Online Supermarket Innovation through the Customer Web, Benefits of Online Shopping - Essay Example

Abstract The internet has helped in facilitating the occurrence of new business models and strategies in many industries. There must be substantial changes that are happening in supermarket retailing whereby there is the introduction of online shopping in terms of online partnership, development of fulfillment center model, new ways of increasing customer value, channel development and coordination and redefinition of business scope. Online supermarket has undergone significant changes in the past few years. Basing on the empirical evidence available this paper will discuss the competitive advantage the supermarkets are getting from online ordering services. Online business is a new concept in business era, and therefore calling for further studies to be done. Introduction The internet has led to the emergence of new business models in several industries. Supermarket retailing experiences a rapid growth of online home shopping services. These changes are in terms of product and service offering and channel development. Basing on recent empirical evidence from the UK using case studies and online surveys this paper will seek to integrate several aspects that help to understand the introduction of online supermarket, and it influence other business models, the consumer and advantages it offers the business to other business competitors (Faulkner, 1998). It is evident that many supermarkets in the UK are on using online retailing since it is a relief to the business since it can be able to reach a magnificent number of people. Online supermarkets have undergone two major phases in its development. The first part took place during the internet boom when virtual supermarkets were introduced in the US. Examples of these virtual supermarkets include, Webvan, Peapod, Grocery Works, and Home Grocer. Though, most of them were closed up during the internet bust. A new phase was established after the creation of virtual supermarkets. This new phase began when mortar and brick supermarkets come into the online shopping arena. In the UK, these supermarkets included Asda, Iceland, Tesco and Sainsburg (Bongio, 2000). Fulfillment Centre The most and very important element of online supermarket are how fulfillment to both the consumer and the company (supermarket) is handled. This is one of the competitive advantages that online supermarkets have. Some models have been used to explain the concept as. The first model is the in-store picking; his model is adopted by using stores that are owned by partners or online supermarket themselves. The second is building of a dedicated picking Centre as this will work well with online supermarket customers. With this type, of model supermarkets can cover a wide area and also reduce the costs of picking. This is an advantages to both the company and the customers thus making online supermarkets the best in retailing in the UK. The third is the hybrid model; this model is created by including local distribution Centers to traditional supply chains. This model can only be possible by redesigning the supply chains of products hence these will reduce the cost by passing some of the stages for picking attributed to online customers. Delivery of products and services Important aspects here are the delivery time offered to customers. There are three delivery concepts to use in this case: self-pick up, attended and unattended. With respect to the attended one, the customer has to waits for the agreed time of delivery. In the unattended slot, the consumer fulfillment is reached using reception box; this is a refrigerated box stored at the costumers’ site or delivery boxes. Most of the supermarkets in the UK have developed strategic management systems that handle the issue of customer’s reception of products hence making the system customer friendly hence an advantage as compared to its competitors. Online Supermarket Innovation through the Customer Web Home shopping trend in supermarkets in the UK has been for quite a long time. The operations were conducted using call centers and catalogues (Nielsen, 1999). The use of these activities proved to be expensive to supermarkets to handle as its margins grow smaller. After the integration of the internet, it proved to be a cheaper means of home shopping. In the UK, the business players (supermarket owners) were challenged with virtual supermarkets entrants in the US, and they also started to embrace using online home shopping. Call centers in the UK started being replaced by websites and customers started conducting home shopping over the internet. Studies have revealed that internet enabled innovations in the supermarket business exploits the customer web. The UK Online Market Most British shoppers have turned to online shopping. Though, the sales through the internet only represent a small proportion, although the percentage is growing by the day. Most people in the UK today use the internet to make price comparisons and gather information on products before they go visiting the local stores. In the UK, Tesco company is the largest supermarket benefiting from online trading this is because it was the first retailer business to introduce online shopping and its currently the world largest internet supermarket as well as grocer. The supermarkets have teamed up with existing small and home retailers to offer delivery of goods to consumers. The small retailers have teamed up because the capital cost of entering this type of market is extremely high and the market returns are uncertain. The Target Market of Online Shopping In the UK In general, internet shopping appears to be limited to the affluent persons. E-shoppers is now more likely to belong to ABC1 socio economic groups. It is evident that house holds with more cars are likely to use the internet for shopping. Most of the supermarkets that offer these online services are now targeting both the affluent and the lower class individuals in the society. It has been noted that the middle class society is the one benefiting from the services and products form online ordering from supermarkets. The lower society is experiencing the problem of less man hours in the internet therefore, missing a very important business tool while the affluent have no time for online shopping since there are at work or busy most of the time. However, supermarkets are doing ground analysis on how to reach these two types of groups. Benefits of Online Shopping The importance/advantages or benefits of online ordering services are attributed to both customers and the retailers (the supermarket owners). To Retailers: The internet is a hard and tough nut to crack for many industries since it is a very hard area to invest and make a profit from it. The business expectation should be very high while the cost of delivery needs to be minimized so as to attain the profit basket. The shopping