UNIVERSITY OF MUMBAI

PROJECT REPORT ON
IMPACT OF ONLINE SHOPPING ON SMALL BUSINESS
IN PARTIAL FULFILLMENT OF BACHELOR OF
MANAGEMENT STUDIES
2015-16
SUBMITTED BY:
BHUNESH.CHANDRAKANT.SHAH
(ROLL NO. 4160)

RESEARCH GUIDE:
ASST. PROF. RUCHIKA BASSI

SPECIALIZATION

MAHATMA EDUCATION SOCIETY OF

PILLAI COLLEGE ARTS COMMERCE& SCIENCE,

NEW PANVEL

DECLARATION

I, BHUNESH CHANDRAKANT SHAH of TYBMS, Mahatma Education society of

Arts Commerce &Science, New Panvel, Here by declared that I have completed project
report on A Study on Impact OF ONLINE SHOPPING ON SMALL BUSINESS
submitted by me is true and original to the best of my knowledge.

Date of submission:

Signature of student

ACKNOWLEDGEMENT

Take this opportunity to express my profound gratitude and deep regards to my Prof.
Ruchica Bassi for monitoring and constant encouragement throughout the course of this
thesis. The blessings, help and guidance given by their time to time shall carry me a long
way in the journey of life on which I am about to embark.

I am obliged to staff members of BMS department, for the valuable information provided
by them in their respective fields, I am grateful for their cooperation during the period of
my assignment.

Lastly, I thank all my parents, brothers, sisters and friends for their constant
encouragement without which this assignment would not be possible.

BHUNESH SHAH

Chapter No.

Content

Page NO.

Introduction

Conceptual

Framework
3

Data collection and

Interpretation
4

Conclusion

Finding and

47

Suggestions
6

Wiblography

Chapter 1
INTRODUCTION

63

Since the Internet has become a business tool instead of merely a research network,
businesses both large and small have seized the opportunity to explore how to use it to
become more productive and competitive. At the same time, media reports have
speculated how the Internet will allow businesses to access a global-wide customer base
up to millions. It is now better known that although there may be a large number of users
on the Internet and that the potential of doing business with these users does exist, it is
nonetheless not straightforward, or at least getting business directly from the Internet is
not as simple as it was first thought. Blatant advertising and broadcasting "make-moneyfast" opportunities only end up attracting disapproval instead of actual business.
However, does it mean that the once-promising global network has lost its charm, or
rather that harnessing the potentials of the Internet requires a more in-depth learning
process? With the newer concepts such as the intranet or even the extranet, there are more
opportunities to exploit the Internet technology beyond its existence as a common global
network to encompass enterprise-wide networks and inter-organizational systems. Given
all these developments, what are the effects on small businesses? Can small businesses
use the Internet to become more competitive and responsive to the global market? What
are the barriers and realities when small businesses attempt to use the Internet?
As business activities on the Internet gain momentum, there are an increasing number of
research efforts focusing on the impact of the Internet on existing business models (see,
for example, Cronin, et al., 1994; Benjamin and Wigand, 1995; Hoffman and Novak,
1996; Quelch and Klein, 1996). However, relatively few focus on how the Internet has
affected small businesses. Barker (1994: 81) is among the first who conducted research
on the importance of the Internet for small businesses. He concluded that searching for
customer information and obtaining specific information for marketing purposes were the
most important benefits the Internet offered to small businesses. He projected that small
businesses in the well-established "Internet industries," knowledge and information
industries, niche markets and new business types which fit well when conducted over the
Internet are the main groups that will be first to benefit from the Internet. Since then, a

Number of other researchers have studied different aspects of small business and Internet
use. For example, Fuller and Jenkins (1995) reported an experimental study on the
learning and business transformation process of small business adoption. They found that
the information richness of the environment in which the firm operates, the necessity to
collaborate in order to compete, and the business cultures present in communicating
electronically all play an important role in ongoing Internet use. Poon and Swagman
(1995) analyzed the government policies of countries with well-developed Internet
connectivity and found that all were encouraging small businesses to use the so-called
information superhighway to become more effective and efficient in the global
competition. More recently, more diversified studies on small business Internet use have
emerged. Abell and Lim (1996) have carried out a survey study on the use of the Internet
by small businesses in New Zealand. Lymer et al. (1996) constructed a business impact
model based on a number of case studies on how the Internet impacts on different aspects
of a firm. Sieber (1996a, 1996b) studied how Swiss firms are using the Internet and the
issue of "virtuality" on future organizational forms. Although these are generally
exploratory studies, they have illustrated the current and potential impact that small
businesses face in the electronic commerce era.
In the following sections, we will first discuss a two-phase project on the study of
Australian small business Internet use with comparisons drawn with a study carried in the
UK. Then we present our findings and address some current and emerging issues faced
by small businesses when it comes to the business use of the Internet. Finally, we will
outline follow-on research projects based on this study.

OBJECTIVES
To gain knowledge about the decision making process regarding the consumer buying
behavior.

To identify the impact on small scale business.

To identify the strategies of retailers.
To identify the problems faced by consumers.
To identify the problems faced by retailers.

LIMITATIONS OF THE STUDY

Only one city (NaviMumbai) of the country had been considered. Findings might
vary according to the location, income level, standard of living etc. and all of
those factors had not been considered separately.

Chapter 2
RESEARCH METHODOLOGY

PRIMARY DATA:

Survey method, questionnaire.

SECONDARY DATA:
Internet, Newspapers.

Chapter 3
Conceptual framework

HISTORY OF ONLINE BUSINESS

Despite the fact that online shopping is relatively new trend in business sector its brief
history is filled with controversial events. The rapid growth of the popularity of the Web
from 1995 was accompanied by a highly profitable period for e-business companies.
Setting up a fully functioned e-business website was very easy and cost efficient and at
that time it was thought to guarantee success and profits. The number of e-business kept
growing in an attempt for everybody to have a share from the profit pie. On the turn of
the century, their number reached its peak and their profit opportunities and potential
financial growth was capped. This led to the huge stock market collapse of many ebusiness companies which had revaluated their strategic approach towards e-commerce,
growth of e-business started to increase again, reaching double digit level through the
current period.

