Retailing Business on International Platform - Essay Example

Retailing Business on International Platform by Department TABLE OF CONTENTS 1. Introduction 2. E-tailing Prospects ………………………………………………………………..1 3. Modes of market entry for retailers……………………………………………….2 4. Success of International retailing…………………………………………………5 5. Customer service and retailing……………………………………………………7 6. Conclusion…………………………………………………………………………..8 7. References ………………………………………………………………………….9 8. Appendix…………………………………………………………………………….11 Introduction Retailers operate on local and international basis. The retailers sometimes want to expand their business to international platform. The internationalization of retail is not an easy task and the retailers need to plan well ahead to enter a foreign market , One of the aspect which made the retail business an easy process is E- tailing. However, E- tailing is still in infancy stage and need advancement. The other mode of entry is franchising, licensing and other ways. However merely by opening stores abroad retail business cannot succeed. The pricing, promotion, store design and customer service need to be efficient for international retail business to flourish. E- tailing Prospects E-tailing is a business operation of retailing which take place on internet. It has started in the end of 20th century and is a business to consumer transaction. According to Rouse (2005)“E-tailing began to work for some major corporations and smaller entrepreneurs as early as 1997 when Dell Computer reported multimillion dollar orders taken at its Web site”. In e- tails software tools are used for creating online catalogues and managing the retail business. This electronic retailing has taken retailing to a new level in western countries. In E– tailing the consumer can shop for products and services through virtual shops. The payment can be done through internet and the products are delivered to the customer by courier and shipping service. In the last 10 years there had been a rise in E- tailing in western countries however it is still in an infancy stage. In Western world, there is lot of E- tailing sites but the problems is that many companies are still worse at this business process. In U.S only less percentage of sales take place through E – tailing. As per UDEL (2005) “ E-tailing currently accounts for 2% of retail purchases in the U.S. ($17.2 bn fourth quarter 2003; up more than 25% from the fourth quarter 2002)”. Many facilities in the e-tailing are not compatible for consumers to get attracted to this prospect. The transactions on certain web are of a security concern to consumers and the retailers need to make sure their websites and fool proof. Sometimes, the E- tailing is not a smooth operation for consumers and many shy away from websites. As per William (2011)“The websites are considered most important because lack of aesthetics sense in the websites consumers may switch to another store”. So e-tailing needs to be easier for consumers to handle and process. The graphic presentation of the catalogues is also a concern in e- tail sector as technology is still evolving. E- Tailing is an effective marketing platform but unless the products are digital the delivery of the product need to be considered. The reason is that the consumer fear that they may not get the product for which they paid. Many people attract customers but flawless delivery is a practice which needs to be maintained. The customers should be given opportunity to track the delivery status of their product. Another problem is that payment process of transaction on E- tailing is more costly that of normal purchase as the credit card companies take a percentage of money. So e- tailing needs to install cheaper way of payment process. Also E – tailing is does not ensure much privacy as the personal information provided by the consumer can be mishandled or exploited. As per News 24, (2014) “One of the main reasons why people don’t shop online is the fear for their cards being cloned.  This is a possibility, but there are precautions you can take to make sure your transaction is a safe one”. So e- trust should be more developed to ensure customer data safety. Also the E- tailing is in infancy because the web design is not efficient enough to carry out a smooth shopping experience for many E- tailing sites. Modes of Market entry for retailers E- tailing is an important medium for international retailers; however there are other methods of market entry available to internalizing retailers. Some of the methods are as follows. a) Export/import agents - Export and import agents or trading companies are an option for retailers to enter into international retail business .This is suitable for companies which have less exposure to international environment. These agents will give exposure to many international companies to the retailers. In such a way, the retailers have more opportunities to sell product to potential market. However, there is a commission which is charged by agents which may not be acceptable for some retailers. According to Arnold(2003)“Second, agents often operate on a commission basis, and they do not actually buy the goods from the international vendor, so there is a credit and cash flow risk that is not present in distributor arrangements”. b) Piggybacking – Though it is a rare form of market entry it is a worth try. This means taking advantage of channel to an international market. Here, the vendor may be given a spare space on plane or ship and foreign license to sell by an international