1. Describe and Compare Online and Offline Environment for a Product or Product Group
E-commerce is simply any business where goods and services are exchanged through the electronic gadgets using internet. With e-commerce traders and sellers exchange goods and services without physical contacts. E-commerce is divided into several major parts which are: consumer to consumer, business to consumer, business to government, business to business and mobile commerce. At the moment, e-commerce between businesses contributes over a half of the online business done today. One of the products that have been revolutionized by e-commerce is book selling which went viral when the concept was first introduced in the mid-1990s. It was that time when internet was picking hence opening many business opportunities which could easily be done online (Bosman 2008).
1.1 How the Product is Sold Through the Online Environment
This type of transaction was easily adapted by consumers worldwide to the extent of almost wiping out physical book stores from the market. For example, in the United States this move made large book stores to introduce their online websites in order to compete for sales as their profits dwindled due to mass preference of consumers to online shops. The idea of selling books was introduced by the Amazon.com which is the world largest online business of today (Sears 2007). The success also led the company to incorporate selling of goods online as well as triggered other firms to join the market. The trend is likely to increase with time as more and more people get access to the internet. Technology improvement in this sphere means decreasing of prices of electronic gadgets and communication and increasing of availability of information (Cohen 1998).
Prior to introduction of e-commerce books selling was generally dominated by large physical book stores. These stores stored a maximum of ten thousands books. The use of physical stores meant that they could not easily keep every book on the shelf. The implication was that sometimes consumers could not easily get the books they were looking for especially if the books were not latest editions. Another shortcoming was the fact that it was always hard to search for a specific book manually. The accessibility of books was also a challenge, especially for those people who lived in small towns due to the fact that the stores there are smaller and lacked variety. The consumers did not have the option of comparing prices from different stores especially for those who had only one store in their local area. This generally meant that sales were always on the optimal and consumers’ needs were not always taken care of (ISM 1968).
On the other hand, online selling of books made the sales to go up due to the following: selling only meant that there was no need to rent physical stores in the cities which are expensive. The advantage was easily transferred to cheap prices, hence, attracting more consumers. Online consumers can easily search for a book of their choice by simply pressing a button. Online stores can keep millions of books and deliver them at the consumer’s request since they do not require physical space. This means that even old publications can be easily traced on the internet (A9.com 2004).
Online shops also provide the customers with other services like a variety of books about the topic of their choice, hence, giving the consumers options. The delivery option means that books can be delivered anywhere in the world and this has considerably increased the market base. It also means that consumers are no longer hindered by their geographical locations when they want to purchase books of their choice. Other advantage is the option of having an e-book which can easily sell and be downloaded by the consumer giving them even more options. All these options coupled by location have led to success of online books business (E-business 1998).
1.2 Comparison Between the Online and Offline Business
In comparison there are some aspects that stand up between the online and offline sales. Some of them include the prices which are different due to different cost of running the businesses. Online business is always cheaper due to workforce and other costs associated with physical premises. This means online business can sell its products at cheaper prices and still make good returns. Therefore, books sold online are always cheaper compared with other goods sold on physical book stores. Secondly, the geographical location or simply the ability of the seller to supply goods where they are needed at the right time is enhanced. This means using online option the place is always guaranteed since consumers can access goods from almost everywhere across the world. When they purchase online, their goods are easily transported to their destination. The seller can use social media and other avenues to target specific segment of consumers. This gives the business a wide market base compared to off line sales which have physical constrains.
Thirdly, online selling of books provides different selling modes, thus, consumers get what they want. They have an option of getting electronic books which they can easily download to their electronic gadgets. This can be convenient for the consumers who rarely use hard copies of books. Other advantages include the fact that the consumers get a chance to evaluate the product and also access the preview of previous consumers giving them profound knowledge about the product in question. The online option is, therefore, better compared to physical book stores which hardly offer the above services. Lastly, in terms of promotion, online has an advantage over the physical stores due to the coverage area. Although, some physical stores may use internet for promotion they only appeal to the consumers in their locality. The fact that online selling is not time or geographical bound like other promotional services e.g. newspapers and television, coupled by the fact it is cheaper than other channels makes it effective. Consequently, online business can be very effective in terms of sales and price management (Lurther 2001).