WHAT IS DRIVING CONSUMERS TO SHOP ONLINE?

In the developed world, 77 out of every 100 people are now connected to the internet 2.
This high level of internet penetration coupled with a generation brought up online and
familiar with the digitally connected lifestyle, we think has led to comfort in sharing their
personal details online. With this comfort in using both the internet and sharing personal

details, it seems inevitable that savvy retailers would capitalize on these favorable market
characteristics.

According to research by Macquarie Bank, the online drive by consumers is being driven
by primarily by three things:
Price in a largely price transparent world, consumers are able to use the internet to
quickly and easily compare prices online. Websites such as Static Ice and Shopbot
aggregate pricing from various retailers and display them sorted by price. International
retailers who have the existing advantage of lower labor and occupancy costs have been
further helped by the strength of the Australian dollar, which made their prices relatively
cheaper still.
Convenience of the shopping experience Consumers cite convenience as being one of
the reasons of their shift to buying online. Consider that you can do all your research,
order and have your goods delivered to your doorstep without setting foot outside of your
own home, or looking up from your mobile screen.
The range of products available online Physical constraints can inhibit retailers from
displaying or carrying a full range of items, in contrast to online-only retailers who can
display any and every product they sell, and only pay for warehousing and postage costs.
Amazon for example, has an operating cost to sales ratio half that of
its in-store peer average. Furthermore, certain products are simply unavailable offline, for
example, media and entertainment content available from US and UK that do not have
local distribution licenses.

There is evidence to suggest that as consumers become more comfortable with the
experience of purchasing online4, that convenience and product range become relatively
more important as a deciding factor to continue shopping online. Price is the gatekeeper.

WHAT ARE THE IMPACTS TO RETAILERS?

Analysis by Exane BNP Paribas5 shows that in Europe, retailers face the combination of
stagnating retail sales, rapidly rising online sales and modestly growing space; causing
reduced sales density a measure of sales productivity on the basis of space.
On the other hand, retailers are being forced into investment spending in order to develop
new channels to compete with the online entrants.
Combining these issues, European retailers are facing a deteriorating external
environment, existing high fixed costs, as well as increased capital expenditure, which
means that retailer margins are likely to decrease.
Exane BNP estimate that the shift to multi-channel by European retailers will lead to a
24% reduction in operating profits. Its likely however, that this fall in profit will not
simply be borne by the retailer alone.

WHAT ARE THE RETAILERS DOING ABOUT THIS?

Globally, retailers have had to adapt to the changes ongoing in the market in order to
survive. The retail response to changes facing the industry appears to be toward strong,
more personalized engagement, flexibility and community. PSFK in its 2012 report The
Future of Retail described several key trends (amongst others) emerging in retail:

Shoppers and retailers trading data for more personalized service

Retailers using shopper data to construct personalized shopping experiences

Shoppers developing a community around a brand, and act as an affiliate for the
brand improving retail stickiness.
In Europe, where the prevailing culture of online shopping is more mature, retailers are
investing in developing multiple channels with which to do business with shoppers. The
multi-channel approach means that retailers are ideally indifferent to where a purchase
occurs, in person, online, through a mail order catalogue. The key to success in this
strategy appears to be a seamless integration across the different channels to ensure a
consistently engaging, quality experience for the customer. Neiman Marcus the United
States luxury store is a great example of integrating multiple channels. Neiman developed
a location-aware iPhone application called NM Service, which enables an opt-in service
letting customers program the app with their preferences which are pushed to sales staff
as the user enters the store. The sales associate at the store is provided with the users
social media information as well as the selected preferences of the application. The app
also works in reverse, allowing customers to set up appointments with sales staff and
identify who the manager of a store is.
Australian retailers currently enjoy the highest retail margins globally, according to
Macquarie Bank4. The high retail margins are driven by unique structural factors in the
Australian retail market, mainly labor and occupancy costs. Occupancy costs drive
around half of a retailers operating cost base. Retailers are pursuing

Productivity gains as a way of reducing their labor costs and there is evidence that
This investment in productivity is resulting in price competitiveness
This increased price competitiveness should help traditional Bricks and Mortar
(B&M) retailers claw back some of the substitution away to online retailers by
customers.
B&M retailers appear to be undertaking an integrated, multi-channel approach.
In order to compete against online players, it is clear to us that retailers are focusing on
shopping centers that provide the following favorable characteristics:

High productivity

Growth potential

Efficient layouts

Positive competitive dynamics

High shopper traffic

These characteristics are critical for landlords to ensure that their shopping centers
perform. Ultimately, landlords must have a clear understanding of the value they are
creating. If landlords can satisfy retailers on the above characteristics they will have a
strong shopping center.

WHAT ARE THE RISK TO SHOPPINGCENTRES?

Rental expenses can account for anywhere up to 45% of a retailers operating costs base6.
The strength of rents has been driven predominantly by structural factors such as retail
zoning laws, landlord market and the two decades of favorable macro conditions. These
factors combined have led to a low vacancy environment and strong returns for investors.
As these conditions change, it is inevitable that landlords will also need to adapt with the
changes to their lessee requirements and consumer spending habits.
Certain retail sectors are more at risk from the structural changes flowing through
economies at present. Research has shown that as the penetration of online shopping
increases the contours of the online purchasing landscape become more pronounced.
As online shopping penetration increases, shoppers are focused on purchasing
electronics, books, music, apparel, sporting and outdoor goods. On the flipside, food and
beverages, supermarkets, liquor, do-it-yourself and gardening, Luxury fashion and
healthcare tend to be less affected by the flight to retail and subsequently strong
performers.

