E-Business Versus Traditional Retailing

E-Business Versus Traditional RetailingAbstractAs the net access becomes widespread, some(prenominal)(prenominal) fe bes and consumers orbitwide used web as a main tool for marketing and shop. As a result, the impact on retailers and consumers be relatively significant with the rise of the E- disdain. This project looks into the advantages and disadvantages of E-business and traditional retail stores, and then by comparing the two different business modes concludes an integrated business, which is to a greater extent adapted by public. Further, an analysis of amazon.com and Wal-Mart as well lose the notion that multi-channel retail seems to be more satisfy the need and want of retailer and consumers.IntroductionThe origin of e-business was 20 years ago. In the 1990s, the definition of e-business was used by wholeness of the first supplier, IBM, in its advertising campaign. It was defined as the transformation of key business processes through the use of Internet technologi es. (Li ,20079) Today, the meaning of e-business is much broader. According to Cunningham (2002) E-business refers to the transactions, processes, and systems that support the act of doing business through electronic networks.Businesses in industries much(prenominal) as banks, automobiles, travel, and many opposites are undergoing a significant transformation. In the past, traditional retail stores were throttle by geography, location, and size on the new(prenominal) hands, in the age of information, these are not important anymore. Although the Internet has a great influence on the step-up of E-retail, there is one thing of aid, it as well presents with terror and opportunity.The aim of this project is to compare and contrast E-Business and traditional business in retailing across a variety of criteria from customers and retailers perspectives, and then to analyze the two biggest retailers in the world in terms of E-retailer and personal retailer and then conclude which bu siness is better adapted to e-commerce. Firstly, the project will consider advantages and disadvantages of E-business from retailers and consumers view, then analyses Amazon.com and Wal-Mart by the means of SWOT analysis (which can be defined as Strengths, Weakness, Opportunities, and Threats) and finally will work out future retail developments.E-Business Versus Traditional RetailingThere are numerous opportunities for businesses to reach new markets on the Internet across nations, freeze off costs, and relationship-build with customers.For more or little businesses, enterprise a virtual retail seems like to be filled with opportunities as well as challenges. The rest of this project will address these opportunities and challenges.The opportunities in E-Business market placeThere are a number of advantages for e-business. First, with regard to the location, it is clear that online business cede the opportunity to access farther than physical stores. According to Dennis and H arris (2002), the trine most important elements in retail are location, location and location. Without constraint on geography, the Internet has provided the e-retailer with a store in all home all everyplace the world. Almost every product and serve well on the Internet has an first step to be sold globally. In other words, e-business sells equally well to anywhere in the country and even overseas, compared to traditional stores. Since building a business online does not need to lease a building on a specific place, which saves a great count of money on rent. Compared to the existing stores, running a business need to situate on one street, town and country, which is the most dearly-won part due to paying high-priced rent monthly as well as tax. In addition to location, another factor needs to bushel is size. In the past, size of stores was principal when competing with other stores. A large store has the capacity to stock as many products as it can however, there is a li mitation of quantity for those small stores. Thanks to the invention of the Internet, even a small e-business has the chance to vie with large traditional stores.Secondly, as far as the number of consumers and opening time are concerned, online business can reach a larger number of consumers than the traditional stores. Without boundary on the Internet, everyone in the world have equal chances get online. Especially for overseas shoppers, could easily reach web sites in which they are interested. Additionally, with fewer barriers in both time and limitation of consumers, online businesses have a better opportunity to market their product on the Internet. In other words, the problems of time difference in the midst of nations and nations have been solved. In contrary, it is operose for traditional stores to sell further, when considering the limitation of time and geography. In the past few existing stores are opened 24 hours a day, 365 days a year. However, since online business is on the web all the time, consumers with different shopping habits do not have to worry most the opening and closing hours of physical stores.There are many other advantages regarding to online business. Usually, building a traditional store need to concern the expenditure of ongoing costs, including