Effects of e-commerce
E-commerce has many effects on the market, for both the customer and the business itself. Here are some of the effects that e-commerce has on easyJet -
Effects on pricing in global digital markets
E-commerce allows easyJet to make significant cost savings. The business is cheap to set up in comparison to opening a high street travel agent style store. The premises costs are minimal, as are those for fixtures and fittings. Staff costs can also be reduced as the firm needs fewer sales staff and less administrative support. These savings can allow the firm to offer cheaper prices, and this in turn should boost sales.
The Internet allows companies to quickly revise the pricing of products offered if circumstances change. For example if easyJet had a travel brochure labelling their prices then it would be costly and uneconomical to reprint everytime prices need to be changed, but in terms of a website, the prices can be quickly and cheaply updated. Companies can therefore be very responsive to market changes.
Boosting demand and supply
By selling over the Internet, easyJet can access a much wider customer base. Not only a wider customer base in the UK but also globally as people can access the internet worldwide. However a disadvantage to this is to sell across the world means that easyJet need sales staff available to serve customers around the clock, since night-time in the UK is daytime elsewhere in the world, but an e-commerce presence can be available 24 hours a day.
Reduces Barriers to Entry
Because it is relatively easy to set up an e-commerce site, this breaks down some of the natural barriers to entry into markets, so firms can react quickly to new market opportunities. The 24-hours-a-day. seven-days-a-week nature of e-commerce also means that customers can shop at times that are convenient to them.
Providing Information
Providing information to customers is significantly easier today. In the past, easyJet might have relied upon methods such as printed brochures, leaflets and catalogues being sent through the post, which took time and was relatively inefficient. Today, providing detailed information via a company website is a much better solution. It is not only the customer being able to gain information about the company that is useful. easyJet can gather information about their customers using customer databases. All of the information that is gained when a customer books a flight can be stored in databases which can then be used to decide the type of people which are buying the flights and also serve as contact details for easyJet to contact their previous customers with things such as offers and changes to the company.
Providing Services
E-commerce provides companies and other organisations the chance to offer services to a much wider target market. This includes not only people who live in remote rural places and in other countries, but also those who have mobility problems such as elderly or housebound people. Via the Internet, such people can find out about the services that may help them much more easily and can also place orders without leaving their homes. For example Tesco offer a home delivery service which allows people throughout the UK to do their shopping online and get it delivered to your door on a specified date and for a small charge. This enables people that may be too unwell to get to a shop or are unable to go shopping, to order their food and necessities simply and easily. This not only allows people to order their food easily but allows Tesco to reach a wider audience because people that may not usually shop at Tesco may now do so because of the convenience it offers.
The Internet also makes it much easier for customers and companies to compare prices and specifications of products before they buy, which is clearly a better level of service. However, this could also prove disadvantageous to firms if they do not compare well with their competitors. In terms of easyJet they are the pioneer of this particular market and currently offer flights from just £17.99
Gathering Information
As we have already seen, a website offers a good opportunity for gathering information about customers' buying habits, which can inform promotions, but it also offers the opportunity for customers to give direct feedback about products and services through e-mail. These can prove to be valuable information sources, which is why so many firms include them on their sites. This primary research can then be use to model things such as new products or revising prices and is a much cheaper way of researching the market. If easyJet were a high street store they would have to pay to carry out the same research in the form of printed questionnaires and posted surveys. easyJet offer their customers an online complaints system which allows them to complain direct to easyJet simply through the website. This allows easyJet to put right some of the things that are causing passengers distress to ensure that they run a successful business where all passengers are pleased and want to return.
Global Demographics
Webographics examines trends in the use of e-commerce and e-business, for example how many people are using the Internet to buy goods and services, and the trends in value of those transactions.
Things change very rapidly in the world of the Internet. For example in the 12 months to October 2004, the number of people actively surfing the Web from home each month in Europe grew by 12% to 100 million, according to figures published by Nielson Net ratings (www.nielson-netratings.com). At the same time the number of people in Europe using high-speed Internet connections from home increased from 34.1 million people to 54.5 million people, an increase of 60%. The largest increases occurred in Italy (120%), and in the UK (93%).
