MaddalenaSocial in the Current E-Commerce Business Environment - Case Study Example

Essay for Mid Term Exam e business e commerce Contents Introduction 3 Discussion 3 Main Competitor Analysis 3 Business model 4 Revenue Model 5 Customer Profile 6 SWOT Analysis 7 Conclusion 8 9 References 10 Introduction The domain of electronic commerce has been experiencing a boost since the last 10 years with newer opportunities emerging in this segment for both the existing and new businesses. Therefore, a new electronic commerce business known as MaddalenaSocial is planned to be set up which will aim at positioning itself as a main player in the market by competing effectively with the existing e commerce businesses and by offering a wide range of varied merchandise that can be sold and purchased by individual consumers, traders as well as business organizations and small merchants alike. The main competitor of MaddalenaSocial is identified to be EBay Inc. which is currently the global leader in the foray of electronic commerce business. This report includes an analysis of the main competitor of MaddalenaSocial and proposes the most effective business model, revenue model, target customer groups and customer profiles that would be essential to identify for setting up the new e commerce business in a competitive and sustainable manner. Also, a SWOT analysis for the company is conducted to identify the main opportunities and threats for the business. The report is concluded by highlighting the feasibility, viability and success factors as identified for MaddalenaSocial. Discussion Main Competitor Analysis As mentioned before, the main competitor for MaddalenaSocial is EBay Inc. EBay Inc. is a multinational electronic commerce company based in the United States of America. The company operates in the same segment in which MaddalenaSocial is planning to enter into which is the provision of Business to Business (B2B) and Business to Consumer (B2C) sale of products via the medium of the internet. EBay Inc. is one of the greatest success stories in the history of the electronic commerce industry. It is currently a multibillion dollar value business which has operations in more than 30 countries across the world (EBay Inc., 2013). As such, the hold of the company over the major consumer groups in the domain of e commerce is impressively strong. EBay Inc. sells the products and services of different merchants through online auctioning and shopping systems. The company is renowned for the wide variety of products and services it deals with. Sellers and buyers from all corners of the globe carry transactions through the e commerce platform of EBay Inc. Also, the products sold in the e commerce site of EBay Inc. which is EBay.com are shipped all across the world. Along with the “buy it now sales”, the e commerce giant is also renowned for the auction style listing of various products and services. The collaboration with PayPal Inc. which is one of the largest online money transfer system in the world has acted as another feather in the cap of EBay Inc., thereby strengthening the business and taking it to new heights. Business model The business model for MaddalenaSocial would be developed in the same line as that of EBay Inc. This is because, in order to compete efficiently with the main competitor, MaddalenaSocial has to take up a competitive business model that would help the new business to take up the same opportunities as the competitor using similar resources and capabilities (Henning, 2004). MaddalenaSocial would function through the use of a conglomerate business model for electronic commerce. A simple business model for the company would be followed in which MaddalenaSocial would function as the website platform which would act as the connecting medium between the business organizations and individual customers. The company would facilitate the placement of orders from the customers through various payment options. Once the payments are received, they would be kept in the payment medium of MaddalenaSocial and the seller would be informed that the payment has been received after which the seller would have to dispatch the product from his end within a stipulated time period. The payments for the products would be released to the concerned seller after the products have been successfully received by the buyer and the same is confirmed by the buyer through his or her account in the website of MaddalenaSocial. The simple business model on which the company would be based is given in Figure 1. Figure 1: Business model for MaddalenaSocial (Source: Greenstein, 2011) Revenue Model The revenue model of a company refers to the ways in which the company plans to generate its primary and secondary earnings. MaddalenaSocial would earn its main revenues from the listing fees, insertion fees, promotional fees and the final value fees for the products sold in the website. The main source of revenues for the company would be the share from the sellers who list and sell their products through this electronic commerce website. The listing fees, auction fees, promotional and final values fees would be calculated as per the category of the merchandise listed and sold and as