Business Strategy

CIS8100 Assignment 2 E-commerce Business Strategy Report & Prototype Website

Letter of Transmittal

The key purpose of this report is to develop the understanding of the strategies, e-business model concept and cloud computing aspects for an e-commerce business named as OpenSourceMatters.org (OSM).
From this report, it is found that OSM needs to adopt differentiation e-commerce strategy to get competitive advantage in the market. At the same time B2B model will be useful to generate revenues through commission and per sales basis on its site. In addition, cloud computing can be beneficial for the company to bring flexibility and continuity in the business and reduce the cost of operations.
The focus on the proposed e-commerce strategy and business model and cloud computing can be effective for the company to establish its business. 

Executive Summary

This report is aimed to develop understanding of strategies, business model and significance of technology like cloud computing for an e-commerce business namely OSM. From this report, it is analyzed that differentiation strategy can be suitable for OSM to develop competitive advantage in the highly competitive e-commerce retail market. At the same time, the use B2B e-commerce business model will be appropriate for the firm to generate revenue by commission and per sales basis on its site. It is also identified that the use cloud computing can be beneficial for bringing flexibility and continuity in the business and reduce the cost of operations. On the basis of this, it can also be recommended that firm should be customer-focused and provide seasonal offers and navigate the customers’ preferences and requirements to provide customized solutions.

Introduction

This report provides information on e-commerce business strategy for OSM site to provide goods and services to the customers effectively. In addition, it also discusses the use of e-commerce business model in perspective of value proposition, revenue generation and competitive advantage and cloud computing in relation to the e-commerce site. It also explains the benefits and challenges of cloud computing services for the firm.

Section 1 – E-commerce Business Strategy

A business strategy ensures the long-term success by setting plans. For the proposed online retail business, differentiation can be an effective business strategy to operate this business successfully. There is high competition in online retail business market as online firms like Amazon, The Home Depot, Best Buy, Alibaba Group, ASOS, eBay, etc. that are competing to each other. However, e-Bay and Amazon are the major players of the e-commerce industry. These firms provide products with some differentiation based on fees, payment, and customer engagement (Nanehkaran, 2013). In such market, it is difficult for new entrants to enter in the industry due to switching costs, reputation effects, and economies of scale.

In such highly competitive market, it is required for OSM to consider the differentiation strategy by focusing on different attributes including customer service, product varieties and customer purchasing experience (Solaymani et al., 2012). For this, it will be crucial to decide which type of services can appeal the customers. In addition, through this strategy, the firm may focus on same day delivery and provide effective packaging, personalization and shipping options. It needs to respond to customers’ mails on time, provide a live chat feature and deliver the right product in the right condition without delays (Mohapatra, 2013).

OSM may provide different types of products and services including books, baby products, apparel, consumer electronics, beauty products, health and personal care products, kitchen items, grocery, jewellery and watches, musical instruments, toys and games, music CDs and automotive products. In terms of unique value, the firm may focus on better customer services as free delivery and product returns with ease and comfort can be considered to influence the buying behaviour of the customers. Apart from this, OSM can respond the inquiries and mails of the customers promptly by providing them solutions. Customer service process can be distinguished by offering instant solutions to the customers (Laudon and Traver, 2013). Automation can be considered in Receiving Orders, Processing an Order in the Warehouse and Shipping to automatically capture, track and ship customer sales orders.

Personalized and customized shopping experience can be generated by the company through meeting of the specific needs and preferences of the customers. Personal information of the customers can be analysed to personalise their shopping. Through proper analysis of customers’ personal information, OSM can provide the products as per their buying patterns and budget level, interests, buying behavior, demographics and psychographics (Da Costa, 2016). Every element of website page can be personalized as per account details, shopping history and potential shopping needs of the customer. For instance, it may provide personal hello and link to the customer account and offer my wish list and location site (Qin et al., 2014).

In addition, Appstore for android may also be provided to generate the personalized and customized purchasing experience by visiting the mobile site. OSM can customize how the customer can navigate an e-commerce website. This means the firm can use the browsing behaviour of the users across their devices.  It may customize the features of the products when the customers run a search or filter (Chaffey, 2015). It may be helpful for the customers to see only what they want to see. It increases the comfort level of the customers to search any product on the website of the firm and also enhances their loyalty.

Section 2 – E-commerce Business Model

The e-commerce business model is a Business-to-Customer (B2C) model that helps in e-commerce businesses to reach customers easily.

Value Proposition – Value proposition is a unique combination of products and services that helps in adding the value to the customers by providing solution to the problems that customer usually face. In simple words, value proposition are the products and services that help in creating or developing the value for a specific customer segment.  There are different key elements that help in providing value to the customers such as newness, design, performance, customization, price of the products and services, brand status and many more (Wang et al., 2016). These all elements plays a significant role in targeting a customers by providing them with an innovative and unique design product and services so that customers demand get fulfilled on time.

