6.4 Developing effective E-Business Strategy

 

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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 6

The Future, Critical Sucess Faktors, E-Business Strategy, Results and Conclusion 

 

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

6.1 Introduction 185
6.2 Future trends 188
6.3 The critical success factors for E-Business 194
6.4 Developing effective E-Business Strategy 203
6.5 Lessons learned 210
6.5.1 Understanding E-Business 210
6.5.2 Change 210
6.5.3 A ‘complete’ development process 211
6.5.4 Customer satisfaction 211
6.6 Recommendation 212
6.7 Conclusion

 

6.4

Developing effective E-Business Strategy

 


Less than 20 per cent of Australian organisation have set up a dedicated e-business division, a new survey shows.
This is despite 80 per cent of organisation planning to increase investment in e-business by an average of 36 per cent next year.
” 40 per cent of respondents felt a lack of coordination affected their adoption of e-business, but only 18 per cent had a dedicated division.

Other factors inhibiting e-business strategies were security (33 per cent), budget and funding constraints (28 per cent),
technology (26 per cent) and lack of management support (17 per cent). (Foreshew , 1999)

 

Com Tech Online general manager Dave Jacobsen said businesses should formalise an e-business or e-commerce strategy to resolve co-operations issues. 94 per cent of organisations saw e-commerce as critical to their business strategy.

 

The E-Retailer will experience and therefore have to develop an E-Business strategy to meet the following challenges. Increased accessibility will help the customer to find exactly the information they seek for, exactly when they want where in the world the information will be at the moment. The customers will get direct accesses to the person or company who has a product or service to offer. The customers expect a personal gain because much of the job will move from the person or company who is offering this product/service to the customer.

 

An E-Retail commerce strategy requires:

  • Market Research
  • An understand how the Internet works
  • A carefully planned strategic framework
  • Clear objectives
  • Thorough preparation coupled with adequate Resources
  • What the options are for setting up and running a E-Retailing commerce operation
  • A realistic allocation of time to show returns.
  • May involve re-engineering the company’s business processes

 

 

 

The E-retailers should ask the following strategic questions:

  • What innovative products and services can they offer?
  • Can they develop a more complete customer solution?
  • Who are the right business partners?
  • What relevant competencies can they offer for their E- customers?
  • How can they exploit their current channels?

 

 

 

E-business strategy development should be a rapid and focused process that envisions ways to take advantage of E-Business opportunities in the E-retailers market.

The objective should be to create realistic plans for developing and deploying persuasive E-Business solutions at two levels: (Chizzo, 1999)

1. Overall e-business strategy
The process should ensure that the broad range of potential e-business opportunities is fully explored. Examine such questions as:
  • Can e-business help my company to attain its strategic objectives?
  • What are my e-business opportunities?
  • How will they affect my bottom line?
  • Which technologies and architectures should I choose?
  • What skills will I need and how much can I do myself?
  • What should I do first, and why? How do I get started?

Table 6.7 Overall e-business strategy

 

2. Specific domain strategiesThe process should also develop strategies for the for specific domains of E-Business, comprising both Business-to- Consumer and Business-to-Business opportunities, as appropriate:
  • E-Commerce Selling products to customers and managing orders through the cycle of inquiry, ordering, validation, payment, scheduling, shipment, and delivery
  • Customer Relationship Management. Managing customer interaction and providing personalized service that creates long-term, mutually-beneficial customer/vendor relationships
  • Supply Chain Management. Responding to customer demand with increased speed and customization by more efficiently managing relationships with suppliers and distributors
  • Knowledge Management. Enabling more effective decision-making by internal and external customers by capturing, categorizing, and disseminating information.

Table 6.8 Specific domain strategies

 

Developing an E-Business strategy combine traditional strategic planning processes with some very new concepts. Like any high-level strategic process, e-business planning includes some steps, like: (Chizzo, 1999) 
  • Defining and achieving alignment on the imperative for change·      Evaluating the opportunities and threats in the industry
  • Assessing opportunities and requirements for success
  • Envisioning creative solutions
  • Developing a strategic vision and roadmap
  • Identifying potential obstacles to success


Table 6.9 E-Business planning

 

Strategic steps
  •   Alignment. Build common understanding of e-business opportunities and threats in the industry·        Assessment. Analyse the network of business relation-ships that define your business to identify e-business opportunities
  • Commitment. Define the e-business strategic vision and roadmap of specific solutions; build the business case
  • Mobilisation. Identify potential issues & obstacles and develop your mobilization plan

 

Table 6.10 Strategic steps

 

Specific Objectives and strategies for the E-Retailer:

  • Customer intimacy

Customer closeness or intimacy is independent of the Internet for E-Retailer. It refers to the E-Retailer’s ability to be closer to customers in the sense of understanding and therefore anticipating their needs, interests, and expectations. The E-Retailer’s value proposition is build around the E-Retailer’s understanding of customers; therefore, getting closer to them increases the success of E-Retailer’s proposition. Customer closeness can be enhanced or completed through the innovative use of Internet capabilities. Customer closeness can build loyalty and brand equity as well. The Internet can be used to get closer with all members of the E-Retailer’s organization: customer, business partners, and even employees. The E-Retailer can get more direct customer feedback through reader respond card or e-mail.·

  • Mass customization and virtual products

With the Internet technologies, the E-Retailer can leverage the concept of mass customisation. Mass customisation, personalisation and virtual products are those products that generate information tailored to individual customers. The E-Retailer should want to create personalized messages to reflect new products, services of particular interest to the customer. In this way, The E-Retailer can use the Internet to extend their relationship with customers. Making it easy for others to do business with the E-Retailer.

E-Retailer’s goal is making it easy for customers and partners to do business with the E-Retailer’s organization. Quick delivery and response.

