Ecommerce
business
Baby
store
Executive summary
Ecommerce
businesses are catching the trend rapidly in present scenario where consumers
do not have enough time to make purchase from physical store and looking for
cost saving by making online purchase. In present context ecommerce business
has been developed for Baby store which is a portal selling product for small
kids such as baby boy clothes, baby girl clothes and footwear for boys and
girls etc. Present business model enlist the analysis of environmental factors
and industry factors so as to understand their net impact on the business
carried by ‘Baby Store’. Further present business offer 24 hour guaranteed
delivery and low cost as its major value proposition. Company employs pay per
click business model so as to attract consumers.
Table of Contents
Environmental analysis
The present
ecommerce business concept named ‘Baby Store’ deals with the all kinds of baby
clothes and footwear boys and girls. The major product category for the present
business would include boy clothes, girl clothes, boy footwear and girl footwear
etc. The present business concept has been chosen looking into the increasing
emphasis on the kid’s clothes and footwear through ecommerce as consumers
attract to save time and cost (Anderson et al, 2006). Further environmental analysis for
the organization Baby store can be given as under:
§ Political and legal factors:
Political and legal factors for the present environmental analysis for Baby
Store would consider several regulations towards import and export business,
implication of tax, new business policies pertaining to ecommerce are and cyber
laws developed in a country. Since ‘Baby Store’ would be having its operations
into multiple countries hence all these regulations would be important for Baby
Store so close monitoring of these regulations and laws needs to be done. For
example any increase in tax for the export of footwear and clothes in domestic
country or import of baby footwear and clothes in the consumer’s country might
lead to additional cost for the company or consumers. This has high degree of
power to impact the overall business of the organization.
§ Social and culture factors: Social
and cultural factors for the consumers include changing consumer behavior,
decision making process, impact on the lifestyle of consumers and influence of
society on consumers. These factors are important in shaping the consumer
decision making process for the ecommerce business and for a particular product.
For example it is the general consumer behavior that in unbranded clothes
segment consumers would not make a decision by just viewing the product online
and would like to have touch and feel of the cloth. Hence ‘Baby Store’ provides
the buy and try concept to the consumers of the company so that any footwear or
cloth selected by consumers can be sent to their home and after trying the footwear
and clothes they can make a purchase decision. This would give a complete feel
of physical store buying process where consumers make decision after touch and
feel effect (Parasuraman, 1997). Another major impact can be social buying process as
friends and relatives affects the decision making process of consumers. So
marketers should understand the philosophy of decision maker unit in order to
lead overall selling process. Hence cultural and social factors are important
to the ecommerce businesses such as Baby Store and understanding this behavior
would allow Baby Store to understand needs and wants of the consumers.
§ Technological factor: Recently new
innovation in technological domain has allowed the business organizations to
leverage on the internet technology so as to sell their products to consumers
not only into domestic regions but across the world. Further technology into
financial domain such as credit card, online banking and other payment
technology and technology in courier industry has enabled the ecommerce
businesses to develop competitiveness against the physical store businesses.
§ Economic factor: Economic factor is
critical in assessing the environmental impact as consumers spending power,
interest rates, tax rate and inflation rate affect the overall business for the
organization. Recent economic crisis has hit the major economies and consumer spending
power has reduced but it is recovering fast. Consumers are more inclined
towards lifestyle products and their spending is ever increasing for the
lifestyle products (Prahalad and Hamel, 1990).
Value proposition
Value
proposition is basically cost benefit analysis for the consumer wherein
benefits offered by the products and services of the organization against the
cost incurred by the consumer to buy that products would be considered. In
present business context of Baby Store which offers variety of footwear and
clothes to the consumers across domestic and international locations the major
value proposition would be lower prices, quick delivery, availability of all
size & shapes and hassle free return policy. This value proposition offered
by Baby store has been developed looking into the fact that consumers are
looking for ecommerce sellers with lower pricing while quick delivery would
give additional edge to the business wherein 24 hour delivery would be
guaranteed to the consumers. It has been observed that for ecommerce businesses
return policies is a major factor where consumers feel cheated due to complex
terms and conditions of the ecommerce companies while Baby store would offer
the hassle free return policy. Hence analyzing the overall value proposition
offered by Baby store to the consumers this would be for the middle class
consumers looking for the value for money composition (Galunic
and Rodan, 1998).
Core competencies
Core
competency of the business provides the unique advantage offered by any
business to their consumers which is not being provided by other market players
prevailing in the same industry. The major target segment for Baby store would
be middle class consumers having moderate income and lifestyle. Core competency
for Baby store would be lower cost and 24 hour guaranteed delivery (Leonard-Barton,
1992). Consumers at
present are witnessing the trend where ecommerce companies make delivery for
the product in 5-7 working days due to this consumer’ lose interest in their
purchased goods. In order to provide better offer for the consumers 24 hour
guarantee delivery time would be allowed wherein after order consumers would be
delivered the goods within 24 hour time. This 24 hour shipment would be a major
challenge for Baby store but with the help of business partners into courier
industry this competitive advantage would be developed.
