What is e-commerce used for?
E-commerce
In this report I will be discussing the benefits and costs of starting up a website. The company I am designing the website for is a cosmetics company. The website is called Smoothannice.com. In this report I will discuss:
* Benefits of starting up smoothannice.com
* Costs of starting up smoothannice.com
* The laws the website must abide by
* Who the business can communicate to through the website
* The barriers to e-commerce
* Setting clear objectives for the website
What is E-commerce?
E-commerce is sometimes referred to as e-business. E-commerce is said to be buying and selling of goods over electronic networks, such as the Internet. This can be between businesses, business and customers, or between the public and private sector.
The sale of a product can be transacted electronically; the ultimate delivery of the good or service may be conducted online or off-line.
Broader definitions of e-commerce cover transactional e-commerce, but also include "process e-commerce" - which covers activities between businesses for intermediate goods and process information done by electronic means. Defined broadly - e-commerce describes how businesses are using information gathered electronically to improve their business processes and relationships with suppliers and consumers. This potentially covers all business areas, such as design, production, operations, customer service, as well as buying and selling.
E-commerce can be used for communicating to customers or communicating with other businesses.
What is e-commerce used for?
E-commerce is being used a lot these days by people, and it is why so many companies have started up websites where the customers can purchase goods. Companies start up the websites so that they can do business with other businesses (B2B) and with customers (B2C)
Business to Business
When using e-commerce it is possible for businesses to communicate to each other. The other business could be a competitor, another chain store or a supplier. Some companies that sell their product to other companies are Apache and BT Internet. This is beneficial as other businesses do not have to phone or go the retail outlet to make an order or pass on a comment. They can do this by going to the website and e-mailing the business what products they want or any other comments they have. This is very beneficial as then it will speed up the communication process making both businesses more efficient.
But the major reason for e-commerce is so that companies can communicate with their customers and allow them to purchase products from the comfort of their own home. A lot of companies these days have set-up websites allowing customers to purchase goods form home, the most successful website to do this in the U.K is Tesco's. As you can see from the table in appendix 1 they have £11.2 million from internet sales alone. Some companies have failed when it has come to making a successful website, the most famous being boo.com. So much was expected of boo.com but because of poor planning it failed.
Due to this new method, websites such as smoothannice.com have to think of how they can forecast the demand. It will be extremely hard for smoothannice.com to predict the demand levels at each stage of the year, as they do not have any past sales records over the Internet as this is their first year. Although the method they can use to find out the demand levels, is to look at other cosmetic companies that sell their products on the internet, and see when the highest and demand level is throughout the year.
Another factor that the websites have to take into account is the size of their warehouses. It is essential that they have appropriate sized warehouse so that they can store a lot of the products their. If they only have a small warehouse that means they only store a little bit of stock, this would mean if there is a high demand during the year then smoothannice.com will have to take longer times to deliver the products as they would then have to order some new stock, then put it into the warehouse then deliver it. If they had a larger warehouse then they would have sufficient amount stock to deal with the high amount of demand, and will not have to order more stock and will take less time distributing the products.
Following on from the previous factor it will be essential for smoothannice.com to come up with a plan on how they are going to distribute all their products to the consumers. This is essential, it will be no good for smoothannice.com to have ten vans distributing their products. As these ten vans will have to try getting customers their products within the limit set on the website. Also customers can be from anywhere such as one customer could be in London then the next one could be in Newcastle followed by Birmingham. It will be no good if one van has to deliver these products as it would take to long. Also what if a person from America has ordered a product how will the company get their product to them. It would be appropriate for smoothannice.com to open up warehouses in every region of the U.K. So they have one warehouse covering the Lancashire are and another covering the Yorkshire area. This way it would be easier and more efficient to deliver the products to consumers. I also suggest that that the company sign a deal with one of the delivery companies such as DHL, FedEx or any other courier. This way if someone from abroad did order a product then their would be a good chance the product would arrive to them quickly and safely. This would give the company a very good image.
Benefits and costs of e-commerce
Below is a table showing the costs and benefits for any organisation to start up a website.
Benefits
Costs
Businesses can communicate with customers easily. The business can receive and send e-mails from/to customers. This allows customers to quickly get in contact with the business. This can also be done to suppliers is well. This means that the business will forge closer relationships with customers and suppliers.
Customers feel unsafe about giving their details over the Internet. This is a big constraint as many people do feel unsafe about giving their credit card number and therefore do not bother to buy any products.
