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E-Business Concepts and Customer Relationship Management SUMMARY The paper examines the advantages of e-commerce for e-business providing B 2 C (business to consumer) home shopping services by the example of Littlewoods Home Shopping Limited, the second largest UK home shopping retailer and the fifth largest non-food retailer. The use of Customer Relationship Management techniques and the use of Intelligent Agents on the e-business providing B 2 C retailer are examined. The paper explores possibilities to disintegrate the companys distribution channels by using e-business. The factors from the Electronic Shopping Tests are considered to assess whether the company has good e-business potential. The findings confirm that the use of e-commerce systems can be recommended for the companies to achieve competitive advantage. INTRODUCTION Littlewoods Home Shopping Limited is the leading UK retailer.
The company is positioned as the second largest home shopping retailer and the fifth largest non-food retailer. Littlewoods was founded in 1923 by Sir John Moores. The companys strategy is to establish multichannel retail business and to provide customers with an opportunity to shop with easy within the framework of different channels and formats. Littlewoods Home Shopping operates through two major home shopping channels: Littlewoods extra and Littlewoods the all-inclusive catalog. In addition, the company operates more than 250 high street stores under three fascias: index, Littlewoods Stores and Littlewoods Catalogue Discount Stores. The development of internet introduced a new way to conduct business that is becoming more and more popular.
E-commerce allows the companies to enhance their productivity, efficiency and profitability. The expansion of e-commerce offers the companies numerous possibilities to retain its competitive position in the global market. In order to retain the companys position in the market and to be a step ahead of its competitors, Littlewoods actively develops e-commerce and interactive customer communications. The companys website (web) offers a wide selection of more than 40, 000 products online. Littlewoods started its e-commerce business several years in order to beat decreasing high-street sales (Littlewoods 570 in Online Sales with a 10, 000 product Data Feed). Recently the company has announced results of over 3000 m in turnover, with internet accounting for 30 per cent, or 570, of Littlewoods turnover, making it the fourth-largest online retailer in the UK (Littlewoods 570 in Online Sales with a 10, 000 product Data Feed).
In such a way, the companys e-business experience is successful Yet, there are several aspects to be taken into consideration while examining optimization of business companies with help of B 2 C (business-to-consumer) solutions: THE USE OF CUSTOMER RELATIONSHIPS MANAGEMENT (CRM) Littlewoods Home Shopping focuses special attention on customer relationship management. CRM is the modern direction in sphere of automation of the corporate management. Littlewoods faced the dilemma: whether it is cheaper to find new customers or to make the old customers to remain loyal to the company. The development of the market and increasing competition in the industry forces the company to search for competitive advantages. Such advantages can be provided with the help of intrinsic operation effectiveness, or specific market orientation that should be better than that of competitors. Littlewoods uses both ways to strengthen its positions in the market.
The company assures its operation effectiveness by means of different corporate management systems like SAP, Baan, and others. However, the company is more focused on information systems providing the most effective market orientation, such as customer relationship management systems. CRM systems are used to create the database of loyal customers, where such database becomes for the company a significant competitive advantage. Littlewoods places high emphasis on possibility to implement consistent interaction with the customer concerning operational activities. The main objectives of Littlewoods CRM strategy are: To guarantee that products move with no problems and delays from the companys suppliers to the customers; To keep the costs down, while keeping the inventories low. One of the CRM solutions, utilized by Littlewoods, is developed by Chordiant Software, Inc.
According to the economists, this decision confirms the companys determination to transform its UK operation from a reactive customer service environment to a proactive sales culture (Littlewoods Extends the Lifetime Value of Customers, n. d. ). This solution allows the company providing customer service agents with multidimensional and real-time interaction, reducing the companys customer contact costs, enhancing customer retention, meeting all customer requirements and extending the customer lifetime value. Littlewoods objective is to establish new standards in customer service and, correspondingly, to extend customer value and loyalty. THE USE OF INTELLIGENT AGENTS Littlewoods consistently implements new technologies in its business process both to make the customers and the companys life easier. For example, the company uses special web-based performance reporting system that provides the managers with daily analysis of merchandising, marketing and financial information, purchasing data and space planning.
The use of this initiative helped Littlewoods to IT-supported initiative to deal with overstocking. One of the most interesting innovations utilized by the company is the use of different web-based services for the customers, such as service for price comparison and the use of intelligent agents. Littlewoods improves its distribution with the help of a specific website en click shopping that allows comparing prices. In such a way, the customer is able to search for a product and to compare the prices available. Yet, the company undertakes all efforts to enhance the level of customer loyalty and to make the customer shopping experience positive, easy and enjoyable as possible. The use of intelligent agents allows the company to obtain competitive advantage, because the vast majority of the e-commerce stores provide customers with a simple interface.
The intelligent agent increase the customer loyalty and viral marketing, reduces the cost of customer acquisition, and drive higher transaction levels (Georganas, n. p. ). The main aim of the intelligent agent is to emulate the social experience of shopping in real space The process is quite simple: the customer enter a website, logs on to the e-commerce store. The e-store has a user profile for each customer. The profile is transparent to the user and the customer is able to control the data about his interests, preferences, etc. He also has access to his past purchases and his expected products.