business trader. In this way, the retailer can have access to many countries in marketing their goods. As per Mehra (2011,pg 1-16) “ A piggybacking arrangement allows the unbranded retailer to reach the same number of customers as the branded retailer without incurring any corresponding search advertising costs”. Piggybacking Strategy Low cost Less regulations Easy marketing c)Franchising – Franchising is another market entry mode available for internationalizing retailers. It is not a much explored way of marketing by retailers. This gives the vendors a viable way to introduce their products to the international market. Franchising Strategy Moderate level of Control Exchange of intangibles Dynamic and flexible Reduces perception of foreign firm. As per Holmes (2003) “Both among prospective owners and with the consuming public, franchise systems generally have a superior image over other distribution approaches, particularly if there is uniformity as to retail presentation, marketing methodology, operational compliance, etc., precisely the things which are easier to achieve within a franchise framework”. d) Licensing – Another mode of market entry for retailer is the licensing method. This is suitable for vendors who have legally and protected asset. In licensing, the vendors get the opportunity of media production and distribution. It is an effective way of entering foreign market. According to LIMA (2014)“Licensing is a marketing and brand extension tool that is widely used by everyone from major corporations to the smallest of small business”. However, the licensing gives autonomy to for local licensee on the designing of product and products need to be innovative. Licensing Strategy Intellectual property protection Profitability Brand identity Success of international retailing Many business owners presume that internationalization is all about opening of stores abroad. A business cannot only become an international brand if it opens stores abroad. Any business need to understand and evaluate its long term prospects before they open stores abroad. An international business can face many crises during its journey. According to Constanza (2011,pg149-69) “Regulatory, geographical, economic, cultural, psychic and administrative differences between countries are seen as generating costs, risks, and barriers for internationalizing firms”. So expanding alone cannot ensure a successful internationalization. The pricing, quality and promotion of the products or sold has an important role in internalization. In a foreign market price is an important element which can determine the success or failure of a firm. Price is a competitive factor as there are many products which cheaper price in foreign market which can hinder the success of retailers in foreign countries. In same manner the quality of the product or service should be attractive enough to the customers in international platform. The consumer behavior and choices of international consumers can be a threat to internationali -zation and only expanding cannot make it a success. Pricing strategy Market conditions Competitor price Input costs Trade margins Please see Appendix 1 The promotion campaigns of international market are huge and if it lacks with the competitors it is not easy for business to survive. The promotion need to assure the customers that the product will satisfy their needs. The promotion in an international market need to be innovative, creative, sophisticated to catch up with its competitor’s businesses. According to Khan (2011,pg 445-49) “ There is a considerable change in the international business environment, which is said to be an environment of many challenges and many opportunities”. Promotional Strategy Advertising Selling Sales promotion Public Relation The international business needs to comply with laws and regulations of every country in which they conduct business. The more stores one open there is more chance for the business to face legal complications. The international business need to understand and comply with legal formalities regarding labor law, company law and other regulations. Certain courtiers also prohibit certain products due to social, religious or cultural reasons. So these need to be considered while opening stores around world. Also the financial stability of the business needs to be strong. According to He(2011,pg.48-57) “Internationalization requires solid financial ability. The whole issues should be addressed under the background of global context. Factors like the global financial crisis and changes of monetary policy should be brought into the analysis since they have a direct impact on the expansion and branding of nearly all the firms which are on their way of internationalization”. Apart , from all this the store design also means a lot for the business success. The store theme need to be in align with all other stores and must be pleasing and innovative. The customer needs to get attracted, safe and comfortable in a store they purchase. Customer Service and retailing In any business whether local or international, customers are the reason for its success or failure. A customer decides to make a business success or a failure. It is often said that “customers are king” and they need to be treated with respect and dignity. A customer service is what makes an international retailer a success .Customer service of a retailer give a competitive advantage over other business. According to Times 100 (1995) “Good customer service involves developing bonds with