Traditionally, the buying and selling of products and services has always occurred either through a face to face transaction, a letter of intent or even a simple phone call where a person places an order and pays upon delivery. Yet due advances in technology where the scale and scope of the retail industry has come to encompass a global market place, the traditional processes by which this industry has always followed has started to change. The internet has brought has an unprecedented level of interconnectivity on a global scale through which more and more transactions such as banking and even retail are conducted. Sites such as Zappos.com, Amazon.com and numerous other online retail sites have enabled consumers to buy all their sporting from one site.
This is a growing indication of a shift in consumer preference from buying their wants and needs through traditional retail establishments to picking the convenience of the internet for all their buying needs. As a result, numerous sportswear companies have shifted various levels of their retail operations to online stores in order to compete with their rivals and take advantage of this growing trend. It is based on this that “Digital Sports Wear Collections” will be a new apparel store that will cater to people who are interested in sporting activities such as football, riding hiking and skating yet want to do their shopping through a more comfortable medium (i.e. the internet).
Introduction: What is E-Commerce?
E- Commerce, an abbreviation of the term electronic commerce, is a way in which business transactions such as the buying and selling of products is conducted over the internet. Due to its widespread proliferation with thousands of users being added to the online browsing population on a daily basis, the breadth and depth of the internet is not to be underestimated (Johnson, 2011). With estimates placing the number of users in the hundreds of millions, companies have started to capitalize on this trend by moving traditional operations such as advertising and retail to online mediums in order to attract customers to their products.
Business Model Chosen
The chosen E-commerce business model for Digital Sports Wear Collections is the B2C (Business to Customer) model which focuses on a single entity selling products to multiple customers. This particular model focuses on selling sports apparel developed and made by the company under contract from licenses brands in order to sell them directly to consumers (Johnson, 2011). The limitations of this particular concept lies in the fact that the company has to deal with all aspects of the such as production, sale and transportation which does entail a significant amount of cost as compare to merely being a retailer of already finished products.
Information systems can be described as the interface between people, organizations and technology enabling the business to accomplish a specific task or action. One example of an information system are the various applications and websites utilized by Amazon in selling products, accepting client payments through credit card processing applications, contacting their warehouses and shipping bought products to the correct addresses indicated by their. While this is only a one example of the plethora of information systems out there, what must be understood is that information systems act as methods of integration for a company helping to streamline specific processes so that they can be controlled, influenced and improved when necessary (Troy, 1999).
Developing proper information systems is an essential aspect for a company for without it a company will be unable to properly deal with the buying, selling and the utilization of resources across the internet. Due to the varied and often complicated nature of company operations it becomes a necessity to streamline and integrate product delivery processes, methods of operation, customer service and various other operational capacities (Violino, 2005). An E-commerce company cannot just simply develop and market a product without taking into consideration how best to allocate specific resources in determining where a product needs to go, which branch needs it most, and how will product returns be processed. An E-commerce company requires an efficient and up-to-date information system in order to integrate the factors mentioned into an efficient and effective operational strategy so as to better serve its clients and reduce the inherent costs of operation.
RFID Tag Technology and Inventory Management
Another type of technology that is often utilized in an online E-commerce store such as Digital Sports Wear Collections is the use of RFID tracking for various packages and items within their warehouse. An RFID (Radio-frequency identification) chip can considered an ingenious device due to its overall simplicity yet wide applicability in a variety of fields and applications.
The chip, no bigger than a grain of rice, works via system of query and transmission wherein the chip releases a coded identification number when it is queried by a reader device that produces the necessary type of signal. The result is a method of package tracking and identification which enables companies, medical institutions and even government agencies to immediately identify and track a particular object or person based on the RFID signal transmitted by an embedded. Companies such as Amazon, Wal-Mart and Costco have been utilizing RFID technology as a means of tracking their products in their various warehouses and department stores (Witt, 2005).
