Definition of Internet Based Business
Question:
Describe how an internet business can create value for customers in ways that store-based retailers cannot. Identify the value propositions from the internet and retail business.
An internet based business can be defined as those types of businesses which do not have any physical existence and they control their operations with the help of their own websites which contain information. This type of business can also be defined as those which mainly provide e-commerce facilities to the consumers. The main factor that defines this type of business is the usage of technology to provide different types of facilities to the consumers. Internet based business is also more suitable for owners with small businesses. The cost factor related to internet based business is less as compared to the physical or brick and mortar style business (Casadesus?Masanell & Zhu, 2013).
Internet based business can be mainly of three types which are namely, business-to-business, business-to-consumer and consumer-to-consumer as well. The business that is conducted with the help of internet involve much less costs as compared to the physical style of business. The connection of the consumers with the business is much more in case of internet based business. The consumers of the particular business can connect with the business operations and their needs can also be easily judged (DaSilva & Trkman, 2014).
Value creation of a business is related to the value that is created in monetary terms for the profits of the business. The value that is achieved by the business organization by deducting the costs that are related to the business operations from the total sales of the company. The business organizations purchase the supplies as well as works so that value can be created and the end products can be sold at higher prices as compared to the costs that are required by the company. The more value that is created by a business at lower prices, more is the profitability of the business. The business which cannot create value in the market are unable to survive in the competitive market (Wirtz et al., 2016). The businesses that operate in a competitive market try to acquire the raw materials from the same suppliers as their competitors so that they can create the same value in the market. Value can be added to the business by adding new products to the product line of the business as well. The needs and desires of the potential customers need to be judged and the products are created accordingly. Expansion of the business into new markets and creating innovative products also helps in increasing the value of the business organization (Saebi & Foss, 2015). The value of a business can be increased by changing the methods of production and bringing new manufacturing methods. The organizations can aim at decreasing the costs related to production by changing the supply sources.
The retail business organization that is taken into consideration for the analysis is The Reject Shop (Rejectshop.com.au., 2017). The ways by which the business organization creates value in the competitive market is by increasing the range of products and also offering the best values so that they can beat the competition in the market. The organization offers a wide range of products to the consumers including home and garden products, health and beauty products, grocery, stationery, products for pets, toys and clothing products. Value is created by the organization in the market by providing extra discount to the consumers with the help of gift cards and loyalty benefits. The website of the company provides all related information to the consumers and the feedback of the consumers is also received with the help of the links provided in the website (Baden-Fuller & Haefliger, 2013).
Types of Internet Based Business
The internet based business organization that is taken into consideration for the analysis is DealsDirect.com.au. The website provides an online shopping platform for the Australian citizens (Dealsdirect.com.au., 2017). They provide many different types of products that include apparels for men and women, beauty products, products for kids, sports and technology related products. The internet based business can create value by increasing their range of products and providing deals and offers as well. The wide range of products that are offered by the organization helps in increasing the sales and thereby creating more value for the organization as well. The website provides branded goods from different parts of the world and they provide huge discounts in each of the products. In this manner the organization is able to attract more and more consumers towards the website (Fielt, 2013).
Businesses
The website that is taken into consideration is an internet based business that is based on the merchant and brokerage based business model. The website follows the brokerage model where the buyers and sellers are brought together on a single platform and the products are thereby sold to the consumers. An online based business needs provide value to the consumers so that they can be viable in the market. The organization also needs to keep a check on the amount of revenue that is generated by the business and also fulfilling the needs of the consumers. Internet based businesses are quite successful in bringing many different types of products for the consumers with the help of the connection and channel that is created with the help of internet (Schneider & Spieth, 2013). DealsDirect.com.au website follows the brokerage model of internet business and helps in bringing the different sellers of the products that they offer in the website with the buyers or consumers. The major factors that are related to brokerage model of business are as discussed below,
- Exchange in the marketplace occurs where the huge variety of products are offered along with the services of the website by completing the transaction process.
- Fulfilment of buying and selling is achieved by taking the orders from the consumers and delivering the products based on the terms of sales.
- Brokers also play a major role in the process of transaction where the payment needs to be made for the products that are purchased by the consumers.
- The distributors of the products that are offered by the website play a significant role in the process of sales (Kim & Min, 2015).
The retail business model that is followed by The Reject Shop mainly refers to ways by which the business owners purchase the products from the suppliers or the distributors and then sell the products to the consumers. The retailers mainly purchase the products from the wholesalers and then they offer the range of products to the consumers. The retail business model mainly involves the suppliers of the business who provide the raw materials and the wholesalers as well. The major elements that are present in the retail business are the services or products that are offered by the company including the quality of the products and breadth and depth of the product range. The shopping experience of the consumers is another major element of the retail business model (Visnjic, Wiengarten & Neely, 2016). The pricing of the products and the revenues earned by the company is also an important element of the retail business.
