Unit 29 Introduction to the internet and e-business P3 + M2

What are the trends in the use of e-business?

There are a lot of strong trends that are related to the world of business and the internet. More and more businesses and users are logging on every day and this changes how businesses approach certain objectives and aims.

According to a survey that was carried out in 2006 about e-business trends in manufacturing by SVM showed us that there are many changes going on in the real world. 78% of the manufacturers intended to increase spending on their website, 60% intended to increase investment in email marketing and 48% were boosting spending on search engine marketing. By looking at these statistics it is clear that e-business has a major trend on the businesses of today.

Some of the main trends of e-business are as follows:

Marketing Benefits
The internet is growing in number every single day and this means that the consumer market is growing making there more opportunities for e-business. According to Clickz Stats the population of the internet was 1.08 billion in 2005. This will continue to increase because of all the developing countries that are growing in population and technology all the time. The internet shopping method is far more convenient for the customer as they can buy items from the comfort of their own home.

Re-formulating the marketing mix
The original marketing mix that consists of product, place, price and promotion can be ‘remixed’ to become the e-marketing mix. The new e-marketing mix modifies the old marketing mix to make it relevant for online activities as such. In the original marketing mix there is the ‘USP’ which is the unique selling point of a business, for e-marketing mix this is known as the online value proposition (OVP). This gives the customers who are logged online an incentive to stick around on the website, this could be by offering points that you can trade in for vouchers, discounts or prizes.

24-Hour global presence and flexible location
Probably the greatest benefit of e-commerce and the internet itself is that it businesses doors are open 24 hours a day, seven days a week. There is no need to have to spend time opening up and shutting up shop like a brick and mortars store. Promotion can also be done 24 hours a day through search engine marketing (SEM) and banners located on websites. Prices on online products can be changed with ease and there are products that can be available at anytime without delivery waiting time, these products are in digital format so that would include; music, videos and games.

Personalisation and feedback
Personalisation and feedback is a great benefit to offer online for customers, this means that they can get information and promotion details that is relevant to them and no one else. This makes the promotion activities of businesses even more profitable and worth while as both parties get what they want. Say for example a customer bought an iPod on Amazon; Amazon will then send them emails relevant to iPods and iPod accessories. Customers are also offered to give feedback on Amazon’s service to get better for their sake and for the customers.

Opportunities for competitor analysis
Whilst the internet offers great opportunities to access a greater market, it does expose your businesses offers and promotions all over the web for other companies to view and analyse. This works both ways however and gives your business the opportunity to look at your local or maybe global competitors and see how they manager their overheads and see what they are offering to their customers. This could be their postage offers, whether its first class recorded, second class recorded or just standard postal delivery.

Opportunities to communicate with customers
When a customer registers on a website to buy a product on a website they put in their email. Businesses use this email to get in touch with the customer to promote new offers, games and products. The customer can sometimes have the option to select what type of emails they wish to receive in order to get what they want out of the business. This is known as ‘opt in email’ and businesses value this immensely as it is the communication point between the business and the customer, some businesses pay a lot of money for a niche email list as it opens a whole range of customers who are interested in that niche.

Cost Benefits of E-Business

The internet offers a wide range of products and services available to view and purchase 24 hours a day, 7 days a week from almost anywhere with an internet connection. Customers are now open to a wider range of choice irrelevant of their location making bargain hunting even more efficient.

There is also ‘infomediary’ sites setup on the web which acts as the ‘middle man’ between the customer and the business. An example is the site ‘Kelkoo’ that provides consumers with the ability to search and compare prices and offer reviews on businesses. This makes it so much simpler for the consumer to find the best deal.

Premises and location
The internet straight away gives a global geographic spread without the need to move premises. A business considering growing and expanding could consider the web as a valuable tool as it saves on costs. Customers search for businesses online instead of businesses having to find the customer. The online businesses are virtual and this means that there isn’t a lot of cost to relocate premises. Some businesses can relocate to a different area of the world to and sell online via there in order to gain tax advantages to sell at lower rates than competitors.

Reduced staffing costs
When moving onto the internet as the main source of business income and activities the business must sack a lot of the administrative staff who previously looked after all the invoices, orders, delivery notes and credit notes. When going online these are all done electronically and therefore management of physical paper has been abolished meaning the business can cut back on previous staff expenses. This will result in more capital left for the business to use.

Cash flow advantages
The cash flow advantages of using e-business as a source of income is excellent because sales can be instant and the customer pays for items quicker without having to walk in store, queue up and pay at the till. Digital format media can be downloaded instantly and the customer can get what they want with one sweet download. Digital media can be music, games, videos and pictures. When the business has a faster sales rate it means they have more cash flowing through their business making it more able to meet its debts.