Low cost
would be another competitive advantage for Baby store wherein lowest of the
price would be offered into all footwear and clothes segment for the men and
women. This lower price for the company would be set by backward integration
wherein company would produce some of its clothes & footwear through its
subsidiaries. Also outsourcing can also be done so that a local manufacturer
can produce quality goods for the company with the brand name of company only.
This would allow lowering the overall cost to the company and this would be
passed on to consumers by safeguarding the cost involved into marketing of the
products (Needham, 1996).
Marketing analysis and trends
Latest trend
into the ecommerce business reveals that more and more consumers are like to
shop through online websites especially into lifestyle goods domain looking
into time and cost saving factors. It has been found out into a research that
more than 60% of the lifestyle goods spending into developed countries for
middle income consumers happen through ecommerce medium. Further fashion goods
ecommerce business has witnessed growth of more than 200% in past one year with
more than 1 million websites operating into the fashion goods business at
present. Hence consumer trend in present age has shifted towards consumers and
gives motivation for the ecommerce companies to indulge more and more into
these products.
Marketing
analysis for Baby store include segmentation, targeting and positioning of
their consumer segment. Major target segment into the footwear & clothes
industry include branded & non branded segment, low income, middle income
and high income segments and physical store & ecommerce business segments. Hence
there can be mainly three types of segmentation which is done into the baby
cloth and footwear industry (Kerin and Rudelius, 2001). The major target segment for Baby
store would be the consumers who are looking for the low cost and quick
delivery. These consumers would belong to low to middle range income and would
not be brand lovers. There would be very low brand loyalty and tendency of
switching as well from their previous footwear & clothes brand and online
store as well. These consumers would be having average spending into lifestyle
goods products and would be value for money seekers. Baby store would position
itself as the footwear & clothes brand with lowest cost industry wide and
quick guaranteed delivery. Value for money positioning would be made by the
company. Direct competition of the company would be from the marketers into
ecommerce domain selling clothes & footwear and physical cloth stores.
Porter’s competitive analysis
Porter’s
competitive analysis provides the analysis of external market forces pertaining
to an industry so that impact of these market forces on business can be
evaluated. For the present context of Baby store porter’s competitive force
analysis can be given as under:
§ Bargaining power of supplier:
Suppliers would be majorly related to the technology domain and courier
companies which are the business partner since Baby store would be going into
backward integration for manufacturing their own footwear & clothes brand
so as to attain lower cost. Due to the fact that 24 hour guaranteed supply is
the major competitive advantage for company hence supplier would contain high
bargaining power. A long term contract would be made with the supplier so as to
ensure strategic relationship creating benefits for both Baby store and Courier
Company as well (Don et al, 1993). ITECH 3211-7211 business planning report
§ Bargaining power of customers:
Consumers are always having dominating power in retail industry and same would
be the case for the present ecommerce business as well. Due to availability of
large number of online retailers and physical retailers pitching their market
offering to the same segment of consumers, bargaining power of consumers have
increased many folds. This increasing power of consumers allows them to avail
heavy discount on goods and other facilities such as free shipping and quick
delivery etc.
§ Threat for new entrants: Ecommerce
domain has no barriers to the entry of new entrants and it is very easy to
enter into ecommerce domain due to lesser capital barrier. There would be high
threat from the new entrants as number of new players would be entering into
industry with their unique value proposition so as to attract the same
consumers segment and creating a stiff competition in the industry.
§ Competitive rivalry within industry:
Ecommerce industry is already having high number of players fighting for the
small consumer segment into ecommerce business. While with the introduction of
new ecommerce players and even with the entry of branded clothes & footwear
players into ecommerce domain would enhance overall competition into footwear
& clothes industry to many fold. This would initiate a price war and
competitiveness to provide best possible services to the consumers at lowest prices
(Koichi, 2009). Margin for retailers would decline so as to attract
consumers by providing lower cost.
§ Threat of substitute products: footwear
& clothes are basic human need and there is no substitute to the footwear
and clothes in near future. Hence degree of threat of substitute product is
quite low in this business domain wherein scope for the footwear & clothes
would increase in near future with more and more emphasis of consumers on the
style quotient.