E-commerce allows customers to look at the businesses products from their home. This means that customers will be able to look or buy the product at any time rather than only when they go shopping. Also with the business being on the internet it will mean that that the business will be able to aim their will be easy to access and that more people can see their product.
Some customers may not be able to access the Internet, therefore not seeing your product.
It is said that trading on the Internet promises greater market penetration, increased customer response, more flexibility and lower costs.
Another reason customers may not buy the product over the internet is that they won't be able to see or test out the product. Some customers will want to see the product before they buy it, such as in other cosmetic shops such as Boots, the customers are allowed to try on the product by using testers. On the Internet this is not possible and therefore could repel customers.
E-commerce is also considerably fast and means that the business will be more efficient.
Saves costs, as the business does not have the costs associated with running the business. They do not have to pay for such things as lighting, electricity, and fittings.
As you can see the benefits of starting up a website do outweigh the costs so this can persuade some organisations to start up websites.
Objectives of Smoothannice.com cosmetics
The cosmetics website smoothannice.com will have six main objectives:
. Product awareness, if the cosmetics company were to launch smoothannice.com it would increase product awareness. This is so as people all around the world have access to the website as long as they have a compute and an internet connection. So more and more people will be able to see the products.
2. Increase profits, the website could lead to an increase in customers, which would lead to an increase in sales and profits. The profits could rise quite sharply due to the fact that the people from all around the world can access the website.
3. Increase market share, due to the increase in profit, the market share of the company is likely to rise.
4. Increase in consumer loyalty, if the launch of the website was to go ahead then all ready existing consumers are likely to use the website from home. Allowing them to see and buy the products, meaning they are less likely to go and buy cosmetics from any of the competitors.
5. Expand, if other objectives are met it could lead to the company expanding. Meaning they could have websites for all the countries, and have offices and warehouses with supplies set-up in each country making it easier for them to distribute their products. This means the smoothannice.com could become worldwide well known product.
6. Increase share prices, if the other objectives shown above are met it will have a direct influence on the companies share price. If the profits, market share and consumer loyalty all increase then the share price will increase. This could lead to ...
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5. Expand, if other objectives are met it could lead to the company expanding. Meaning they could have websites for all the countries, and have offices and warehouses with supplies set-up in each country making it easier for them to distribute their products. This means the smoothannice.com could become worldwide well known product.
6. Increase share prices, if the other objectives shown above are met it will have a direct influence on the companies share price. If the profits, market share and consumer loyalty all increase then the share price will increase. This could lead to more people investing money into the business. Which could result in more money for the company to spend on products and designing new products.
With he help of e-commerce it is very likely that twiceasnice.com will meet their objectives set. As e-commerce does attract more people to look at your products, this is so as people from all corners of the world have access to the website as long as they have a computer and an Internet connection. If you were to have a look in appendix 1, you will see that the sales and profits made by companies using e-commerce is quite high. If this was to happen for smoothannice.com it could mean that they meet objectives 2,3 and 6.
If more and more people were to start using the website from all around the world, the companies profits would rise. This would mean they could expand by starting up in other countries making distribution of products faster and more efficient.
Benefits and costs of starting up smoothannice.com
Benefits
Costs
Product awareness. The companies' products would receive a lot more attention. Allowing people from all around the world to see their products.
Costs. Running a website could increase the companies costs. The costs of maintaining the website, advertising the website and a number of other things.
Access. People can go on the website at any time as the website is open for viewing 24hours a day 7 days a week.
Staff levels. The companies staff level may rise due to the fact that a lot more staff will be needed to maintain the website.
Increase in profits. If more people come on to the website and more people buy from the website, it would mean that the sales figures would increase resulting in an increase in profits.
Risk of failure. When setting up a website there is a risk that the website could fail. The most famous website that failed was www.boo.com. There were a number of reasons why boo.com failed and will be explained later in the report.
No use of intermediaries. Due to the fact that the company will be operating on the internet their will be no use of them using intermediaries such as retail outlets.
Lack of sales. There is a possibility that people will be very hesitant to use the internet to buy goods. For more detail look in the section marked 'Why people don't use the internet to buy goods?'
Advertising. Smoothannice.com can easily advertise their new website. They can pay a major website such as www.yahoo.com to let them advertise the cosmetics website, then a lot of people will see the new website. Also if twiceasnice.com is a success then a lot of companies will be willing to pay the company to let them put their domain name on the website.
