Online Retail Shopping - Coursework Example

Abstract In today’s world of IT and commerce, traditional retailers are venturing into internet retailing for. There are varying degrees of success as retailers combine internet with business. It involves uncertainty to some extent but it also presents a unique environment for retail business which should be discovered. Internet retailing should be done on sound theoretical foundations for better integration of internet into retail business. This research paper discusses some of the issues concerning online retailing. Introduction Internet retailing is an aspect of e-commerce which is business transactions that are conducted on internet rather than real world. Its importance is increasing with every passing day as it offers; convenience, zero time limitations, safety, comfort of shopping from home and price comparison. Negative points that are associated with retail shopping include; credit card frauds, disclosing personal information and uneasiness of not touching that is bought. Online retailers try their best to remove these concerns of consumers. In the next decade, internet based transaction is going to make up 25 per cent of all retail business (Ghosh 1998).By providing secure retail services for consumers, maximum benefits can be derived. Providing right information to the right person and at the right time is very important for an online transaction. Today the actual product is replaced by the information about that product (Rayport and Sviokla 1994).Growing technology has changed the scenario completely by cutting the cost of gathering and disseminating information to the target audience. People browse and collect the required information about the product or service. It is a process of navigation which is far different from that of real world; where we have to go to many stores for just selecting a right pair of shoes. Navigation in today’s world, is a business of its own kind (Evans and Wurster 1999) Opportunities and challenges Basic purpose of retailing is to facilitate final transaction which involve final consumer. Internet provides the opportunity to research and to make comparative decision for the consumer. It also helps in educating potential consumers to make the right choice by consumer purchasing process. Internet retailing gives rise to certain sectors which were not present before as, consumer to business transaction (i.e. Priceline) and consumer to consumer (i.e. EBay). Internet retailing has numerous benefits from both retailers and consumer’s point of view. For retailers it includes the global possibilities of; Creation and management of supply chains, development of networked firm, joint ventures and partnerships. It helps business to exploit more and more opportunities; for example, Wal-Mart invested in electronic data processing system. It gave the store greater control and flexibility over international market (Budd and Harris 2004).Online stores are comparatively cheaper to maintain; they are professional and can be operated from anywhere since the product or service is available to customers on internet. Internet proposes four kinds of business opportunities (Gosh 1998); It provides direct link between companies and customers, suppliers or other interested people. It is an effective tool for development of new ideas about the products and services. It allows companies to skip intermediaries in the value chain. It gives control to business companies; a. To dominate the e-media for particular segment or industry b. To set business rules c. To controlled access to customers In case of compact disk retailers, if we compare online and offline retailer’s price levels, price dispersion and price adjustment. We can observe the online retail channels to be more efficient and prices to be very low; online retailers don’t increase prices for gaining flexibility between supply and demand. It is observed that the internet retail stores adjust prices by taking small increments because they want to show flexibility to demand and supply conditions. Internet retailing is a source to improve efficiency, lower the cost of information dissemination; internet retail price dispersion is lower than the traditional one. Internet retail models separate consumer order location to the inventory location in order to support supply chains. For better management, internet retailers rely on in-stock and drop-shipping strategies with the increasing market share and product enhancement Consequently it gives rise to customers’ loyalty and number. Competition is also included in increasing factors (Evans And Wurster 1999). E-retailing and role of Logistics Internet retailing has changed the shopping scenario. Now shoppers and retailers share a different relationship, retailer do more than retailing (i.e.) distribution. Online shopping is apparently very easy as we just have to click a few times and the product or service is with us, but it is not as magical for retailers. To make our wish come true, there involved a real world of logistics. Internet retailing business involves the connection from front-end software to the back-end software including the process of shipping. Internet retailing has changed the physical structure