Online Small Scale Retailing Business - Essay Example

Online Small Scale Retailing Business Student’s name: Institution affiliation: University: Online Small Scale Retailing Business The use of internet for retailing purpose has increased over the recent years. Organizations have resolved to embrace technology to pursue their objectives. Small business enterprises accept the new move. They use internet and World Wide Web to collaborate, communicate, obtain information, and share information. The use of internet facilitates marketing, promotion, buying and selling of products. This concept is known as electronic commerce (Peterson, Balasubramanian, & Bronnenberg, 1997). There are several advantages of using online retailing to a small business enterprise. They use it for advertisement, customer, and business to partner’s transactions. There are several challenges experienced in online retailing. For a small business to enjoy the benefits of this concept, the opportunities or advantages embraced as the challenges are mitigated. Identification of both the opportunities and challenges plays critical role in maximizing the advantages of online retailing, while disadvantages are minimized. Online retailing facilitates purchases of products. They meet potential supplies who search for potential retailers to supply their product to. They bargain and make negotiations using the internet. In this case, the business compares different offers and goes for the best offer. This reduces purchasing costs and time taken while searching for possible supplies. The organization moves on by making orders online while the suppliers will deliver products to the business. They get information about changes in the market, particularly availability of substitutes. This keeps the small business trader well informed, and hence he or she makes well informed purchases transaction. The costs of finding new customers are highly reduced when using online retailing. The increase in use of computers and internet has resulted into many customers looking for goods and service providers’ online (Jarvenpaa, & Todd, 1997). A small business using online retailing will be easily accessed by such customer. This increases the small business customer base. Some large organizations search for possible supplies from small business organization through the online search. If a small retail business in online operations stands a chance of trading with such an organization. Online retailing enhances the value of chain of distribution. Small scale retailers get direct link with the manufacturers. They develop trading relationship through the internet. This reduces the disadvantages of intermediaries in the chain. The retailer gets first hand information from manufacturers; hence he or she offer services the customers using first hand information. The retailer in this case, purchases goods at a low price than when intermediaries are involved. They then make more profits, and sell at lower prices. Many business organizations have struggled to manage their Inventory costs. Online retailing is a significant solution to this problem. Due to the faster ordering process, small scale retailer operates with minimal amount of inventory. This reduces the cost of holding large volumes of inventories, expiration, breakage and warehousing costs. This reduces cost of stationery. Ordering and other transactions are made online using computers. Organizations learn about current innovations through online trading. This acts as a wakening point to practice innovative trading. The organization learn to trade at no or minimum errors as they can learn from other organizations. Online trading facilitates ordering directly which reduces chances errors in trade. Online trading improves the customer service. The system operates on twenty four hour basis. A customer contacts the trader at any time of his on his or her convenience. The customer easily makes suggestion or enquiry on product information including instructions, safety, specification and any other information about the organization and the products (Huang, 2000). The customers rating and comment are immensely essential. They are used to improve the quality of services offered. There are several disadvantages of Online retailing to the organizations. Competition in the market has increased. The increased number of organizations using e- trading increases the number of competitors in market (Sherry & Robert, 2005). Entry to the market is not controlled, and the survival for retailers minimized. The customer gain bargaining power. They access variety of offers and chose the best out of all. This sees most companies reducing their prices, and hence their revenue. Another disadvantage of online trading is the increase in the rate of fraud. The retailers are risked by the use of stolen credit cards. Customers are required to put details about their credit cards and addresses. This information can be trapped easily by routers, and use it to perpetrate fraud (Sherry & Robert, 2005). Some retailers have suffered as they try to refund and compensate customers from fraudulent purchases made using their credit cards. Some have spent a lot trying to come up with techniques to reduce the rate of these frauds. Privacy is particularly essential to any business organization and individuals. Retail trader in online trading provides their information to existing and potential customers and suppliers. This is done in good faith but these information rants on any one who operates through internet. Competitors use this information to out win the trader. The increased lack of computer security is a major concern to online traders. The traders spend a lot of resources to ensure security of their computer through the installation of high tech anti-viruses and firewalls (Sherry & Robert, 2005). On the other hand a small retail business which does not use online for trading enjoys several advantages. The most important advantage is the privacy it enjoys. The chances of confidential information liking to outsiders is minimal than that of the trader who uses online to trade. The competitors will therefore have less information bout the trader therefore, fair competition takes place. Another benefit of this trading method is the minimum cases of fraud. Most transactions are done face to face and therefore; the seller can see who is purchasing your product. The control measures put in place to reduce or completely eliminate frauds can be monitored unlike in online dealings. When goods are delivered, the customer is physically contacted. The payment of such goods is also almost assured, and with little efforts they can be easily recovered. Operating online require more funds for the purchase of modern computers. In addition, there are costs of installing and maintaining internet services. A small retail business not operating online escapes these costs. On this tip, highly skilled staff members may not be required. This reduces the cost of wages. Online operations offer an organization with a wide range of customers (Jarvenpaa, & Todd, 1997). Retail trader limits his or her market size by not operating online. This results into low revenue, and hence low profits as compared with online operating retail traders. There is limited number of suppliers to make purchases for trader. In this case, the purchases made can be overcharged or of poor quality which affects overall performance the trade. Innovation is extremely essential in business world. With a wide range of information, online trading retailer develops better goods and services. The trader not operating online makes insignificant improvement on goods and services. Such a trader may face very stiff competition from other trader. In the modern market, consumers look for value of money they spend. E- Trading causes the change in financial management of organizations. Due to the additional and expanded market, there are huge changes that can take place particularly when the full potential of online trading is realized. The online trading requires experts with the knowledge of online dealing to assist in formulation of expected sales from the market. The analysis is done about the competitors’ prices and strengths, and the market size. This move calls for more funds allocated to pay for such services. The use of online trading, results to need of online security measures. These securities are not free of charge therefore; there is the need to make financial allocation. The new payment system of payment must be adopted when a company goes for online trading. The change will lead to change in the financial management styles applied before to accommodate those changes. Online trading or e-commerce for small scale retailer is a reality in our modern days. The use of computer for trading purpose is unstoppable move. We expect a rise in number of retailers using online for trading transaction. There are benefits of embracing this method in trade. It is particularly essential to control the negative or shortcoming of online trading. References Jarvenpaa, S. L., & Todd, P. A. (1997). Consumer reactions to electronic shopping on the World Wide Web. International Journal of Electronic Commerce, 1(2), 59–88. Peterson, R. A., Balasubramanian, S., & Bronnenberg, B. J. (1997). Exploring the implications of the Internet for consumer marketing, Journal of the Academy of Marketing Science, 25(4), 329–346. Huang, M. (2000). Information load: its relationship to online exploratory and shopping behavior, International Journal of Information Management, 20(5), 337–347. Elliot, S., & Fowell, S. (2000). "Expectations versus reality: a snapshot of consumer experiences with Internet retailing", International Journal of Information Management. 20(5), 323–336. Sherry, Y. C., & Robert D. M. (2005)."The assessment of usability of electronic shopping: A heuristic evaluation", International Journal of Information Management 25, 516–532. Read More