Brick Ang Click
Total Page:16
File Type:pdf, Size:1020Kb
A Project Report On Competitive advantage of online selling By brick and click company Submitted in partial fulfillment of the requirement for the award of Two year full time, Masters in Business Administration. Submitted To Submitted By PRIYANKA GARG INTRODUCTION BRICKS-AND-CLICK Bricks-and-clicks is a business model by which a company integrates both offline (bricks) and online (clicks) presences. It is also known as click-and-mortar or clicks-and-bricks, as well as bricks, clicks and flips, flips referring to cataloes. For example, an electronics store may allow the user to order online, but pick up their order immediately at a local store, which the user finds using locator software. Conversely, a furniture store may have displays at a local store from which a customer can order an item electronically for delivery. The bricks and clicks model has typically been used by traditional retailers who have extensive logistics and supply chains. Part of the reason for its success is that it is far easier for a traditional retailer to establish an online presence than it is for a start-up company to employ a successful pure "dot com" strategy, or for an online retailer to establish a traditional presence (including a strong brand). The success of the model in many sectors has destroyed the credibility of analysts who argued that the Internet would render traditional retailers obsolete through disintermediation. Advantages of the Bricks and Clicks model Click and mortar firms have the advantage in areas of existing products and services. In these cases there are major advantages in retaining ties to a physical company. This is because they are able to use their competencies and assets, which include: - Core competency. Successful firms tend to have one or two core competencies that they can do better than their competitors. It may be anything from new product development to customer service. When a bricks and mortar firm goes online it is able to use this core competency more intensively and extensively. - Existing supplier networks. Existing firms have established relationships of trust with suppliers. This usually ensures problem free delivery and an assured supply. It can also entail price discounts and other preferential treatment. - Existing distribution channels. As with supplier networks, existing distribution channels can ensure problem free delivery, price discounts, and preferential treatments. Brand equity Often existing firms have invested large sums of money in brand advertising over the years. This equity can be leveraged on-line by using recognized brand names. An example is Disney. - Stability Existing firms that have been in business for many years appear more stable. People trust them more than pure on-line firms. This is particularly true in financial services. - Existing customer base Because existing firms already have a base of sales, they can more easily obtain economies of scale in promotion, purchasing and production; economies of scope in distribution and promotion; reduced overhead allocation per unit; and shorter break even times. - A lower cost of capital Established firms will have a lower cost of capital. Bond issues may be available to existing firms that are not available to dot coms. The underwriting cost of a dot com IPO is higher than an equivalent brick and click equity offering. - Learning curve advantages Every industry has a set of best practices that are more or less known to established firms. New dot coms will be at a disadvantage unless they can redefine the industry's best practices and leap frog existing firms. Pure dot coms, on the other hand, have the advantage in areas of new e-business models that stress cost efficiency. They are not burdened with brick and mortar costs and can offer products at very low marginal cost. However, they tend to spend substantially more on customer acquisition. Brick „n Click is a fully integrated end-to-end retail/wholesale management system which offers integration of your current sales operations with up to four new sales channels. Sell on eBay auction, eBay Stores, Web Store, Amazon, ProStores and your own retail store, all the while maintaining a single database for sales and inventory reconciliation. In this new era of retail, increased customer demands in the marketplace and the need to increase profitability have changed the way retailers are doing business. It is increasingly more difficult for retailers to compete with the super large, multi-store chains and discounters. However, thanks to the new technology tools available today, MTI is leveling the playing fields and the picture gets better and better for small to medium sized Retailers. Competitive advantage A competitive advantage is an advantage gained over competitors by offering customers greater value, either through lower prices or by providing additional benefits and service that justify similar, or possibly higher, prices. For growers and producers involved in niche marketing, finding and nurturing a competitive advantage can mean increased profit and a venture that is sustainable and successful over the long term. This fact sheet looks at what defines competitive advantage and discusses strategies to consider when building a competitive advantage, as well as ways to assess the competitive advantage of a venture. Competitive Strategies/advantages Cost Leadership Strategy The goal of Cost Leadership Strategy is to offer products or services at the lowest cost in the industry. The challenge of this strategy is to earn a suitable profit for the company, rather than operating at a loss and draining profitability from all market players. Companies such as Walmart succeed with this strategy by featuring low prices on key items on which customers are price-aware, while selling other merchandise at less aggressive discounts. Differentiation Strategy The goal of Differentiation Strategy is to provide products that stand out from competitive offerings. An example is Southwest Airlines, which promotes its no-fee baggage handling as unique from other airlines. Innovation Strategy The goal of Innovation Strategy is to leapfrog other market players via the introduction of completely new or notably better products or services. This strategy is typical of technology start-up companies, who often intend to "disrupt" the existing marketplace, obsoleting the current market entries with a breakthrough product offering. It is harder for more established companies to pursue this strategy, once their product offering has achieved market acceptance. Apple has been a notable example of this strategy, for example, with its introduction of iPod personal music players, and iPad tablet computers. Operational Effectiveness Strategy The goal of Operational Effectiveness as a strategy is to perform internal business activities better than competitors, making the company easier or more pleasurable to do business with than other market choices. State Farm Insurance pursues this strategy by promoting their agents as "good neighbours" who actively help customers. Technology-based competitive Strategy (Project Socrates) In the United States of America during the Reagan Administration, a team of experts led by Michael Sekora was brought together to 1) determine why US industries were losing their ability to compete in the world marketplace and 2) develop a solution to restore US industry's ability to compete. As a result, Project Socrates was initiated. The Socrates team launched one of the most in-depth research undertakings ever conducted in the US intelligence community, producing ten key findings that became the basis for the "Socrates technology- based competitive strategy" system, and support tools for developing and executing competitive strategies. The Socrates system was successfully deployed and considered instrumental in the economic recovery of the 1980s. However, early in the George H. W. Bush presidency, the program was de-funded by Bush for political reasons. Leaving the government shortly after Socrates was de-funded, Michael Sekora continued refining the system and applying it to individual companies. Recently legislation has been introduced to revive the Socrates system as a solution to the US current economic downturn. E-COMMERCE: GLOBAL TREND E-commerce globally has been on the rise. Both travel and retail have grown faster than several other categories in India. Travel visitation has an overall reach of close to 40% worldwide and has grown over 12% Y-o-Y. Retail visitation has an overall reach of close to 72% worldwide and has grown over 13% Y- o-Y. More than a billion people worldwide visit retail sites every month. In India, Travel has always been ahead of the curve in terms of visitation and transactions compared to world averages and is at 44% penetration and has grown over 41% from last year. Retail has grown 43% and reaches 60% penetration among online users, but is still below world averages. This shows the immense potential that the retail category holds in India with online retail filling the distribution and convenience gap. The ecosystem to support growth in online retail has also evolved including improvement in logistics and awareness among brands in making the products available online. Bricks-And-Clicks Strategy Will Dominate E-Commerce International Data Corporation (IDC), a Framingham, Mass.-based information technology research firm, says that the U.S. online jewellery market (e-commerce) will grow from $77 million in 1999 to more than $1 billion in 2004. The research contends that people who shop online are becoming increasingly Internet-savvy, to the point of feeling comfortable with a $1,000 online purchase. "The market will defy the conventional wisdom that says consumers would want to see and hold fine jewellery before they plunk down large amounts of money," says Jonathan Gaw, a research manager with IDC's consumer e-commerce major purchases program, who conducted the research. Many factors contribute to this conclusion, Gaw says, including the increasing number of jewellers going online with Web sites, the cost savings of buying products online, technology improvements, and the lack of pressure felt by consumers buying online.