HOW HAVE SHOPPING CENTRE LANDLORDS AND RETAILERS

RESPONDED?

Headlines have been predicting the demise of shopping centers since they were first
constructed in 1956. But to date this never eventuated. Shopping Centre landlords were
able to focus on providing the right leasing mix, right design and targeting the right
customers, consequently adapting to the changes facing the industry and the best
shopping Centre operators have been able to do this on a consistent basis.
Again today, the strongest asset managers and shopping centers have remixed their
portfolios, shifting away from industries which face the strongest headwinds, and
improving their engagement and lifestyle offerings. We believe the key to their continued
success will result from offering real points of difference over the internet shopping
experience, embracing the online evolution, introducing internet parcel pick up points
and creating a retail marketing mix that will minimize online comparisons.
By spring 2015, Simon Property Group will transform a wing of its new Long Island
shopping mall into a luxury wing, featuring Neiman Marcus and potentially other luxury
retailers as its anchor tenants6. Similarly in Melbourne, Chadstone shopping Centre is an
example of how strongly the luxury segment of the retail sector is performing with a
proposed expansion to the shopping Centre including a hotel, multi-story offices and
expanding the food and entertainment quarters.
The European experience shows, however, that a reliance on entertainment and food and
retail will not sustain the landlords profitability, food and cinema operators do not pay as

much as non-food retailers. Therefore, either: food and cinema rents will go up, another
industry will need to take up the slack or rental Income will decrease.

On the convenience side of the flight to online, landlords have begun investing in their
shopping centers to increase convenience in parking as well as offering digital solutions
to make it easier for consumers to navigate their center. Shopping Centre owners have
invested in mobile apps to help customers find what theyre looking for, including their
car on the return trip. To add to the parking convenience, Westfield has developed a
parking guidance system, a mobile app and provides valet parking at its centers. CFS
Retail Property Trust Group and GPT are following suit, with parking guidance systems
of their own as well.

HOW SHOULD INVESTORS THINK ABOUT POSITIONING THEIR

PORTFOLIOUS?

With the benefit of global exposure, investors can track different parts of the online retail
story. In the US, online shopping has captured 19% of the $110bn retail industry growth
since 20057.
Since online retailers have become prevalent in the US, the department store category and
the shopping mall property format have faced a significant decline.
Not all US shopping malls look set to suffer this fate, Simon Property Group, for example
has significantly outperformed relative to other US names.

Source: Bloomberg as at September 2013.

In the UK, internet retailing has taken 39% of industry growth since 2005, more than
double penetration in the US8. This is primarily driven by the different structural market
factors such as: a high population density, a well-established catalogue shopping industry,
high rental costs and long working hours.
Lessons from the UK show that the most exposed categories to internet retailing are:
video games, music, computer products and clothing9.
Land Securities provides a great example of the changes that have occurred over two
decades in shopping centers. In their most recent development10, Trinity Leeds, Leeds,
UK, 20% of occupancy is in food and beverage, as opposed to 20 years ago where only
5% of a shopping center would have food and beverage tenants11. Land Securities has

fully embraced the notion of providing consumers with an experience, and given their
strong portfolio of assets, their share price has reflected how theyve adapted to changes
in industry.

PROBLEMS OF ONLINE SHOPPING

Possible problems of interoperability, that means some e-business software or

applications does not fit with some hardware, or is incompatible with some operating
systems or other components.

Additional cost to request special Web servers and other infrastructures, in

addition to the network servers.

Integrating the internet and electronic commerce software with current databases

and applications difficulty.

The software development tools are still evolving and changing rapidly.
Not enough telecommunication bandwidth.
Lack of sufficient systems is standards, reliability, and security and

communication protocols.
Inconvenient and expensive accessibility to the internet.
Breakdown of human relationships
Rapidly changing and evolving e-business.
Many complicated legal issues.
Lack of feel and touch online.

ADVANTAGES OF ONLINE SHOPPING

1. TO CUSTOMERS

To improve morale by give people the tools and time they need.

To provide free staff value added services.

To reduce the cost of core service provision.
To reduce process errors.
To save time.( time taken by customers, elapsed time for process)
To improve service.

2. To BUSINESS

The benefits of implementing tools the opportunities to adopt new business models and
develop tailored customers support.

To reduce the cost of doing business by lowering transaction costs and increasing
efficient methods for payment, such as using online payment and reducing

stationary and postage costs.

To access to broader information through research.
To increase hours of operation( a website provides 24 hour 7 day information to

existing and potential customers)

To strengthened marketing capabilities and reach.
To quicker and easier communications.
Not so much use of technology, as in the streamlining of business process and the

ease in finding new markets.

More detailed information on customer transactions.
Internet is an interactive marketing medium.
Target specific customer groups.
Serve larger customer base more efficiently.
Reduction in physical boundaries and distance.

SCOPE AND FOCUS

The scope of E-Business is as wide as an ocean & there by the implementation hurdles.
When one thinks of the Electronic Business even through final goal remains the same as
that of the traditional business, but the way in which they function in order to improve the
performance is different. As information sharing is the major part of the corporate
industries, networking has given boost to E-Business. This change in view-point has
opened door for new opportunities. According to them their perceived benefits include
convenience to customers, speed and quality of service, reduction of queues in shops has
reduction in the total overhead cost such as reduction in employee recruitment and

reduction in space for clients and customers .These factors that pushed their drive to
adopt e-business.
The research provides powerful, real time E-Business reporting to help E- Business
managers improve merchandising and increase sales. The research is very much useful to
get the lifetime value of your customers based upon their acquisition source, and increase
your expenditures on sources that generate the best customers over lifetime. It tracks the
performance of all your online marketing initiatives, including Pay - per- click keyword
buys, doing transaction online, paying bills using net banking, banner ads, e-mails and
affiliate programs and also how it is effective to implement.
It helps the E-Businesses to convert visitors into customers.