Such adaptive intelligent software agents, like shopping bots, personal user agents, monitoring agents, spam filters, server monitoring tools and game bots create a friendly environment for the customers, because they integrate numerous tasks and tools for web purchasing. DISINTEGRATION OF DISTRIBUTION CHANNELS. DISINTERMEDIATION. Littlewoods internet store allowed the company to remove the intermediary in its supply chain. It is a common knowledge that business companies have a certain type of the intermediate (e. g.
wholesaler, broker, distributor, agent, etc. ). A business-to-consumer supply chain allowed Littlewoods to bypass the intermediary and provided the customers with possibility to buy directly from the companys website, and, thereby, to pay less. The typical business-to-consumer supply chain can be illustrated as follows (Rosen, 26): In order to reduce costs, business companies try to minimize quantity of unnecessary intermediaries that are conductive to increased price of the products. The ideal model of disintermediation is as follows: Although such practice is suite successful for e-commerce based stores, there are several problems involved. Such practice was very popular at the beginning of e-commerce era and was actively implemented by numerous producers to cut costs or to increase profits. Yet, disintermediation is not as easy as it seems to be.
The attempts to reduce the quantity of intermediaries to the lowest possible quantity resulted in problems like high cost for handling or shipping small orders. However, Littlewoods experience has positive outcomes. By implementing e-commerce based store, the company managed to bypass traditional retail chains. Disintermediation allowed the company to reduce quantity of intermediaries between the suppliers and the buyers LITTLEWOODS: ELECTRONIC SHOPPING TEST The ES Test (Electronic Shopping Test) comprises of three parts: product characteristics, familiarity and confidence, and consumer attributes.
The ES Test can be applied to all kinds of products and services. Product Characteristics (implies the products appeal to the business). As far as Littlewoods sells basic clothing and basic household attributes (women, men, kids, sport clothing, home and garden items, electrical, appliances, toys and games, jewelry and gifts), the product characteristics is very important. The index of product characteristics will be low, because the more physical the products primal appeal, the lower its ES score (Band, 10). Figure 3 - Product Characteristics 's coring Source: Kare-Silver, (1998, 2000) Familiarity and Confidence As far as Littlewoods has a strong and well-recognized brand, its familiarity and confidence score will be quite high.
Figure 4 - Familiarity and Confidence Scoring Source: Kare-Silver, (1998, 2000) Consumer Attributes The consumers attribute score measures the extent to which the target consumer base for the product or service is responsive to electronic shopping (Band, 11). Figure 5 - Consumer Attribute's Scoring Source: Kare-Silver, (1998, 2000) The test results should be interpreted according to the table: Sample Products
Product Characteristics (0 - 10)
Familiarity and confidence (0 - 10)
Consumer attributes (0 - 30)
Total out of 50
Basic clothing e. g. men, women, children clothes, sport clothes
4
7
8
19
Basic household
8
8
15
31 Table 4 - The ES Test - Products with Likely High ES Potential-Scoring Source: Kare-Silver, (1998, 2000) According to the results from the table 4, the ES Test score is more than 20, that means a significant future ES interest and companys business potential.
THE ADVANTAGES OF E-COMMERCE FOR THE BUSINESS COMPANY With the rapid growth of the internet and consistent development of the information technologies use of e-commerce is important not only to retain, but to widening the companys position in the market. Use of e-commerce is vitally important for the companies in conditions of the modern competitiveness. E-commerce can be considered a new economic system. The development of the internet created a completely new kind of economy with colossal tempo of growth.
The implementation of e-commerce changes traditional concepts of business. Internet is the ideal environment to conduct business. In case the company operates traditional stores, the target segment of customers is limited. With implementation of e-commerce all users of the internet are potential customers of the companies and the most important thing is to shape the proper mechanism of providing the potential customers with information about the companys products. However, the most significant advantages of use of the e-commerce based system are: Tangible (personnel reduction, inventory reduction, the improvement of the companys productivity, enhanced order management and financial cycle improvements, etc) Intangible (new and improved business processes, information visibility, customers responsiveness, flexibility, standardization, globalization, and enhanced business performance) CONCLUSION The business experience of Littlewoods stores show that the company that operates a number of offline retail stores can effectively use its potential to obtain higher profits from online trade. Integration of the e-commerce based system is able to enhance the companys productivity and profitability.
However, the business companies should take into account the fact that the effective e-commerce comprises of a number of factors, such as perfect customer relationship management, consistent implementation of new technologies, developed marketing and business strategy, to mention a few. The detailed analysis of Littlewoods show that the company managed to enter a new market due to several reasons: Littlewoods avoided high market expenditures due to its strong brand name; Littlewoods e-commerce store became profitable due to entering a new market at a low primary costs, while implementing the newest technologies to attract new customers and to make they stay with the company; Littlewoods developed its business model by implementing an effective customer relationship management. Bibliography Band, R. PROFITING FROM EMERGING E-COMMERCE TECHNOLOGIES: MANAGING COMMERCIALIZATION FOR RESULTS. 28 February 2007 r. < web >. Electronic Shopping. 28 February 2007 r. < web >. Georganas, N.
D. Enhancing e-Commerce with Intelligent Agents in Collaborative e-Communities. 28 February 2007 r. < web >. Littlewoods. 28 February 2007 r. < web >. Littlewoods 570 in Online Sales with a 10, 000 product Data Feed. 27 September 2006 r. 28 February 2007 r. < web >.
Littlewoods E-Store. 28 February 2007 r. < web >. Littlewoods Extends the Lifetime Value of Customers With Chordiant CRM Solutions; Leading High-Street Retailer Leverages New Chordiant JX Architecture. 22 January 2002 r. 28 February 2007 r. < web >. Rosen, A. The e-Commerce question and answer book.
United states of America, 1999.
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Research essay sample on E Business Concepts And Customer Relationship Management