Image of company. If the website is of a poor standard or is slow, then it could be reflected on the company. This could lead to the company gaining a poor image and people going to competitors to buy their cosmetics.
Build up consumer profiles. With the use of cookies twiceasnice.com can build up a consumer profile. Showing what the consumer likes to buy and how much they are likely to spend on the website each week.
Security. Another cost is the fact that people can hack into the companies database. This means they could steal company information and information about customers such as credit card numbers. This could lead to the company getting a bad image.
Increase in consumer loyalty. Allowing consumers to buy the products at any time or place, will increase the consumer loyalty. As it will mean the consumer is less likely to go and shop at other cosmetic stores, as they can use smoothannice.com and buy the products from home.
Increase in demand. Due to the fact that more people will see the companies product, it could lead to more of a demand in the companies products.
Barriers of e-commerce
A major barrier to e-commerce is that customers don't trust e-commerce, they can't find what they're looking for and there's no easy way to pay for the products. Customers are worried about people hacking in into the companies profile and stealing their credit card numbers and personal information. Most shoppers still aren't convinced that it's worthwhile to hook up to the Internet, search for shopping sites, wait for the images to download, try to figure out the ordering process, and then worry about whether their credit card numbers will be filched by a hacker.
Below is a list of other barriers to e-commerce.
* Inflexibility of internal business structure which can lead to lack of co-ordination and poor communication between departments
* Lack of commitment to the project
* No clear promotional or marketing strategy
* Failure to identify and meet customer needs for this new sales channel
* Organisational culture might discourage change
* Channel conflicts (i.e. what will be the effect on other sales channels if this one is developed)
* Scarcity of personnel with appropriate skills
* Need for technical skills to maintain and keep the site up to date
* Costs
* Legal constraints
* Lack of trust in the internet as being a safe and secure way of conducting business.
* Customers attitude (which may include a lack of understanding of the internet)
* Inability to cope with any increased demand caused by e-commerce
* Difficulty in forecasting the effect on demand
* Effect on company image of poor or slow site/service (e.g. estate agencies may not update sites when properties are sold and on-line recruitment agencies may not update when vacancies are filled).
It is possible for twiceasnice.com to overcome these barriers, below is a list of things smoothannice.com can do to overcome these barriers.
* Taking advantage of current government support
* Help from organisations such as AEB (Alliance for Electronic Business)
* Commercial websites offering help and support e.g. PriceWaterhouseCoopers (www.e.business.pwcglobal.com)
* Training and development of staff
* Recruiting new staff
* Customer education and awareness campaigns
* Using case studies of success (many of which are available on the web)
* Using businesses which offer services in such areas as web design, domain names and software to support the e-commerce function
* Networking with other organisations e.g. First Tuesday North
* A sound business plan
Abiding the laws
When the website is launched it is the law that smoothannice.com abide by the following laws.
Data protection act 1984
This act, introduced in 1984, is an attempt to protect members of the public from the misuse of personal data that are held about them on computer systems. Data users must specify the purpose of storing the data. The Data protection Act states that users of such systems should keep to the following rules:
* The data should only be held for specified purposes.
* The data shall not be disclosed to third parties unless doing so is compatible with the specified purposes.
* Only data needed for the specified purposes shall be stored.
* The data must be kept up-to-date and accurate
* The data must not be kept after they are needed for the specified purposes.
* The data must be kept securely
The individual whose data are stored also has some rights under the act:
* He/she is entitled to be informed when data is held about them.
* He/she is entitled to access any data held about them. (the data user may charge for this.)
* He/she is entitled to have any errors in the data corrected or erased.
Computer misuse act 1990
In the early 1980's in the UK hacking was not illegal. Some universities stipulated that hacking, especially where damage was done to data files, was a disciplinary offence, but there was no legislative framework from within which a criminal prosecution could be bought. This situation was rectified by the Computer Misuse Act 1990 which defined three specific criminal offences to deal with the problems of hacking, viruses and other nuisances. The offences are:
* Unauthorised access to computer programs and data;
* Unauthorised access with a further criminal intent;
* Unauthorised modification of computer material (i.e. programs or data).
To date there have been relatively few prosecutions under this law - probably because most organisations are reluctant to admit that their security procedures have been breached, which might lead to a loss of confidence on the part of their clients.
The sales of goods act 1979
This law states that goods sold to consumers should meet three main conditions.
