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Assessment 5

To what extent do all businesses need to embrace e commerce to be


successful in the future.
Electronic commerce is the commercial transactions of goods or
services conducted electronically on the Internet. As of 2014, this
fundamental feature in the business industry was worth USD$1,994
billion and is forecasted to rise by USD$309 billion in 2015. E
commerce remains a relatively new, emerging and constantly
changing area of business management and information technology
however, it consists of three main categories, business-to-business,
business to consumer and consumer-to-consumer transactions.
China, the global business and manufacturing centre is the leading
country in the E commerce industry in terms of turnover, being
responsible for 27% of the world turnover. With recent statistics in
2014 showing that USD$1,588 is the average amount spent by an
online customer in its lifetime, proves that this industry is vital
within a business to reach customers not only in footfall but online
too. As the e commerce market is so saturated the only way in
which businesses can penetrate the market is by using porters
generic strategy to differentiating the product. The measurement of
success is subjective to the perspective of the Business and can be
measured by profits, customer base, customer, employee and
owner satisfaction.
The future of E commerce is also a huge factor, as the market is so
volatile, Businesses need to be open to adapt and develop with the
market. The e commerce market is fast moving as well therefore the
future is really unpredictable.
E commerce has created majority of markets to become volatile and
the success of the business is determine on the time it takes for the
Business to adapt. Tescos is a British multinational grocery and
general merchandise retailer. It is the third largest retailer in the
world measured by profits and second-largest retailer in the world
measured by revenues. It has stores in 12 countries across Asia and
Europe and is the grocery market leader in the UK where it has a
market share of 28.4%. Tesco has operated on the Internet since
1994 and was the first retailer in the world to offer a robust home
shopping service in 1996 gaining first mover advantage. Tesco.com
was formally launched in 2000. Their Click and Collect scheme is
now implemented that you buy online and then collect at a local
store in order for convenience, Tesco also had first mover advantage
on that meaning that they gained customers in order for ease. The
supermarket industry at this time was highly led from Tescos
therefore the competitive environment changed. However, without
being able to patent their service other supermarkets followed suite
in order to compete with the market leader. Companies like
Sainsburys used the differentiation strategy of their service to

regain customer base and introduce their nectar card as a means of


brand loyalty whilst creating a next day delivery service to make
their service even more convenient, creating a very competitive and
rapidly moving market. In evaluation, the future for Tesco is positive
due to the market share they currently own. There is also evidence
of fast initiative in order to get to the market with the click and
collect scheme creating a first mover advantage. This fast initiative
comes under Kotters 8 ways to change and establishing a sense of
urgency has created opportunities for Tesco. This proves Tesco has
facilities to adapt quick, which leads Tesco to be successful in terms
of customer base in the future volatile market.
E commerce has created opportunities for Businesses to create ease
for customers with cost minimisation in order to penetrate the
market. Uber, a leading taxi company in over 100 cities has used
Porters generic theory to penetrate their saturated market by using
electronic means to exchange the money making it attractive to the
customer in terms of convenience. This convenience of electronic
transactions is not used by Black Cabs in London therefore always
needing cash to pay, however after the backlash of employees from
Black Cabs about their lost trade, Black Cabs have now installed
card readers to pay in response to their new rivals, Uber. After
creating a response and acting upon their lost trade Black Cabs
have still lost market share due to brand loyalty Uber have created.
By having an app, and an account with the company this creates a
loyalty towards the company from the consumer. This convenience
and loyalty combined makes a strong business, which will be hard to
compete against. Black Cabs are now relying on their image of a
typical British icon and their distinctive design to ensure customer
base. For Ubers future of product development with self-driving
cars, this may need to be implemented with caution in order to
retain customer base at a constant to ensure safety. Although Uber
want first mover advantage they still want to keep the trust from
their employees of reliability and safety, therefore they do not want
to produce negative PR, destroying their brand if anything were to
happen with the self-driving cars. However if this is their step
forward their PR would be negative, as they will create a high
redundancy rate for the company, however this strategy also follows
Porters other generic strategy of cost minimisation. In the short
term, the costs maybe high for research and development but in the
long term it will cut costs, as staffing expenses will decrease. In
evaluation, Uber is an example of how E commerce has created the
market to be so volatile and how the market share of a company
can be changed so quickly with accessibility to the Electronic market
to decrease costs.
E Commerce, however poses new threats to the market by making
some companies bankrupt for not adapting to the new markets of E
commerce. Netflix is a global provider of streaming movies and TV

series. Netflix started as an American DVD-by-mail service in 1998,


and began streaming in 2007. As of April 2016, Netflix reported over
81 million subscribers worldwide, including more than 46 million in
the U.S. It is one of the biggest suppliers of online Internet
streaming in the world. Although the growth of the business is bright
their competitors may introduce new threats to them due to the
volatility of their market. With competitors such as Sky, Amazon
Prime, Blockbuster and Hulu, backed by the US giants Disney, Fox
and NBC. With Amazon considering a free service paid for through
advertising, whilst the BBC are using their expertise, reputation ad
back catalogue to establish themselves in the online market, having
already moved into the US with BBC America. These threats that
have arisen are threat of new entrants, using Porters 5 forces. This
will create tension in the market with potential cost minimization to
win a customer base. The main threat is the ease E commerce has
created to adapt a product or service in order to compete with other
Business. Netflix may have a first mover advantage and the highest
subscribers, but the fast pace of the market may change this in the
near future with other Businesses creating long term plans for
success. In evaluation, Netflix has a bigger market therefore can
succeed due to its customer loyalty and capacity to change with
the market, therefore in this case Businesses, to a large extent need
to adapt E commerce in order to be successful in the future due to
the high level of competition.
In conclusion, I believe it is very important for Businesses to
embrace E commerce within their business in order to keep up with
the volatile market and the fickleness of customer being able to
change so frequently to different products. It depends on the market
however, as the Tesco case study, has an equal balance between
bricks and mortar and Pure play therefore their consumer can still
buy online but collect at stores or they have that choice of selecting
their products off the shelf, similar to the fashion market. Therefore
Businesses need to be sensitive towards their customers wants. The
short term implications of introducing E commerce within a Business
is the capital in order to set up an online footprint and to keep the
capital to generate the website and apps. It also needs extra staff to
monitor the technical element, therefore a large investment. The
long-term implications are the revenue gained from expanding the
Businesses marketing by increasing its online presence. Therefore
finically is a positive in the long term if it is successful. The most
important factor is to keep market research open in order to keep
the Business successful and to understand the customers further
needs in order to keep improving.