Launching e-Commerce to Add Value for Customers
1. PART 1
Launching e-Commerce to Add Value for Customers
England is the home of Phab a retailer of mobile phones, tablets and accessories. The company is owned by Ogonwe, who is also the founder of the company. Retail sales were begun in a stall at the mall and since those humble beginnings the business never stopped growing. Ogonwe recently purchase Networkz, a Norwegian business in the same business sector as Phab. The new merger offers great opportunities and new challenges. The changes Ogonwe initiated and new ideas also offer risks. The company is looking at the opening of a new warehouse as an opportunity to venture into e-Commerce territory. Future plans include Business-to-Consumer (B2C) online e-commerce capability. In the past Phab’s Ogonwe demonstrated that he is good at spotting opportunities and taking action.
1.1 Company Profile
Phab began as a small enterprise selling mobile devices including smartphones, tablets and phablets with a variety of accessories from a stall at a UK shopping mall. The business is owned by Ogonwe and as business grew he expanded into a shopping centre and opened a full-fledged shop. Two more shops were opened in the same way, but then Ogowne turned a different direction by purchasing Networkz, one group with eight outlets expanding his retail business by including the Networkz brand. The purchase of Networkz is a turning point for Phab not only due to the speedy addition of eight new outlets but also because of the new products and services offered. The move is a risky one while at the same time the changes offer a great deal of opportunities.
The new organization of Phab and the company’s business design will offer an entire selection of mobile phone products ranging from broadband networking kits to agreements with the major UK mobile and Wifi carriers. Ogonwe does not think small regardless of his beginning his business in a stall, his business goal is to enter the European market. The addition of Networkz causes an expansion of the reach for Phab from the UK to their new outlets in Norway. Clearly a new warehouse is in order; and Ogonwe is looking at locations in north east England.
In this time of transition, Ogonwe recognizes an opportunity to add ecommerce as B2C without adding an unmanageable amount of overhead costs. Ecommerce means customers can buy items over the Internet and no face-to-face relationships are possible. The ecommerce component of Phab will be different from the shop outlets in terms of selling to customers, delivery of products and organizing the supply chain. The ideal circumstances for Phab will allow customers to feel like they are still dealing with the Phab brand.
Phab’s new retail business plan will include the entire current inventory plus add more choices including business arrangements with major carriers like O2, Everything Everywhere (EE), and Vodaphone. O2 offers 2G, 3G and 4G networks in UK and operates O2 Wifi (O2 2015). EE covers 98 percent of the UK population because they bring customers Orange and T-Mobile (EE 2015). Vodaphone offers broadband and a variety of mobile phones (Vodaphone 2015). All three vendors offer sales and customer service online so the decision to take Phab in the same direction is timely and can turn out to be fabulous for Phab.
OIM was asked to prepare the following report and include the following functions.
Evaluate the available technological and supply chain needs,
Add B2C ecommerce capabilities, and
Locate suitable Open Source software to integrate Phab retail stores and ecommerce functionalities.
1.3 Research Question
At the moment Phab has many outlets offering face-to-face personal service to consumers. The question for the future is ‘Will Phab make customers feel personally important to the company during online transactions?’
2.0Preparing Phab for the Future
Business to Consumer (B2C) enterprises are businesses that sell directly to consumers like online auctions and on bookstores like Amazon.com. B2C applies to Phab, especially to the future. Therefore exploring challenges that other B2C enterprises are facing will give Phab time to prepare. An important difference from face-to-face sales compared to ecommerce B2C is the new supply chain environment (Ta et al. 2015). Researchers show that ecommerce supply chain management in B2C relationships allows an environment of “customer intimacy” with both the business and the customer involved together in value creation (Ta et al. 2015: 133). Ecommerce business enterprises cannot afford to assume their customers are somewhere in a virtual world; businesses need to continue to build positive relationships with their customers. An example of consumers as value co-creators is when they personalize the items or services they purchase from Phab (Ta et al. 2015). Ecommerce allows customers and potential customers to impact some of the decisions made by rating website services, range of items available and giving them a chance to write feedback about their Phab experience.
One of the biggest issues is how to build trust with consumers when no face-to-face interactions take place. Before trust can be developed, potential customers must accept technology as a way to do their shopping. Once technology is accepted user behavior offers significant information about whether or not the individual is likely to buy an item and if they will buy other items in the future (intention to buy) (Venkatesh et al. 2003).
