SUBMISSION-I

(Semester – I)

E-SUPPLY CHAIN MANAGEMENT

Establishing an E-commerce Business Model

NAME – Manisha Gupta

REGISTRATION NUMBER – 202104939

PGCM (DM)-2021

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 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Introduction:
The Internet has changed the way the world does business. Buyers and suppliers around the
globe can now network with the click of a mouse. Information — from terms and conditions of
service to specifications to complete, in-depth product catalogues — can be accessed in real-
time. And electronic commerce is affordable for even the smallest home office.

There are tremendous advantages in doing business on the Internet. It can:

 Drastically increase sales

One of the greatest advantages of doing business on the Web is that it allows businesses to save
money and time. For example, the Internet can considerably reduce the costs associated with
customer service, says F.C. Brigham, director of inbound marketing for Tempe, Arizona
Insight, and a national keynote speaker on e-commerce topics. But how do you get to this
"Promised Land"? It's not enough to use your current business model on the Web. Businesses
must rethink the issues of marketing, supply chain management, inventory and customer
support, then formulate a Web-oriented business plan. It's a new way of doing business. In
essence, your existing business model has to be adapted to meet the technological requirements
and advantages of this new landscape.

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Establishing an E-commerce Business Model:

According to Anthony Cospito, founder and CEO of Lynn, Mass. Power Generation, Inc., a
provider of strategic marketing and e-commerce consulting to high growth, Web focused
organizations, the core of any e-commerce business model is built on the following five areas:

Service:

Ask Nordstrom executives how important service is to their business, and you'll get an earful,
because it is truly the key to the company's success. For that matter, all good retailers — and
retailers — realize the critical role that quality customer service plays in their success.

However, there's a strong dichotomy between what the brick-and-mortar retailer knows about
customer service and what the online retailer knows. Many e-commerce sites view transactions

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as technical processes and not as interactions between people. As more companies realize that
the buying experience and what follows after the sale are just as important — if not more so —
as technology, e-commerce sites will reach new highs in sales and popularity. Take
Amazon.com, for example: With personalized recommendations, online and off-line customer
service, and strong postal follow up, they've created one of the most successful e-commerce
sites on the Web.

Selection:

As with any off-line experience, e-retailers need to offer customers the right mix and quantity
of products. On the Web, this equates to building a site with personalization and partnering with
suppliers that can scale. Streamline.com is a good example of both extensive selection and
targeted offerings. Streamline's food-shopping service offers the same amount of product
selection you would find in a brick-and-mortar environment. Through personalization, the site
also offers products that shoppers are more likely to buy based on previous clickstreams and
purchase behaviour. Streamline also allows customers to compare nutritional information with
the click of a button, creating a positive user experience that is based on real-world shopper
activities.

Emotion:

Emotion speaks to the overall user experience: How do customers feel as they are navigating
the site? Do they feel as if they are taking a leisurely stroll through one of their favorite stores?
Or, do they feel like they are confused by the shopping experience? It's important for the type
of products and target audience to match the design and level of intimacy.

Forrester Research says that 46 percent of Web users currently research purchases online, and
that 14 percent will conduct transactions online by the year 2000. This behaviour change will
put e-marketers closer to a consumer's purchase decision than traditional media. This also
brings them closer to the "emotional three feet" that manufacturers have dealt with for years,
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which is defined as the short distance between a consumer buying your product instead of the
competitor's. Today, that emotional three feet isn't just a movement to the left or right on the
supermarket shelf, but a simple click of a mouse. Because of this, brand loyalty and user
experiences need to be that much stronger.

Efficiency:

When it comes to efficiency, think of the express lane in a grocery store. Can you imagine what
would happen if every store had 1,000 lanes and no waiting? It is possible online, where
customers want to move through the transaction process as quickly and as painlessly as
possible. This means not having to input the same information twice in one visit; it means
offering one-click ordering; it means tying inventory into the real-time database systems so
customers can check quickly to see if a product can be shipped immediately. Efficiency is
especially important now, in the initial stage of e-commerce, as the majority of consumers are
purchasing for the first time. The goal is to have them come away from the transaction thinking,
hey, that wasn't so bad, and then telling their friends they've just made a purchase on your site.

Cost:

While cost is always important, there is a reason that it is last on this list — at least for now.
Saving money is not one of the top reasons why consumers are currently shopping on the Web.
The most important aspect is convenience, and if your site is extremely convenient, consumers
will be willing to pay a little more for your products. Of course, as online competition heats up,
price will become more important as the majority of products become commodities. For now,
the bottom line of the cost issue is this: Charge as little as possible, but still be able to maximize
cash flow enough to fund the technical improvements on the back end to deliver a powerful and
convenient user experience.

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When You Already Have a Business:

Existing companies are turning to the Web as an additional low-cost way to reach customers.
But since their businesses are not "Web-centric," they must develop a strategy to determine
what role the Web will play. Does the Web completely eliminate the need for brick-and-mortar
locations? Or does the Web simply expand market share possibilities? As an example, a
specialty Greek deli in Boston has a Web site that features their best-selling products. The site
is promoted in the store, so that when tourists come in and fall in love with their breads and
cheeses, they can continue to buy them whether they live in Oregon or Oshkosh.

