The document is a report about Herman Street, an e-commerce company that sells computer software and electronics. It discusses how Herman Street initially used ShopSite software for its website but faced challenges with conversion rates. The report analyzes Herman Street's market gap and proposes adopting a new shopping cart software, Pinnacle Cart, to address issues and potentially improve business performance through innovation.

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Report on Herman Street an Ecommerce Website

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Summary
Herman Street is an e-commerce website that sells and service computer software.
The customers of the company are both consumers and businesses. Initially, the company
chose ShopSite software for website launch. However, with the passage of time the
application presented problems. Therefore, Herman Street identified the need to innovate and
add new technology to the business for business growth. The report identifies the reason for
market gap and encapsulates the factors that result in a deviation from an objective set. The
study proposes an innovation to potentially improve the Herman Street business. Hence, from
a given study it can be summarised that in the current scenario the company would benefit
from the introduction of new technology.

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Contents
Summary .....................................................................................................................................3
Introduction.................................................................................................................................5
Market gap analysis...................................................................................................................... 6
Value perception of customer and business................................................................................... 9
E-commerce relationship strategies andinnovation...................................................................... 11
Conclusion ................................................................................................................................. 13
References................................................................................................................................. 15
Appendix.................................................................................................................................... 18

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Introduction
Currently, E-commerce is the fastest and innovative way of doing business. It is a
new, emerging and evolving area in the field of business and information technology. Many
major corporations are transforming key business process through the use of internet
technologies. E-commerce facilitates e-business by providing infrastructure and environment
(Reynolds 2004).
The given report sheds light on Herman Street. Herman Street launched in 2005 is an
e-commerce website. The e-commerce website sells and service computer software and
electronics to consumers and businesses from their website http://www.hermanstreet.com.
Over the years, the company has streamline their shopping cart and ordering systems by
making online buying process simple and reliable. Herman Street vouches to offer best
software and electronics products by making an online purchase process easy and familiar for
buyer. The website has experienced rigorous growth in last few years. To meet the changing
customer expectation, the business has added developers to their staff for creating and
customizing the website (About us 2014).
However, the company is facing challenges and is needed to solve immediately to
scale the business. Hence, it is required by the company to innovate in their processes and
inputs. The success of the company lies in entrepreneurial and innovating capacities that
include developing existing relationship, building strategic finances and keeping abreast with
the latest technology. The future of e-commerce lies in innovation. The recent trend change is
at supply chain level, processing, accessing, controlling and managing information (Zhao
2007).

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The purpose of the report is to identify the gap in the e-commerce business and
propose innovation to improve the company performance. The study considers the purpose,
business concept, target customer, future trends and strategies adopted by ecommerce
business. Moreover, the report suggests innovation and recommendation to Herman Street for
successful running of the company.
Market gap analysis
Herman Street chose ShopSites application to meet their needs. Although, the
economical application use give boost to business growth, but it also presents problems. The
business demand for Herman Street products outstripped the capability of ShopSite software.
The challenge for Herman Street is a shopping cart abandoned rate. It is 49 percent, which is
comparative high as compared to competitors. Herman Street is concerned about their
conversion to sales metrics. A large number of customers would abandon the cart before they
complete the purchase. However, the sale metrics is relatively in line with the industry
average but business can perform much better by improving the shopping experience for their
customers. Shopsite the current shopping cart software also fail to test marketing theories.
The application does not support split testing for marketing purposes. Therefore, to improve
the sales rate it is important to customise the shopping cart application.
Herman Street should identify the gaps to know competitor strategies. The gap
analytical tool will assist the company to compare its objective such as growth with its
expected performance. The analytical tool as shown in Figure 1 helps the business in sound
decision-making (Steffan 2008)

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Profit gap Chart
(Source: Essential Management Accounting: How to Maximise Profit and Boost Financial
Performance 2008)
Herman Street has the competitive advantage and innovative aspects of product range
that differentiates them from competitors. The strength of the company is in marketing,
distribution, price and quality of resources such as people or assets. However, few reasons for
the gap in the performance are cash flow constraints, supply chain issues, poor organisational
management and insufficient processes and systems. (Armstrong 2011).
The numbers of driver that result in the performance gap are macro and
microenvironment factors.
Technological element- The rapid pace of advancement in technology has posed a
challenge for companies and consumers.
Political factor- It includes the role of government legislation, in the development of
e-commerce and technology (Bartol et al. 2008).