Phab needs to transfer the customer satisfaction that has allowed the growth of the company; the customer satisfaction must be transferred with online services including mobile transactions. Researchers point out that although an online business deal is impersonal on the surface, in reality, the same human behaviors that occur in a sales transaction in a store occur in a sales transaction over the Internet (Schlosser et al. 2006; Kim and Prabhakar 2004). Kim and Prabhakar (2004) studied trust using online banking as an example and found that significant predictors were the three following factors.
Propensity-to-trust of the consumers,
Structural assurances, and
Relational content of word-of-mouth
Figure 1 Trust model factors (Adapted from (Bandura 1977)
In older consumers who do not have experience with technology ‘innovation resistance’ is a problem that is based on distrust (Laukkanen 2007). The three major factors that can be considered in an online ecommerce transaction are the person or potential buyer, the characteristics of the Phab company and brand known to users and the environment of their on line experience (See fig. 1) If a person is naturally trusting, then their trust factor will already be high. The propensity to trust already have when they enter the website indicates what their likely behavior will be (McKnight, Choudrey and Kam 2002b). Not all people have a trusting nature though, and some people are wary and distrustful due to past experience. Some problems potential ecommerce customers of Phab are not related to the company at all. Some consumers have had to deal with losing money or purchasing a low quality product after expecting a high quality product. Other past problems that influence trust are trouble using their credit online or having more charged to their credit card then they expected.
Phab can counter those past bad experiences by offering a cheerful, fun environment on the Phab-Networkz ecommerce sites. The institutional factors are the types of impressions and experience the user has had with Phab or Networkz. Their experience may only be that they like the advertisements or they may have had a good (or bad) customer service experience that highly influence their intent to buy. Venkatesh and Davis (2000) found that essential characteristics of a trust model need to include the potential buyer’s potential of benefit, their expectations that they can buy something they like, and the perceived size of the website and the perceived reputation of the website. Large websites like Amazon.com and Ebay are trusted more than small ones (Venkatesh and Davis 2000). Big brands are more trusted because users have heard the names of the brand and are familiar with the brands. Phab needs to take advantage of their brand recognition and the brand recognition of the items sold through the company.
Behavior when it applies to trust is assumed to be based on ethical beliefs of right and wrong that determines whether a person will act honestly or dishonestly (Banduara 1997).)
Phab present the website in a way so that trust will be easier to gain from potential customers. Some ecommerce websites allow customers to rate the website, the products and the service. The feedback from customers can be added to the site in blog form. A Phab blog that shares information about sales, products and customer feedback is a good way to start building trust. Blogs need to be kept up-to-date and offer interesting blog posts to be successful. Registration onto the website and purchasing products need to be simple.
2.2 Supply Chain Functionality
Research has shown that collaboration is a significant asset in B2C due to the important of innovation and “the ability to develop marketable inventions” (Montero-Romero and Cordobes-Madueno 2015: 1834). The same research demonstrated that openness externally (outside the company borders) and interdepartmentally encourage collaborations that lead to innovation (Montero-Romero and Cordobes-Madueno 2015). Giving customers individualized service and added value from the consumer point of view are two activities that Phab needs to use to their full advantage (Montero-Romero and Cordobes-Madueno 2015). Three major components of the service providing process can be designed so collaboration is a possibility; marketing department, product division and the supply chain (Montero-Romero and Cordobes-Madueno 2015). Features of the business organization that will highly influence the supply chain capabilities are the software applications that are used and networked throughout the Phab organizational system.
2.3 Open Source Option
Open source applications are available for B2C ecommerce enterprises in many different designs with the capability of being tailored to the needs of a company. Compiere is new compared to many other available packages and a main asset is that is available as an Enterprise Resource Planning (ERP) linked with the Cloud. The software looks attractive for Phab because it is used an ERP in retail settings with integrated applications for “supply, storage and inventory” and for management (Montero-Romero and Cordobes-Madueno 2015: 1687). Compiere offers a free ERP trial and warehouse management solutions and customized business services on the Cloud (Compiere 2015). A free version and a paid version of Compiere are available (Compiere 2015). Their website contains links ad downloads for free advice on warehousing functions and other
Business often relies on SWOT analysis to enhance decision-making by taking into account internal and external advantages and disadvantages at any given time in the life of a business. The internal portion of SWOT evaluates the strengths and weakness of the business, its management and business plan and any other relevant information. The second part of the SWOT evaluation takes into the external threats from competitors and opportunities in the market. SWOT is popular because it only takes brain power so no extra costs are added to the business budget. Faarup (2010) explains the popularity of SWOT analysis because it is easy to use, simple and intuitive. Discussions about SWOT are easy to initiate and understand (Faarup 2010). The analysis is flexible because any part of the business process can be applied (Faarup 2010). Finally the analysis offers a way to integrate diverse types of information in a way that makes sense so a holistic picture results (Faarup 2010). SWOT analysis helps “minimize and avoid threats and to maximize and exploit opportunities” (Hillson and Murray-Webster 2007: 25).
