E-Shopping SWOT Analysis
A company’s ability to compete in its chosen industry highlights the level of success that it can achieve. Ocado is a clear example of how an organisation can create its own niche by specialising in a fraction of the actual industry therefore working against the usual business model of supermarkets. Although existing companies might already have an advantage with infrastructure a company’s strength will become evident if it is able to implement the e-commerce principle to expand its customer base whether it be on a local or global scale without expending too much time or capital that leads to its downfall.
For an existing company, having a standard brick and mortar supermarket although deemed as an initial advantage, would not necessarily be the same for a new entrant. Having low overhead and start up costs for an e-shopping retail business would be more beneficial. These benefits though can extend to the consumer. Having an online business in this period is more of a necessity and consequently would allow a company better levels of communication which is achieved at every stage of the purchase especially through the use of e-mail.
A customer in this market has no way of identifying the size of the company via the internet and consequently cannot identify the capabilities of the chosen company. Consequently a customer demands the same level of service from a new small online business as it would from a retail giant. A new company also has the task of identifying and understanding consumer behaviour, customer values and expectations therefore a new entrant is left with the task of designing and structuring a website that assists the consumer in locating the exact product that is desired as well as allows it to assert its position in a generally oligopolistic industry. The new retailer also has to deal with the uncertainty that plays in the mind of a consumer which could have been influenced or dealt with if in store. The uncertainty extends to the fluctuation in economic temperament which causes people to try and avoid what they deem as unnecessary costs such as the delivery charge.
The ability for a company to have a 24/7 business allows it to be accessible round the clock on every day of the week which means that customers are able to make orders at anytime with orders processed and filled during trading hours. Another potential opportunity is the addition of the e-commerce factor to the brick and mortar supermarket which creates the increased prospect of the expansion of trading on a global scale.
The Food retailing industry has seen various supermarkets seeking out cost savings in their operations through the improved advantage of information technologies. In addition Mergers, acquisitions and alliances which have included takeovers are important which again could allow for mass exposure. As of 2008 online shopping had overtaken internet sales of other items (Daily Mail 2008) with ‘New research from IGD, the food industry’s trade body, forecasting that UK consumers will spend £7.2bn on food and grocery shopping online by 2014 – nearly double the figure for2009’. (Telegraph 2009)
Evidently competition is rife in the grocery market with only a few major retail giants fighting for the top position. All parties involved closely monitor the activities of others. ‘In the UKand Europe, the leading suppliers are the major food retail groups, whose profile and brands are already familiar to shoppers.
As far as the major supermarket groups are concerned, online and internet shopping enables them to not just gain easy access to their customers but allow for another way to get to the customer, offering a wide range of items (both food and non-food) that shoppers might not have time to peruse in store. (www.companiesandmarkets.com)
Consumers continue to have concerns about online services in relation to fraudulent use of their financial data. This in turn means that companies lose out on a substantial segment of the population. This fear also extends to privacy issues or identity fraud with consumers being sceptical about giving personal information via the internet.
- Hall, J. (2010) Online food shopping expected to double in five years [Online] Available from: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7020524/Online-food-shopping-expected-to-double-in-five-years.html [Accessed 30/01/10]
- Daily Mail (2008) Online grocery shopping overtakes sales of electronic goods as bargain hunters battle economic crisis [Online] Available from: http://www.dailymail.co.uk/sciencetech/article-1081194/Online-grocery-shopping-overtakes-sales-electronic-goods-bargain-hunters-battle-economic-crisis.html#ixzz0jn8uySCA [Accessed 10/01/10]