Bear, DE, January 29, 2010 --(PR.com)-- eValuShop Inc has studied the business practices adopted by 55 established online retailers, and identified the effective e-commerce strategies essential for building a high-growth retailing business online. Findings from this research has helped eValuShop Inc adopt effective e-commerce practices on its online department store cum peer-to-peer (P2P) auction platform.
The research attempted to examine the influences of an online retailer’s competitive profile on the adoption of 11 factors that have been identified as critical to e-commerce’s success in previous studies. The term, competitive profile, is used to refer to the strategic decisions made by top management that define the characteristics of a retailing business pertaining to product categorization, growth strategy, competitive focus, phase of growth and channel strategy. The 11 factors are commitment, content, convenience, control, interaction, community, price sensitivity, brand image, partnership, process improvement, and integration.
Companies employing more than 200 employees and start-ups with less than two-years involvement in e-commerce were excluded from the survey. Studies showed that more than 75 percent of e-commerce start-ups failed within the first two years. Those that survived the initial two years must have done something right, and their inputs would contribute valuable insights into this study. Suitable respondents were asked to evaluate the frequency of adopting each of the 58 e-commerce practices identified from the 11 critical success factors.
The research identified the following fundamental growth factors:
Commitment. The owner’s capabilities and commitment to grow the business is a very important determinant of e-commerce success. Committed owners are more willing to adapt to market changes, reinvent their businesses continuously and adopt appropriate technologies to computerize their operations and build system scalability to cater to rapid growth.
Content. The Web site serves as a focal point for gathering, sharing and disseminating product, sales and marketing information. Web content must be accurate, informative, up-to-date, easy-to-understand, easy to access and relevant to the customer’s need at specific point in time. If a customer looks at one product, the e-store should be capable of presenting related products on the sides to help the customer make a better choice. In particular, merchants can consider offering some incentives to encourage customers to contribute content such as product reviews, shopping tips, and hobbies. Such content are highly valued by other shoppers.
Control. Online retailers must put in place control systems to track and respond to customers’ queries, handle complaints, feedback and product returns, track order fulfillment, process online transactions, control credit risks, and conduct regular operational audits to measure and correct any lapse in customers‘ expectation and perception of service quality for key business processes. The systems should also make this information available to customers in the password-protected account section.
Partnership. Partnership is particularly important to small businesses because resource scarcity compels them to work closely with customers, suppliers and business partners to leverage brand awareness, improve marketing effectiveness, launch customized products, pursue new market opportunities and streamline business operations. Most importantly, the ability to involve customers as stakeholders through affiliate program, P2P auctions, product reviews and other Web 2.0 concepts is crucial to an online business’ success - a phenomenon substantiated by the rapid growth and success of social networking sites such as Facebook, MySpace, YouTube, Wikipedia and others.
Integration. Selling products online is highly price-sensitive. To sell products at below market average prices, an online retailer must raise operational efficiency through process computerization and system integration to keep operating costs low and maintain profitability. Many small enterprises do not have the technical expertise or resources to fully computerize their operations and choose to ignore this important capability for supporting high volume business and delivering high service quality, performance and productivity. A three-staged process is proposed for small businesses - start integrating with the systems of technologically advanced business partners, followed by selected in-house integration, before moving into full integration of internal and external IT systems.
Adopting the above factors will prepare an online retailer for rapid growth. However, there is some fine-tuning to be done based on the retailer’s competitive profile. Broadly, retailers can be divided into two groups based on product categorization - shopping and specialty goods.
Shopping: Community, Process Improvement & Integration
Retailers adopting a mix of low-cost and differentiation strategies generally deploy more resources to build online communities to encourage interactions among shoppers through Web 2.0 applications such as forums, blogs, P2P auctions, independent product reviews. A vibrant online community offers many opportunities for the retailers to increase sales and profitability. The study also found that online retailers selling shopping goods generally deploy more resources in process improvement and system integration than specialty retailers. This is understandable because shopping goods are more price-sensitive than specialty goods. There is a greater need for retailers selling shopping goods to raise operational efficiency and keep operating costs low.
Specialty: Community, Price Sensitivity
Specialty retailers adopting differentiation strategies also rely on building vibrant online communities to increase sales and profitability, while those adopting low-cost strategies tend to compete primarily on prices.
Other factors not mentioned above cannot be ignored. All online retailers are expected to implement the essential practices under each of the 11 critical success factors to ensure the smooth running of the e-commerce operations, except that more efforts and resources should be deployed on the fundamental growth factors, community and process improvement factors. eValuShop.com is a real case study that applies the research findings into its design and development. Hopefully, it will inspire more small businesses to venture into e-commerce.
Research Paper: Effective E-Commerce Strategies for Small Online Retailers
Tan, Patrick J.S., Sharma, Ravi S. and Theng, Yin-Leng, Effective E-Commerce Strategies for Small Online Retailers (September 10, 2009). International Journal of Electronic Business, Vol. 7, No. 5, pp.445–472, 2009 . Available at SSRN: http://ssrn.com/abstract=1471227
You can send your queries to Patrick Tan, President of EVALUSHOP INC, via fax or email. If you prefer to talk over the phone, please send an email to Patrick Tan to arrange an appointment. Thank you.
Biographical Note: Patrick J.S. Tan holds a MSc degree in Information Systems from Singapore’s Nanyang Technological University, and a BSc degree in Business Administration and an MBA degree in Finance from Hawaii Pacific University. He is the former e-Business Manager of a leading department store in Singapore. His self-published book, Success with Online Retailing for Small Businesses, won the ForeWord Magazine’s Book of the Year 2003 Finalist award. He believes the e-commerce concept is fundamentally sound and viable as a mainstream activity and sets up www.evalushop.com to pursue his interest in developing global e-commerce, e-supply chain and order fulfillment systems.
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