Strategic goals and objectives
Setting goals
and objectives for any business is important from the view that all
organizational resources can be deployed so as to make coordinated efforts in
order to attain their goals. Strategic goals and objectives for Baby store can
be given as under:
§ To develop unique market competitive
advantage by offering low cost and 24 hour guaranteed delivery
§ To develop business partners with
long term relationship so as to ensure timely delivery of the goods and better
enabling technology into ecommerce domain
§ To attain 5% of the ecommerce market
share for the footwear & clothes industry in coming 3 years
§ To develop a strong brand image among
consumer’s mind by providing reliable products
§ To develop an overall profitable
business with 20% profitability year on year
Stakeholder analysis
Stakeholders
are the vital entities having direct or indirect impact on the business
activities of any organization. For the present business of Baby store
stakeholders include buyers, suppliers, government agencies, financial institutions,
business partners, shareholders and employees of the organization. Buyers of
the company would be having expectation for the high quality and low price
goods. The main role of the buyers would be to promote the organizational
products through word of mouth and reference among their friends and relatives
(Koichi, 2003). Suppliers would be having the responsibility for timely
supply of goods or raw material for clothes & footwear manufacturing with
lower price so as to develop a long term strategic relationship with them.
Government
agencies would frame the laws and regulations pertaining to online business and
import-export guidelines. The major expectations from the government agencies
would be to have stable regulations so that there are no major impacts on the
business through these policies. Financial institutions have the role to aid
the business of Baby Store by extending financial support. It is expected the
financial institutions would keep their support for long term. Business
partners would be having the role to provide enabling technology and courier
services for the faster delivery of goods to consumers which would form
competitive advantage for the organization. Shareholders of the company are
vital as they have invested their money into this organization and shareholders
would be expecting goods from the present business. Employees of the
organization has role to provide best possible customer services and helping
them to return of goods. Employees would be expecting good career growth with Baby
store Company (Brian, 2011).
Business model
Business
model for any organization decide the strategy adopted in order to carry out
business operations and also tells about the revenue source involved into the
business. For the present e-commerce business of Baby store pay per click model
would be followed. Advertisement would be given on the major social portals
such as Facebook, Twitter and other social forums. Also other online platforms
for the fashion goods such as magazines, blogs and forums would be captured so
that online advertisement can be given and advertiser can be paid based on the
clicks generating business for the organization. It is important to ensure that
payment to advertiser needs to be done basis on the payment page click so as to
ensure that visitor has made the payment (Jerome, 1975). The major benefit of the pay per click
business model for Baby store would be to generate huge customer inflow on the
website and also this business model would ensure sale of goods as payment page
would be linked with the payment made to the advertisers.
Potential risk
There are a
number of risks pertaining to the ecommerce business in present context which
includes currency risk, technology risk, regulation risk and financial risk.
Currency risk would be the major element for present business organization as
it deals into various countries and any fluctuations in the currency prices can
have severe implications on the business profitability of the organization.
Hence hedging options should be used in order to carry out export or import
business at large scale.
Technology
risk implied introduction of any new technology into ecommerce domain which can
change the entire business scenario and even investment made into the present
business would also be under risk. Hence it is important to keep track of
changing technology for Baby store as this would lead to better and upgraded
technology and safeguard from the risk of technology to the organization. Risk
of regulation is also vital as it may affect the export-import policies, tax
implications or cyber rules (Coyne and Sujit, 1996). Change in any of such factor would
lead to adverse business impact for the organization and in order to mitigate this
risk government policy should be understood and their business changes in
conformity to these regulations should be done by Baby store. Baby store has
invested heavily into the present cloth and footwear business and with the
backward integration for manufacturing of footwear & clothes there would be
high cost employed in the present business. One of the major risks to the
organization is in terms of losing the entire investment by lower profitability
or not capturing the significant market share into clothes & footwear
industry due to high competition prevailing in the baby cloth & footwear
industry. In order to mitigate the financial risk carried by company it is
important that various stakeholders should be present for the business such as
financial institutions, promoters and shareholders. This would allow dividing
the overall financial risk into different entities (Porter,
1979).
Conclusion
The present
ecommerce business developed by Baby Store has unique offering for the
consumers wherein lower cost and 24 hour guaranteed delivery would be made as
the competitive advantage for the organization. Political factors and social
factors have high degree of power in order to affect overall industry as such
forces can make significant changes in the business operations. Market for
ecommerce business has witnessed high number of sellers into the industry with
approx 1 million websites prevailing into ecommerce business in present time. Increasing
consumer spending has also made significant impact into the ecommerce industry
and consumer wallet share is increasing with their increasing expenditure into
lifestyle goods. From the porter’s analysis it has been explored that impact of
new entrant and supplier bargaining power are vital in order to carry out
present business. Business model adopted for the present business is pay per
click which provides goods results in term of customer flow and ensuring
purchase made by the customers. Company is also exposed to several risks such
as technology, currency, financial and regulation risk. Baby store need to
shape the business elements in such a way to mitigate all such risk present in
the business model.