Retail
Direct response marketing mainly refers to the type of marketing activities where the immediate response of the consumers can be achieved and the products in which the consumers are interested can be judged as well. The direct response strategy helps the customers to take immediate action related to the purchase of products and services that are offered by the company. The process of direct response marketing can be carried out with the help of various mediums including print advertisements, print ads, radio ads and TV ads as well (Schwartz, Bradlow & Fader, 2017).
Value Creation in Internet Based Business
The barriers related to marketing can be reduced with the help of direct response marketing strategies and the response can be collected. The marketers need to be specific about the quality of the products and services that are offered to the consumers. Direct response marketing can also include various offers, discounts or free items as well. The value of the organization can be increased with the help of free items that are provided to the consumers. The short period of time that is provided along with the marketing technique also helps in getting the response of the consumers (Tsao, 2016).
The Reject Shop can use the direct response marketing technique to attract consumers by providing many offers and discounts to the consumers. The organization uses the website to collect the response from the consumers and thereby provide them the services and products as well. The organization can try to persuade the consumers to purchase the products to get direct response from them. In this manner the organization can get response related to the marketing activities (Rejectshop.com.au., 2017).
DealsDirect.com.au can also use direct response marketing activities by providing discounts and offers to the consumers. The ways of using this strategy is easier for internet based marketing as compared to retail marketing. The immediate response of the consumers can be achieved faster in case of internet based marketing activities. It can therefore be said direct response marketing is an appropriate method for internet based business organizations like DealsDirect.com.au (Dealsdirect.com.au., 2017).
Retail
The internet based businesses as well as the retail businesses can use many customer acquisition tools that will help the businesses to increase their profitability. The different types of customer acquisition tools that can be used by any business organization to acquire customers are as discussed below,
- MozBar is one of the most important tool that can be used to for the purpose of acquiring customers.
- Google Analytics can also be used for self-reflection and the latest figures can also be obtained.
- LeadCrunch can also be used for the acquisition of customers which uses artificial intelligence to detect the leads related to customers and who can be acquired.
- GetResponse is another type of customer acquisition tool which is the most effective tool that can be used for marketing in the present scenario. The testing features that can be applied to acquire more and more customers are offered by this customer acquisition tool (Tsao, 2016).
The customer acquisition tools that are discussed can be used by The Reject Shop as well as DealsDirect.com.au. The tools can assist the companies to detect the correct group of potential customers that can be acquired by the organization and thereby the needs and desires of the consumers can also be detected
References
Baden-Fuller, C., & Haefliger, S. (2013). Business models and technological innovation. Long range planning, 46(6), 419-426.
Casadesus?Masanell, R., & Zhu, F. (2013). Business model innovation and competitive imitation: The case of sponsor?based business models. Strategic management journal, 34(4), 464-482.
D’Haen, J., Van den Poel, D., & Thorleuchter, D. (2013). Predicting customer profitability during acquisition: Finding the optimal combination of data source and data mining technique. Expert systems with applications, 40(6), 2007-2012.
DaSilva, C. M., & Trkman, P. (2014). Business model: what it is and what it is not. Long range planning, 47(6), 379-389.
Dealsdirect.com.au. (2017). Cite a Website – Cite This For Me. Dealsdirect.com.au. Retrieved 27 December 2017, from https://www.dealsdirect.com.au/
Fielt, E. (2013). Conceptualising business models: Definitions, frameworks and classifications. Journal of Business Models, 1(1), 85.
Kim, S. K., & Min, S. (2015). Business model innovation performance: When does adding a new business model benefit an incumbent?. Strategic Entrepreneurship Journal, 9(1), 34-57.
Rejectshop.com.au. (2017). The Reject Shop | Homepage. Rejectshop.com.au. Retrieved 27 December 2017, from https://www.rejectshop.com.au/
Saebi, T., & Foss, N. J. (2015). Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3), 201-213.
Schneider, S., & Spieth, P. (2013). Business model innovation: Towards an integrated future research agenda. International Journal of Innovation Management, 17(01), 1340001.
Schwartz, E. M., Bradlow, E. T., & Fader, P. S. (2017). Customer acquisition via display advertising using multi-armed bandit experiments. Marketing Science.
Tsao, H. Y. (2016). Budget Allocation for Customer Acquisition and Retention to Balance Market Share Growth and Customer Profitability. In Thriving in a New World Economy (pp. 130-130). Springer, Cham.
Visnjic, I., Wiengarten, F., & Neely, A. (2016). Only the brave: Product innovation, service business model innovation, and their impact on performance. Journal of Product Innovation Management, 33(1), 36-52.
Wirtz, B. W., Pistoia, A., Ullrich, S., & Göttel, V. (2016). Business models: Origin, development and future research perspectives. Long Range Planning, 49(1), 36-5
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