Opportunities of Online Retailing - Essay Example

E-Commerce Table of Contents Table of Contents 2 Introduction 3 B2B E-Commerce 3 B2C E-Commerce 4 Opportunities of Online Retailing 5 Challenges of E-Commerce 6 Current Consumer Behavior towards Online Shopping 7 Satisfying the Consumer Preferences Using World Wide Web 8 Conclusion 9 References 10 Introduction E-commerce refers to buying, selling, or transferring products, services or information via internet with the help of a handheld device. The E-commerce business involves a wide range of business activities from the consumer based retail environment to the exchange of products and services between business enterprises (Watson & et. al., 2008). E-commerce has created an enormous opportunity for business units to conduct their business in a more effective way. The introduction of online shopping, which is a form of E-commerce, allows buyers to purchase their desirable products and services at any point of time via internet. At the same time, the sellers also get the opportunity to display varieties of products and services through their online websites from where the consumers can choose the product to be bought (Pearson Education, 2014). Therefore, E-commerce helps in the eradication of issues related to distance and time by allowing the customers to perform the electronic exchange of products and services. With the emergence of various online platforms and evolution of internet, the trade and commerce all over the world is increasing at a rapid rate. In addition to the opportunities of E-commerce activities, there are also various challenges that are faced by the retailers in the implementation of E-commerce in the business process that would be discussed in this paper (KPMG, 2013). B2B E-Commerce B2B or Business-to-Business E-commerce is one of the major forms of E-commerce business. It is a form of E-commerce transaction that exists between two business units such as, between wholesaler and manufacturer or between wholesaler and the retailer. However, it is found that the overall volume of B2B transactions is much higher in comparison to the Business 2 Consumer (B2C) transactions. This is because of the fact that in a normal supply chain, there are multiple B2B transactions, as companies purchase various raw materials as well as other components that are used in the manufacturing process. The example of automobile industry can be considered in context to B2B transaction. The automobile manufacturers purchase the parts and accessories such as lights, tires, batteries and locks from their respective manufacturers, which involve transaction between two businesses. Conversely, with respect to communication, B2B transaction refers to the communication between two or more companies that operates via internet through personal handhelds devices or computer (Subramaniam & Shaw, 2010). B2C E-Commerce B2C or Business to Consumer E-commerce is also one of the major forms of E- commerce transactions that exist between the business and the consumers. Selling of goods and services by online retailers to the consumers via internet can be referred to as a B2C E-commerce transaction. It can be depicted that in general, a business enterprise mainly prefers B2C transaction rather than B2B transaction. In a broader context, B2C e-commerce transaction also includes online travel service, online banking and online health services among others (Makelainen, 2006). Therefore, the B2B model of E-commerce highly emphasizes on direct marketing and selling that prevails between consumers and the business enterprise via an E-commerce website. As in this business model, the online retailers purchase products directly from the manufacturers, which eliminate the existence of intermediary in the process. This result in earning higher profit by the online retailer and at the same time customers can purchase products at much lower price than the market price of the similar product (Strebinger & Treiblmaier, 2006). Opportunities of Online Retailing There prevails a great opportunity for online retailers all over the world that will help them to expand their business and earn maximum profit. The recent trends of the E-Commerce development reveals that majority of the people are inclined towards online shopping. This is because of the fact that online retailers provide opportunity for the customers to choose their required product from a vast range of products and services directly through their personal handheld device via internet. Due to this easy accessibility of vast range products and services from a single location, customers are largely attracted towards online service. However, the advancement in technologies is also an opportunity for the online business sector to expand. Various mobile applications are being developed that allows easy accessibility to online shopping websites. The decrease in the cost of cloud technology also provides opportunity for the potential online retailers to start their business. The cost of running web services and applications in the cloud is decreasing day by day, which allows online retailers to keep higher margin on their products and thus the revenue will increase (Andam, 2003). The government of every country is establishing strict rules against online fraud and cyber crimes because of which online transactions have become much secure. Majority of online transactions through website provide the option of online payment through credit/debit cards rather than cash on delivery option. People therefore hesitate to pay online because of the fear to lose their money due to online fraud. However, the strengthened security in online transactions is also a potential opportunity for the online retailers to attract more customers. The increased use of debit/credit cards by people all over the world also serve as a prime opportunity for the online sector. Moreover, running an online business benefits the retailer to remain free from paying various types of tax that the traditional businessperson has to pay. This allows online retailers to earn maximum profit and at the same time provide the products and services at a lower price, which ultimately helps in attracting customers (Andam, 2003). Challenges of E-Commerce Even though online retailing has vast opportunities, there prevail several challenges that are faced by online retailers in implementing E-Commerce strategies. Among the challenges of E-commerce, the lack of trust among the customers regarding online payment system is considered as the most significant. Majority of the people believe that online payments are not safer as the rate of cyber crimes is increasing on a rapid rate, even though the government of various countries are establishing effective laws and regulations