. That they are merchantable quality which means that goods should not have any serious flaws or problems with them.
2. That they are fit they are fit for the purpose for which they were purchased (e.g. paint which is sold to be used outdoors should not begin to peel or flake with the first outbreak of poor weather conditions).
3. That they are as described. Thus, an anorak described as waterproof should not leak in the rain.
Supply of goods and services act, 1982
This seeks to protect users of services ensuring services are of 'merchantable quality' and at 'reasonable rates'. For example, a holiday firm which booked clients into a four star hotel that turned out to be of lower quality would be in breach of the conditions. Breaches of this and the 1979 act are subject to civil law. An injured person can sue for breach of the act.
Sales and supply of goods act, 1994
This act amends the sale of goods act, 1979 and the supply of goods and services act, 1982 in favour of the buyer. For example, consumers now had a right to partial rejection. A buyer of a case of wine, may accept ten bottles, but reject the two which do not match the description ordered.
Trades description act, 1986
This prohibits false or misleading descriptions of goods or services. For example, a pair of shoes, which are described as leather, cannot be made from suede.
Why people don't use the Internet to buy goods?
The reason why a lot of people do not use the internet to buy products, is that they are concerned about the security of their details and about how the product will be delivered.
Customers are concerned about the fact that hackers could hack into the companies' database and get hold of their personal information. This is one of the major reasons why people do not like to buy products of the internet. Also it is a well-known fact that companies do not like to admit it as they think they will lose customers. This is because customers will again feel unsafe purchasing goods from the internet. It is now becoming a regular occurrence and you hear about it in the news every month that some major company has been hacked into. Even the massive windows have been hacked into recently.
Another major influence on people's decision not to buy products over the internet is that they worry about the delivery of the product. People are worried about how they will receive the product once they have paid for it. People are concerned about:
* Will the product be damaged?
* Will it be in the colour the customer requested?
* Will it be in the right size?
* How long will it take to arrive?
* Will it be the right product?
* And people most worry about is will the product actually arrive?
Due to people asking themselves these questions they are very likely to be put of buying products on the internet, when they know that they can go to a retail outlet and buy the product, were they can see the product and make sure that it meets all the requirements.
It is essential that smoothannice.com can persuade customers to buy on the internet. They can do this by reassuring customers that their personal information and details will not fall into the wrong hands. They can achieve this by offering customers a telephone number to pass their credit card number over instead of putting through the website. They would then have to reassure the customer that their product will arrive. It is essential for smoothannice.com to write how long it could take for the product to arrive e.g. they can write that it takes up to 7 working days for the product to arrive. This way it gives the company a chance to get the product to the customer. If the product as not arrived in seven days then the company will know that something is wrong and can offer the customer a discount in order to keep the companies good image.
Making smoothannice.com a successful website
In order to make smoothannice.com a successful website a lot of factors have to be taken into consideration. These factors will help smoothannice.com not become a failure like boo.com.
Design the website for all of target audience
The first factor that smoothannice.com has to think about is that does their website suit all internet connections. This means does the website run better on a 38.8kb connection or a 56kb connection. It should not run better on either. The website should run the same on any connection, if the website was to be slow on certain connection speeds then its very likely that some people will not come on the website. This is because if smoothannice.com takes so long to load up on their computer then they will go to another website which takes very little time to load up. So the first factor that smoothannice.com will have to consider is how they will make sure that the website loads up as fast as possible on any connection. The best way to make sure that the website loads up as fast as possible is to have not so many pictures, as these are the main reasons why loading up a website takes so long.
Easy to use interface
It is essential that twiceasnice.com has a easy to use interface, this way customers can easily find what they are looking for weather it is products to buy or information on the company. Many people will not use the website if it is to complicated to use, this is very off putting. Why would you g to a website that is to complicated to use and you don't know what is happening when you can go to another website which has an easy to use interface. As you can see in the design section of my report my user interface will be very simplistic.
Treat customers as if they are gold
If a mistake has occurred and a customer has been overcharged. Then make sure you communicate to the customer in a good manner. Do not keep asking the customer if he/she is sure or they might think that you think that they are lying and this will not give the company a good image. Look up the records and if the customer is wrong be polite and explain to them carefully about how the costs for the product(s) is correct. If the customer is correct and has been overcharged then apologise and offer the customer a discount or compensate them some way. This will make the customer feel appreciated and will give the company a good image, it is also very likely that this customer will purchase their goods on smoothannice.com again.