renting, tax, electricity. In addition, for those traditional stores reaching consumers either baptismal font to face or by telephone, have to pay for a significant additional cost. On the other hand, for those businesses that open e-shops could save a great deal of money on the wages costs of face to face salespeople and the costs of premises. Furthermore, a virtual store whitethorn save budget on all the other needless expenses, such as additional training requirements. Many studies have shown that many online stores in the existing marketing reservation a big wage on account of reduced costs and increased sales. Furthermore,The Challenges in E-Business MarketGenerally babble outing, although there are many advantages for e-business, considering near disadvantages is also needed. First of all, online business is less powerful than face-to-face selling in many ways. In the traditional stores, sales representative with high skill of convincing shopping can be a part of modestnesss influencing consumers to shop. For example, when going shopping we are always calorie-free to be persuaded by people close to us who support for purchasing. On the other hands, due to fewer impulse of salesperson online, it is easier to say no to a computer. Consumers are totally decide buy or not to buy. Moreover, e-Selling is also less powerful than face-to -face selling. For example, for certain products, it is difficulties with products not sold by touch, feel, and smell. E-businesses are lack of theses advantageous positions.A further disadvantage is that consumers have a perception of lower prices online. They expect online prices to be lower than prices in traditiona l stores. This puts pressure on margins for online business, and can lead to shoppers expecting consistent how prices in store. Looking for low prices online is one of study factors affecting consumers to shop on the Internet. However, such a perception across all product categories may be unwarranted. Only in some areas such as airline tickets and books can find much lower prices on the Internet. Also, there is a limitation for selling products online. Not everything could be selling on the Internet, such as daily products and fragile items, which limit consumers product selection.In addition, cost in Internet customer contact and maintaining technology could be expensive. Although a beneficial thing for e-business is save the costs of wages of salesperson and rent, the system requires regular maintenance to ensure customer satisfaction. Compared with traditional stores, they do not have to pay the extra maintenance fee on system due to most of they are lack a sophisticated comput er system.Finally, after-care can be difficult, especially if the shopper is overseas. It is always not easy to collect those unwanted products which have been return by online shoppers. When ever any of products have technique problems, it is a disconcert to return it back to e-shop, especially for those overseas customers.Because not only consumers require to pay the delivery fee but also the online shop, which is a burden for both consumers and e-retailer.Drivers of Consumers AdoptionThere are considercapable potential benefits for consumers to shop online. The main reason for consumers to buy online is to save money. In some given products categories, online prices are significantly cheaper than existing stores. On the Internet, shoppers could always get good value of bargains. Furthermore, consumers could also save the cost of traveling to the existing stores, the cost of finding a position space, parking, walking through the mall to the stores, finding the item in the store , waiting in line at the checkout, Internet shopping provides in-home access 24 hours a day, seven days a week, which enhances convenience by minimizing many of these costs.The other advantage for online shopping is the convenience of shopping at any time of day. On the Internet, the stores are opened 24 hours a day, 365 days a year. Consumers could never worry about missing the open hours of the exiting stores. The other good thing about e-shopping is that the webs offer older consumers, those with disabilities, and those live in remote areas to access to information and serve. The other motivation for people to accept shopping online is that consumers could make a bribe at home instead of leaving from house. In addition to convenience, consumers could not only save more time on the travel time, but also save the time on walking through all the stores to find what they want, especially when at the height of the holiday. Whether on booking a ticket for an event, purchasing a book, or registering and paying for a fee, the Internet saves time.With regard to breadth and depth of products, consumers could find a great variety of products on the Internet than in any one single store or mall. Rare items can be purchase easily by simply click a setback the web sites can take shoppers from one online store to another. The benefit of online shopping is even greater when purchasing foreign-made products.Many traditional businesses will shift a significant part of their operations and selling to the Internet. Growth in the consumer segment is likely to be slower. Security concerns regarding online