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Analyse the contribution IT makes to the delivery of physical products from online retailers and discuss how this relates to the requirements of the consumer.

Extracts from this document...

Introduction

Managing Information and Operations ASSIGNMENT TWO - MG5085 Date of submission: 10th January 2005 Tutor: Mr Mark Henry Compiled by: Prerna Thakkar Student Number: 0428819 Table of Contents Page Introduction 2 The Reality of E-Commerce 4 Internet Commerce 5 Convenience of Online Shopping 5 Consumer's Demands 7 IT Contribution 8 The Details Behind the Scenes 12 The Customer Perspective 15 Innovation v/s Technological Progress 16 Conclusion 17 Bibliography 19 Word Count 19 Topic A: Analyse the contribution IT makes to the delivery of physical products from online retailers and discuss how this relates to the requirements of the consumer. Introduction: The 'dot-com' era is now fast receding into the past. But, throughout the world, managers are still grappling with turning the e-business concept into a business reality. Companies in some sectors have demonstrated success. In Europe, the low cost airlines such as easyJet and Ryanair have succeeded in migrating the majority of their customers to online booking in the space of a few years, while acquiring many new customers. Other companies have used the internet to gain competitive advantage. For example, the supermarket Tesco has launched a market-leading e-commerce service for customers and also uses the internet extensively for purchasing (Tesco Information Exchange). Although many start-up companies which adopted innovative business models, have now failed, some are now achieving profitability. For example, now operating profitability across many countries in Europe include lastminute (main focus travel: www.lastminute.com), Kelkoo (consumer retail: www.kelkoo.com) and Wanadoo (Internet Service Provider: www.wanadoo.com). In some traditional industries, the impact of the internet has been immense. Banking, for example, shows that in a seven and half year period (May 1995 - December 2002), the number of households using online banking worldwide increased to 100 million as around 6,000 different financial institutions offered web based banking. (Source: Online Banking Report, Number 89, 10 December 2002). Meanwhile, many business-business companies and governments have found encouraging their customers to use their online services to be much more challenging. ...read more.

Middle

The web site is then connected to the back office system where the payments are processed and the fulfilment of the order is actioned. The e-shop having taken an order needs to ensure that the goods that have already been paid for are despatched rapidly and reliably. The basic requirement for the back office is a warehouse with appropriate arrangements for the despatch of goods, replenishment of stock and processing of returns. Different servers are required which combine the applications logic and database storage for different requirements. These may be physically separate servers or may be combined. This can be clearly explained with the help of the following diagram1: E-Business Architecture for the B2C Company Payment Catalogue ERP Web Browser Web Merchant INTERNET Personalisation CRM The purpose of each of the servers is as follows: Web server - manages HTTP (Hypertext Transfer Protocol) requests from the customer and acts as a passive broker to other servers. Returns or serves web pages. Merchant server - This is the main location of the application logic which integrates the entire application by making requests to the other servers. Personalisation server - provides tailored content and may be part of commerce server functionality. Payment server - manages payment systems and secure transactions Catalogue server - A document management server that displays detailed product information and technical specifications. CRM server - stores information on all customer contacts ERP server - required for information on stock availability and pricing from the customer. This is also accessed for sales order processing and histories along with logistics for distribution. Once the order is placed by the customer, EDI transfers the structured data from one business information to another computer system. The typical example would be supermarkets that use the EDI to replenish their warehouses. EDI has also enabled the online retailers to move to just-in-time providing faster speed of transaction, error reduction and cost cutting. ...read more.

Conclusion

Offering a tailored design to the customer account and personalising it could attract the customer to re-visit the website. Retailers can also provide discounted offers to their patrons based on the shopping patterns captured on earlier purchases. Besides offering the above, the retailer must be innovative in its approach to sell the products by adopting smarter and more efficient technologies to make the user experience a memorable one. Innovation could further take the form of technological enhancements enabling the consumer to access the sites to make purchases from a PDA (personal digital assistant) or GPRS enabled mobile phones. This would enable customers to make productive use of their time whilst on the move. With these and many more innovations lined up the possibilities are endless. Conclusion: Information Technology brings a combination of new opportunities, challenges, changing cost structures, new customers, and faster response times. E-commerce has already demonstrated its great benefit for both consumers and merchants. As time goes on, the growth of domestic Internet access, and the increasing involvement of mobile devices (m-commerce) will yield more potential customers. Nonetheless, security clearly represents a significant concern given the range of potential threats and the limited extent to which suitable precautions are followed in some cases. While e-retailing is less turbulent than in previous years, we can conclude that the future of e-retailing will largely be in the hands of the multi-channel operators. The onus is upon operators to make appropriate use of technologies to reduce risk, and to assist in improving customer awareness of genuine risks in order to increase their confidence in using the services. Learning from the dynamics of population growth, entrepreneurs can evaluate the market they are attempting to enter, determine which stage on the evolutionary model dominates the environment and then understand where the competitive pressures will lie. The IMRG says that by 2009, a quarter of all UK shopping will be conducted via the internet or mobile devices, in a market worth �80bn. A further 20% of purchases will be influenced by online research. The question is what kind of growth we will see. ...read more.

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