1.3 Significance of the problem

 

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The E-Business, the E-Customer, their Relationship and Interactivity

 

 

KunnskapskildenE-Business –
E-Business, E-Customer, Relationship and Interactivity

 

Dissertation
The E-Business, the E-Customer,
their Relationship and Interactivity 

Jan Vig

 

Dissertation  av Jan Vig om E.Business, E-Customer, Relationship and Interactivity  (286 sider) i forbindelse med Masterstudie i Information Technology and Communication Juni 2000.

 

The E-Retailer Business, the E-Customer,
their Relationship and Interactivity

Table of Contents

Chapter One Introduction to the study

Chapter Two Business in Cyberspace

Chapter Three E- Retailer Commerce

Chapter Four E-Customer, Relationship and Interactivity

Chapter Five A Successful Case study – Amazon.com

Chapter Six The Future, Critical Success Factors, E-Business Strategy, Results and Conclusion

Appendix

 

 

Chapter 1

Significance of the problem 

 

Chapter One Introduction to the study

1.1 Introduction
1.2 Statement of the problem
1.3 Significance of the problem
1.4 Definitions
1.5 Overview of the dissertation

 

1.3

Significance of the Problem  

 

The root of the Net’s problems – and the solution – is the customer experience.
The Web isn’t primarily about technology, or “usability,” or “design,” or even “permission marketing.” The key driver of online success, or failure, is the customer experience. (Rossi, 1999)

 

Retailers at this time have extraordinary opportunities when going online, but they must be aware that it is more than simply another channel. Instead, they must know the Internet as a market well and view their online presence as a new way to conduct business.

Although there are many documented methods for developing an efficient E-Business, there seems to be a lack of customer-led E-Business methods  and solutions that prepare companies for the new digital world of the E-Customer.

 

The transition from the Old World of business management to the New World of e-customers is unique.
Before 2000, companies pushed products through the channel to waiting customers.

After 2000, customers pull products and services through on demand. By 2010, most buyers will be connected,
completing the Customer-Led Revolution (Siegel, 1999: 2).

 

At present much of the literature which provides advice and rules for developing E-Business solutions fails to consider the importance of competitors’ intelligence and market research to get required information about the market and the E-customer’s need, wants and priorities, prior to the development of the E-Retailer Web Site.

 

To futurize your company externally, you’ll learn to take the customer’s view of your web site. You’ll see that most companies don’t ask the right questions when they’re preparing to go online and that what they offer is not really what the customers want. To futurize your company internally, you’ll learn to let your customers lead the way. You will let them have the vision (Siegel, 1999: 4).

 

Further, the importance and difficulties of developing a customer-oriented company instead of a management and supply-oriented company is undervalued. By a customer oriented- company, the company will listen to the customer, try to get direct feedback, start discussions groups, implementing their suggestions and invite them to online meetings with the aim to encourage both the own employees and the customers to make regularly conversation with each other.

Similarly, literature that presents methods about the development of an E-Business very often doesn’t cover the whole process a business has to go through to be successful in the online world. Here opportunities for a customer-led development team are arising.

 

The E-Retailer and the customer led-development team will need additional help from consulting companies within areas such as:

  • Strategy development, that includes a strategic Internet marketing plan
  • Competitor Intelligence and Market research
  • Customer surveys
  • Customer Relationship Management
  • Online/offline marketing

 

 

That gives companies, which offer a complete E-Business development process to take care of the E-Retailers needs and wants, numerous opportunities to lead these companies into the E-Customers revolution and be more successful.

Another aspect is that online Business models, just as the move from print publishing to online publishing have essentially translated from ‘face to face’ model to an online presence without due consideration of the consequences for the retailer and the customer.

E-Retailer’s commerce sites have two goals. First, they should support the company’s marketing objectives and stimulate sales. Second, the web site should help customers make decisions. The customers are in control on the web, in a completely other way than with most other media. They choose which E-Retailer to visit and how much time they want to spend there. It is obvious that the better the E-Retailer web site matches the E-Customers’ decision processes, the better the site would meet the customers needs and wishes.