Don't start up the website before it is ready
It is important that smoothannice.com is not released before it is ready and been tested. If the website is incomplete and the front or back of the internet is not complete, then the website is sure to fail. Say the website has been launched but is incomplete, then a customer clicks on a product or button but nothing happens after that, the customer will become impatient and leave the website. So it is important to make sure that the website is ready to be launched and if not try to put the deadline back a bit.
Have a good plan
It is essential for twiceasnice.com to have a good plan, a good plan will lead to a good website. It is important to have a good plan so employees know what they have to do and when they have to do them by. It is no good people working on bits by themselves as someone else might be doing the same job and their will be lack of communication. So it is extremely important that smoothannice.com has a good plan so that every one works together and no one repeats a job which could lead to a waste of money and time.
Offer alternatives
One-way to become a successful website is to offer alternative methods of purchasing products. One of the main reasons why people don't use the internet to purchase goods is because that they fear that their credit card number will get into the wrong hands. So if smoothannice.com offer a telephone number which the customer can ring to say their credit card number it will make the customer feel more safe and make them shop at the website again. It will be essential then for the website to put codes next to each product so that when the customer rings up they can give the product number, their credit card number and their address. Some new websites have started to take cash. The way they do this is that they phone the customer the day before they deliver the product and tell them when they are coming, then the customer can pay in cash as soon as the goods have arrived.
Plan
In this section I will discuss on the plan I have for making smoothannice.com cosmetics a successful website.
I suggest that the company hire about 10 computer technicians to create and maintain the website. These technicians will be expensive but at least the website will be of high quality and safe to use. These technicians then should work together, each having a job to do but contrasting to another member. This way at least no job will be repeated and no time or money will be wasted. Then after the website has been designed they can watch the site incase any errors occur or if the site contains a virus or if someone has hacked into the companies database. These technicians do not have to work every day f the week it would be good for them to work on a full time basis when constructing the website then part time afterwards say 3 days a week.
I also propose that we get a focus group in. This way the company can find out what attracts people to a website and is of putting of a website. They can find out what colours should be used how the title should look and so on. Then we can analysis the focus groups opinions and try to design a website that will attract people to shop for their cosmetics on it. A focus group is an easy and cheap way of collecting data on how people think the website should look and how it should perform.
It is important for the website to be advertised otherwise no will know about its existence. The company can write on their products packaging the website address, this is so existing customers can see the address and visit it to order their products. Also it would be a good idea if the company could get a very popular website such as www.yahoo.com to let the company advertise on their web page, this is so people can see the web page address and when the page will be launched. Also people will think that the website will be a good and trustable website as yahoo.com has a good image and this could be reflected on to smoothannice.com.
It is essential that the website is tested before it is launched, this way the website can be checked for any problems. The testing will be performed by existing consumers. This is so that the company can see if the website is easy to use and if the customers like how the website performs. If the company let the technicians do the testing it will not prove to be useful as they have designed the website and know what do, were as the customer has never seen the website and can truthfully tell the company if they do or do not like the website. But the technicians will test the website to see if there are any faults which maybe the customer does not see and making sure that the website runs efficiently on all speeds of internet connection, but only two or three technicians might be needed for this.
Below is a table showing the costs of the company making and then running the website.
Constructing the website
Job
Employee(s)
Hourly rate per employee
Maximum hours needed
Total
Constructing the website
Technicians * 10
21.56
336
£7244.16
Testing
Technicians * 3
21.56
0
£215.60
Maintaining the website
Job
Employee(s)
Hourly rate per employee
Maximum hours needed
Total
Maintaining the website
Technicians * 3
5.86
20 (per week)
£317.20
Security
Security organisation
-
-
£80 per month
Advertising
Advertising
Costs (monthly)
Internet
000.00
Newspapers
50.00
Billboards
250.00
Registering domain name
Domain name
Cost (yearly)
www.smoothannice.com
£80
Total costs of constructing, maintaining and advertising the website (after first year)
£40,525.36
So overall to construct, maintain and advertise he website it will cost over £40,000 but this does not take into consideration when the website has to be updated or when there is a virus. So the costs of running the website can increase over
The construction of the website will start at the beginning of August, this will give the company a lot of time to prepare for the Christmas demand and sales. If there is a problem there is enough time for the company to solve the problem and still be ready by the Christmas season. I have chosen to launch the website close to the Christmas season as a lot of people will be buying gifts. So they can go to the website and buy the product saving them a lot of time. Also the website is likely to get a lot hits during the Christmas season as people would rather shop from home. If the website performs good during the this time the company and web page will get a good image and the profit levels and sales level will increase.