In concern to this, OpenSourceMatters.org (OSM) also focuses on meeting the customer demands successfully for which company identifies the customer’s needs and demands so that customers are provided with the products on time and they achieve high satisfaction. The company will able to attain the value proposition by providing customers services at a cheap rate with an effective and customized product (Osterwalder et al., 2014). There are various types of products and services like body care, baby care products, retail products and many more that help in adding value to the business performance.

In addition to this, designing a value proposition for any company is very challenging task because while designing, there is need to concentrate and consider the customer demands and requirements so that value proposition can be utilized. According to Chiu et al., (2014) for achieving value proposition, it is necessary to understand the customers by creating a profile of customers which include customer’s needs, demands and problems they face. The use of this business model helps an organization to sustain in the competitive market by selling the products and services which meets the customer’s demands and needs efficiently.

Revenue Model

Revenue model is related to generation of profit from the sales. The OpenSourceMatters.org (OSM) earns revenue by attracting large numbers of sellers who sell their products and services to the customers through this e-commerce site. In concern to this, Turban et al., (2017) clearly explained that a company can attain high profit by increasing the sales and targeting customers. The OpenSourceMatters.org (OSM) can earn high revenue and high return on investment by meeting the customer’s demands and fulfilling their satisfaction level. For every e-commerce organization, it is very important that they earn some revenue in order to run a business smoothly for which organizations need to adopt effective strategies and model efficiently and effectively.

In e-commerce business, it is very important that they focus on attaining more return on investment by investing amount in the business and economy growth. In this business, OpenSourceMatters.org (OSM) allows other sellers to sell their products and services on their e-commerce platform for which it will change some profit ratio or per sales charges basis like a commission. This will lead organization to earn profit, revenue and positive return on investment. On the other hand, Chaffey (2015) also stated that by marketing a products and services properly, company can easily generate the revenue and profit by focusing on selling a products to customer base efficiently. There are different sources in e-commerce platforms that help the organization like OpenSourceMatters.org (OSM) in investing their amount in best way so that long term benefits can be achieved successfully. Thus, revenue model helps OpenSourceMatters.org (OSM) to evaluate the e-commerce business platform efficiently in order to determine the earnings and advantages of ROI in advance for a long term period.

Competitive Advantage

For achieving a competitive advantage, it is very necessary that company meet all customers needs and demands on time so that company can attain a favorable business position in the market easily. The special advantage that OpenSourceMatters.org (OSM) brought in the market to the customer is that it provides customers to easy access to their sites and buys required products and services that meet their demand. The advantage that company enjoys is related to increase in the sales and also increasing in efficiency the employees as well as help in improving public services efficiently and effectively.

Moreover, Turban et al., (2016) also explained that in B2C business model, an organization can achieve a competitive advantage by developing a market strategy that help organization to promote its products and services at the marketplace in order to attract & target the customers to a large extent. For attaining a competitive advantage, it is clearly explained that organization need to focus on specific groups and products that provide an advantage to the customers in terms of satisfying needs and demands. Laudon and Traver (2013) also stated that in B2C business model, company focuses on final consumers who are also known as customers in order to sales and market the products efficiently in front of them.

At the same time, B2C business model is widely used by e-commerce companies as strategy because this model clearly defines the motive and purpose of establishing a business in the highly competitive market. The other competitive advantage that e-commerce business achieves is the increase in competitiveness in a competitive market and this creates huge impact on the business performance and practices in a positive manner (Mohapatra, 2013). For OpenSourceMatters.org (OSM), customer service is a main competitive advantage that it wants to achieve so that company can create or develop its position in an organization.

In context to this, Qin et al., (2014) clearly stated that for both B2B and B2C business, customer experience is very important as customer experience is major point or factor that are needed to be considered by an organization. For OpenSourceMatters.org (OSM) business also, it is very necessary to attain a competitive advantage by lowering the prices of products and services so that large customers base is targeted easily as well as this will also help in experiencing higher sales and profit growth in business at e-commerce platform. Thus, B2C business model is best effective model for e-commerce business as it helps in attaining competitive positive in the market and also achieves all organizational goals and objectives.

Section 3 – Cloud Computing

Cloud computing is a computer based related to information technology (IT) that enables the business to run their business smoothly and efficiently. Rittinghouse and Ransome (2016) clearly defined that cloud computing referred as a way that delivery the computer services or resources on time over the internet. Usually, cloud computing is treated as a best habit that uses internet services for running the workloads efficiently. At the same time, Botta et al., (2016) also explained that in today’s business environment, every organization are widely using the loud computing services in order to save, secure and handle their data effectively and efficiently from any types of threat. It is very important for every organization to maintain confidentiality of their data by storing their data directly to cloud computing system.

In the research study of Krutz and Vines (2010), it is clearly elaborated that cloud computing is an effective and efficient IT infrastructure services that help in increasing capacity of networks and mitigates the problems of storing a large amount of data at a one place. There are various benefits of cloud computing that help in increasing the efficiency, flexibility and strategic value of an organization. The business can achieve the benefit of using the IT infrastructure services in terms of storing and accessing the data, reliability, security and so on. Mostly, companies are using their clouds computing because it helps in reducing the cost, scalability, brings efficient continuity in business and also creates flexibility in the work practices and business processes.