  • Attracting new customers and partners with wider market reach.

The E-Retailer can use the Internet to reach wider customer base, as well as to target niche customer groups. Because the size of the overall market is so large, the niche size is often significant.

  • Getting more from less: Increasing return on assets and individuals.

Communications, distributions, rent, advertising, marketing, customer support, and sales all represent major business expenses. The Internet, however, provides an alternative to the traditional channels of performing these functions while significantly reducing expenses for the E-Retailer.

  • Reducing time to market.
    The Internet allows the E-Retailer to come quickly to market.
  • Customer acquisition and loyalty.

One purpose in developing an innovative E-Retailer Web site is as soon as possible get the target group familiar with the services the E-Retailer provide and has that customer incorporate, the better is the E-Retailer’s chances for keeping that customer. Once the customer has been acquired, the goal migrates to achieving his loyalty.
Beyond innovation, loyalty increases when customers’ needs, concerns, and preferences are integrated directly into the product planning process.

  • Revenue-generating opportunities

The E-Retailer could see that for some segments of the population, trends seem to indicate that the Internet will be a preferred channel of distribution, one with attractive revenue-generating opportunities. Indications show that Internet users are more likely to actually buy a fund than those who call in by phone.

Table 6.11 Specific Objectives and strategies for the E-Retailer

 

 

In a Web design strategy study it was stated the following: (Lee, 1999)

“Web design is one of the most important components of web marketing strategies.”

 

The following questions were asked:

  • How do web designs influence the traffic of a web site?
  • How important is web design in determining the success of a web business?
  • What web technologies have impacts on the traffic of a web site?
  • Does professional web design matter?

 

 

There are two different approaches to understand the impacts of web designs, one is to ask visitors to evaluate a web site and to tell what they like or dislike. The other approach is to ask the E-Retailer how they design their web sites and how successful their web businesses are and then build the relationship between web designs and web success. This research used the second approach The most important finding in this research was that web design technology does not have a strong and direct impact on web traffic.

 

The E-Retailer should also have a strategy concerning e-mail because it is not only a useful tool
for communication on the Internet but also a very important marketing tool on the Internet. (Lee, 1999)

 

Email Marketing Strategy Objectives
  • How does E-Retailer use emails to market their businesses on the Internet?·      How important is such email marketing for E-Retailers?·      How effective is email marketing in branding, building relationship and selling products or services?
  • What are the effective email marketing strategies? How to develop own email marketing strategies?

Table 6.12 Email Marketing Strategy Objectives

 

 

Major findings
  • Email mailing lists are popular among web businesses. More than 68% surveyed said their web businesses have at least one email mailing list·      Most mailing lists are small in numbers. About 70% web marketers said their email mailing lists have less than 1000 subscribers·      Generating revenue (7%) and branding (7%) are not the primary purposes of maintaining an email mailing list. The top three primary purposes are: promoting products/services (32%), building community (23%) and communication (21%)
  • 89% of the email mailing lists have op-in policy while 84% have op-out policy
  • Email newsletter is more effective in building customer relationship. With an 1 to 5 scale rating, (where 1 means «very ineffective» and 5 means «very effective» ), the average ratings are: building customer relationship (3.8), building a community (3.6), promoting products/services (3.5), branding (3.5) and generating revenues (2.8)
  • About 57% of the responses said that email marketing is important or very important to their web businesses. However at the same time, about 64% thought they did not devote enough efforts to develop and execute their email marketing strategies
  • To publish the email newsletters frequently, to communicate with the subscribers and to meet readers’ needs are the key drivers to develop a successful email mailing list.

 


Table 6.13
Major findings

 

 

What is the primary purpose of the email newsletter(s)? (329)
Building community 23%
Promoting products/services 32%
Branding 7%
Communication 21%
Generating revenue 7%
Publishing 4%
Other 7%

 Table 6.14  The primary purpose of the email newsletter

 

The result from Key Driver Analysis shows that to publish e-mail frequently, to communicate with the readers and to meet their needs are the key to success.

 

One of the hottest current topics among companies is how they will manage emerging wireless technologies for mobile e-commerce.

Several emerging technologies promise to reshape approaches to e-business using wireless communications and Internet access
to create new business channels and processes.
The three “U”s that governed mobil phone adoption – ubiquity, utility and usability– will become even more important
as mobile devices are increasingly used to access corporate information,
Web content and emerging mobile e-commerce services. (Johnson ,2000)

  • Ubiquity: By the end of 2003, the number of mobile phones deployed worldwide will exceed one billion. Mobile phone penetration will approach that of wristwatches.
  • Utility: Current and future mobile phones will support a wide range of consumer interactions and useful experiences using voice response, SMS) short Message System), WAP (Wireless Access Protocol) and HTML microbrowsers, proprietary and Java application execution. WAP is designed to ensure that Web content can be presented to diverse mobile devices coherently and consistently
  • Usability: WAP services and content adapted to wireless devices provide a framework for Web based e-commerce solutions for mobile users. Users can charge small purchases to their mobile phone bills using mobile phone network providers’ value-added services, such as micro charging.

 

To be successful the E-Retailer has to go trough a complete process, that start with research what the competitors are doing online, what the E-customers needs, wants and demands are, finding the right partners to develop an E-Business not only a web site. Further develop a strategic plan for going online, make user survey what their customers really want and after that start to build the E-Business. Most of the businesses, which are going online, are making a poor job, before they actually are making the Front End and Back End. After testing the Web Site and before launching the Web site, preparation for Online and Offline promotion has to start. And when the E- Retailer commerce site is launched the really hard work is beginning. Getting customer to the E-Retailer web site, keep them there and get them to buy and be loyal customers.

 

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