of business. On the other hand, it has to manage a distribution system which can not be carried out with traditional methods anymore. Automation of the business makes this process easier and safe, but for small companies it is difficult to manage without an automated system; traditional method of ordering is prone to error. It is harmful for internet retailing as once a consumer is mistreated, he will loose faith for ever. Retail outlets can get maximum of internet retailing by; supply and distribution management and integration of physical and virtual systems. Internet accelerates the process of innovative competition. Speedy and direct access to customers helps to understand customer needs Help in development of better strategies to cater market needs Businesses enhance their reach to sell advertising during transactions (Gosh 1998). For local markets it provides adaptations and customization and help in creating niche products (Klein and Quelch 1996). Searching for the right product or service to purchase can be very expensive and time consuming. Infect it is practically not possible for customers to search so extensively so, they depend on suppliers and retailers. As a result cost of the product increases, on the other hand internet provides the opportunity of detailed search with almost no cost of search involved. Market enhancement Difference between real and internet retailing become clearer as we consider reach to the consumers. Internet market is as vast as the availability of internet connection. Large size of marketplace provides immense possibilities as far as reach is concerned. Reach is as wide as the number of eyeballs that view a website (Evans and Wurster 1999); these sites provide small niche business with a chance to access markets easily. It will also help them to skip those parts of supply chain on which suppliers depends for competitive advantage. Promotional activities Internet retailing involves certain advantages in promoting their products or services. Promotion includes different ways which a business undertakes for communicating its products and services attributes to the potential audience (Kotler 1991).Advantages of promoting on internet (Evan and Wurster 1999) is; Availability of plenty of information Direct link with consumer which involve very low cost Access to sales information and customer demographics Data mining can help to built customer profile for precise and targeted promotions This kind of product information is important if the product had a connotative context and customer is passionate and energetic (Evans and wurster 1999). Branding Internet retailing is very important for established brands. People are more influenced and attracted by the brands they are familiar with. Almost 46 per cent of new people shopping at net tend to prefer the brands they have already bought offline, according to recent surveys. Evan 34 per cent of people who shop online again, prefers familiar stores (Kane 1999). With ever increasing competition it is hard to maintain a position in the market where you are not much different from your competitors. In this scenario internet provide a chance to directly communicate with the consumers to motivate sales, to have a dialogue with consumers and to solve their problems. Businesses can also discover and exploit customer’s individual interests (Sealy 1999).Contrary to the television and other media, the products and services can be discussed with consumers without interruption on internet. The business establishes a relationship with consumer in this way which is maintained by re-supplies. Improved products and better brand promotion is done when trade marketing expenses cuts down (Sealy 1999). Limitations of internet promotion Consumer may be hesitant to give information because of his privacy concerns. Consumer may want to get premium in return of the information provided (Evans and Wurster 1999). Provision of rich information is not as useful when purchasing decision is objective, comprehensive and detached. There is a problem of access to the website and lack of credibility in a product, web site versus an independent site that compares multiple products (Evans and Wurster 1999). Internet Pricing It is as important as the real world decisions; however, it increases the competition and standardization of prices. Businesses use technology to differ pricing to discriminate between consumers (i.e.) in different countries (Klein and Quelch 1996).It is a very sensitive process as user can compare and find out the difference quickly resulting in increased price competition between suppliers. There is need to employ new pricing models for online selling business (Rayport and Sviokla 1994).The stores providing services on internet bear little or almost no marginal cost; product or service approach its marginal cost with the increased competition. Technology helps in providing services on low prices and consumer can’t really guess that. For example, information provided by voice mail brings more money in because of the convenience and added features for the customers (Rayport and Sviokla 1994). Internet retailing has also removed the tradeoff. The store on internet provides more products and detailed information