must reach the customer in the correct timescale that is pocket friendly to the company. In order to attain the expected profits, then the websites should be updated constantly and should also offer the right products in the right prices. However, as all businesses strive to get benefits from their investments supermarkets offering online services in the UK reap the best from internet business. Using the internet to trade there exist extensive lines of products with bulky good of higher margins that includes products like vehicles, there is a cost reduction of doing business, there exists real time pricing whereby the customer and the supermarket agree over a given price of a commodity (bargain), the business offers are not restricted to floor space since the supermarket orders for a good directly from manufactures upon the customers request, the cost of running an online website is much lower as compared to that of running a retail store whereby the floor space matters a lot and finally, online ordering services as no limited market since the world is the market place: everybody has the chance to be in the business as long as one can get access to the internet. Upon collection of all the above benefits on online ordering services to supermarkets, it makes UK supermarkets support this type of business without fear or favor hence proving to be a competitive advantage. In the future, the automated reordering systems will pull consumers closer to the company. To consumers: Convenience is the key to the 21st century consumers. Larger populations in the world are in the group of a working population. These persons continue to undertake tough domestic decision making and hence they don’t have time to shop from traditional retail shops when they are easier home delivery options. However, they are a lot of complains to commercial websites whereby they take long to load up and have proper stability. In order, to attain the full capitalism on development of online ordering services the companies have to build trust to consumers so that they can earn revenue growth and online loyalty. Customers are able to get benefits from online trading: they have limited time in travelling; there have increased availability of products to choose from since online supermarkets websites are more, the customers have greater information on price, and since online business is 24 hours available it gives online ordering services for UK supermarkets an added advantage (PHP: PHP, 2006). Benefits to supermarkets Benefits to Customers The world offers market for goods and services The running cost of the website is less as compared to that of a store Online ordering offers real-time pricing of commodities There is a cost reduction of running the business There is less travelling looking for goods There is an open window to choose commodities The business type if 24 hours available to customers There is more information available on price information. Evaluation of Online Ordering Services Considering the investment of online business today, there has been a belief and future on retailing through internet. This has taken considerations of the high percentage of online shoppers that this business might pay them (Powell, 2003). Though, the internet is not completing the whole online business practice since there new channel of distribution on a daily basis. The product market is low at the best, but on reverse the consumer market is very large hence overweighing the demerits of online shopping in the UK. In the UK supermarkets operating on online business hold relatively high market share giving consideration to the regional concentration and the short operating time. Nevertheless, this market share could be much higher if supermarkets could spend more on creating awareness as well as advertising their online offers (Farmer et. al 1999). Through a close examination of online business by comparing that in the UK and that in the UK, it is evident that most of the online traders range to the middle class people mostly the young population. After a close look at the surveys conducted in this field of study, it has been noted that online business is facing a lot of challenge in the UK since most of the people don’t understand how it works and others seem not to have time to take part in the business. A close evaluation of websites offering online ordering services have shown that the websites are offering quite a competitive business and offers to the customers though they should be made much easier even for 10 to 12 years citizens of UK to be able to use it (Reed, 2006). Conclusion The younger generations are the most shoppers as well as the most consumers who use the internet. One of the research companies in the year 2009 predicted that, by 2003 online ordering services would have grown from $5million to $15 million though surveys have shown that the customers/consumers are tending to resist buying goods online. It has also been identified that some of the traditional supermarkets in the UK have online component (Yantra Corporation, 2005). The transition of online retailing form the traditional ones will take time but due to the recent changes in the twenty-first century, the people, business management, and changes to effective business strategies more companies will rise to success to this business thereby pulling the economy of United Kingdom to the right track. Despite the growth of online supermarkets very few individuals think that purchasing goods online is the better way of having certain commodities as compared to traditional activities of going to the supermarket stores. It is encouraged that all supermarkets operating online ordering services in the UK to merge with other small retail business so that they could increase the investment capital hence a steady flow of operating both the website and the delivery sections of the business. References Books Bennett, S and McRobb, S and Farmer, R (1999). Object Oriented Systems Analysis and Design Using UML. Berkshire, McGraw-Hill. Bongio, A. (2000). Web Modelling Language (WebML): A Modelling Language for Designing Web Sites. WWW9 and computer newtworks. 33 (1-6), 137-157. Faulkner, C (1998). The Essence of Human-Computer Interaction. Pearson Prentice Hall. Nielsen, J (1999). Designing Web Usability: The Practice of Simplicity. New Riders Publishing. PHP: PHP usage stats, 2006. Usage stats for October 2005 [online]. Available from http://www.php.net/usage.php [Accessed 06 Novemeber 2005] Powell, T (2003). The Complete Reference HTML & XHTML. Osborne. Reed, D, J. (2006). The Convergence of Computer Programming and Graphic Design. Consortium for Computing Sciences in Colleges.  Yantra Corporation, (2005). A guide to Implementing an In-store Pickup Initiative. Available at http://www.yantra.com/downloads/whitepapers/In-Store_Pickup.pdf. Appendixes: Examples of Online supermarket websites Spar Website Net Grocer Website Harris Teeter Website Read More