Investigate Market Potential For An E Commerce Information Technology Essay

I have decided to analyse the potential of B2C e-commerce business, operating in United Kingdom, France and Germany, selling the equestrian equipments. According to European Horse Network statistics the horse industry is a growing by 5% a year, generating about 100 billion euros a year of economic impact. (European Horse Network, 2010) In the UK alone there is 3.5 million people who have ridden a horse at least once per a year, giving insight in to a size of the possible market. (bhs.org.uk, 2012)

Leisure riding is in general more popular than a lecture riding; Great Britain has a 600 riding schools, but an average price is one of the highest from all european countries. On the other markets in Germany and France, the prices are on average 3 times lower and they have a much larger number of a riding schools about 7000 and 4000 respectively.(Liljenstolpe, 2009)

These Factors and the high popularity of horse riding sports in selected countries creating demand for equestrian equipments, clothes and accessories. About 70% of riders are women and according to (Barletta, 2003)

women control over 80% of a household spendings. Based on these data we can assume that most of the potential customers will be women and so the marketing and the selection of the goods needs to be modified for this purpose. The assortment needs to be of a wide range from children’s clothing to the accessories which doesn’t have to be necessary to carry out an activity, but to fulfil a fashion function as well. For every business its important to estimate the length of a period in which the customers are going to return to the shop. (Stricker, 2008)

A quarter of the UK equestrian market is represented by people under 16, this imply that the clothes has to be purchased for them more often, due to their constant physical development. It’s estimated that about 8% of horse users in the UK are disabled, hippo-therapy is a main way of their interaction with the horses and to address this niche market, it’s necessary to provide therapeutic riding equipments in our store. (RDA, 2012)

Kamil Bublis

Student No.: 122012

Assignment 3

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This e-commerce is aiming to provide the services in three countries and for this purpose it is necessary to have a quality distribution channel and this can be outsourced to a supplier using drop shipping, which is a form of shipping directly from the suppliers to the clients. In order to compete abroad there may be a need to accommodate a local suppliers of that particular country to keep the costs of final product competitive. Threat to the business is also a strong competitors base on a well established market, where it will be hard to compete with an aggressive price politics for a newly established business, therefore it will be better to focus on providing better services and flexible delivery times, which could be a key to gain a part of the market share. (COM, 2012)

3.2 evaluate current e-Commerce systems in use by organizations.

Businesses have a wide variety of e-commerce solutions to chose from, but based on previous analysis, only few of them are suitable for the chosen e-commerce. Amazon was one of the first e-commerce businesses starting in 1995 by Jeff Bezos and is currently offering an Amazon Webstore platform to the public, to host there their e-commerce businesses. (Amazon, 2012)

Advantages for a business using amazon services are international presence in countries where Amazon is carrying out their business, large potential customers base, payment gateway and already built network and delivery infrastructure. For starting business selling goods, drop shipping is one of the least expensive way how to start e-commerce. (Stephenson and Rich, 2008)

The seller doesn’t get to hold the item, reducing warehousing expenses, but rather pay the supplier to deliver the goods directly to the customers. The need to host a website on an Amazon Webstore may be seen as a disadvantage because the website is hosted on someone else’s server creating amateurish look and feel of the business, rather than having an own domain and starting business will also have to consider monthly instalments and fees for the service. (布卢å†æ-¯ä¼¯é‡Œå‡ºç‰ˆå…¬å¸, 2003)

An open source e-commerce system can represent a less expensive solution, but for a cost of need to setup and interconnect various parts of the e-commerce by the business owner. Magento is popular content management system written in PHP offering free and

Kamil Bublis

Student No.: 122012

Assignment 3

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paid version of the software and will be used to develop the planned e-commerce, because of its flexibility and a level of control over various parts of e-business. (McCombs and Banh, 2009)

Content management system is the back-end of the e-commerce website where the products can be added and updated. As I have decided to use drop shipping because of low initial cost and simplicity, the ecommhub.com will act as a middle man providing inventory management, order fulfilment and be linked to my suppliers. Next step is to set up a payment gateway provider, such as sagepay.com for its competitive prices and no transaction fees, which is necessary to carry out an e-commerce. (Jones, 2012)

The advantage over amazon’s system is modularity which allows to modify only certain parts of system like a hosting, payment gateway provider and to give a better control over business.

3.3 discuss the financial implications of an e-Commerce solution.

From financial point of view the e-commerce implications can be separated to the expenses required to commence the business and the payment systems. Three different payment systems exist such as pre-paid, instant-paid and post-paid system each with their own advantages and disadvantages. Post-paid system is the simplest solution for a seller but also poses a credit risk in a case of a fraudulent customers, because the goods are delivered prior to receiving a payment. (Groenink, 2001)

Instant-paid system accomplish the payment at the time of purchase, but require security measures in form of encryption of the communication. (LBC 2012, Lesson 9 Internet Payment Methods, page 1)

This will be the preferred payment system for the equestrian e-commerce, as 43 million people in the UK are using debit cards and it is the favoured way to carry out the payments. (UK Cards, 2010)

There is many payment gateway systems to choose from, but I have opted for sagepay.com solution, as they provide very competitive prices for a flat-rate. The company is based in the UK which is an advantage as the e-commerce will be carried out nationally first, with a plans to expand abroad and sagepay accept multiple currencies to enable this.