Starting From Scratch:

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If your company is originating on the Web, it's not alone. Each day, thousands of entrepreneurs
launch successful, viable business entities in cyberspace. Whether they're working from home
or running their operations from an office or warehouse, it makes no difference to the
consumer. Power Generation, Inc. developed the following Venture Capital Acid Test TM to
assist in analyzing the viability of an e-commerce concept:

 Give an example of where this model has worked with this target audience.
 What are the sizes of your nearest three competitors?
 What competitors have failed in this space?
 Are you doing something that has never been done?
 What is your unfair advantage?
 What contracts do you have in place? How much are they worth?
 What is your current valuation?
 How do you know people want this product/service?
 What is your personal background?
 What experience does your executive team bring to the table?
 How many employees do you have now? Next year?
 What is your customer acquisition costs?
 How much do you depend on alliances?
 What are you doing to drive traffic to your site?
 What are you doing to attract business?
 What is the lifetime value of a customer?
 How will you build the brand?
 How defendable is your market position?
 Why are you better?
 Explain why your model will scale
 What could cripple your business?

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Defining Your Online Niche:

Finding your business' unique niche in, say, a small-town atmosphere, is relatively easy. It
works like this: A new business owner simply discovers what's missing in their town — a pizza
place, for example — then builds one. But online, nearly every business in the world is
represented, and with a simple mouse click, consumers can get their hands on products and
services from across the world, not just in their backyards. When Royal P. Farros, CEO of
iPrint in Redwood City, Calif., sat down to figure out what his company's niche would be, he
thought of all of the people in print shops across the country, trying to figure out what their
business cards would really look like when delivered. The traditional process forced them to
create visual items in a non-visual way, he says. He knew there had to be a better way. Because
pictures can be digitized, they can be sent over the Internet — a more efficient means of
distribution for companies producing corporate materials, often under tight deadline pressures.
At the same time, Farros also discovered his firm's core competency: It allows users to see
exactly what they're creating and proof it right on the spot.

Aligning With Reliable Suppliers:

All e-commerce sites that rely on vendors to supply their products must give strong
consideration to buying from the best possible suppliers in each product category. Issues like
shipping times, condition of products and "best price" all come into play when a company
chooses to act as distributor, and it is vital that vendors understand the importance of keeping
customers happy — especially online, where a simple click can send them to another, similar
site on the Web. An example of an online company that chooses its suppliers with care is
GreatFood.com. Founded in 1996, the Seattle firm has been recognized nationally for its high
quality, diverse product offering, as well as ease of use and a secure online-ordering system.
The Biz Rate Guide ranked the site as the top gourmet food site, as well as one of the Top 25
shopping sites. The company scours the world and fancy food shows looking for unique "best

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of category" products, which are then put through rigorous taste testing prior to being sold on
the site.

Adding Value:

"Adding value" is a term being used across all industries. It simply means giving customers
more than just a product in a box, whether it's through convenient ordering systems, excellent
product support or money back guarantees. For example, elimination of the middleman — a
phenomenon that is fully utilized through a direct selling channel like the Internet — can add
value in terms of money and time (delivery) savings. "Middlemen will need to have a keen
understanding of the shifts taking place in how technology affects their role," says Cospito.
"Those who 'get it' will find their role changing as they add value in new ways. Those who hide
their head in the sand will be disintermediated in a heartbeat."

Convenience Is King:

Today, an increasing number of customers are being lured by the convenience of shopping
online. And while products seem like the most logical attraction for consumers who want to
shop from the comfort of their own homes, service-oriented companies are also benefiting from
the e-commerce boom. Whether a firm is involved in selling health care, legal or graphic design
services, the Internet serves as a viable sales channel, as well as a great way to "get the word
out" about a company.

Thinking Globally:

The Internet forces companies to think globally because, unlike the real world of brick-and-
mortar stores, sites online are inevitably going to attract international customers. At that point,
companies have to either branch out with a site that allows customers worldwide to conduct
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business with them, or they must decide to stay focused on domestic business. Either way,
Brigham advises making the decision up front and clearly spelling out what your intentions are
in this realm.

Designing a Site That Drives Traffic to Your Door:

Some businesses looking to expand into e-commerce get so dazzled by the potential that they
forget the basics. Even the smallest site on the Web demands an advanced business, marketing
and advertising plan to attract visitors. Sites need regular maintenance and fresh content to keep
customers coming back. If you don't have a site that makes people want to visit it, then you
won't have repeat visitors — or repeat business.

Where to Go for Help:

Company managers and owners who are looking for help in getting started on the Web would
be wise to take a peek at what the competition is already doing. Cospito also advises going to
Forrester Research's site to review information on successful strategies to launch Web-based
initiatives. Check out the industry publications, like E-commerce Times, Business 2.0 and The
Industry Standard, and vendor sites, like Open Market, ICOMS and Cybercast, which are
helpful in general terms of understanding the concepts (but are biased toward their own
products, he warns).

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CONCLUSION:

New technology is beginning to turn the Web into the dynamic selling environment that experts
have been buzzing about since it first emerged. Both start-ups and existing businesses of all
sizes are launching their e-commerce ventures in droves to cash in on the power of the virtual
selling machine.

But before you attempt to take the e-commerce challenge, you must first create a business
model that will work in cyberspace. Then, use the tools in this IBT to determine your best
online strategy, and be sure to consider important points like how you will add value to your
products and services; whether or not you're ready to sell globally; how you will design an
attractive, user-friendly site; and how you will create "sticky" customers who keep coming back
for more.

Overall, when it comes to choosing an effective business model, the bottom line is that it must
be based on providing a great shopping experience for the customer. "E-commerce is all about
the customer experience," says Brigham. "If a company is making it difficult for a customer to
conduct a transaction, then it doesn't matter what kind of business model the company has or
exactly what company it is, I don't think that customer is going to come back. E-commerce is
really all about setting up an extremely pleasurable online experience."

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