract a majority of youth customers from the educational background. The web store of the venture will post regular updates of its collection of second-hand books, which can provide adequate opportunity to attract a large number of potential buyers in the UK market (Safko & Brake, 2009). Sales Visibility Sales visibility generally portrays the sales performance of the organisational product through using social media approaches. With regard to the proposed venture plan, Textbook Palace will also focus on selling advertisements and subscriptions which can enable the organisation to gain popularity and brand position in the respective business industry. The organisation will charge a nominal amount of fees as a process of commission, which can further help the venture to strengthen its revenue (Safko & Brake, 2009). Site Design The Textbook Palace site will be designed using the persona and customer journey map. Persona will provide a significant contribution to the design of the website. Persona takes into account business buyer’s persona which is also termed as marketing persona or customer persona. Persona helps in segregating the target customers into discrete groups of people. Persona will provide a fictional depiction of the prospective customers which will be entirely based on real information regarding customer demographics and their behaviour that would result in creating the Textbook Palace website. In the process of designing the website, buyers persona will be separated into three main functions which would include segmenting the demographics of customers in which each potential buyer’s detailed description would be extracted from the market information, the needs of the customers would identified wherein it will be revealed that customers tend to buy used books through online websites on a large scale and finally a profile would be developed based upon the behaviour of the customers which will include details of the time spent by the customers on researching about the books and the kind of books they tend to buy (Hinshaw, 2012). Nonetheless, after a clear understanding is derived about distinct buyer’s personas, initiating the design of the Textbook Palace website can be started. The website can be created by choosing an appropriate style and including links on the home page of the website that would facilitate the visitors to choose their specific requirements and provide the customers an exceptional experience. Different profiles must be created that would make it easy for the customers to access the required information and make the owners of the website segment the customers based upon their requirement. Textbook Palace will be designed by creating a customised page for each customer persona that would be unique from other websites as it will have separate persona for the customers and their needs. The next step would be creating a targeted landing page that would include contents for each customer’s persona. In order to ensure that the persona caters the needs of the customers targeted landing pages along with the contents of the persona would be required. The website should include ebooks, product demos and webinars that can be used as links in the pages of individual persona. The next step to be taken is identification of the contents in webpage through persona wherein the persona would be friendly to the customers. The appearance of websites must be made beautiful so that the customers get attracted to it along with providing relevant contents that cater the expectations of the customers. Ultimately, the design of website must be optimised that would provide lead generation and ensure that the books are sold. Customer Journey Map (CJM) can also be used to design the website as it is a tool that provides a broader idea on the strategy of customer experience and will help in designing the website for Textbook Palace. CJM provides a clear understanding regarding the gap between the expectation and perception of the customers. Therefore, while designing the CJM of a website, the website owner must be clear of the goals to be achieved along with the idea of understanding whose journey would get mapped. A CJM should work as a tool that would communicate with the customers and should ensure that the journey of the CJM goes towards the right direction. A CJM is very important for designing a website as it is a broadly shared artifact, however it is required to be effectively shared and socialised for the website of Textbook Palace. To be precise, CJM is a tool that is very effective in understanding the needs of customers and accordingly designing websites for various businesses (Hinshaw, 2012). Review The prepared digital business plan for Textbook Palace has focused on creating a website for selling second-hand educational textbooks. The plan has aimed at providing cheaper textbooks to the students through the use of e-commerce domain. The plan has focused on initiating a website for Textbook Palace in the .co.uk domain wherein there is a huge competition in selling textbooks through online e-commerce ventures. Certain measures have been determined that can facilitate Textbook Place to sustain in the market along with meeting the requirements of the customers. However, it can be ascertained that there are few weaknesses associated with the plan as there are numerous number of websites such as Amazon and eBay which are already functioning in the UK market and have gained a significant share and customer recognition. Their presence in the market would provide adverse competition to the Textbook Palace website and may resist it from sustaining in the market. Correspondingly, the aim of the business venture to always operate at a low cost or profit owing to the sales of books at a cheaper rate can land it in some difficulties. Moreover, Textbook Palace’s book selling site might not be initially relied upon by the customers as they are already used to buying books from the other sites. This aspect can be considered as a weakness on the part of Textbook Palace venture and there would be significant risk involved for this site to sustain in the market. However, these weaknesses and risks can be managed and mitigated by using an expert developer for designing the website of Textbook Palace. Textbook Palace has opted for using Shopify to promote its products i.e. used books, therefore there is a possibility that customers might get attracted to the website of Textbook Palace and buy books from the website because Shopify is recognised by the customers for its valuable service. In the present day context, there is a rapid change in the technology used by the people, therefore it is highly considered for Textbook Palace’s business partners to use the appropriate technologies in order to make the most out of it. Technologies used in this website must provide ease of access to the customers in order to deal with the challenges faced by the frequent changes in technology. References Amazon.com, Inc, 2014. Comic Book Store SWOT Analysis Plus Business Plan. SWOTAnalysisDB. [Online] Available at: http://www.amazon.com/Comic-Book-Store-Analysis-Business/dp/B00995NLOE [Accessed March 09, 2014]. Blackwells, 2013. Students. Home. [Online] Available at: http://bookshop.blackwell.co.uk/jsp/editorial/students/students.jsp?route=students [Accessed March 09, 2014]. Chaffey, D., 2012. A Summary of Amazon’s Business Strategy and Revenue Model. Amazon.com Case Study. [Online] Available at: http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/ [Accessed March 09, 2014]. Crown, 2011. A Guide to Legal Forms for Business. Department for Business, Innovation and Skills, pp. 1-8. Hinshaw, M., 2012. Customer Journey Mapping: 10 Tips for Beginners. 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