References
§ Anderson,
J. C., Narus, J. A., &Rossum, W. v. (2006) v84(3), p. 90-99. Customer Value
Propositions in Business Markets. Harvard Business Review
§ Parasuraman,
A. (1997). Reflections on gaining competitive advantage through customer value.
Journal of the Academy of Marketing Science, 154-161
§ Prahalad,
C.K. and Hamel, G. (1990) The core competence of the corporation, Harvard
Business Review (v. 68, no. 3) pp. 79–91.
§ Galunic,
D.C. and Rodan, S. (1998). Resource recombinations in the firm: knowledge
structures and the potential for Schumpeterian innovation. Strategic Management
Journal 19. p. 1193–1201.
§ Leonard-Barton,
D. (1992). Core capabilities and core rigidities: A paradox in managing new
product development. Strategic Management Journal 13-S1. p. 111–125.
§ Needham,
D (1996). Business for Higher Awards.
Oxford, England: Heinemann.
§ Kerin,
H and Rudelius, 2001, "Marketing, The Core," 4th Edition, McGraw Hill
Publishing
§ Don
E., Stanley I., Robert F. (1993)“Integrated Marketing Communications,”NTC
Business Books, a division of NTC Publishing Group.
§ Koichi
S (2009) "Advertising Theory and Strategies,"16th edition, Souseisha
Book Company
§ Koichi
S (2003)"Symbiotic Marketing Strategy,"4th edition, Souseisha Book
Company
§ Brian
S (2011) Engage!: The Complete Guide for Brands and Businesses to Build,
Cultivate, and Measure Success in the New Web, John Wiley & Sons, Inc.
pp.201-202.
§ Jerome
M (1975)”Basic Marketing: A Managerial Approach," fifth edition, Richard
D. Irwin, Inc., p.37
§ Coyne,
K. and Sujit B (1996), Bringing
discipline to strategy, The McKinsey
Quarterly, No.4.
§ Porter,
M.E. (1979) How Competitive Forces
Shape Strategy, Harvard
Business Review
Process to form website
Present
business model development process would create website with the help of simple
platform named Joomla. Joomla interface provide simple steps to develop a
website for the ecommerce businesses wherein templates are used in the
interface in order to develop the websites. There are several templates and
functionalities available in the Joomla platform which can be set on the
platform so as to enable the particular design and functionality for Joomla
platform. Joomla offer dynamic design for the websites offering ecommerce
business where fast changes can be done through admin module. There are
basically two interface provided in Joomla one is for customer interaction
while other one is for the administrator where changes would be done for the
website. Process to make changes in the website through admin module is very
simple and without requirement of much technological expertise website can be
created. In order to create the website hikkashop offer simple process wherein
user need to go to browser and star mark the required template and after
marking star changes can be saved so that impact of that template is visible on
the entire website area for both admin area as well as front area to which
consumer interact.
Component, template and modules
Joomla
platform for website development make use of the Hikkashop for enabling
different elements in the website. Hikkshop is a simple component which allows
carrying different templates and modules for making changing in the design or
functionality of the website. There are large numbers of templates available on
Joomla platform. Out of these templates some are the existing templates while
other templates can be easily downloaded from the internet in order to provide suitable
platform to consumers. There are different templates for the admin area and
front end as well. Usually there are 3 templates provided on the admin area
while there are just 2 templates on the front end. For the present context “Bluestrok” would be
used as the template for admin area and School for front end area. This would
be downloaded from the internet in order to suit the business environment for
footwear and cloth business. Product categories and sub product categories can
be added on the website based on the color, size and prices for the footwear
and clothes offered by Baby store.
Future improvement areas
Present
process for website development has been carried out by keeping in mind all
important aspects so that no feature of the ecommerce business is left but
still there are some important changes which can be made in the website in
future:
§ Live chat: Live chat would be helpful
for the consumers in order to help them for online purchase and to resolve any
difficulty faced during purchase process.
§ Forums and blogs: Forums and blogs
would be developed for SEO purpose and consumers would come to these blogs and
interact with each other.
§ Customer feedback support: Customer
feedback support is provided in order to know consumer perception towards the
products and services of the organization and to make changes in the service
desired by consumers.
2nd activity: In order to carry out the
present activity web resource named http://www.nd.gov/itd/services was referred in order to understand the various business
perspectives in relation to IT plan developed by North Dakota. Present activity
involves carrying out the thorough analysis based on the IT plan (2013-15) and
ITS strategic plan was also referred in the present context. This activity was
started on 25th April, 2014 and it took 3 days in order to complete
the task. This task also involved making decision on the business parameter for
setting evaluation performance. 