Disintermediation of the supply chain
When you shop online the supply chain can be shortened to just the supplier which allows customers to purchase straight from the supplier rather than having upmarket retail prices. In essence it cuts out the middle man who separates the supplier from the customer. Selling products straight from the supplier benefits the business because it doesn’t have to worry about competition as they are the ones creating the product. This will result in greater sales revenue.

Benefits to Customers using E-Business
The Internet is open 24/7 for customers to buy products when it suits them, there is no rush to get to the shops before it closes. Customers can now choose products from a bigger range of businesses without having to worry about their location.

Personalised Offers
Many websites can offer personalised pages that suit one individual. Tesco does this very effectively by adding a favourites section so when the customer comes in to the store they can just go to their favourite items and choose from their very own personalised display. This makes the online experience easier for the consumer.

Operational implications of trends

Many factors need to be considered before a business set up a transactional buy and sell website. The everyday running of a business is known as ‘operational management’. There can be a number of problems with a new business that starts to trade online. These include:

• Large expectations and product fulfilment • The customer expectation of the site and how easy it is to use • The increase in competition when opening up online, exposing your offers etc.

Strategic implications of trends on organisations
The strategic implications of trends when using e-business include:

• Increased competition pressures, lower overheads result in cheaper prices, online business means less staff costs. • Taking over businesses, mergers and relocations give businesses online more ability to compete together. • Refocusing business in order to fit in with the internet opportunities.

River Island is an example of a business that has to apply with the implication of trends in their industry. Customers expect to see all fashion updates, instant viewing of all available sizes and a clear layout of what offers are available. This will be a benefit to the customer as they can fulfil their expectations and purchase clothes online with ease.

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They can also use the internet to offer personalised offers which benefit the customer. Say for example a customer bought a blue knitted jumper; River Island could email them with updates or offers of new blue knitted jumpers. This information will be relevant to the customer and will give them what they want to see, a personalised email.

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A different organisation, Harpenden Leisure Centre, also has to apply with the implication of trends but it is different within their industry. Customers expect to see clear pictures of what the leisure centre offers on their website, what activities are going on and what the opening times are. It deals with increased competition when it opens up all of its information onto the web as competitors can see what they offer and how much they charge for a certain service.

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The Harpenden Leisure Centre website gives customers the opportunity to give personalisation and feedback which is a major trend in e-business. The customers can say what they like and what they don’t like about the gym and what they think should be added such as different music channels, more televisions etc.

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M2

Harpenden Leisure Gym

Premises and location
The Harpenden Leisure Gym uses its premises and location on their website to inform the customer where they are on the map and exactly how to get there. Also, on the location they display pictures of the interior and activities in progress. They display the premises and location on their website by creating a ‘location and contact’ tab on the side bar which shows the address and image of a google map in relation to their area of business. They do this so that the customer can easily locate where their business is and so that they can find it easier, if they can find it quicker then they will be more encouraged to sign up.

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Disintermediation of the supply chain
The Harpenden Leisure Gym cuts the supply chain by selling their service online without any promoters or advertising agencies taking commission or profit from the business. They cut the supply chain by setting up the website themselves and offering the ability for the customer to book gym sessions online instead. They do it this way so that customers are paying the gym and not a middle man who promotes the gym and charges a higher price for a membership, this way they can offer lower prices compared to middle men.

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River Island

Opportunities to communicate with customers
River Island offers the chance for customers to opt in on email and subscribe for the newsletter which has updates and blogs on all the latest fashion trends. They do this by creating a ‘email sign up’ tab and give the option for customers to sign up when they register. They do this so that they can keep in touch with their customers and keep them up to date about all the new fashion trends right from celebrity fashion to college fashion.

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Reduced staffing costs
When River Island went online to do e-business they experienced a decrease in physical administrative paper work and cut their staffing team significantly. Most of the staff employed for River Island all work in store but if you try and apply for a job on the River Island website you will find that you cannot find one tab anywhere. Even when searching the website you will get nothing. They use their original staff (or the staff kept on) to manage the files, invoices and receipts online, they do this because it is quicker, saves space and cuts costs on having to employ more staff.

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There are many images and tabs to navigate the site well.

It displays a clear ‘just arrived’ section for customers to see what is new.

The River Island website is clearly laid out with individual department tags

Here is a list of personalised emails sent to me relevant to my previous orders.

The website has clearly laid out tabs to show all the customer’s needs. Everything is colour coded and everything is as expected.

Leave the feedback in the box for improvement.

The ‘location and contact’ tab shows the address and postcode of the gym. It also displays a map of where to find it.

The ability to book an activity online cuts the middle man out of the supply chain and lets the gym offer cheaper memberships.

The email sign up lets the customer fill out a form in which lies details valuable to the business to contact their consumers.

There are no tabs to look for jobs.

When searching the River Island website to find how to apply for a job there is nothing. This is evidence that there have been such significant job cuts when moving to e-business that they don’t feel the need to advertise for job vacancies.