Kamil Bublis

Student No.: 122012

Assignment 3

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An advantage is also a free Paypal integration, support for major cards and free personalised payment page so the customers won’t feel that they have to be redirected to a different website to pay for goods. (Sagepay, 2012)

Beside this, there are other expenses directly related to an e-commerce such as cost of web hosting, intermediary services like an ecommhub to manage inventory stocking and the expenses for solicitor. An online business has to comply with a laws of the country where the business is carried out, address privacy policies, data protection and website terms and conditions (Smith, 2007), to address these requirements I have chosen Pearne & CO solicitors. (Pearne & Co, 2011)

3.4 design an e-Commerce solution

The e-commerce I am about to design will have only a virtual presence and therefore the website will differ from its counterpart, where the business is carried out in a mortar shop and launching an online e-commerce. These websites are distinct in their purpose and design. The most suitable design is a catalog website where the customers can browse the products, read descriptions and reviews to base the purchases according to them and the purpose of e-commerce for brick shop is to sell, but also attract customers to their physical branches. (Bushry, 2005)

For already established business, the domain name is the same as the business name, but it should be short or easy to remember. (LBC 2012, Lesson 7: Designing E-Commerce Solutions, page 5)

The domain name for our e-commerce will be relevant to the main products, reason for this is to improve a searchability of our website in the search engines, one of the main marketing tools for an online business. The domain name registration will be provided by the web hosting service pixelinternet.co.uk for 2 years period. Using a hosting company has many advantages particularly for a small starting business, because the expenses related to the hosting of own website, staff resources and technical equipments can be high. (Lawrence and Tavakol, 2007)

Disadvantage of hosting service is loss of a full control over the system and limiting software and hardware options, but the chosen hosting service provider has very flexible

Kamil Bublis

Student No.: 122012

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options to satisfy specific needs of developers. The website will be developed using Magento system, partially in-house and with a help of an outside designer to create the unique Magento template design to separate the business from competitors. The reason for this is a simplicity of Magento content management system for a back-end, managed in-house and an importance of having an outstanding visually attractive front-end for the customers. Search engine optimization is very broad discipline spanning through IT, design/usability, public relations and social media, to increase a natural traffic to the website via listing high in the search engines. (Enge, et al., 2012)

The basic SEO practice is proper use of meta tags for keywords and description which in this case would be something like horse equipments, equestrian clothes and shoes. The search engines are using spiders, small programs to crawl and search the internet for new websites, but to speed up the process, it is a good practice to submit the website to the search engines manually. Marketing of an online business is a constant process during a lifetime of the e-commerce, starting with a website code, through SEO, paid forms of marketing and analysing of the website traffic to modify system to better target customers. (Remenyi and Brown, 2001)

To collect and evaluate customers data from website traffic, business can use analysis software which is in case of a selected hosting provider included in a price. The collected data can be used in the blogs and social marketing to better understand customers needs. Testing of the website is an important part of the development prior to deploying, as any imperfections, technical or grammatical, are perceived by potential buyers as a drawback. It is necessary to test a payment gateway and try to buy and get delivered the products to catch any bugs or glitches in the system. Direct approach to get a customer’s opinion is a survey which can be conducted online and according to studies, the quality of the web based survey is higher than other approaches. (Spitz, Niles and Adler, 2007)

3.5 evaluate the suitability of an e-Commerce solution.

The suitability of the e-commerce solution can be evaluated against many criterias and scalability is amongst them. It is important to monitor the peak traffic of the website and the performance of the servers and network infrastructure to avoid the bottlenecks. The web

Kamil Bublis

Student No.: 122012

Assignment 3

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hosting provider provide an unlimited network bandwidth, which create room for more traffic in the future. Another important factor is a flexibility of product catalog in the e-commerce to accommodate to a future changes of the product range. It is down to a database design for a content management system, to be able to address future items and incorporate them easily to an e-commerce. (Oracle Corporation, 2011)

Modularity of proposed e-commerce system, instead of single platform, create a higher requirements to manage different parts of the e-commerce from supplier chain, payment gateway to CMS, but also enable to change particular element to save costs or to provide more powerful services. Website metrics can be used to measure an e-commerce performance, usability and security, but as the evaluated e-commerce doesn’t provide us with the performance or usability data, I will focus on a security of an e-commerce. (Abd El-Aleem, et al., 2007)

The web hosting provider is offering an advanced SSL security certificates for data encryption required during transmissions of personal data and are used in conjunction with a digital certificate. Purpose of digital certificate is to prove the identity of particular server or in this case a business. (LBC 2012, Lesson 7: Designing E-Commerce Solutions, page 3)

The feasibility study is an analytic tool used to estimate how a business would operate under a set of assumptions about technology, equipment and capital needs. (Katimuneetorn, 2008)

The cost of technology in chosen e-commerce are expenses for web hosting, payment gateway and development of website, these costs are also a running expenditures for e-commerce, except the cost of website development. (Abdul, 2009)