Below is my plan showing how and by when the website should be ready.
Month
Tasks to be done
August
The construction of the website starts and for the first month we collect market research by asking consumers what they expect of the website. During this month a lot of questionnaires will be handed out (can be found in appendix), the results will be analysed and towards the end of this month the design of the website will be made. The website will be deigned on the basis of the results of the questionnaire
September
Bring in the technicians show them the design of the website that the company would like them to design. Find out if there are any problems with the design. Keep the technicians informed that we wont the sight to load up fast on any connections and for the user face to be simplistic. The technicians will be working 5 days a week with weekends of. Start the advertising of the web page, by having a few newspapers containing the address. A choice will also be made on what security program will be used, the technicians will also be asked for their opinions.
October
During this month the advertising of the website will be more intense the address will be placed on the products packaging, also their will be pop ups of the advertisements on popular websites such as www.yahoo.com which will show the address www.smoothannice.com
Also during this month the website will be put through numerous tests by customers and by the technicians. A focus group will be performed, this way we can find out if the website is in good working condition. The security company will be chosen and called in to install their program.
November
The website will be launched, this means their will be enough time for people to find out about the new website and for them to get used to it. We will be looking out for any complaints people have about the website.
December
By this time the website should be up and running, customers who have been using the internet site will be well established with it. This means the website will be ready to take in orders for the Christmas season.
Then after the December the website will be running smoothly and hopefully the website would have many hits over the Christmas season. Also by then the website will be trusted by many customers. Due to the Christmas season the website should have made a lot of sales and had a lot of visitors. This would mean my objectives are being met as the product awareness levels would have raised. Also the number of sales made should be high which means profits would be high. So that means objective 2 would have been met. This would lead to a increase market share and share price. If the website was to increase the companies market share then there is likely to be more shareholders. Which will mean more people investing money into the business, with this new found money the company can expand by setting up warehouses in other countries so that they can make distribution easier.
Marketing mix of smoothannice.com
Below is a description of my marketing mix, with this and the plan the objectives that have been set should be met.
Price - the price is one of the main reasons why people buy stock of the internet instead of buying stock from a retail outlet. So to attract customers it will be essential for smoothannice.com to charge low prices. Below is a table of cosmetics that are priced by Boots compared against the price that will be charged over the website.
Product
Boots Price
Smoothannice.com price
Difference in Price
Nail Polish
£2.50
£1.80
-£0.70p
No.7 eye makeup
£6.00
£5.00
-£1.00
Rimmel Lipstick
£15.00
£11.00
-£4.00
Coco Chanel Fragrance
£40.00
£32.00
-£8.00
Lip Gloss
£5.00
£4.00
-£1.00
With the website charging these prices I believe that many people will be attracted to the website and that their will be enough profit to cover the costs.
Product - the products that will be for sale on the website will be mainly cosmetics and fragrances. Below is a list of some products that will be for sale on the website.
* Nail polish and remover
* Makeup
* Lipstick
* Fragrances
* Lip gloss
* And many other cosmetics
With the website having all the cosmetics that anyone needs, they will not have to go the shop when they can just buy the goods from the comfort of their own home.
Place - the place where the products will be sold is on the internet, which allows people from all round the U.K and from all corners of the earth to see the products. Placing the products for sale on the internet means you are likely to get much more customers than you would through a retail outlet.
Promotion - the website will be promoted on billboards and the internet and in newspapers. The billboard will read the website and will tell people that they can buy their cosmetics from home. Their will be pop up advertisements on existing popular websites such as www.yahoo.com this is so a lot of people can see the website address and what the website contains. Also I think that adverts should be placed in newspapers such as 'The Sun' as help the population of the UK read that paper and they can buy cosmetics for their wives, mothers, sisters, cousins and so on.
Advantage VS Disadvantages
On smoothannice.com
Below is a table showing the advantages matched up with the disadvantages of running the website.
Advantages
Disadvantages
Costs - no need for intermediaries such as retail outlets, and no sales advisors are needed.
Costs - although no retail outlet is no longer required, the company will have to employ more staff to construct and to maintain the website.
Increase in sales - with setting up a website it can lead to an increase in the companies sales.