It helps to determine

whether online competitors can significantly harm your business by providing some of
the value you currently Offer customers in the traditional way. It helps the E-Businesses
to convert visitors into customers. It helps to determine whether online competitors can
significantly harm your business by providing some of the value you currently Offer
customers in the traditional way.

LITERAURE REVIEW

INFORMATION IS POWER this is one of the most widely accepted statements and
applies for every aspect of human activity. Internet is an unlimited pool of information
and benefits anyone who uses it properly. According to Porter and Millar (1985)
information gives competitive advantage to a company in three different ways:
a) By changing industry structure and changing the rules of competition.
b) By providing companies with new ways to outperform their competitors.

c) By creating new businesses, even from within a companys existing operations.

The authors continue by discussing the strategic significance that Information
Technology has obtained for companies, by affecting the value chain, thus the
technological and economic activities that a company performs to do business. Not only
it transforms the value chain, but also transforms the product or the service that the
company produces.
Additionally, authors suggest five ways for Information Technology to be successfully
implemented in business processes. This can be done by:
a) Assessing the intensity of information.
b) Determining the role that Information Technology will have in the industry structure.
c) Understanding the ways that it can create competitive advantage for their companies.
d) Investigating the possibilities of new businesses.
e) Developing a strategic plan to take advantage of Information Technology.

SUCCESS AND FAILURE FACTORS OF ONLINE SHOPPING

E-business and E-service will move to the forefront of technology priorities. To take full
advantage of the E-service, you need to look at your organization from an alternative
perspective. The question is how to deal with these changes, at what cost, and at what
speed. This is not the time to worry about "disintermediation". It is the time for
cooperation, integration, and the consideration of customer loyalty, profitability and
competition advantage. As we have seen, e-Business has noticed remarkable growth and
success over the last years. Despite the numerous examples of successful e-Businesses

there are many examples where e- Business failed to succeed. By looking at those
characteristic examples, this report tries to understand the factors that lead to a successful
e-Business but also to figure out the dangers that may lead to failure. These factors would
form a helpful guideline, which would help in making the IT employment website as
successful as possible.

TRANSACTION MEDIUM

Most e-commerce is done over the Internet. But EC can also be conducted on private
networks, such as value-added networks (VANs, networks that add communication
services to existing common carriers), on local area networks (LANs) or wide area
networks (WANs).

TYPES OF TRANSACTIONS

E-commerce transactions can be done between various parties.

Business-to-business (B2B)
Collaborative commerce (c-commerce)

 Business TRANSACTION -to-consumers (B2C)

Consumers-to-businesses (C2B)
Consumer-to-consumer (C2C)
Intra- business (intra-organizational) commerce Government-to-citizens (G2C)
Mobile commerce (m-commerce)

HOW SAFE ARE E-BUSINESS FINANCIAL TRANSACTIONS

New security technology like 128-bit SSL encryption ensures the safety and privacy of
both you and your customers, and is built into the latest e- Business software tools. Your
security and privacy is a top priority with all e-Business providers.

CAN MY BUSINESS BENEFIT FROM E-BUSINESS

Reduce administrative and operating costs. Reduce inventory costs. Reduce the cost of
procurement. Improve customer service and satisfaction. Streamline procurement
procedures. Increase communication efficiency and interaction with employees, vendors,
customers and strategic partner. Increase revenues and profit margins.

To reduce the cost of doing business by lowering transaction costs and increasing
efficient methods for payment, such as using online payment and reducing

stationary and postage costs.

To access to broader information through research.
To increase hours of operation( a website provides 24 hour 7 day information to

existing and potential customers)

To strengthened marketing capabilities and reach.
To quicker and easier communications.
Not so much use of technology, as in the streamlining of business process and the

ease in finding new markets.

More detailed information on customer transactions.
Internet is an interactive marketing medium.
Target specific customer groups.
Serve larger customer base more efficiently.
Reduction in physical boundaries and distance.

FACTORS OF ONLINE SHOPPING

1.TECHNOLOGICAL

FACTORS

The

degree

of

advancement

of

the

telecommunications infrastructure which provides access to the new technology for

business and consumers.
2 POLITICAL FACTORS including the role of government in creating government
legislation, initiatives and funding to support the use and development of e-commerce
and information technology.
3 SOCIAL FACTORS incorporating the level and advancement in IT education and
training which will enable both potential buyers and the workforce to understand and use
the new technology.
4 ECONOMIC FACTORS including the general wealth and commercial health of the
nation and the elements that contribute to it. Since a distinction has been made in this
book between e-commerce and e-business for consistency, the key drivers of e-business
are also identified. These are mainly at the level of the firm and are influenced by the
macro- environment and e-commerce.

KEY DRIVERS OF ONLINES SHOPPING

ORGANISATIONAL CULTURE attitudes to research and development (R&D); its

willingness to innovate and use technology to achieve objectives.
COMMERCIAL BENEFITS in terms of cost savings and improved efficiency that
impact on the financial performance of the firm.
SKILLED AND COMMITTED WORKFORCE that understands, is willing and able
to implement new technologies and processes.
REQUIREMENTS OF CUSTOMERS AND SUPPLIERS in terms of product and
service demand and supply.
COMPETITION ensuring the organization stays ahead of or at least keeps up with
competitors and industry leaders.

