Ecommerce

Question 1

Types of e-commerce

Answer 1

B2B, O2O, B2C, C2C

Question 2

Increase of John Lewis’ competitiveness, due to e-commerce

Answer 2

• group sales up by 5.1%
• Online sales up by 21.4%
• Online sales represented 40% of total sales in 6 week Christmas period
• Reliable IT operations and logistics
• investment of half a billion pounds, predicts online sales with overtake stores in 4 years

Question 3

E-commerce forecast in 2016

Answer 3

• most shopping journey’s will be multi device
• More big online shopping days. Singles day (Nov 11) worlds biggest online shopping day, alibaba reported sales worth$14.3 bn, 60% increase from previous year

Question 4

Impact of ecommerce on marketing

Answer 4

• Dominoes has reported a 10pc increase in UK sales thanks to order through smartphones [4]
• Customers can tweet a pizza emoji to order pizza in USA [4]
• 10 million downloads of Dominoes app [4]
• Use of social media, Twitter and facebook etc
• Emailing list, inform customers if they want extra information.
• John Lewis offers free delivery on orders over £50 [9]
• Stores online are able to collect data while you browse and then promote items they think you will like based on this

Question 5

UK businesses not responding to e-commercialisation of the market:

Answer 5

• HMV collapse in January 2013, only retailed in store, eclipsed by other distributors such as Amazon and ease of illegally acquiring music and film

Question 6

Impact of ecommerce on HR

Answer 6

• Need for employees to have broader skills (complete online transactions etc) [6]
• Employ more staff based on seasonal demand [6]
• Concern over conditions in warehouses [6]
• Increased automation in e-commerce (John Lewis invests £500m) [6]
• John Lewis expected to hire over 500 IT professionals. Partly through overseas contractors [7]

Question 7

Impact of ecommerce on operations

Answer 7

• Logistics behind large-scale e-commerce platforms are complex [6]
• Places greater emphasis on close relationships with key suppliers [6]
• Economies of scale are becoming increasingly important [6]
• It is now relatively easy for smaller firms to sell online; sophisticated e-commerce software (integrated with financial, marketing and other systems) is widely available [6]
• John Lewis’ distribution hub sends out as many as 400000 orders a day [7]
• Large amount of waste from packaging, increase in costs
• Amazon attempting to automate warehouses, it is simple manual labour. Amazon acquired kiva systems [8]
• Amazon penalised for poor working conditions as employees had to work in 38c heat. [8]
• Employees tracked in wharehouse using technology, slow performance lead to employees being reprimanded [8]

Question 8

How ecommerce effects customers

Answer 8

• Amazon offers prime, a subscription service that offers free delivery, this usually ends up with members spending twice as much (it builds loyalty) [10]
• Online only cannot impact consumer behaviour through ‘warm’ customer service [12]
• Consumers are able to compare various aspects of products before making a decision [12]
• Most online customers of online and offline businesses have generally formed brand loyalty before using the online store [12]
• More bargaining power, customers can more openly complain about a business online [13]
• Need more security, data security etc [13]
• Can be easier to communicate with businesses due to social media etc

Question 9

Threats caused by ecommerce

Answer 9

• Average reported loss from computer attacks was approx. $2.7 million [11]
• Lowering of barriers to market entry
• Introduction of share-economy, introduction of businesses such as airB&B or bla bla car
• A global study revealed that if shoppers don’t immediately like the mobile consumer experience and service, as many as a third wouldn’t purchase from you again. [14]
• Threat to data security (TalkTalk and Sony), threat to brand reputation if not dealt with correctly
• Threat of continuous change, study of 150 leading Uk retailers showed the average age of their retail logistics and supply chain tech is 10.8 years old [15]
• Expectations of customers, overnight delivery etc.

Question 10

How Ecommerce affects employees

Answer 10

• Requires employees to have different skills [13]
• Change in working conditions; seasonal peaks can mean more extensive use of temporary labour, concerns how staff are treated (Amazon)

Question 11

How ecommerce affects suppliers

Answer 11

• Greater need for integration of the supply chain. Need more sophisticated IT systems, greater use of JIT supplies [13]
• Some suppliers can now use ecommerce to transact directly with customers, disintermediation [13]
• Reduced bargaining power, customers find it much easier to source supplies and compare supplier prices [13]

Question 12

Evidence of effect of ecommercialisation on market

Answer 12

• Revenue of Amazon up from 49B in 2011 to 107B in 2015 [17]
• In 2015 Amazon generated a revenue of $107 billion, 15x the amount they made in 2004[1]
• Operating profit margin increase from 1% to 2% from 2012 to 2015 [18]
• ROCE increase from 7% in2012 to 12% in 2015 [18]
• John Lewis’ gross margin has gone from 52.3% in 2012 to 52% in 2015 [19]
• ROCE has gone from -3.09% in 2012 to -3.21% in 2015 [19]