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Social factors- the level of advancement in IT education and training that enables
potential buyers and users to understand and use new technology. E-commerce is
experiencing high growth and has increased the competition in the virtual marketplace.
Economic factors- Herman Street performance is affected by country economic
growth, average income, cost of technology, i.e., hardware and software. The pricing
structure for accessing telecommunication infrastructure and introduction of innovative
business models affect the working of the company (Introduction to e-commerce 2013).
The micro factors affecting the working Herman Street e-commerce business are-
Organisation Culture- It includes the attitudes and willingness of staff to innovate and
use new technology to achieve objectives.
Competitors- the others organisation offering similar products and service has the
effect on sales metrics of the company (Bartol et al. 2011). Herman Street should continually
innovate in their business process to surpass the rivals.

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Key drivers of e-business
(Source: Introduction to e-commerce 2013)
As shown in Fig.2, the performance gap between demand and supply can be reduced
by identifying macro environment elements affecting business. The market gap can be
reduced by providing technological infrastructure to improve organisation processes,
commitment to integrate new technology and improving working practice among workforce.
Value perceptionof customer and business
In the present century, the concept of perceived value is an emerging concept in e-
commerce. Organisation and market researchers are extensively identifying the perceived
value as a critical factor in strategic management. E-commerce organisation is increasingly
focusing on the creation of customer value as it is the reason for firm existence and its
success. The building of customer value is a strategic imperative in building a sustainable
competitive organisation for organisations (Fernandez & Bonillo 2007).
The concept of ‘perceived value’ is connoted differently in the literature such as
values, utility, price and quality. The essential precursors of perceived customer value in e-
commerce are on-line shopping experience, perceived product quality, perceived risk, and
price of the product. The relationship between these variable and on-line shoppers value
perception are explored (Chen and Dubinsky 2003).
The perceived value of consumers can be maximised by efficient design of e-
commerce user-interfaces. As more and more product and service are sold over the internet,
it becomes essential for electronic commerce companies to design for trust (Egger 2001).

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Herman Street has strongly linked loyalty and profits for creating value for the
customer by offering quality products. The company has enhanced customer confidence by
building up knowledge in-e-commerce particular user interface. Herman Street strongly
focuses on website interface properties by attractive graphic design and user-friendly
interface. The perceive value of Herman Street customer is high because of effective
relationship management. The efficient handling of queries over time, immediate response to
questions and quality of assistance has raised the trust value among its customer. The
customer at Herman Street site easily access relevant information. The site has been
structured in accordance with customer domain model and expectation.
As depicted in Fig 3. The value perception of business and consumer is strongly
linked with the competitive advantage. The customers are insensitive to the price, recommend
products or service to others and give company suggestion (Lee & Overby 2004).
Fig. 3 Conceptual Model

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(Source: A mediating influence on customer loyalty: The role of perceived value 2013)
Herman Street focuses on achieving customer loyalty through appropriate marketing
mix. The outcome is customer loyalty brings absolute competitive advantage to the company.
The perceived value and purchase intention play a significant role in the client satisfaction.
Herman Street emphasises on service quality and customer satisfaction. It is a major
determinant in gaining competitive advantage and business sustainability (Hu 2013).
The e-commerce company obtain the competitive advantage for sustainable
development in the stiff market competition by committing themselves to design and deliver
products that provide value to customers. Herman Street eliminates the barriers of time and
space and takes advantages of enhancing communication between company and consumers
(Li 2009).
Herman Street gains competitive advantage by understanding customer needs,
increase the sensitivity of the reaction, protect consumer online security, implements
contracts timely and accurately and prevents fraud.
E-commerce relationshipstrategies andinnovation
E-commerce site is an effective way to maintain and strengthen customer
relationships. The shopping cart feature of the site is a direct marketing strategy that allows
customers to purchase outside the region. The business through effective strategies can build
a competitive edge over competitors by using e-commerce feature of websites to emphasise
customer loyalty (Barkley, Markley & Lamie 2007).

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The e-commerce business should develop its marketing strategies by identifying the
target market for its product and services. The product, price, promotion and place are the
elements of the marketing mix and should be designed such to enhance sales to target market
(Shin 2001).
Herman Street can increase its sales and profit by various product offering, price
discrimination, with effective promotion and effective logistics. The unique mix of these
elements will allow the company to compete effectively, thereby ensuring profitability and
sustainability.
The innovation is another strategy that reduces the threat of product substitutes. The
product bundling is another competitive strategy that reduces the threat of rivalry among
existing firms. Herman Street has effective price discrimination strategy that make difficult
for buyers to compare the prices of alternative product offerings (E-commerce and Consumer
goods 2012).
Herman Street supply chain application software delivers product or services by
reducing transaction and distribution costs. Therefore, it is important for Herman Street to
find an innovative solution to the issues faced by company regarding inefficient software
shopping cart application. The company should adopt the strategy that requires less time and
cost. The company should first make a list of things that is to be included in new shopping
cart solution. The access to the code is the first thing needed so that company can customize
parts of the application as when required. Herman Street also requires PHP scripting to
perform A/B and multivariate testing so that they could perform various marketing testing on
their site. The company need well-written code and robust performance in the software to
handle increase online order demand.