DEMAND FOR PEOPLE WITH SKILLS IN ONLINE SHOPPING

This introduces a Skills Triangle framework, reflecting the importance to online

shopping of three main types of skill business, creative and technical. It argues that eBusiness predominantly needs people with a mix of types of skill, a proportion of them
with a fairly even balance between two or all three types of skill. It goes on to look in
more detail at the skills and work content associated with the main types of skill. Based
on the analysis, four main e-Business occupations are identified, and the demand for new
people and re skilling of existing members of the workforce is explored for each one. Key
findings are that:

Business Studies programmed should have a significant Information Technology

content.
Business Studies programmed should have an e-Business orientation that permeates all
subjects studied.
There is a need for Business Schools to have a proportion of Information Systems
programmed. With a fairly equal mix of business and information technology content.
There is a requirement for the existing population of managers and management
advisors to understand the business implications of e-Business.
Every business with a web site will need a webmaster
E-Business has boosted demand for people with technical IT skills
There is a need to update the skills of technical people using dated technology.
There is a major increase in demand for designers to work on web design, and for
people with a strong mix of design and technical skills.

Many of those already working in print design need to acquire web design skills

 As available bandwidth increases, the requirement for people to produce live action and
animated content will increase.
Everyone entering employment should have IT skills.
Third level graduates should ideally have an understanding of the business uses of
Information technology.
Industry needs to make existing employees IT literate, perhaps at an overall rate of
about 2% of employment per annum

THE ONLINE BUSINESS MODEL

The e-Business model, like any business model, describes how a company functions; how
it provides a product or service, how it generates revenue, and how it will create and
adapt to new markets and technologies. It has four traditional components, The eBusiness Model. These are the e-business concept, value proposition, sources of revenue,
and the required activities, resources, and capabilities. In a successful business, all of its
business model components work together in a cooperative and supportive fashion.

THE ONLINE BUSINESS CONCEPT

The e-business concept describes the rationale of the business, its goals and vision, and
products or offerings from which it will earn revenue. A successful concept is based on a
market analysis that identifies customers likely to purchase the product and how much
they are willing to pay for it. GOALS AND OBJECTIVES: The e-Business concept
should be based, in part, on goals such as "become a major car seller, bank, or other
commercial enterprise", and "to become a competitor to some of the well- known firms in
each of these industries." Objectives are more specific and measurable, such as "capture
10% of the market", or "have $100 million in revenues in five years." Whether these
goals and objectives are realistic or not, and whether the company is prepared to achieve
these goals is addressed in the business plan process for startup firms and in the
implementation plan for an existing firm that is considering a significant change. In
looking at the business model it is sufficient to know what the goals and objectives are,
and whether they are being pursued.

CORPORATE STRAGIES IN ONLINE SHOPPING

Embedded in the e-Business concept are strategies that describe how the business concept
will be implemented. These are known as corporate strategies because they establish how
the business is intended to function. These strategies can be modified to improve the
performance of the business. Environmental strategies, discussed in a following section,
describe how the company will address external environmental factors, over which it has
no control. THE E-BUSINESS CONCEPT AND MARKET RESEARCH The selection
and refinement of the business concept should be integrally tied into knowledge of the
market it serves. In performing market research care must be taken to account for the
global reach of the Internet for both customers and competitors. It is also important to
remember that markets shift, and can shift rapidly under certain conditions. But most
important is to truly to truly understand what the market is, who comprises it, and what
they want.

THE ONLINE BUSINESS CONCEPT OF PRICE

Pricing is an important part of the e-business concept and should be established on the
basis of market research. Price is often set with an eye on the competition and can have a
direct effect on market share. In traditional commerce in the U.S., the seller sets the price.
Online pricing, on the other hand, may include negotiation or auction pricing, where the
interaction of sellers and buyers can affect the price. Knowledge of competing prices is
also readily available online, and will keep downward pressure on prices. When is it OK
Pricing is an important part of the e-business concept and should be established on the
basis of market research. Price is often set with an eye on the competition and can have a
direct effect on market share. In traditional commerce in the U.S., the seller sets the price.
Online pricing, on the other hand, may include negotiation or auction pricing, where the
interaction of sellers and buyers can affect the price. Knowledge of competing prices is
also readily available online, and will keep downward pressure on prices. When is it OK
Pricing is an important part of the e-business concept and should be established on the
basis of market research. Price is often set with an eye on the competition and can have a
direct effect on market share. In traditional commerce in the U.S., the seller sets the price.
Online pricing, on the other hand, may include negotiation or auction pricing, where the
interaction of sellers and buyers can affect the price. Knowledge of competing prices is
also readily available online, and will keep downward pressure on prices. When is it OK
to increase prices? It depends on the business. If a company has high fixed to variable
costs, prices should be changed cautiously. If customers are "locked-in", and the product
or service is less sensitive to price, then prices may be changed, to a degree, with less
risk. But all changes should be checked beforehand with market research and financial
analysis.
A potential problem for some products is that the market may change faster than the
seller can change the product or service. One way to survive in this environment is to sell
at the minimum price that allows a profit, avoid price changes and continuously upgrade
the product. This approach is often used in computer hardware and software sales. At the
same time the seller should invest in finding how to shorten the development cycle, and
put in place a market research program that will quickly identify trends and changes. The

steady development of a product has other advantages. It evens out the revenue stream
rather than having the "boom or bust" cycle of a single product. It also shows that the
company is steadily developing and upgrading products for the customers who should
begin to buy into the company's vision. And customers, analysts, and investors will
develop confidence that the company is going to be around for the long-term. The price
must also provide real value to the customer that is the customer must be pleased with the
purchase of the product or service. In addition to price, the buyer may also be interested
in how the product can be of assistance to his company. In this case, comparisons of price
and ROI may be used to show that the offering adds more value than a competitor's. The
price can also be a basis for building long-term customer relations, which can lead to
multiple sales. For example, as retail customers become more comfortable shopping on a
site, it should be easier to get them to migrate to higher margin products.
Access to a large and available inventory that presents options for the buyer providing
value in an e-business uses the same approach as providing value in any business,
although it may require different capabilities. But common to both are the customers who
seek out value in a business transaction. The value proposition helps focus the business
on the well-being of the customer, where it remains in successful companies:
. Products that lead to increased efficiency and productivity
Speed of delivery and assistance
Improved service or convenience such as the "1 click" checkout

VALUE PROPOSITION

The value proposition describes the value that the company will provide to its customers
and, sometimes, to others as well. With a value proposition the company attempts to offer
better value than competitors so that the buyer will benefit most with this product.