From the point of view of corporations, the use of tracking “chips” is a positive facilitator of customer care since not only can warehouse managers respond quickly and efficiently to a product requests but they can avoid utilizing particular procedures or methods of product retrieval that are laborious or time consuming. Aside from their use in warehouses and factories, RFID chips have been utilized extensively in the package transportation industry via installed electronic sensors on in warehouse systems. Such devices are commonly seen on vans that deliver packages through highways and various areas and deposit their products in the store requesting them.
These systems allow companies to identify the transmitted code attached to the driver’s RFID systems and automatically allow them to pass through security gates while at the same time creating a “mark” within their systems indicating the arrival of the truck. This system is often utilized by FedEx, DHL and UPS in order to tracking transports and packages across long distances in order to inform customers where their packages are and their estimated date of arrival. Other more subtle methods of RFID technology use has been their implementation in store tracking systems and large scale agricultural operations. The technology in effect has made it easier to easily track both equipment and goods as they are transported from one location to another thus facilitating easy identification leading to access to particular ports of entry.
How does this Business Add Value to Consumers
When dealing with online retail operations it must be noted that such methods of selling to customers do not suffer from the regular limitations that affects in-store selling. One aspect of regular retail stores and outlets is that they require employees in the form of cashiers, stock clerks, baggers, store managers and an assortment of other personnel within the store that enables a store to operate and give a customer a pleasant shopping experience (Ginella, 2009).
With an online store, Digital Sports Wear Collections is able to save money on employee salaries, benefits and bonuses since the entire process has been automated using computers resulting in the potential for a greater product to profit ratio due to the lower costs involved in operations. As a result, this amount of cost savings is passed along to customers as well in the form of cheaper air fare and hotel bookings. Not only that, a website does not close (except for maintenance and upgrades) enabling customers to buy products on their own time and at their convenience. This translates into a better customer experience that encourages consumer patronage of a website’s service (Harris, 2001).
Economics of the Business
Online sporting goods stores employee skeleton crews of website editors, procurement specialists and online marketers which enable the company to run a website with fewer employees needed yet are able to display their products in a much more efficient and attractive way than in a store and are able reach a much larger market due to online marketing campaigns (Carr, 2003).
Another problem attached with in-store retail is the fact that utilities such as electricity and rent come into play when taking into account the cost of running such an establishment. With online retailing most of the framework of a site is either run of servers which requires much less electricity than a retail outlet and there is no rent involved. The only cost involved in such a venture would have to be the cost of the domain name or in the case of rented online capacity the cost of cyberspace which is actually negligible considering the fact that the cost of putting up an online retail today is equivalent to only a quarter of single employees salary in most retail outlets in the U.S. (Carr, 2003).
Effectiveness of the Model
The effectiveness of the business model all boils down to how it is able to create an effective “experience” for the consumer while utilizing the site. The “experience” that is being referred to is not just the quality of the product itself but what customers feel when they enter into a particular establishment or in this case, when they start and utilize various aspects of a website. For example, in the case of Panda Express in the U.S., all their outlets have a warm and friendly ambiance which is not only family friendly but actually promotes, in their words, “a happy feeling” for customers (Who shops for sporting goods online?, 1999).
Another example can be seen in the case of Apple Inc. (which is considered the world’s most valuable company), all their stores, no matter what country they are present in, have a stylish and ergonomic design that looks “clean, modern and cutting edge” which has come to exemplify the experience of buying products at an Apple store. Based on the popularity of not only Panda Express but of Apple itself, it can be seen that by making their store into an “experience” rather than just a store this helps to encourage buying behaviour among their clientele and even repeat visits. As such, when it comes to the chosen model, the most important factor is how it is able to create a great shopping experience for consumers.
One example of creating a more convenient shopping experience that was implemented by Amazon.com was the removal of the need to open an account within the site in order to make a purchase. This simple act of streamlining the process and making it more convenient resulted in a 60% increase in sales the year it was implemented throughout the site. In this particular instance, it can be seen that the inconvenience of having to create an account on the site was what prevented people from actively making their purchases. As such, a more convenient experience resulted in higher levels of consumer patronage which directly translate into higher profits for the company. It is based on this that if Digital Sports Wear Collections wants to increase its customer base, it is important to develop the experience their website provides so as to better appeal to consumers and create repeat business.