Phab is starting the ‘new Phab’ including the purchased Networkz and with ecommerce, but the company is not starting from zero. Internal strengths and weaknesses are focused on Phab and the internal workings of the company. (See table 1) Phab has been building up a positive reputation for several years already, now Ogowne and his employees need to take full advantage of their positive reputation for service and a positive reputation for their brand and continue to make improvements.
External opportunities are available for Ogowne including that he may eventually make his dream come true of breaking into the European market place and really make his mark. (See table 2) The SWOT analysis shows a longer list under threats than under the side with opportunities. Many challenges are going to face Ogowne as he integrates Networkz into his existing business and then transitions a portion of his business into ecommerce. The threats are overwhelming in some instances, like the completion from other companies. Another concern is the competition between carriers, even the carriers Phab is going to add to the ecommerce component of the business are competing against each other. Another problem with the carriers is their sometime spotty customer service record (EE 2015). Worries about making the ecommerce system secure and ensure privacy for all the customers are justified and that kind of threat will be continual.
On the other hand, opportunities are available too. Phab now has opportunity to gain customers from the UK, Norway and neighboring countries. The warehouse is available to hold consumer items that will be sold over the website. At some point Ogowne will want to decide whether renting a warehouse is advantageous as buying a warehouse. Many costs will be lower and reduced overhead is expected from the ecommerce part of the business. In some ways the expansion of Phab is like an experiment to start better communication with another country; Norwegian is a difficult language but with translations on the website potential customers should have no problems.
Risks are a big part of the change Phab is making, because there is uncertainty about many factors (Hillson 2015). Models for Internet adoption by small enterprises are a good reference (Mehrtens et al. 2001). Interoperability is important to implement and maintain between all the departments, consumers, Networks and Phab (Rani 2014)More open source and free software for ERP and accounting are available online than I ever though could be accessed (Montero-Romero and Cordobes-Madueno 2015) Consumers can be involved by making ratings on services or delivery times (Legris et al. 2003). In other words, Phab is facing a big challenge with a lot of work ahead but the pay off can be worthwhile down the road. Ogowne is taking a risk to meet his dreams and this merger with Networkz and transition into ecommerce might make all the difference.
Carry out SWOT assessments regularly to evaluate any factors that are not obvious otherwise.
Hire a consulting firm to run a trust model about Phab and learn how to can customer trust and loyalty
Hire a highly qualified IT chief of staff to oversee networks and keep all the technology running smoothly
Seriously look into the open source Compiere software applications for ERP
Ogowne developed much strength in his business since the first stall at a mall in the UK. He is an experienced business owner ready to take on new challenges, and his high motivation will help make solving problems that he meets easier to solve. The past business experiences were a great education and a lot of lessons were learned. Now it is time to remain open-minded and optimistic. An important factor is a willingness to adapt to changes as the company goes through this transition to ecommerce. A willingness to try new management strategies will also be valuable. Monitoring the process put into place and reviewing the data can help the company succeed more quickly. Under no circumstances can Ogowne afford to take ecommerce customers for granted. Relationships with online customers are as important as face-to-face relationships with customers who shop in a store.
4. PART 2
FORUM FINAL ASSESSMENT
Marketing needs to be done differently when mobile devices and monthly or annual subscriptions are the consumer than (2015)for bicycles or cars (Faarup 2010). Customer satisfaction is the number one priority when selling mobiles and subscriptions because the competition is so high and customers change their subscription packages often. Learning about the psychology of online customer who make purchases is important (San Martín 2012) Innovation is good but it leads to uncertainty (Rogers 1995). People who have used IT for some time are more likely to be comfortable with ecommerce (Taylor and Todd 1995) Articles for web security for privacy, safe payments and other topics for ecommerce are at website for a Web Security Interest Group (2015) TechTarget is a great resource for all topics about websites and ecommerce (TechTarget 2015). TechTarget links to other websites with technology news like the HP Enterprise Solutions for customers and up-to-date news about customer satisfaction and measuring ecommerce customer behaviors.
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