transactions and the difficulty of modifying consumer behavior can apologise the slower pace of growth in the business-to-consumer marketplace.Barriers to Consumers AdoptionAlthough shopping online can by easy, there are a variety of reasons related to security deters online shoppers from making a purchase. Dennis indicated that Security fears as the number one barrier to m ore consumers shopping online (Dennis et al. 2002). Safety of credit card and other private information are key issues that discourage many consumers e-shopping. A study sponsored by the Better business Bureaus Online found that over 80 percent of users had some concern about security online. (Better Business bureaus, 2005) Most web sites today require users to create personal accounts and provide a lot of personal information. Some consumers are afraid(p) that personal information may be broken in by website hackers or be access by unauthorized organization moreover, personal accounts provided to online vendors may have a risk to be rejected due to service attacks and human error. Therefore, security of credit card information is quite negative for online consumer.The unfitness to talk to a live salesperson is another concern for consumers. Even though the Internet brings the world into our homes, customer may still wish to speak to someone to seek advice on the product when shoppi ng online. Also, for older consumers, and those who are relatively new to Internet shopping, exceptionally need a live salesperson to get information they are interested in. However, many of online business have not provided customer service for online shoppers reached by phone, live chat. A report by Data Monitor (www.datamonitor.com) found that only 8 percent of the over 60000 call centers in the US were Web-enabled, and only 1 percent of Web sites shortly offer live customer assistance (Venkat, 2001307).Additionally, the difficulty in returning products is major reason for a large number of consumers not shopping online. BizRate.com, a company that measures post-purchase satisfaction found that in a survey of 9800 consumers, 89 percent said that return policies influence their decision to purchase online. (ibid 2001304) Above all, the reason why returns sometimes are difficult may say is because of the lack of face to face negotiations.In addition to returning, the cost of shi pping is another concern for consumers. A survey by Greenfield Online revealed that 32percent of consumers surveyed mentioned high shipping costs at the reason for not shopping online (Greenfield, 2002)Most consumers perceive online prices to be lower than prices in conventional stores. It is true however, sometimes shipping costs can negate other price advantages. Although various products sell at a discount online, when adding into the shipping rate, the consumer may end up paying more than traditional store.Many consumers are still uneasy with online shopping because they prefer to see and touch the goods. Plus, some products are difficult to buy on the Internet.Take clothing for example, it is impossible for online shoppers to feel the fabric. When buying clothes, most people still like to try them on. Online shopping provides a lower sensory stimulation (through smell, touch, music, in-store decorations, etc.) than does offline shopping. (Fernie, J. 2005106). People incline to use five senses in developing beliefs and bias towards various products. However, on the Internet, only three of these senses can be used.Case Study of Amazon.com and Wal-MartThere are a range of criteria of SWOT Analysis about Amazon.com and Wal-Mart, and this paper will only revolve around on the areas related to the above sections establish on current developments and future developments in how e-retail and traditional retail adapt to e-commerce.SWOT Analysis of Amazon.comWith regards to strengths, according to Harris and Dennis (2002258), Amazon as a US-based multinational e-business company, is the biggest online retailer all over the world. Over the years since it opened its online bookstore in 1995, has established a customer around 30 million people. Besides books, now has launched various products including electronics, computer software, toys, video games and home improvements, apparel, furniture, and food. In addition, Amazon has created different website pages in the US A, the UK, Europe and Far East. It also provides global shipping to certain countries for some of its products.The major weakness for the company is that it heavily depends on external delivery companies, which may tackle a major problem. Due to the rising fuel and vehicle taxation, a potential increase costs should be concerned. As a consequence, the increasing shipping fee may lead consumers rather to visit a local retailer than purchasing online.It is realistic that the rise of Amazon.com has had a profound influence on virtually every sector of business in the world. There are many opportunities for Amazon.com to expand further. One of the priorities is to open exiting stores to solve the disadvantages of E-business.As far as threats are concerned, it is easy to attract competition on the Internet.Since Amazon.com markets similar products as physical retail, it pose a negative impact on Amazon.com within the price