By designing an Customer-led E-Retailer web site in accordance with the customer’s decision process and the company’s communication strategy instead of a management and product-led approach and by using the following model (Kotler, 1997: 195), an E-Retailer will have a much better chance of achieving customer satisfaction and get the customer to buy.

 

The model has the following five stages:

  • Problem recognition – identify and understand problems.
  • Information search – understand attributes of products and product categories.
  • Evaluate alternatives – compare products.
  • Purchase decision.
  • Post purchase behavior – use, maintain, repair and upgrade the product.

 

 

Another point, which highlights the significance of the problem with customer dissatisfaction, is the observation that there is an analogue between the usability of the E-Retailer Web siteand buying from the E-Retailer based on how easy the Web site is for the customer to use. The unfortunate reality is that E-Retailers are losing unbelievable amounts of money online. Customers, who can’t buy, won’t buy. Companies spend millions driving visitors to their site, but the E-Customers who are there, find often the E-Retailer web site too hard to use. As a result, companies lose opportunities for sales, customer relationships and their positive image, adding up huge amount in lost revenues.

Many surveys on the Internet have found that more than 30% of the E-Customers are giving up buying from the Internet because of unsatisfactory shopping experience. The main reason for the frustration is mainly slow download time and confusing navigation, as the E-customer wants speed and convenience. This is quite serious for the E-retailer as it means that they lose more than 1/3 of their revenue because of this.

«The State of Online Retailing 3.0» found that in 1999 online business-to-consumer revenues across all categories grew 120 percent to $33.1 billion,
representing 1.4 percent of all retail sales. (BCG, 2000)

 

In 2000, the market is expected to grow 85 percent and surpass $61 billion in revenues.

Inventory and delivery problems were at the top of the list of problems experienced by Internet shoppers during the 1999 holiday season, according to the Andersen Consulting (2000) study.

 

Top 10 Problems Experienced by Internet Shoppers
Problem Percent of
Internet Buyers
Gift wanted to purchase was out of stock 64
Product was not delivered on time 40
Paid too much for delivery 38
Connection or download trouble 36
Didn’t receive confirmation
or status report on purchase
28
Selections were limited 27
Web site difficult to navigate 26
Web site didn’t provide information
needed to make purchase
25
Prices not competitive 22
Site didn’t offer enough gift ideas 16
Source: Andersen Consulting (2000)

 

Table 1.1 Top 10 Problems Experienced by Internet Shoppers

BCG (2000) in the «State of Online Retailing 3.0» also found that approximately 65 percent of online shopping carts were abandoned before the final purchase transaction took place, representing significant lost sales and highlighting the need to improve the shopping and checkout processes.  Some other surveys on the Internet came to the same conclusion. The E-Customer often gives up because of speed and usability. That means that a lot of the E-Retailers’ web sites are designed in a way that is not customer friendly and violate simple design principles.

Another point, which shows the significance of the problem is how traditional businesses undervalue the importance of a customer oriented web design.

 

Nielsen (1998) estimates that at least 90% of all commercial web sites are overly difficult to use due to problems like:

  • Bloated page design that takes forever to download.
  • Internal focused design that hypes products without giving any real info about them.
  • Obscure site structures that either have no logic or are based on the company’s organisational chart.
  • Lack of navigation support, making it very hard to find things when combined with an obscure structure.
  • Narrative writing style optimized for print and linear reading; not for the way users scan online.

 

Retailers often does not have the necessary training nor skills required for E-Commerce. The recruitment of people with the necessary skills is quite difficult, because there are few programs that train and educate people within these field and the chances to fail with E-Commerce is quite high. Another aspect is that a lot of the staff, because of the lack of education are using old fashioned business methods in the new online world, which in most cases are doomed to fail because they do not consider that this is a new way to do business, with new rules and opportunities.

There is a need for a relatively easy to use model for E-Business to achieve customer satisfaction and get the E-Customer to buy. The E-Customer-led E-Business will be an answer to this need.

The E-Retailer has numerous opportunities to register data ‘for’ the E-customers not  ‘about’ them and this is both a challenge and an opportunity. The E-retailer has to manage this through relationship and loyalty.

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