2. Content Page
The advantages and disadvantages ecommerce strategy
Dissuasive argument for the ecommerce strategy
Recommended strategy
References
Instructions and questions
3. The advantages and disadvantages of the
ecommerce strategy
Ecommerce is defined a business model or tool that enables users or customers to
buy, rent and sell a specific products or service via the internet. It allows users to
shop without physically going to the store to go and buy a product or service in the
comfort of their home or it can be done via a mobile application (Investopedia, 2016).
We will look now at the various advantages and disadvantages of ecommerce that
be problematic or essential to a company.
Advantages:
Ajeet Khurana, Ecommerce expert, looks at the advantages of ecommerce
(About.com, 2016.):
Overcoming Geographical Limitations; looks at when having a physical outlet, the
company can only service within that area. However, when having an ecommerce
platform, the company is able to service to the whole world, which means that the
company that which makes use of ecommerce will service more than a company
which has a physical outlet in an area.
Lower Costs, this can be in the sense of real estate, advertising and personnel. With
reference to real estate, no physical property needs to be bought or rented. When
speaking about advertising, no need to look at traditional advertising like billboards,
posters and such that will go in having a psychical store. Personnel, no sales
assistants and cashiers are needed, as there is new technology that looks at stock
management and EFT’s (Electronic Funds Transfers) can be done via the internet as
well.
Eliminates Travel Cost and Time. This is essential as customers are willing to drive
for bargains if it is when the store is close to the customer and it isn’t expensive to
get to the store as well.
Remain Open at All Times. Trading hours can be a customer’s worse nightmare, if it
is that the customer needs a specific product but is stuck in traffic or cannot leave
the office. Ecommerce is available 24 hours a day, 7 days a week and 365 days a
year and trading hours doesn’t exist with ecommerce.
4. Sahra Ashton also identified advantages of having an ecommerce platform
(Business 2 Community, 2016.):
Equipping Customers with Information. This can be colours, sizes, specifications,
shipping costs, payment options and many more that will make the customers life
much easier. It can also allow the customers to navigate to information that the
customer needs, and spend unnecessary time on unwanted or needed information.
Better Understanding your Customer. When having an ecommerce platform, a
company will have a much more detailed view of what customers wants, what prices
they looking for, what motivates them and what are customers buying-habits are like.
Having such detailed information one can easily identify the needs of the customers
and adapt to any changes in their behaviour.
Attract new customers. A normal store, will having to build relationships with
customers that enter the store, with ecommerce customers will search for words that
relate to product or service through SEO (Search Engine Optimization) and having a
strong SEO a company can reach new customers.
Establishing an online presence. Customers are now seeking for companies with
ecommerce, as it is faster, easier and efficient. Not having an online presence will
make loyal customers switch to a competing brand that has an online presence.
Disadvantages:
Ajeet Khurana, Ecommerce expert, looks at the disadvantages of ecommerce
(About.com, 2016.):
Ecommerce Lacks the Personal Touch. When arriving in some stores, salespersons
comes and greets you, asks how you doing and what you looking at purchasing
which makes an impact on the customers buying behaviour. As customers liked to
feel special and important.
Delayed Goods. It is not always that you can expect the goods to be in your
possession the same day, giving an exception to ordering pizza or fast food. Even
though a website can say “express delivery” which usually means same day, it can’t
be delivered the same day due the time of purchase.
No experiencing of the product before purchase. Normally examining the product is
important for customers. For example, you cannot fit the shoe, cannot touch the
material of the dress and you cannot smell the perfume, which can problematic when
upon arrival it is not what the customer wanted.
5. (Tutorialspoint, 2016.), looks at it from a much more technically and non-technical
viewpoint which also be very important when having an ecommerce platform.
Technical Disadvantages:
When establishing an ecommerce platform, the site can be unreliable or not high
standards if your security systems are not of utmost importance.
It could difficult to integrate ecommerce as there are hardware and software
compatibilities.
Non-technical Advantages:
Initial Cost, it is expensive to develop ecommerce in-house as no experience and
mistakes. Which means that it become very costly when making errors and not
having any experience of ecommerce development.
User Resistance, as per normal customers are faced with sales assistants that help
them from the selecting to purchase stage, however customers will find it difficult to
buy over the internet as the customer isn’t aware to whom he/she is assisted with.
Another thing that needs to be taken into consideration is the cost and users of the
internet. It can very problematic for customers who live in rural villages that do not
have access to the internet. Internet isn’t something cheap, the cost of installation
and monthly premiums is something that not everyone can afford.