VALUE DELIVERY THROUGH INTEGRATION OF ACTIVITIES

INTEGRATION OF ORGANIZATION OR ENTERPRISE
OPERATIONS

The integration of systems inside and outside the organization can provide value for both
customers and the organization. One of the requirements for e-business is to link frontend with back-end systems in order automate the online operations of the organization.
Front-end activities deal directly with the customer while back-end systems include all of
the internal support activities that do not deal directly with the customer. Some
enterprises have different geographic locations for front-end and back-end office
activities and rely on the integration of the associated computer and network systems for
successful corporate operations. Front-End & Back-End Operations, customers order
fulfillment EXTERNAL INREGRATION.

THE SUPPLY CHAIN

On the Web can also extend to cooperating firms such as partners in a supply chain, also
known as a "Value Web". The Value Web may include a wide range of participants as
well as the possible use of a digital exchange to procure or sell products. Many firms
have participated in a supply chain for years using Electronic Data Interchange (EDI)
technology to buy and sell components and products. Successful supply chains are vital
for manufacturing operations since the timeliness, cost and success of the final product
may depend on a component part made by a single supplier. The competence of suppliers
may now be demonstrated through the ISO 9000 qualification process, which is critical
when using suppliers from foreign countries or when the final products are exported.
. Production tracking
Customization of products based on user requirements
Order placement through point-of-sales systems

SUPPLY CHAIN INTEGRATION

When the supply chain transactions of the partners can be automated and integrated over
the Web into the back-end systems of each other, then the resources of all the chain
partners can be planned and managed for an efficient operation. An emerging approach to
automate transactions with partners is to link systems through the corporate portal, which
greatly reduces the integration requirements. Portal software now has potential
connections, or hooks, where the systems of different enterprises can be linked to
securely transfer data. In addition to good technology, it takes a strategy, time, resources
and, most importantly, trust between partners, for the supply chain to function
successfully.

STRUCTURAL CONCEPTS TO DELIVER VALUE

The effective delivery of value to a customer, requires that a company organize its
structure and functions according to the type of product or offering delivered. The value
chain, as popularized by Michael Porter 1, describes a linear set of steps, which could be
activities or business processes such as design, production and sales, whereby a
manufacturing company delivers value. This value chain delivery model strives for
overall efficiency and cost reduction by increasing the efficiency and reducing the cost of
each business process. Each step is independent and separable, and can be outsourced, or
contracted out to another company. The value chain becomes a supply chain when a
company uses the inputs and activities of other companies in its manufacturing process.
However, the value chain doesn't appear to describe how many service-oriented
businesses operate. Stabell and Fjeldstad, Timmers, and Afuah and Tucci, have developed
additional concepts of "value shop" and "value network", following the work of
Thompson to address other types of businesses. The value shop describes a service
operation, such as a consulting, law or accounting firm that focuses on customer needs
rather than on the production process of the value chain. It may also describe a
department, such as customer service, within a larger organization. For example a
manufacturing company, a value chain operation, could have within it a department that
operates as a value shop. The e-business set up as a value shop works directly with the
customer to provide a necessary, often unique, solution. The value shop is geared to solve
specific client problems rather than to make a common solution more efficient. Some
value shops, such as large consulting companies, will attempt to duplicate solutions
among clients by introducing jargon to describe steps in an approach, and by attempting
to fit the client's problem to the approach, rather than focusing on the client's problem.

Use Fees
Syndication
Subscription
Sponsorship

Sales profits
Sales commissions
Licensing
Agent commissions
Affiliation
Advertising

ONLINE BUSINESS ENVIRONMENT AND STRATEGIES

The rate of change in e-business presents an enormous challenge to managers. Business

on the Internet is just beginning, and is evolving through a process of trial and error.
Management flexibility is a key for survival and success in e-business. The environment
of any organization consists of all of the factors that are beyond its control, but influence
it in one way or another. Examples of these factors are shown in the figure, E- Business
Environment and Strategies. To counter the potential adverse affects of these factors, the
e-business can respond with strategies. An external strategy is an approach to deal with
factors in the external business environment such as competitors, markets, and
technological developments that are beyond the companys direct control. This is
different from a corporate strategy, which addresses factors under the company's control
such as the approach to marketing, sales, and pricing. Other components of the business
model such as the value proposition and sources of revenue may also include strategies.

External strategies may be driven by components of the business model, such as finding
workers with certain capabilities to staff activities. If the required work force is not
available locally, the business concept may have to change, and workers brought in, or
the work outsourced. Even though strategies may be implicit in the business model, such
as hire workers at the industry wage, it is important to recognize them explicitly because
they may have to change as the business environment changes.