competition between e-business and traditional stores.SWOT Analy sis of Wal-MartWal-Mart is the largest retailer in the world. It is famous for its convenienceand a wide range of products all in one store. The retailing whale has annual revenues of over $ 100 billion. According to Grant (2002) the Fortune 500 ranking list, published in 2002, showed that Wal-Mart was the worlds largest public corporation by revenue. These years, Wal-mart has experienced global expansion to 3,600 stores and more than 750,000employees worldwide.Although Wal-Mart stores, Inc. has expanded to the global market, they have a presence in a relatively small number of countries Worldwide. They only focus on the market in the UK, but their competitors are grown in the other countries. Besides, Wal-Mart has a risk in the location of their stores.Since Wal-Mart is the leading physical retailer in the USA, it has a magnificent opportunity to become the largest retailer in the world. Therefore, international expansion will be a huge opportunity for Wal-Mart. Although the store s are currently only trade in relatively few overseas there are many opportunities for future business in expanding consumer markets online.A major threat to Wal-Mart is the intense price competition with online business. Being a leading retailer also represents being the target of competition locally and globally. How to compete with e-retail in the international market will be a major question for Wal-Mart.EvaluationFrom the SWOT Analysis, it is clear that both mazon.com and Wal-mart have itsspecific strengths and weaknesses. This evaluation concluded that, based on thecriteria mentioned above, the e-retail has competitive advantages over e-retailstores while physical retail stores have advantages over e-retail.With regard to disadvantages, online retail faces many difficulties compared to existing stores. For online retailers, the major challenges are face-to-face interaction and immediate delivery, and this is an area where traditional stores have an advantage. On the other hand , online retail also affects opportunities of traditional retail to certain extents. Take location and opening hour, for example, E-retail outweighs traditional retail stores.Many consumers are willing to select products on the Internet, but would not want to wait for delivery. Due to the need of consumers, it stimulated the flourish of multi-channel retail (physical stores plus e-retail) becoming dominant, which has both e-retail and physical retail stores components, provides consumers with a higher degree of satisfaction. Thus, more and more e-shoppers find online shopping and in-store pickup more attractive than pure E-railing and traditional retail stores. According to Harris and Dennis (2002258), the proportion of e-shoppers preferring to shop from e-sites run by physical retail stores rather than Internet-only is soaring 9 up from 22 percent in October 2000 to 33 percent in April 2001.As a result, many E- businesses are attempted to establish physical stores, and just as tra ditional stores are also creating online business. That competition is not about E-business versus traditional business. Gandy (2000122) claim Its about integrating both-pulling together the best of what is available through the physical distribution with the best of the Web world. As traditional companies begin to provide multi-channel services to combine online business and it would make sense for pure online businesses to offer services of physical stores. The example of Amazon.com and Wal-mart also support it. According to The Sunday Times, Amazon.com had planed to open existing stores to support its growing website. (Mashable, 2009) Similarly, Wal-Mart stores Inc. has continually increased the integration of its physical stores with its Internet business, in order to respond with the growing web-based stores. (Reuven, 2000)ConclusionBoth e-business and traditional stores has its advantages and disadvantages in many criteria. Physical stores has the edge on criteria such as afte r-sell service and face-to-face selling, while e-business is beneficial on the wide-range of products,time saving and convenience. The project presented a comparative business channel to evaluate the two types of retails and concluded that whether e-retail or traditional retail stores is not in perfection, multi-channel retail stores which combine the best of e-retail and traditional retail may be more adaptable to the business purlieu in the future. The analysis of Amazon.com and Wal-Mart has also been highlighted, particularly with regard to integrating e-retail with existing physical stores. These can be summarized as multi-channel retail is becoming a dominant.In 1999, Andy Grove, Chairman and CEO of Intel, once have noted that all companies will be Internet companies or they will be dead. (Venkat, 2001)However, even though e-business is able to provide consumer greater service and choice in a variety of the product, the consumers adoption toward the Internet need to be concern ed. It should be noted that a lucubrate examination of multi-channel retail lies outside the areas of this project and further work could be done in this area, which would be of particular interest to those business involved in this area.