(Triua, 2016.) Also have some disadvantages that can be detrimental to ecommerce:
Scalability of The System, what is meant by this is that a company needs to have
well developed website to support a numerous amount of users at a time. You will
lose customers if your website destination is not up to standards.
Integrity on Data and Systems, when having ecommerce customers expects secured
access at all times, and especially for the protection of data too. If this is not present
in the transaction, you will lose customers.
Products People, customers tend to shop for products but they are more keen on
having physical contact with the product.
Customer Service, customers usually tend to want help with something, with
ecommerce the customer has to communicate virtually where it is perceived to the
customer to rather have face-to-face contact, which can be problematic.
6. Dissuasive argument for the Ecommerce strategy
Ecommerce is something that every company needs to have because times have
changed and technology has become advanced. Selling custom-designed circuit-
board connectors is not easy, you would need a sales person that can explain to the
customer of the specific boards that is needed for a specific project.
When you say “custom” it is something that is made with specifications given by the
user. With that comes time, attention and detail which is something that takes time
and salespersons are needed. It can be difficult to explain or choose what you need
on your circuit board, it is needed for a salesperson to explain to the customer about
the specifications and it could be that customer might want a specific component, a
salesperson will be able to tell the customer that it is not needed before they make
the final decision.
How does one tell 30 salespersons that they do not have work any longer? It is will
just not be about losing 30 but it will have ripple effect, which could mean that they
won’t be able to make house payments or it might be that the salespersons have
family and their children cannot attend school, as their parents won’t be able to pay
school fees.
What happens if your 80% revenue, who are the ones who are serviced by your
salespersons, prefer having the experience of touching the components? What if
they don’t trust ecommerce? What happens if your customers want the components
the same day? What happens if your idea for the ecommerce exists already?
You need to do a lot of research before adopting this strategy, as it can depict
whether a company can handle the increase in customers. Developing an
ecommerce platform is an expensive investment, it’s not a problem to investing, but
what will happen if it fails? This will mean that Cardinal Connectors loses an
enormous amount of money that they can’t get back at all.
Cardinal Connectors doesn’t have any expertise in ecommerce, which means that
we will need to employ someone who is an expert in the ecommerce to develop it
and that isn’t something cheap?
It can be that Cardinal Connectors’ key competitors’ are making use of ecommerce,
but they made much more money before they went ecommerce and they have a
greater amount of customers.
So I wouldn’t suggest that Bill doesn’t venture into the Ecommerce strategy, as the
before mentioned facts are something that shouldn’t be taken up lightly. What needs
to be looked at is that whether it is something Cardinal Connectors is 100 percent
sure, but I believe that they shouldn’t venture into the strategy and I believe that it
isn’t worth it, especially with the speciality products they sell and complicated too. As
7. such products cannot be sold over the internet, as having a salesperson selling the
product will be much better than the internet.
The recommend strategy
I would suggest that they have a small ecommerce rather than following Bills way.
The reason why I recommend this strategy is that businesses has moved away from
the traditional way of doing business and ecommerce is currently the latest yet
easier way of doing business. But in order for this strategy comes into effect Cardinal
Connectors will need to first do two analyses; namely the 6W Analysis and the
Competitors Analysis. I believe that Cardinal Connectors should first conduct the
above mentioned analyses before implementing my recommended strategy.
6W Analysis:
This is one way to comprehend what your customer’s behaviour is like and Cardinal
Connector’s marketing team would need to answer the following questions (Jooste,
et el., 2012:93):
1. Who are the current and potential customers?
2. What do your customers do with the product?
3. Where does your customer purchase your product?
4. When do they purchase your product?
5. Why and how do customers select your organizations products?
6. Why do potential customers not purchase your organizations product?
This analysis is of utmost importance, if Cardinal Connector is a customer lead
organization it will be easy for their marketers to answer the questions. However, it is
not, then marketing research is then needed. This process can either outsourced or
done in-house if expertise is currently employed.
Competitor Analysis:
It when you focus on your competitors, what they do, how they, competitive
advantage and aspects that Cardinal Connectors’ competitors are doing different to
them (Jooste et el., 3012:122):
1. Who are your present and potential competitors?
2. What positions have they established in the market?
3. What are their strategic objectives and threats?
4. What are their present and future strategies?
5. What are their strengths and weaknesses?
6. What are their response patterns?
8. After taking both analyses into consideration and in-depth research and conclusions
were made then I would suggest start with my recommendation strategy.
Now the reason for me choosing the same strategy as Bill is because ecommerce is
a business model that is currently trending as we speak. However, I would
recommend one on a small scale. What do I mean by this, you say?
