The development of E-Commerce has fostered the growth of many internet shops based on the existing shops with good reputation. The guitar shop which is the subject of this feasibility analysis is one of them. It has gained popularity among its customers and is one of the most successful operations in the region. Due to its unrivalled reputation, the guitar shop has gained the customer loyalty among its clients and is ready to expand its operation online.
However, the traditional shop and the online shop are very different (Bhusry, 2005). That is why the owner of the shop has asked for my advice as E-Commerce consultant to conduct a research in terms of feasibility analysis for this strategic move. The major high street guitar shop, being one of the most profitable and successful operations within the region, when transforming into online shop, should not lose its identity, quality and the key selling points. The customer satisfaction is to be the same, and the shop should remain profitable. For this reason cost control and security procedures are to be well-planned and organized (Satterlee, 2001).
This feasibility study focuses on the main success factors of the shop such as unique user experience and the location popularity within the region and intends to transfer them with insignificant modifications to the online operation. The unique selling points of the shop are preserved and communicated to the online users well. At the same time, the report proposes two strategies which focus on having the online shop managed in-house and outsourced.
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E-Commerce can in general be quite successful strategy for many existing businesses. However, one should remember that there is a significant range of potential threats which may become problems in the long-term period. Internet security threats are also taken into consideration. According to Plant (2000), ‘differentiation in the new e-commerce sector is the key to success, and the degree to which this affects success of failure is remarkable’ (p. 5). Therefore, there are number of success factors for the online guitar shop which have to be relied on that we mention further in this report. These factors are used in order to propose a strategy of future development and to forecast the effectiveness of the e-shop in the long term period.
There are two types of strategies for the online shop management: in-house or outsourcing. Both these strategies have their positive and negative features, and the outcome depends on how well these features are addressed. However, it is necessary to mention that both strategies have potential to be adopted for e-commerce site development.
Due to the fact that guitars continue to be broadly used by the customers worldwide in both the sector of classic and pop music, the market opportunity for expanding the target market is the key factor of proposed business strategy. However, it is necessary to count on the fact that currently the shop is tied to the region of its present location and not expanded to any other place in the country. Nor the customers from other regions know about the shop and its popularity among the customers. Therefore, the first proposed strategy is the location-based website which is a sort of ‘tie-in’ for the selected region.
This strategy is chosen due to the fact that the shop does not need additional marketing tools for development within the region as it is already quite popular. Secondly, the shop already has a client base which can enjoy the convenience of buying their beloved products from home. And thirdly, the strategy is well-planned and is in line with logistics and storage space. The location-based strategy enables the use of existing storage and delivery methods which do not require additional expenses accordingly.
However, the strategy has one major very important threat – location-based websites are not usually expanded towards other locations. Therefore, the target market remains limited to the region. GPS capabilities will show the shop only to those customers who are already in the region and who want to shop from the local area to speed up the delivery.
Therefore, the second strategy is an opposite idea which uses the unique selling points of the existing shop. This idea is based primarily on the customer experience in the shop itself.
Currently, the staff of the shop helps the buyers with their advice and assistance. All the employees of the shop have a wide range of experience in guitars and can help the buyers a lot during the selection process. The experience which the buyers receive at the shop should be transformed online to the better use of the website’s potential. Therefore, the second proposed strategy is the contextual visualization site offering assistance online and helping the buyer in the decision-making process.
The main advantage of this strategy is that it expands the unique customer experience which is valuable for the clients and pushes it up to the new level of experience. Visualization helps the clients see the product prior to buying and adjusting it to their lifestyle. Guitar is one of those products that are associated with lifestyle. Therefore, this is a powerful tool for enriching the online customer experience. Moreover, the website is no longer tied to the location, and the target market is not limited.
However, this strategy also has disadvantages as the new customers in new locations are not yet loyal to the product. Therefore, the guitar shop will have to spend on marketing at the first stages of the website development.
The important consideration in terms of e-commerce is also the usage of the in-house or outsourced management. The proposed method would be to still manage it in-house for both strategies. The guitar shop is a unique experience, and this experience needs to be within the control of the shop employees. The IT manager can run the website, and the proposal in this case would be to train the IT manager in terms of e-commerce and to hire additional online marketing manager who would be responsible for the content of the website.
In this situation, the IT department will be able to bear responsibility for the website management. At the same time, the delivery and customer relationship management will be enhanced, and the marketing message, as well as the unique selling points of the guitar shop, will be properly communicated to the audience.
Advantages and disadvantages
The key advantages of the shop are the following:
- Target market expansion;
- Ability to increase profitability;
- Comparatively low operation costs.
The key disadvantages of the shop are the following:
- Less loyalty due to the absence of personal contact;
- High marketing costs for new locations;
- Necessity of developing a well-organized logistics which is likely to affect the pricing.
Internet is a source of multiple viruses which present major threat for all online businesses. From the simplest forms of Trojan worms to the complicated Virus Programs which affect the server information, website security issues are very important in terms of online shop management and maintenance.
There are currently more than a dozen of security threats for e-commerce owners, as well as the buyers themselves. Most of the threats are dealing with the nature of e-commerce that is the procedure of payment. Many types of virus programs are set to steal credit card information from the buyers when they submit payments on the websites. This is currently one of the reasons why some people prefer not to buy to the e-shops.
The most well-known threats are the following:
- Human error;
- Malware payment processing systems (ChronoPay is an example);
- Fake registration.
Human error is a typical security threat which always has the probability of taking place. For this reason it is necessary to ensure that the information that is posted on the website (especially in terms of pricing and availability of guitars) is correct. It needs to be checked by more than one person on a daily basis.
Malware payment processing systems are the programs that work as normal payment processing software, but they copy information on other websites which steal customer information, including credit card details. It is very difficult to recognize, because it works normally as other payment systems. The only way out of trouble in this case is to test all payment software prior to website launch.
Malvertising is advertising which leads to unsecure servers after the user clicks on the ad. This type of threat is the easiest to recognize, but the IT manager always needs to make sure that these ads did not come from the third party, but from those who are well-known companies and whom they trust.
Fake registration is usually protected by typing a code called ‘captcha’. In order to avoid problems with the code, many websites trust that only humans will register in their e-shops. But they are mistaken. Virus software is quickly receiving a path to the server data through registration procedure and can quickly copy all the necessary information for accessing the clients’ accounts.
Recommendations for future development
The owner sees the potential in the application of online auction in order to see those guitars that come in the limited edition series and those that are usually collected by the guitar enthusiasts. There are three major benefits that such move in terms of future development can bring. First of all, auctions increase the website traffic. Secondly, the online auctions help selling the items to various locations worldwide with less operational costs and for much higher prices compared to those from guitar shop’s region. Thirdly, the guitar shop owner can drive enormous amount of publicity to his website.
There are generally many types of online auctions. However, we recommend using the bidding fee auction. Compared to the traditional English auction websites, it allows the website owner making money by both bids purchase and profit from the actual final price of the item. This would increase the interest in selling the exclusive products.
The primary goal of the website is selling the existing range of products (guitars) to a wider audience. Therefore, the increase of the target market is critical for the product. The two strategies proposed for the website focus on two most important selling points of the existing shop.
Beside the online auction, it is also recommended to open a forum for website users to let them exchange their guitar experience, notes, tabs, lyrics, etc. This would lead to creating a kind of inner circle of loyal customers and traffic increase. Both result in more revenue for the website.