These statistics can also be used for easyJet to see which is the most visited flight selling website. If the results indicate that they are the most visited then it is good and they can also investigate what type of people visited i.e. women, men, young adults etc. this information can then be used to know how to advertise their products to in future and who will be the target audience.
Clearly this sort of statistical information is vital to businesses hoping to trade via the Internet, so that they have a good understanding of who uses what sort of site and how best to promote sites. This is fundamental to a successful e-commerce presence, so firms should keep a close eye on trends as they develop.
Censorship
Internet censorship is control or suppression of material an individual can publish or access on the internet. The legal issues are similar to offline censorship. Total censorship of information on the Internet is very difficult (or impossible) to achieve due to the extent of people using the internet and constantly changing technology. Businesses need to ensure maximum security when using the internet because they hold peoples private contact information that in the wrong hands could cause crisis because people known as ‘hackers’ could use the information to steal money if they have customers bank details. It is therefore essential that businesses have privacy statements to ensure their customers that their information is safe. easyJet has a privacy policy on their website that ensures the confidentiality of the customer’s details. They state “easyJet is committed to protecting your privacy, and takes its responsibilities regarding the security of customer information very seriously”. The policy is included in full as an appendix at the end of this task.
Factors shaping on-line business
There are many factors that are influencing the shape and success of e-business. Some of the main ones are described below.
Popularity of Internet cafes/salons
Internet cafes are one of the reasons why Web access has boomed in the UK over the past 10 years. They first started up in the early 1990s and soon became popular, and despite the fact that many homes now have Web access, their popularity continues. The more places that people can access a computer from the better are the thoughts of most online operators, because there is more chance of these people visiting their site. easyJet has their own internet café’s throughout the UK which are known as easyInternetCafe. This allows customers to go on whatever websites they want but since they are in environment advertising the easy brand they are likely to be reminded to visit the easyJet website.
Cost barriers to computer ownership
The cost of buying a computer that was sufficiently advanced to make Internet surfing pleasurable used to be prohibitive, but that is no longer the case. It is now possible to buy a high-specification machine for significantly less than £500, and the cost of fast Internet lines has dropped significantly in recent years. Consequently more and more people have been in a position to give it a try. A much wider base of people with access to websites has made Web-based businesses much more viable. Furthermore there are many government initiatives that give funding to people to pay for things such as computers. These include giving funding to teachers to pay for laptops to enable them to work more efficiently like marking work at home on the computer and planning lessons electronically. Other initiatives include giving money to people living in poor areas that could not afford things as computers, the government have been focusing on these areas and giving computers to try and improve their way of life.
Competitiveness of small on-line firms
It is often difficult for small companies to enter markets because of the costs of setting up, but the Internet business model is so easy, quick and relatively cheap that many new small firms have been able to enter markets. This change encourages analysts to believe that markets are becoming much more 'perfect' as the barriers to entry are reduced. easyJet was unknown when they began in the market. They decided to only operate on the internet and this has proved to be successful as the statistics for the past year prove that 30,739,609 have flown with easyJet alone, with 95% of those people booking online.
Conclusion
Many people have taken to using e-commerce because of the convenience it offers to them, including the elderly and those with disabilities who are no longer being left out of things they may not have been able to do on the high street. Although e-commerce continues to develop it is highly unlikely that it will ever totally replace bricks and mortar commerce. The experiences that the two offer are so different that they are both used for different reasons. E-commerce is used for convenience where traditional retail is often used as a social activity and a form of entertainment. In my opinion the e-commerce revolution will continue to grow but brick and mortar will also remain. Having said this though, there are some exceptions. In terms of easyJet who started out in the e-commerce business, never having traded on high streets, I would not recommend them change the way they operate and stick to the internet trading that has seen them become a pioneer in the market and revolutionise the way that people fly. Once a business has found a trading model that works for them, they should stick to it whilst still being aware of changing markets that could one day force them to change.
E-commerce has proved to be successful for easyJet. They were a pioneer in the online air operator. They have spent a lot of time achieving their aims and objectives which has resulted in a totally ticket-less booking system which has improved efficiency and costs and also made the whole process easier for the customer. The use of e-commerce is the reason why easyJet is so successful, without it they would find it hard to break into the already crowded market. But by having the initiative to offer the customer that they couldn’t currently get from any other operator, it allowed them to break into the market and gain a share of the market.