THE COMPETITIVE ENVIRONMENT AND STRATEGIES

The competitive environment, sometimes known as the industry environment, results

from relationships with other firms. These relationships are with suppliers, customers,
producers of substitute products, potential new entrants, competitors, "complementary",
and strategic partners, which are described by Porter. When suppliers are limited, they
may keep prices high and reduce the profit of a firm that buys from them. A strategy for
the buyer is to find new suppliers, or producers of substitute products. On the other hand,
if there are only a few buyers, they can keep prices low, but a strategy for the seller is to
find more customers to compete for products in order to raise prices, or to find a more
profitable of their industrial capacity. Therefore the Internet serves to increase the
knowledge of prices, find producers of substitute inputs, and subsequently cause
downward pressure on prices. Potential new entrants to a market may also disrupt prices.
Either they enter the market with low prices to gain market share, or they cause the
existing firm to lower its prices in order to create an entry barrier to the new firm.
Competitors may also cause prices to drop through price wars, but can also contribute to
stability in the marketplace. Finally, complementary, firms that make products that need
the firm's product to add value (e.g. software developers for particular PC operating
systems), as well as strategic partners can create demand for the firm's products. In each
case the Internet may be used to the advantage or disadvantage of the e- business. The
point is that an e-business must have an Internet strategy to be successful.
Strategic Alliance: The e-business works with other firms that are not usually direct
competitors. For small e-businesses, alliances may be essential since every facet of
growth can be facilitated through association with a well-known and
Capable partner. Strategic alliances can solve immediate problems of developing
capabilities in distribution, shipping, and billing, and will allow the company to be up
and running" very quickly. However, the small company should be concerned about
losing its autonomy and intellectual property to its larger partner

. Block: The "block" strategy makes it difficult for other companies to copy business
processes and intellectual property. Blocks can be achieved by limiting knowledge
transfer about critical features or by reducing or indicating a reduction in prices.

MAINTAIN AND IMPROVE COMPETENCIES

One obvious strategy is to develop the capabilities, and to build and maintain
competencies in order to keep an advantage over other firms. To do this, one must
understand market conditions and the firm's strengths and weaknesses. Other strategies to
maintain competencies.

THE TECHNOLOGY ENVIRONMENT AND STRATE OPEN

DESIGN

Open Courseware.
Nanotechnology.
Human-Machine Interaction: Intelligent Collaboration, Intelligent Design, and

Intelligent Training Systems.

Grid Computing, including Bioinformatics Grids and Economic Development

Grids.
Global e-Commerce with the Electronic Product Code (EPC) and RFID.
Emergent Computing: Biocomputing, DNA Computing, Optical Computing,

Molecular or Chemical Computing, and Quantum Computing.

Artificial Intelligence including Autonomous Systems.
Alternative Energy Generation at low cost.
GIES Technology plays an important role in e-business and must be tracked
closely. It can shift very quickly and greatly disrupt an unprepared company.

DISRUPTIVE TECHNOLOGIES

When a new technology creates a different approach to performing a task that is less
costly, more efficient, or otherwise relatively advantageous and displaces existing
technology, it is known as a disruptive technology. These technical disruptions can cause
businesses to fail, particularly in those organizations unprepared to change their business
model. Examples of disruptive technologies & Wireless Internet
.Voice, Sight and Haptic (i.e. touch) Response Systems.
Superconductivity.
Knowledge Representation and the Semantic Web.
Parallel Computing.
Problem Solving.

TECHNOLOGY STRATEGIES

Every e-business concept based on a technology break-through runs the risk of being
replaced by a company with a newer technology. Therefore, a strategy to maintain
technological leadership, or to have access to the leading applicable technologies, is
essential for the long-term survival of a technology-based e-business. A technical
innovation strategy can be as simple as outsourcing the technical side of an e- business
rather than trying to maintain the competency in-house. If it is large enough, a firm can
develop new technologies. But for most firms, an R&D program is too expensive. One
option is to partner with an organization known for developing new technologies, so that
they become available as they are developed. Co-developing and licensing technologies
are also options. The use of a strategic alliance can serve as a technology strategy, as well
as a competitive strategy. To avoid falling victim to a new technology, a firm must try to
keep abreast of technological developments that may affect its industry. Any company
that is technology-dependent must have someone in-house who is knowledgeable about
the latest technical developments. But more importantly, the company must be willing to
take action when it appears that a major advance in technology poses a threat.

Chapter 4
Data collection and Interpretation

Q.1) Do you shop online?

Respondent
70%
30%

Yes
No

Sales

No; 30%

Yes; 70%

Recommendation: Here we can see that 70% people prefer online shopping were as
30% of people do not prefer online shopping.

Q.2) How much do you spend on an average shopping per month in GBP (High
street/Malls, etc.)
Amount spend
Respondent

1000-1500
15%

2000-3500
20%

4000-6500
40%

7000-10000
25%

45
40

40
35
30

25

25
20

20
15

15

10
5
0

1000-1500

2000-3500

4000-6500

7000-10000

Amount spend

Recommendation: Here we can see that the 40% prefer street shopping were as
15% prefer dont prefer street shopping.

Q.3) How much do you spend more on online shopping per month GBP (Website
shopping)
Amount spend
Respondent

1000-1500
10%

2000-3500
20%

4000-6500
30%

7000-10000
40%

Amount spend
1000-1500; 10%
7000-10000; 40%

2000-3500; 20%

4000-6500; 30%

Recommendation: Here we can see that 40% if people prefer online shopping were as
10% do not prefer online shopping.

Q.4) How would you rate your internet connection?

Net connection

Slow

Medium

Fast

Respondent

20

50

30

Net connection
50
45
40
35

Net connection

30
25
20
15
10
5
0
Slow

Medium

Fast

Recommendation: Here we can see that 50% of people get medium net connection were
as 20% people get slow net connection.

Q.5) How often do you visit online shopping sites?

Visit
Respondent

Daily
50%

Weekly
20%

Monthly
20%

Visit

Annualy; 10%
Monthly; 20%
Daily; 50%

Weekly; 20%

Recommendation: Here we can see that 50% of people daily visit online sites were as
10% people visit annually.

Q.6) Would you continue buying form online site?

Annually
10%

Continue Shopping
Respondent

Yes
75%

No
25%

Continue shopping
80
70
60
50
Axis Title

40
30
20
10
0

Yes

No

Recommendation: Here we can see that 75% of people continues online shopping
were as 25% of people do not prefer online shopping.

Q.7) How does the website load on your page?

Quality
Respondent

Slow
20%

Fast
70%

Cant say
10%

Quality
Can't say; 10%

Slow; 20%

Fast; 70%

Recommendation: Here we can see that70% of the website loads fast were as 20% of
website loads slow.