While using cloud computing, there are some challenges that create impact on the business performance and on its infrastructure system. The challenges include lack of resources, security issues, cost management, performance and controls, etc develops difficulty in e-commerce business platform. These all challenges have somewhere high influence over the business practices and processes because there are some uncertain situations like slowdown of Internet service and some technical issues i.e., dysfunctional of services. Chang and Ramachandran (2016) stated that there are always a few security issues in every old or new technology that develops problem for the company. The cloud computing is a third party cloud service provider which provide data storing and accessing service to the company. But, Wei et al., (2014) opposed that it very risky for company to store their data in cloud services as there are greater risk of hacking and reliability of the information.

Conclusions and Recommendations to the Business

From the above discussion, it can be concluded that differentiation strategy can be effective for OSM to compete and position it in the market. There is high competition in the e-commerce retail market as the firm can differentiate its products based on features, customer services and purchasing experience. In addition, company can use B2C e-commerce business model that can be effective for the firm to sell to the customers directly to generate revenues. The major focus of the firm will be on customer services and personalized features to enhance the purchasing experience of the customers and attract them to increase its sales and profits. In addition, it can also be summarized that cloud computing can be beneficial to cater to the changing demand and scenarios of market, reduce costs and make faster delivery of the goods to the customers.

Based on this conclusion, it can be recommended to OSM to be customer focused to persuade their buying behaviour and make them loyal. For this, the firm needs to provide quality and differentiated products at competitive prices. It can provide discounts and seasonal offers to attract the customers. Proper navigation can be effective for the firm to determine the needs and requirements of the customers and offer the customized products to the customers. The proper training of cloud computing and other technologies like software to the employees can be significant to enhance their knowledge and serve the customers appropriately. For mitigating the challenges related to cloud computing, company needs to focus more on new technologies and maintaining confidential IP address & ID.

References

Botta, A, De Donato, W, Persico, V and Pescapé, A 2016, Integration of cloud computing and internet of things: a survey. Future Generation Computer Systems56, pp.684-700.

Chaffey, D 2015, Digital business and E-commerce management, Pearson Education Limited, UK.

Chaffey, D., 2015, Digital business and E-commerce management. Pearson Education Limited, USA.

Chang, V. and Ramachandran, M., 2016, Towards achieving data security with the cloud computing adoption framework. IEEE Transactions on Services Computing9(1), pp.138-151.

Chiu, C.M., Wang, E.T., Fang, Y.H. and Huang, H.Y., 2014, Understanding customers’ repeat purchase intentions in B2C e‐commerce: the roles of utilitarian value, hedonic value and perceived risk. Information Systems Journal24(1), pp.85-114.

Da Costa, E 2016, Global e-commerce strategies for small businesses, Mit Press, UK.

Krutz, R.L. and Vines, R.D., 2010. Cloud security: A comprehensive guide to secure cloud computing. Wiley Publishing, USA.

Laudon, KC and Traver, CG 2013, E-commerce, Pearson, UK.

Mohapatra, S 2013, E-commerce Strategy. In E-Commerce Strategy (pp. 155-171), Springer, US.

Nanehkaran, YA 2013, ‘An Introduction to electronic commerce’, International Journal of Scientific & Technology Research, vol.2, no.4, pp.190-193.

Osterwalder, A., Pigneur, Y., Bernarda, G. and Smith, A., 2014, Value proposition design: How to create products and services customers want. John Wiley & Sons, USA.

Qin, Z, Chang, Y, Li, S and Li, F 2014, E-commerce Strategy, Springer, US.

Rittinghouse, J.W. and Ransome, J.F., 2016, Cloud computing: implementation, management, and security. CRC press, USA.

Solaymani, S, Sohaili, K and Yazdinejad, EA 2012, ‘Adoption and use of e-commerce in SMEs’, Electronic Commerce Research, vol.12, no.3, pp.249-263.

Turban, E., Strauss, J. and Lai, L., 2016, Social Shopping: Concepts, Benefits, and Models. In Social Commerce (pp. 127-154). Springer International Publishing, USA.

Turban, E., Whiteside, J., King, D. and Outland, J., 2017, Business-to-Business E-Commerce. In Introduction to Electronic Commerce and Social Commerce (pp. 101-135). Springer International Publishing, USA.

Wang, W.T., Wang, Y.S. and Liu, E.R., 2016, The stickiness intention of group-buying websites: The integration of the commitment–trust theory and e-commerce success model. Information & Management53(5), pp.625-642.

Wei, L., Zhu, H., Cao, Z., Dong, X., Jia, W., Chen, Y. and Vasilakos, A.V., 2014, Security and privacy for storage and computation in cloud computing. Information Sciences258, pp.371-386.

 

 

 

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