E-commerce Flashcards
What are the advantages of e-commerce?
- Start up costs allegedly ‘lower’
- Get products to market faster
- Can browse and compare - consumer +ve
- Worldwide market as geographical barriers reduced
- Carry bigger and more varied stock
What are the disadvantages of e-commerce?
- Inability to touch, test etc. - consumer -ve
- Website development and maintenance costs
- High returns rates
- Consumer denied ‘landscape of consumption’ (shop, high street etc.)
- Economies of distribution - costs more to despatch and deliver than product price
- Problem estates - certain areas don’t get delivered to due to risk to safety delivery drivers
- 25% unhappy with delivery time
- More waste due to more packaging
How much is the UK online market worth?
Roughly £50bn. = 15% retail sales
How much of the grocery market is online?
5/6% = £7bn
How many shop closures were there in 2012?
1779
What are the online market shares for the big grocers?
Tesco = 37% Sainsbury's = 17.4% ASDA = 17.2% Ocado = 12% Waitrose = 3.9%
What are cross-mode relationships?
Weltevreden, 2006
- Neutrality: no interest in e-commerce
- Modification: Loyal to physical store, occasional e-commerce
- Complementarity: equal use
- Substitution: shoppers almost solely e-commerce users
What is the ‘e-society’ (Longley et al., 2008)?
Created a geodemographics classification system purely for e-commerce to assess the likelihood that individuals of certain characteristics will use it
Who said e-commerce was the death of geography?
Cairncross, 1997
What are the 3 factors that mean there is geography to e-commerce?
Age
Income
Urban/Rural dominance
How does age affect e-commerce?
Elderly have less internet access - but likely to be less of an issue in the future
Need to know age structure of locations
How does income affect e-commerce?
Positive correlation between wealth and e-commerce use: wealthy have greater access to internet
> 90% households with income >£75,000 have grocery shopped online
What are the two arguments for urban and rural dominance in e-commerce?
Innovation-Difusion hypothesis
Efficiency hypothesis
What is the Innovation-Difusion hypothesis?
E-commerce will be more dominant in urban areas due to greater technology and tech. start ups
What is the Efficiency hypothesis?
E-commerce will be more dominant in rural areas due to greater distance from physical stores
‘The Client’ case study for understanding e-commerce data:
Clarke et al. (2015)
Sample taken (40% pop.) but includes all stores in Yorkshire and Humberside
Results: high % in rural areas
Found inverse relationship between store accessibility and e-commerce use - geodemographics important influence
Knowledge on access to competitor’s stores important e.g. Flamborough Head: low internet use and poor access to client’s stores, BUT good provision by competitors
What are the key drivers for e-commerce use?
Geodemographics (AB group)
Rural effect
Distance to any store
Distance to company store
How much of the ‘click & collect’ market does the grocery market occupy?
88%
Why have ASDA not entered the convenience market?
Fear it is becoming saturated, so aiming to win the ‘click and collect’ battle - want 1000 stations
What are the current ‘click and collect’ locations?
Store car parks
Drive-through stores - Tesco saves £2 a shop doing it this way
Unique collection points e.g. Business park, Reading
What are the potential ‘click and collect’ locations?
Petrol stations Transport hubs e.g. airports, underground School/Universities Independent shops: Collect + Park & Rides Sports Clubs
Why is the underground an emerging new location for ‘click and collect’?
Huge consumer market - targeting commuters who don’t have time to do a shop in an actual store
How many ‘click and collects’ are there in undergrounds?
Tesco: 7 initial, plus 8 new ones
Sainsbury’s: 7
Waitrose: 6 - temp. controlled lockers i.e. refrigeration
ASDA: 6
BUT: Tesco and Sainsbury’s set to pull out due to poor sales - surprising as seems prime location
What are pop-up stores?
Temporary stores erected for a sole purpose and will then leave
Enter food deserts
Potential for use at events and festivals etc.
What are Dark Stores?
Warehouse stlye stores with a supermarket layout open 24/7 for company staff to do online grocery orders
Why are Dark Stores becoming more popular?
Idea that can decrease costs from £18bn to £12bn due to economies of scale
What is the potential down side to Dark Stores?
Predominantly in the SE - little national expansion - but this means there is room to expand
Now becoming mechanised therefore won’t need staff and costs can be reduced BUT unemployment
What did De Blasio (2008) say, contradictory to Clarke et al. (2015)?
Higher e-commerce use in urban areas as those living far away don’t like that can’t test, try etc. before buying
Only time e-commerce use is higher in rural areas is when buying leisure/cultural products e.g. CDs