No sales - people might no like buying goods over the internet so they might not buy any goods from smoothannice.com.
Increase in profit - with the increase in sales there is sure to be an increase in profit.
Increase in costs - if little sales are made over the new website then the company is set to lose money as their will not be enough money coming into the business to cover the costs.
Become well known name - with everyone being able to see the website no matter where they are in the world, then the popularity of the company will rise. This means they will become a well-known name.
Failing - if the company do not have a lot of sales over the internet they will fail, this could mean existing consumers will lose faith in them and soon everyone will forget their name.
Improving image - if the website is a success this will give the company a very good image.
Gaining bad image - if the website fails then the company will be likely to adopt a bad image.
As you can see there are many advantages and disadvantages to starting up the website. But I believe the risk of failure is small, and I am 80% sure that the website will be a success and that they will attract customers.
Impact of e-commerce
In this section I will discuss the impact e-commerce can have on the company.
When the cosmetics company start up the website, there are six main areas where the business will have an impact on.
Sales - when the website starts up, it is sure to increase the sales volume. With more and more people being able to see the companies products, the more chance there is of the company selling more products.
Increase in share price - if the website becomes successful and makes the company even bigger then the price of the companies shares are set to rise. If the share price rise then this will attract people to buy shares and to incest money into the company so that they can buy more and new products.
Employee levels - with the company operating over the internet it could lead to people losing and gaining their jobs. A lot of jobs could be lost if the company start to operate on the internet, there could be a lose as not many retail outlets will be needed as everyone can buy the products over the internet. But then more jobs might be needed to watch over the website and employees to pick out the stock from the warehouse and post them.
Costs - the costs for the company could rise as a lot more stock will be needed and staff will be needed to look after the website. Computer technicians are very expensive and quite a few could be needed in case there is a virus and or if there is an error.
Competitors - the website will also have a massive impact on the companies competitors. It could be that the competitors start to lose customers as they prefer to use smoothannice.com from home. So competitors might try to copy smoothannice.com so might set-up a website is well. It is a massive advantage for the company to set-up smoothannice.com because if people start to use the website they are unlikely to shop on another website as they can trust smoothannice.com.
Image of the company - the image of the company will depend largely on weather the website is a success or not. If the website is a success, if the website runs smoothly and it there is no reports of hacking then the image of company will be a good one. But if the website has problems and have had reports of hacking the company will gain a bad image. This could then result in the company losing sales and profits, which could result in losses of jobs and drop in share prices.
Customers - with the launch of the website the amount of customers the company has will rise. This is because anyone from anywhere can have access to the web page as long as they have a computer and an internet connection. These customers can be from any part of the U.K or from any part of the world. The customer levels could also fall if the website is a failure this could be reflected on the company so customers night stop shopping at any of their retail outlets.
Demand levels - with the opening of the website, I have already explained that the customer levels could rise. If the amount of customers rise then it is for sure that the demand levels will rise. It is important that the company can deal with the higher demand level. Also it is important that the company has enough stock in their warehouse to deal with high levels of demand during holiday seasons.
Suppliers - if the demand level is to rise then it is important that the company can get suppliers to quickly supply. The impact that the website will have on the companies suppliers is that it can give them more business opportunities as it is likely that smoothannice.com will have a lot of demand.
Profits - as I have mentioned above due to the website the customer and sale level are both set to rise. These two factors will have a massive knock on effect to the profit. Also if the profit has increased due to a direct link with the website then this would mean that the website is a success. But there is a reverse effect. If the website is not of a good quality and is not a success this could mean that the profit level of the company will drop. Also if the website is a failure their will be no money made by the website to cover the costs of constructing and maintaining the website.
Conclusion
I would like to conclude at the end of this report that I think that the cosmetics company should launce the website. After measuring up the costs and benefits of launching the website I decided to go for the website as I believe the benefits are to strong for the costs.
Although some companies have failed with their own websites as I believe if the website is to follow my plan then it can only be a success. I believe that the website will have a immediate success with the launch being so close to the Christmas season, so this will give it a great foundation to build on, and will not make the same mistakes as www.boo.com.
Below are the outcomes that I believe will be a direct result from smoothannice.com:
* Increase in profit
* Have worldwide status
* Increases in market share
* Increase in share price
* Increase in consumer levels
* Increase in consumer loyalty
So I think that it would be a great money maker if the company construct the website, and will blow away their competitors.
HARMINDER BIRK
BUSINESS
E-COMMERCE