2.0 Analyze How Value is created by Value Chain Model
Value is created by incorporating factors of productions, marketing and actual sales in order to produce goods that can compete with alternatives. The goods should, therefore, be prepared in a way that promotes quality in terms of an item and the market price so the consumers can get optimum satisfaction. This means that a company should make sure that it promotes uniqueness of its products, which will eventually create a successful brand (Abdalla & Sheales 2005)
2.1 The Value Chain Model
The model is based on the assumption that several factors must be organized systematically for an organization to deliver a product that is acceptable to the consumer in terms of quality and price. The model groups these factors activities in two sub groups which are the primary and support. The former involves logistics from production to sales while the latter entails what makes the primary activities effective such as finance, technology and infrastructure (Pal & Lee 2005).
2.2 How Value Is Created In Online Book Selling Strategy
On the online book selling the value added comes in terms of acquiring the books directly from the publishers. The mode is advantageous as it eliminates the suppliers, hence, making the books cheaper. In the case of Amazon .com they purchase a lot of books which means that they can easily negotiate prices with the publishers making them lower. The company also provides previews of books to potential customers and internet advertisement which is not location or time bound which along with delivery to any part of the world helps to boost its sales. On supportive activities, some of the factors that stand out include the fact that consumers can easily search for books of their choice in a few minutes. They also get a chance to have an electronic book if they wish (Trout & Rivkin 1996).
3.0 Make Recommendations for Three Significant Improvements That Can Lead to Increased Consumer Use of Online Purchasing
For the last two decades, there has been a tremendous increase in the number of internet users across the globe. This has been facilitated by improved technology which means the prices of electronic gadgets has reduced and the gadgets are easily accessible to the population. Introduction of Internet has led to easy access to various information (Kotler 1986).
3.1 Recommendation 1
One of the factors that can boost sales should be the vigorous campaign about online buying, due to the fact that most people do not know about online purchasing and how it works especially in developing countries where the use of credit card and other services is minimal. However, the developing countries are increasing their purchasing power and their consumption has been rising steadily for the last few decades. One of the benefits it can bring is increased selling of books in those areas due to large market base (Wood 2003).
3.2 Recommendation 2
It is also important to enhance an option of gathering consumers’ personal contacts. This works to create an avenue where the company can constantly update their clients about products. Organizations can also inform their clients with latest products and at the same time get direct feedback from their consumers about the product in question. In case of book sales, it can help create loyalty which is essential for enlarging company’s market base (Mezner 2009).
3.3. Recommendation 3
Security is also crucial in order to maximize online sales as most potential consumers shy away due to online theft. The reason is that it creates confidence among consumers about the goods they are buying. Security will also make consumers trust online shops, thus, boosting the company profitability (Mooij 2004.)
Internet has, undoubtedly, opened up many business opportunities across the globe; this can be attributed to the fact that it covers a large area in terms of geographical locations. It has led to increased awareness of organizations’ compared to pre internet era. For example, most companies run their own websites which they utilize to advertise their goods and services and at the same time deliver their core values and development goals to their clients. Internet has also created a platform where consumers can easily interact with the management of organization and express their wishes (Coyle 2002).
Technology has revolutionized how consumers shop for goods and services. This can be attributed to the fact that they can easily access goods of their choice through the internet. One of the significant aspects of the internet is the ability to give consumers a chance to compare prices and quality of different products (Seybold & Marshak 1998)
Finally, with improved consumer awareness of the benefits of shopping online coupled with ever increasing internet usage round the world the e-business has a lot of potential. In fact, it has been rising tremendously for the last two decades. Other potential of e-business is the emergency of social media which has consequently led to easy spread of information. Social media uses demographic data which can help organizations to direct their efforts to their target segment. Therefore, internet has revolutionized book selling business, by making it cheaper and also giving the consumers a variety of books as it has no limitations unlike physical stores, which can only keep a certain number of books at a time.