to protect cyber crime. Another major challenge that the E-Commerce retailers are facing is the advent of more competitors in the market (Bingi & et. al., 2000). As the cost of establishing E-commerce business has lowered in comparison to establishing a traditional business, therefore many players are entering in the market with the view of earning maximum profit. Thus, ease of entry of new players in this particular market creates a potential threat for the existing online retailers to sustain in the market. Poor logistics and supply chain facility may also be regarded as one of the challenges that are faced by the online retailers that result in the late delivery of online products. Customers order goods online with the expectation of receiving the same within time. However, the late delivery of products creates dissatisfaction among the customers and thus they may choose other options of purchase. Low rate of internet penetration in certain countries may also create hindrance for the online retailers to conduct their business successfully and attract customers. Finally, the psychological issues of the consumers are also considered as a major challenge for online retailers. Many people prefer to purchase products only after interacting with the product physically. Since, online retailers do not provide opportunity to physically interact with the product, these customers are inclined towards traditional shopping where they can touch the product as well as interact with the seller before purchasing the same (KPMG, 2013). Current Consumer Behavior towards Online Shopping The e-commerce trend in the recent years has been increasing at a rapid rate with the advancement of technology as well as easy accessibility of internet. There has been significant development in the field of internet and technology in the past decade that has facilitated the introduction of online retail stores. However, according to a survey, it has been found that majority of the people all over the world have adopted online shopping as an essential part of their life. Online shopping is highly preferred by the consumers because it provides easy accessibility of purchasing and selection from category of products and services directly via internet without going physically to the market or shopping malls (Nemat, 2011.). Therefore, it saves the time as well as facilitates consumer to choose among a vast range of products. Many customers are afraid to purchase products from online because of the fear to be cheated. Most of the online shopping sites accept credit/debit cards as a means of payment and thus some people fear to pay online because of the security issues. However, there are various online retailers, who ensure safe transactions and the governments of different countries are formulating rules in order to prevent online fraud. People are getting more cautious and now-a-days many online retailers have come up with the facility of cash on delivery. This strategy of the online retailers is considered as highly successful in attracting customers as it eliminates the risk of online payment. Moreover, there are also some people who have the perception regarding online retailing that the products purchased from online retailers are of poor quality. Thus, in order to overcome this problem many online retailers have adopted the strategy of providing return facility for faulty or damaged goods (Wali, 2013). Therefore, by analyzing the behaviour of the consumer, it can be understood that there is a mixed response from the consumers regarding the acceptability of online shopping. Satisfying the Consumer Preferences Using World Wide Web In order to sustain in the market, it is inherently necessary for the online retailers to satisfy the needs and preferences of the customers, as they are the only source of earning revenue for the business. In this regard, an online retailer can make use of various social media and social commerce in order to understand the choices and preferences of the consumers. The advancements in technology have led to the introduction of various social networking and social media sites among which Facebook and Twitter is the most popular (Hasslinger & et. al., 2007). E-commerce retailers can use these social networking sites in understanding the needs and preferences of the consumers. The retailers often promote their page in Facebook so that every people can remain updated about the offers of various retailers as well as new category of products that are available in their website. However, in addition, online retailers can conduct survey through social networking sites that would reveal the consumer preferences and based on which the retailers should make product available in their category of products. Moreover, the online retailers through mail accounts can also understand the preferences of the consumers. Short closed ended questions may be provided in the form of pop ups in mail account that are to be answered by consumers (Li & Zhang, 2002). Conclusion From the overall analysis of the paper, it can be concluded that the advancement in technology and communication has led to the development of E-Commerce that has benefited people as well as business establishments globally. Through E-commerce, it has become possible for business establishments to ensure effective communications and transact online with the other business organizations as well as consumers. Online shopping, which is a major form of E-Commerce, is also gaining its significance as it allows the people to shop via internet at any point of time without physically going to marketplace. However, online retailers face various opportunities and challenges in the process of conducting their business operations. The cost of establishing online retail outlet is much lower as compared to traditional business, which attracts majority of the players to enter the market. Moreover, recent trends show that majority of the people are getting addicted to online shopping because of easy accessibility and availability of vast range of products from a single place. However, some customers do not prefer to shop online because of the fear of losing their money that prevails owing to internet crime. Moreover, there are some other factors including poor logistics and supply chain, lack of trust among the consumers, advent of competitors and low internet penetration, which serves as major challenges for the online retailers. However, majority of the retailers are ensuring secure transactions and providing guarantee of their products in order to attract more consumers towards online service. References Andam, Z. R., 2003. E-commerce and E-Business. ASEAN Task Force, pp. 1-47. Bingi, P. & et. al., 2000. 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