per the duration for which the products are listed. The company would also sell online stores in which a seller can buy a store for particular time periods by paying MaddalenaSocial for the same (Hendrick and Heiman, 2001). Additionally, the company would generate revenue from secondary sources like the direct advertising activities on the website and from the provision of end to end support services provided to the sellers which help to increase the salability of the products and also speeds up the transaction processes. Customer Profile The customers that are most likely to use MaddalenaSocial as the main electronic commerce site are the young age group of customers. The individual merchants and small traders are likely to have more inertest in listing their products and services in the website of MaddalenaSocial because the listing fee and other fees that are to be paid by the sellers would be kept at a lower and competitive rate as compared to the primary competitor EBay Inc. The main consumers for the company would thus be the small traders and merchants as well as the individual customers at the initial stages of the establishment of MaddalenaSocial. The company would allow the customers who are below 18 years of age to transact through the website of MaddalenaSocial. This is because, it can be seen that the young age group of people are becoming more technology oriented and see the internet as an effective medium for earning money. As such, the facilities extended by MaddalenaSocial to transact through this site would open up new opportunities for the young age group of people to earn through transactions made by selling new and old products through this e commerce medium (Gao, 2001). SWOT Analysis A SWOT analysis for MaddalenaSocial is conducted in order to identify the strengths, opportunities, weaknesses and threats of the company. This strategic management analysis tool would help to understand how the company would use the strengths to overcome the threats faced by the business and also take up the opportunities available in the external business environment. Also, an identification of the weaknesses would help to decide suitable remedial actions by the company. Strengths Weaknesses The availability of adequate financial, physical and human resources. The experience of the owners in the domain of e commerce. The strong business model. The entrance of the business in a market which has limited competition. The availability of adequate Information Technology related knowledge among the main entrepreneurs and personnel who are to set up MaddalenaSocial. High initial investments required for setting up Information technology Systems and Customer Relationship management (CRM) systems. The lack of economies of scale. The absence of localization which is necessary to operate in the dynamic international electronic commerce business platform. Lack of suitable diversification and growth strategies for the company in the future. Opportunities Threats Collaboration with an internationally recognized online payment company. The continuously increasing number of internet and mobile buyers. The fast spread of e commerce in both the devolved and developing nations. The scope of earning through the payments made from the foreign customers through the foreign exchange values. Opening up new online stores in wider geographic locations. Increasing threats to security for online payment modes and customer information. Intense competition from the leading e commerce company, EBay Inc. The emergence of other small low cost online retailers. The absolution of the revenue model in the future years (DeLone and McLean, 2004). Conclusion Thus, it can be identified that there are several scopes for success available for MaddalenaSocial in the current e commerce business environment. The fact that MaddalenaSocial will utilize a concept of consolidation to provide Business to Business (B2B), Business to Consumer (B2C) products, services and solutions for the target consumer groups ensures that the company will function in a sustainable manner in the e commerce sector. The use of e commerce business models and revenue models that have been proven successful for other companies would ensure the viability and continued success for the MaddalenaSocial. The SWOT analysis for MaddalenaSocial shows that the company can effectively use its resources and capabilities and carefully designed strategies to compete with the existing players in the market and emerge as one of the leading e commerce companies in the future years. References DeLone, W.H. and McLean, E.R., 2004. Measuring e-commerce success: Applying the DeLone & McLean Information Systems Success Model. International Journal of Electronic Commerce, 9(1), pp.31-47. EBay Inc., 2013. Company overview. [online] Available at: . [Accessed 20 February 2014]. Gao, G., 2001. Introduction to e-commerce. [online] Available at [Accessed 20 February 2014]. Greenstein, M., 2011. Electronic commerce: Security, risk management and control. Stamford: Cengage. Hendrick, K. and Heiman, R.V., 2001. Achieving ROI with rational clear case. Stamford: Cengage. Henning, E., 2004. E-commerce management. Pretoria: Van Schaik. Read More