Changing Selling Strategies
One aspect to take into consideration is the fact that at times certain products become a “tough sell” as a direct result of consumer objections to the product itself. One case where this is evident is changing consumer attitudes in the U.S. towards the use of gas guzzling SUVs. From 1995 to the early 21st century SUVs were considered almost the vehicle of choice for a large percentage of families and consumers within the U.S. however due to increasing gas prices the demand for SUVs has severely plummeted resulting in a significant deterioration the market base for current SUV dealers (Serwer, 1998).
When Digital Sports Wear Collections encounters such cases what is needed is to frame an offer to get rid of the objection. This means to create a buying situation where the consumer observes the perks of buying a particular product and neglects to take into account the possible negative implications of the sale. In the case of online sports apparel sites, this comes in the form of constantly updating and changing their selling strategies to match the needs of consumers by giving discounts during particular seasons or creating special offers to increase the amount of products sold.
Online Social Networking
Another aspect of online sporting goods is the use of social networking as a means for small independent companies or even individuals to tell people about products they have bought to the people included in their friends list. Sites such as Facebook.com and twitter.com have evolved beyond their original concept of a way for friends to stay in contact with one another to a way in which individuals and small retailers are able to market and sell their products via customers who like and share their travel arrangements. With such an option placed on most online sporting goods websites at the present, people are encouraged to go to these sites, buy products and share with others online exactly what they bought.
Summary of Findings
Focus on Quality
One of the most important factors in creating and maintaining a successful online sporting goods business is a focus on quality and ensuring that any product bought by a customer is not the result of inferior production or workmanship. What must be understood is that customers tend to patronize businesses that show that they care about their customer by ensuring the strictest measures are followed in product quality. In instances where an online sporting goods company has failed to live up to the expectations of consumers regarding the overall quality of a product, it is often seen that such companies tend to lose customers in droves.
One example of this in action was seen in the company Dell that neglected to implement proper quality control measures on its motherboards resulting in several computers being sold whose motherboards leaked chemicals when overheated. Such a fiasco was a nightmare for Dell and ruined its reputation with several of its customers in effect sending them to other companies as a result. It is based on this that it can be seen that a focus on quality is an important aspect for any online sporting goods company to follow in order to grow and maintain its consumer base.
Adapting to Changes in Business Environments
Another factor that online sporting goods businesses should take into consideration is adapting to changes within local business environments. What must be understood is that businesses do not operate within a vacuum and, as such, it becomes necessary to observe that occurs within local business environments and respond accordingly. This can come in the form of expanding during times of economic prosperity or cutting back and outsourcing specific aspects of the company’s operations during lean economic times. Not only that, online sporting goods companies should be prepared to respond to changing consumer trends in order to stay relevant lest they fall into obscurity and stagnation
Recommendation for Future Developments
Focus on Brand Image
Further examination of the methods employed by online sporting good companies in coping with uncertainty and risk reveals that they placed a heavy emphasis on brand image and how this generated a great deal of consumer interest. A company’s brand image helps to enamour it to customers in that through a distinctive way of presenting the company’s products and services this enables it to distinguish itself from its competitors. On the other, a brand image can also be utilized to popularize a company among a particular consumer demographic in that through the uniqueness of the brand image a consumer continues to remember the company and its brand long after the initial consumption of a product or use of a service from that company.
Examples of this can be seen in the brand image utilized by U.S. based Zappos Inc. (an online shoe store) which has quite literally developed a cult following among millions of international consumers today. They did this by facilitating a brand image of distinctiveness and quality and further enhanced this by providing innovative products that subsequently created a whole new trend in ergonomic design, stylish looks and above all advanced technological capability. These and other examples too numerous to mention show the importance of developing a particular brand image in order to entice consumers, win over potential employees or stay ahead of the competition. As such, it is recommended for any online sporting goods company, newly established or not, to develop a brand image that appeals to the market segment they are targeting so as to facilitate a greater market share for the company (Bellantonio, 2001).
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