customers, hopefully leading to long term relationships” It creates advantages for both customers and the business alike .Customer service means understanding the emotions and preferences of the customer and acting according. If an international retailer wants to stay long in business then the customer service needs to be optimal. The customer service needs to be better than the competitor, so that more customers are drawn to business. The customer nature and behavior changes according to nations and these factors need to be considered by an international retailer. According to Dumon (2013) “When it comes to the business world, customer service is one of the most important aspects of having a successful business”. In international retail business the customer service is even more important as the competition is fierce. The business need to make use of all skills and tactics to make it a success.The customer service has many tactics and can make customer loyal towards any products. The best way of customer service is to make them comfortable. When customers visit the stores they should be given special treatment and must given attention service without delay. Time is precious for people and not attending to them on time can make customers feel insulted and disrespected. The customers should be given advices and opinion which they can benefit. They also can be given promotional offers, discount and other loyalty service which can make them loyal to products. According to Stefani (2013) “When we have satisfied our customers, they not only help us grow by continuing to do business with us, but recommend us to friends and associates as well. Customer service is a word of mouth generates skill and it can earn more customers than advertisement and promotions. Anticipating the needs and demands of customers can enhance the customer service impact. As per Dawn(2011,pg 101-15) “To attract and retain the customers, the retailers particularly the E -tailers have to take more efforts than to just attract. It is very easy to lose an e-customer” Understanding the needs and complying with demands of the customer is the sign of a competent international reailer. The competitive edge of any business is customer service. As per Williams (2011) “Effective customer service is far more than merely being caught by a mystery shopper saying something nice to a customer”. Please see Appendix 2 Conclusion Any business has many risks and complication and retailing in an international market is fierce and competitive. The retailers many a times, needs to take support from others to flourish in foreign market. A retailer needs to take advantage of e- tailing, other market entries, business strategies to succeed. Retailers also need to take care of the customers through qualitative customer service. Responding positively to a customer can win over him at any cost. May times despite of quality, a customer may choose another product mainly due to the attitude of the store employees and owners. References Arnold,D. 2003. Strategies for entering and developing international markets. [ONLINE] Available at: http://www.ftpress.com/articles/article.aspx?p=101588&seqNum=2. [Accessed 17 February 14]. Constanza, B, 2004. AN INSTITUTIONAL PERSPECTIVE ON. International Review of Retail, Distribution, and Consumer, 14/2, 149-69. Dawn, S.K, 2011. E-TAILING IN INDIA: ITS ISSUES, OPPORTUNITIES AND EFFECTIVE STRATEGIES FOR GROWTH AND DEVELOPMENT. International Journal of Multidiscipli nary Research, 1/3, 101-15 Dumon,M. 2013. Why great customer service is important. [ONLINE] Available at: http://www.examiner.com/article/why-great-customer-service-is-important. [Accessed 17 February 14 Holmes, D. 2003. THE ADVANTAGES AND. [ONLINE] Available at: http://www.holmeslo fstrom .com /z_pdf/articles/franchisors/Fran%20Advantages.pdf. [Accessed 17 February 14]. Khan, N, 2011. Crisis in International Business Environment in India. Journal of Emerging Trends in Economics and Management Sciences, 2/5, 445-49. LIMA. 2014. Introduction to Licensing. [ONLINE] Available at: http://www.licensing.org/education/introduction-to-licensing/. [Accessed 17 February 14]. Mehra, A, 2011. Competitive Advertising Strategies for Online Retailers. UNCC, 3/8, 1-16. News 24. 2014. eTailing: Good or Bad. [ONLINE] Available at: http://www.news24.com/MyN ew s24/eTailing-Good-or-Bad-20140131. [Accessed 17 February 14]. He, S, 2011. The Influential Factors on Internationalization of the SMEs in China. Research in World Economy, 2/1, 48-57. Rouse, Margaret. "e - tailing." http://searchcio.techtarget.com. Tech Target, 2005. Web. 18 Feb. 2014. . Stefani,A. 2013. Five Essential Elements for Great Customer Service. [ONLINE] Available at: http://www.destinationcrm.com/Articles/Web-Exclusives/Viewpoints/Five-Essential-Elements-for-Great-Customer-Service-90458.aspx. [Accessed 17 February 14]. Times 100. 1995. Using customer service to position a business.[ONLINE] Available at: http://businesscasestudies.co.uk/first-direct/using-customer-service-to-position-a-business/what-is-customer-service.html#axzz2tfyjjj4s. [Accessed 17 February 14]. UDEL. 2004. Definition of Retailing and its application to E-tailing. [ONLINE] Available at: http://www.udel.edu/alex/online/market5.html. [Accessed 17 February 14]. William, A. 2011. The 5 elements of retail customer service. [ONLINE] Available at: http://2bbiz.co.za/blog/2011/07/the-5-elements-of-retail-customer-service/. [Accessed 17 February 14]. Appendix Appendix 1 Pricing strategy Appendix 2 -Customer service strategy Read More