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The herculean task for the company is to find the right shopping cart software that
includes all the above attributes. The Top Ten Reviews is a sister company of Herman Street
that specialises in comparing various products. Herman Street can compare different
shopping cart solutions going to Top Ten Reviews site. The company can perform the
comparison quickly and easily. The one such top-rated e-commerce software package and
new e-commerce application is Pinnacle Cart. Herman Street can adopt Pinnacle Cart’s
shopping cart as it fulfils the key requirements.
The innovation in shopping cart will improve their sales rate. The Pinnacle Cart’s
ecommerce is suitable for Herman Street in all areas of their essential requirements. Hence,
the innovation in shopping cart software by switching to Pinnacle carts solution, the company
can try out new ideas for improving their response rate, ROI and market perceptions. The
Pinnacle Cart software will support the business in managing existing inventory, order
management and accounting programs. The export feature of Pinnacle Cart allows Herman
Street to prioritize and customize changes to their systems. The migration to Pinnacle Cart
software will lead to increase in revenues and customer satisfaction.
The e-commerce strategies will results in improving business processes such as CRM
and HRM. The company should understand the importance of customer relationship
management for effective decision making and forecasting. CRM is a vital business strategy
to manage customers and optimize long-term value (Information & CRM in e-commerce
2013).
Conclusion

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The rapid growth of business-to-customer and business-to-business reflects potential
benefits such as increased sales, improved ROI, lower cost and enhanced sustainability.
Herman street e-commerce business has substantial potential to improve the efficiency of
operation in all areas of supply chain (Niranjainmurthy, Kavyashree, Jagannath & Chahar
2013). The report includes the challenges encountered by Herman Street in sustaining an e-
commerce business. The introduction of new shopping cart software will benefit the company
by making faster buying and selling procedure, and it will be easy for the consumer to find
products. The pinnacle Cart application software has the capability to handle increased order
demand. The innovation will allow the company to reach more customers in less time. The
introduction of new software will result in low operation cost and better quality of services.
Herman Street integration of upgraded technology throughout front and back end
business will significantly benefit business and result in business process optimisation. The
innovation will improve customer responsiveness and service. The move to upgraded
software will lead to more sales by answering general queries quickly and comprehensively.
The change in technology will facilitate better staff, customer, and supplier relationship. All
in all, investing in new technology in a well-built e-business system, the company built
customer loyalty and trust (Benefits of e-commerce 2013).
The Pinnacle Cart software will allow the Herman Street to test their marketing
theories and successfully capture customer intelligence. It will assist the company in
anticipating customer needs, customised products or services, setting fair pricing strategies,
providing superior delivery, support and feedback systems. Hence, it can be concluded that
the introduction of new technology ensures high potential future growth for the company.

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References
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[Accessed on: 10 December 2014].
Armstrong, M. Armstrong's Handbook of Strategic Human Resource Management. USA:
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Barkley, D., Markley, D. & Lamie, R. 2007. E-commerce as a business strategy. UECD
Woking Paper, 10 (02), 1-15.
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focus. McGraw-Hill: Australia.
Bartol, K, Tein, M, Matthews, G, Sharma, B & Scott, B. 2011. Management A pacific rim
focus. McGraw-Hill: Australia.
Benefits of e-commerce. 2013. [Online]. Available at:
http://www.ajml.com.au/downloads/resource-centre/references/operational-
management/Benefits%20of%20ecommerce.pdf [Accessed on: 11 December 2014].
Chen, Z. And Dubinsky, A. 2003. A conceptual model of perceived customer value in e-
commerce: A preliminary investigation. Psychology and Marketing, 20 (4), 323-347.
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Egger, N. 2001. Affective Design of E-Commerce User Interfaces: How to Maximise
Perceived Trustworthiness. Conference on Affective Human Factors Design, 27 (29), 317-
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Fernandez, R. & Bonillo, A. 2007. The concept of perceived value: a systematic review of the
research. Marketing Theory, 7 (4), 427-451.
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commerce Settings. AISC, 106, 623-628.
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Shin, N. 2001. Strategies for competitive advantage in electronic commerce. Journal of
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Appendix
The four key elements of Herman Street

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