Q.8) What do you believe to the best marketing approach to advertising on E-commerce
website?
Advertising
Respondent

Billboards
20%

Magazines
25%

Newspapers
10%

Other
45%

Marketing Approch
Marketing Approch
45

25
20

10

Bill Boards

Magazines

Nwes paper

Other

Recommendation: Here we can see that 45% people prefer that other means are the best
way of marketing approach of advertising as compare to newspaper.

Q.9) What would be your best payment method if you buy online?
Payment
Respondent

Cash
70%

Online
30%

Payment
Payment

70

30

Cash payment

Online payment

Recommendation: Here we can see that 70% of people prefer cash payment were
as 30% of people prefer online payment.

Q.10) Does your online website consistently meet your requirements?

Consistent
Respondent

Yes
70%

No
30%

Consistency
Consistency

30
NO

70
Yes

Recommendation: Here we can see that 70% of people meet their requirements were as
30% of people do not meet their requirements.

Q.11) Do you consider yourself a loyal customer of online website?

Loyalty
Respondent

Yes
80%

No
20%

Loyalty
Yes

No

20%

80%

Recommendation: Here we can see that 80% of people are loyal customers were as 20%
of people do not consider themselves as loyal customers.

Q.12) Does online shopping sites provide easy steps to buy the product?
Steps
Respondent

Yes
75%

No
25%

Steps
Steps

75

25

Yes

No

Recommendation: Here we can see that 75% of people find it easy to buy the products
online were as 25% of people find it difficult.

Q.13) Have you had any bad experience while using online shopping?
Experience
Respondent

Yes
65%

No
35%

Experince

No; 35%

Yes; 65%

Recommendation: Here we can see that 65% of people do not have any bad experience
were as 35% of people have bad experience.

Q.14) Has online shopping sites have affected your business?

Affected
Respondent

Yes
60%

No
40%

Affected
Affected

60

40

Yes

No

Recommendation: Here we can see that 60% of business men says that it has affected
their business were as 40% of business men say that it has not affected.
Q.15) How is the competence level in business circle?
Competence
Respondent

Low
15%

Medium
25%

High
60%

Competition
Competition

60

15

Low

25

Medium

High

Recommendation: Here we can see that 60 % of businessmen say that the competition
level is high were as 15% of businessmen say that the competition level is low.

Chapter 5
CONCLUSION

This paper presents the findings of a project investigating hour small business affected
through online shopping. We have encountered interesting case on hour the internet is
being used to support business functions characteristics of firms, products/service offered
& geography must scope all have an affect on the small scale business. Human
communication is the main usage although many small business started using internet
believing its value to be in Advertising & Marketing many small business do not have
quantifiable data showing they have gained competitive advantage & have based their
belief of having dove so on perceived benefits. However, all field deposit the lack of
immediate direct commercial returns from using internet they will not disconnected their
internet services as long as they can afford to pay for them. The internet has been helpful
to develop is support business relationship between business partners. How much the
internet is used depends on different stages of business relationship development process.

Chapter 6

Findings and Suggestion

Findings
E-commerce is consistently taking up a larger proportion of consumer time and
spending. There are several driving factors for consumers to shop online with price,
convenience in shopping and wide range of available products being the primary. The
major findings of the study are as follows:
a. Turnover and profit margin of the retailers has considerably decreased in the past few
years.
b. Retail stores are now-a-days more engaged in services related to customer satisfaction.
c. Although the retailers are not able to keep a wide variety in their stock, they attempt to
keep the best of them so as to affect more sales.
d. Customers are seen to make window shopping at an alarming higher rate to have a
physical look at the product and buy that product online at a reduced rate.
e. Retail stores are now starting up with home delivery services of their various products
at the door step of their customers.
f. The consumers become more comfortable with the experience of purchasing online
with the convenience and product range become relatively more important as a deciding
factor for shopping online.
Suggestions
Retailers have to change their attitude towards the market. Todays is a consumer market
and as a result the priority is the consumer satisfaction. The firm has to be in the good
books of the consumer. Better quality products, fair price and friendly after-sale services
are the basic areas in which the business has to concentrate to a remarkable extent.
Additional services should be provided to the consumers to woe them and build upon a
loyalty which in turn would ensure a stable sales in the years to come.

WEBLIOGRAPHY
www.google.com
www.wikipedia.com

www.economictimes.com

Annexure
Q.1) Do you shop online?
o Yes
o No

Q.2) How much do you spend on an average shopping per month in GBP (High
street/Malls, etc.)
o
o
o
o

1000-1500
2000-3500
4000-6500
7000-10000

Q.3) How much do you spend more on online shopping per month GBP (Website
shopping)
o
o
o
o

1000-1500
2000-3500
4000-6500
7000-10000

Q.4) How would you rate your internet connection?

o Slow
o Medium
o Fast
Q.5) How often do you visit online shopping sites?
o
o
o
o

Daily
Weekly
Monthly
Annually

Q.6) Would you continue buying form online site?

o Yes
o No
Q.7) How does the website load on your page?
o Slow
o Fast
o Cant say

Q.8) What do you believe to the best marketing approach to advertising on E-commerce
website?
o
o
o
o

Billboards
Magazines
News papers
Others

Q.9) What would be your best payment method if you buy online?
o Cash payment
o Online payment
Q.10) Does your online website consistently meet your requirements?
o Yes
o No
Q.11) Do you consider yourself a loyal customer of online website?
o Yes
o NO
Q.12) Does online shopping sites provide easy steps to buy the product?
o Yes
o No
Q.13) Have you had any bad experience while using online shopping?
o Yes
o No

Q.14) Has online shopping sites have affected your business?

o Yes
o No
Q.15) How is the competence level in business circle?

o Low
o Medium
o High