than the real world retail stores. The amount of products a retailer carries in their reach was inversely proportional to the amount of information about the product in their promotions (Evans and Wurster 1999).Businesses are not just limited to the information provided through traditional promotional activities and warehousing and distribution are not part of search and selection. Online shopping experience Shopping on internet is an interesting experience; it is very convenient, involves no hassle of going to the busy shopping malls and gives a lot of choices without moving from store to store. I found shopping of digital products like; music and software is magical as the delivery is immediate and you exactly get what you pay for. In my opinion businesses should; Facilitate flawless delivery Enhance the experience by added value services Customer service should be efficient and engaging Outsourcing distribution facilities can be beneficial for consumer and business as well. Online baking It is emerging aspect of internet retailing; it provides interactive services, accessing information about account summery, accessing banking services and products and paying bills from home (Kelaart 2005) Online banks target customers and provide customized services for having competitive advantage; it gives them an edge over their competitors and provides the services on large scale (Cronin 1998).Technology has made the magic possible, we can perform many transactions using single interface(Cronin 1998). Internet retailing has changed our banking transactions phenomenally. We can do variety of financial transactions even from our home, however, real bank are not going to vanish as we feel comfortable and secure with real world transactions. Reach and delivery of internet is greater than any bank network; it allows consumers to manage their assets anytime, anywhere (Cronin 1998). Major advantages of the internet banking are; Easy, Efficient and Effective Convenient Cost effective Access without the limitation of boundaries No physical presence needed for transaction Management of assets Internet retailing has not only increased the range of choice for consumers but also raise the competition and consumer expectations. Consumer’s needs from online banking are increasing everyday; their need for interesting financial products has made it one of the fastest growing industries (Cronin 1998). For banks online retailing provide; A chance to reduce the cost of each transaction Reduce overhead of maintaining branch network Virtually unlimited market and networks Removal of traditional barriers Traditional ways to caters consumer’s needs has outlived its utility and it is not enough to meet ever increasing demands of consumers (Cronin 1998). Disadvantages The most important concern is of trust; if the transaction is conducted correctly or what will be the consequences of a wrong click during transaction. Online banking systems can be difficult to learn; it is something unusual and complicated for new people. It involves consumer’s vulnerability for the risks of; unauthorized access to private information, virus attacks, identify thefts and fraud transactions (Kelaart-Courtney) Online banking is expanding and gaining people’s trust. Banks provide special assistance to educate about the vision of online banking. In an era of so intense and increased competition, it’ll be a challenge for banks to keep the customers loyal.Research institutions anticipates online banking success in future; however, banks will face the challenge of developing and reshaping products and incentives for consumers (Cronin 1998). Conclusion Internet retailing has a great impact on traditional means of business. It is not only convenient for consumers but also creates new opportunities and avenues for business in an efficient way. It gave a powerful communication system through innovative technology. World Wide Web is still not very much friendly for some people, it has limited the e-retailing facilities to e-literate people, and however, its shift to mobile retailing (m-commerce) may overcome the problem in future. The challenge is to combine vision and strategy for better implementation of innovation to facilitate consumers in this competitive world. References Budd, L. and Harris L, 2004.E-Economy: Rhetoric or Business Reality. USA. Routledge. Cronin, Mary J.1998.Banking and Finance on the Internet. Canada: John Wiley and Sons. Evans, P and Wurster, T.S. 1999. Getting real about virtual commerce. Harvard Business Review11:84-89. Gosh, S. 1998. Making business sense of the internet. Harvard Business Review 24:126-35. Rayport, J.F. and Sviokla, J.J.1994. Managing in the marketspace. Harvard Business Review 45:141-50. Sealy, P.1999.How e-commerce will trump brand management. Harvard Business Review 30:171-6. Klein, L. and Quelch, J.A. 1996.The internet and international marketing. Sloan Management Review 37:60-75. Kotler, Philip.1991.Marketing Management: Analysis, Planning, Implementation, & Control, NJ: Prentice-Hall. Kellart, Courtney G.2005.Internet banking: When you thought it was safe. ITP Technology (June 23), http://www.itp.net/features/details.php?id=2839&category=(accessed September 12, 2008). Read More