Executive summary 3
Introduction 3
Summary of the research 4
Research analysis 5
Pros of online retailing to the company 5
Cons of online retail to the company 6
Recommendations and justification 7
Conclusion 7
References 9
- Executive Summary
Globalization of commerce and the continuous technological advancements in recent years have widened the market base for many producers. In an effort to reach out to this large consumer base, there has been an upsurge in the level of marketing innovations. One of the key innovations that have been realized is online retail. For the purposes of this report, online retail is a category of electronic commerce, which entails the ordering of goods and services via internet. Under this form of e-commerce, payments and delivery arrangements are initiated either online or offline based on the terms and conditions of the transaction. Market analysis shows that an estimated average of about 60-70 % of the Americans uses the current satellites to access the online trading system (Forrester 2011).
- Introduction
Online retail has gained wide acceptance from the American consumer market. The continuous improvement and increase in the number of online retailers in recent years indicates that producers have gained more familiarity with the preferences and tastes of consumers in the United States. The access of the internet by millions of US residents has been instrumental to the success of e-commerce in the country. Studies conducted regarding the success of online retail in the United States indicate that both American online consumers and retailers seems are adequately served with internet and the necessary infrastructure for effective delivery (Jacko & Sears, 2003). Based on these factors, many economists have argued that online retail is likely to face tremendous growth in the future.
- Summary of the research
The American economy has moved from one based on manufacturing to one that is based on consumption. As a result of high taxes in the United States, many companies have offshored their manufacturing jobs overseas. This means that the current US economy operates of Keynesian economic model; the more consumers purchase goods and services the more the economic grows (Arnon & Weinblatt, 2011). The purchasing power of the American citizenry has been boosted by the extension of lines of credits by many banks and monetary institutions. If online retail is going to remain effective and stable, consumer’s power to purchase goods and services has to remain relatively high in the United States. Considering that many banks are willing to extend credit lines to the American citizenry, it is important that online retailers adopt better advertisement and marketing strategies in order to appeal to consumers to purchase more goods online.
Like any other business, online retail is faced with various challenges. Some of these challenges include stiff competition from established retail stores such as Wal-Mart who enjoy the economies of scale, change in consumer tastes and preferences over time, and the evolving technology which necessitates online retailers to keep up with modern technological advancements and infrastructural developments. Therefore, it is imperative that any online retailer planning to venture into e-commerce has enough resources to enhance the adaptability of the enterprise to technological advancements, and changes in consumer tastes and preferences. .
Retailers venturing into the market also have to be prepared to counter the stiff competition already existent in the market. By favorably competing with other players in e-commerce, retailers will be in a position to satisfy and retain a given consumer base, which is instrumental in keeping any given enterprise in the market. The changing dynamic in consumers’ tastes and preferences requires significant acceleration in agility and flexibility by the retailers to adapt to the new changes. This calls for an agile organization and business enterprise with a successful business model that allows quick adaptability to these changes in order to enhance the stability of business operations.
The increased use of the internet by majority of the households has been a boost to e-commerce both within and without the United States. It has allowed greater penetration of online retailers into the consumer market through advertisements and other marketing tools. For example, broadband access has reduced congestion on the phone lines, and increased internet efficiency to small and medium enterprises in the online retail field (Moore, 2001).
- Research analysis
Pros of online retailing to the company
There is great potential for the generation of more revenue by producers and the government through online retail businesses. In order to maximize the profits generated from this enterprise, online retailers have to design better websites and infrastructure that is congruent to both the digital economy and consumer needs. In addition, online retailers have to create effective delivery mechanisms to overcome uncertainties that engulf the consumer market regarding the physical delivery of their products to the consumers’ locales.
In some ways online retail is advantageous compared to the opening of physical retail stores. For example, online retailers do not incur cost associated with the several physical retail stores such parking costs, high property taxes, and high rent rates. Instead of having physical stores, where customers can visit, online retailers have adopted single mega-warehouses facilitated with automated machines to help deliver purchased products to their required destinations upon the placement of orders by consumers. For instance, in the web van grocery the warehouse is automated with computer launched bins with variant colors on the convey belt to deliver products to different zones as indicated by the lights. These well-equipped warehouses used by online retailers warehouse facilitate efficiency and reduces both operational and production costs (Forester, 2011).
The intergraded technological solutions used by these online retailers provide faster and efficient delivery model to the customers than the competitors whom may be utilizing their own scratch distribution systems. Consumers do not have to be concerned about driving to retail stores to get a given product. At the comfort of their homes, consumers can order goods and services via the internet. In terms of tracking the shipment of goods and services ordered by consumers, most online retailers need to use integrated software. (Heim, 2001).
Cons of online retail to the company
Studies carried out showed that the new world retail trading system is faced by various challenges. This includes continuous evolution of technological dynamics which requires prompt education and research by online retailers in order to keep up with market dynamics and consumer needs. In addition, not all Americans have access to internet or have the technical knowhow of using the internet. This means that a section of the consumer market remains unreachable by online retailers (Forrester, 2011).
Online retail is also difficult for small and medium entrepreneurs because of the high operational cost involved. Some of these costs include the maintenance of software and advertisement costs. Logistic costs for shipping the goods ordered also remains a challenge to small entrepreneurs engaging in online retail (Ling, 2000).To the customers, the threat of fraudulent on their debit card is an issue of great of concern among consumers. This occurs when individuals with unscrupulous mission, impersonate consumers information. This often influences the confidence of customers in online retail (Zimmerman 2012).
- Recommendations and justification
- Conclusion
With the constant evolution in technological infrastructure used in the online retail, retailers should seek to make their organizations to be more agile and flexible to the changes in the market. In this way they can be able to maintain a certain proportion of the consumer market by constantly meeting their needs. Cyber security and thorough monitoring of online systems is also important if online retailers are going to earn the confidence of consumers. With more safety of consumers billing information, many consumers would be willing to shop online.
References
Arnon, A., & Weinblatt, J. (2011). Perspectives on Keynesian economics. Berlin: Springer-Verlag.
Beck, E. (2000). British Grocer Jesco Thrives filling Web Orders fro its Stores . Wall Street Jaunal , 342-400.
Forrester(2011): Online Retail Industry In The US Will Be Worth $279 Billion In 2015". TechCrunch. February 28, 2011.
Gaka, C., & Walton, S. (1997). Is e-commerce Sustainable? an Analysis of Webvan : Sustainability in the Digital Economy . Greeenleaf Publishers.
Heim, G.R. and Sinha, K.K. (2001) Operational drivers of customer loyalty in electronic retailing: An empirical analysis of electronic food retailers. Manufacturing and Service Operations Management, pgs 264-271
Jacko, J. A., & Sears, A. (2003). The human-computer interaction handbook fundamentals, evolving technologies, and emerging applications. Mahwah, N.J.: Lawrence Erlbaum Associates.
Lee, L. (2003). Online grocers: Finally delivering the lettuce, brick-and mortar chains are finding profits in cyberspace. Business Week, April 28, 3830
Ling, C. (2000). Convenience stores in Taiwan become ecommerce destinations. The Wall Street Journal Interactive, April 19.
Moore, J.F. (2001). Why Peapod is thriving: First-failure advantage Business August 14.
Mott, S. (2000). Resolutions for 2001: What you can learn from a year of hell. Business 2.0, pages 78-97.
Zimmerman, Ann (2012). Showdown over Show rooming. New York.