Bill proposed that all 30 salespeople should get dropped, I beg to differ. I would say
rather hold onto 20 and give the other 10 other options within the company, so that
they still have a job.
What you then do is outsource the development of your ecommerce, as I would
rather pay professionals than buy a book that explains to how to development and
making numerous errors that could lead to unwanted loses.
You then have your ecommerce running and start doing mass marketing, this is
running all above the line and below the line media of your ecommerce launch. You
need to spread the word as you want to get new customers and also inform your
current customers to make use of your ecommerce.
But do not spend an extensive amount of the ecommerce development, because you
don’t want to invest a great amount of money but a few years down the line, you are
forced to shut it down.
I suggest that you set out quarterly goals, where you look at your sales, customers,
new locations, issues involving the ecommerce and general issues but make sure
that you also make sure that you meet your goals as well.
By doing you can identify easily see where you company is heading to and interpret
or forecast your next quarters goals and obstacles.
Running this ecommerce on a small scale can be cheaper and a less of a loss if
times are tough, as money and time are precious things in life and in the business
time is money, and money is time, so we need to be realistic but optimistic as well
when doing business.
Cardinal Connectors are able to develop an ecommerce platform, however I believe
that should start off small rather than going in for the kill, as sometimes you have
luck or just simply don’t have it at all.
9. References
1. About, 2016. Advantages of Ecommerce.
http://ecommerce.about.com/od/eCommerce-Basics/tp/Advantages-Of-
Ecommerce.htm [28 March 2016].
2. About, 2016. Disadvantages of Ecommerce.
http://ecommerce.about.com/od/eCommerce-Basics/a/Disadvantages-Of-
Ecommerce.htm [28 March 2016].
3. Business 2 Community, 2015. 7 Benefits of Ecommerce for Retailers. 10 July 2015.
http://www.business2community.com/ecommerce/7-benefits-of-ecommerce-for-
retailers-01273130#HcoSHCRE5gluRZ0J.97 [28 March 2016].
4. Investopedia, 2016. What is 'Electronic Commerce - ecommerce'.
http://www.investopedia.com/terms/e/ecommerce.as [28 March 2016].
5. Personal Finance and Business Advisor, 2016. 5 Advantages and Disadvantages of E-
Commerce. http://www.triua.com/100/5-advantages-and-disadvantages-of-e-
commerce.html [28 March 2016].
6. Tutorialspoint. 2016. Ecommerce- Disadvantages.
http://www.tutorialspoint.com/e_commerce/e_commerce_disadvantages.htm [28
March 2016].
10. Cardinal Connectors
(Sales management case study 2)
Mike Malan, the sales manager for Cardinal Connectors is suddenly become frightenedabout losing
his job. He has just stepped out of a meeting with her CEO Bill van der Merwe who in this meeting
outlinedhisnewinnovativestrategywhichwoulddramaticallychange the waythe companyconducts
its business. Bill has decided that by using an ecommerce strategy the company’s customers will be
betterserved.He intendsdoingthisbyusingacompanywebsite whichwillreplacethe 30salespeople
who workfor the firmas well asthe networkof intermediarywholesalersthathelpto distributethe
organisation’s offerings.
With two hundred employees and a turnover of R200m, Cardinal is a medium-sizedbusinessthat
manufactures and distributes custom-designed circuit-board connectors. The company has a loyal
base of customers who consist of firms in the telecom, networking and automobile industries.
Currently the customers are served by means of a multiple sales channel strategy. The bigger
customers, which represent 80% of total revenue, are serviced by the company’s 30 full -time
consultative salespeople.The remaining20% of revenue isgeneratedbysmallercustomerswhobuy
the various products through one of five intermediary electronic wholesalers that are on the firm’s
books.
Mike Malan prides himself on his ability to select, train and motivate his team of consultative
salespeople who practice relationship marketing and provide value-add services such as involving
customers with circuit board design as many of Cardinal’s products are unique to the needs of the
customer.Asthe keyapproachisincreasingcustomershare of spendasopposedtomarketshare,the
salespeople use creative selling as opposed to, as Mike expounds on a regular basis, “flogging
products”.Althoughthe bulkof revenue comesviathe salesforce,an attractive amount of salesare
generated by the aforementioned intermediary wholesalers who service the needs of smaller
organisations.Mike believesthatthe wholesalersprovide end-usercustomerswithahostof valuable
services such as access to inventory, parts delivery, engineering support and chip programming.
The CEOhoweverdoesnotbelievethatthe directsalesforce orthe wholesalersprovide genuinevalue
addand asthe productsare of extremelyhighquality,he feelsthattheysellthemselvesandtherefore
do not needsalespeople andwholesalerstomarketthem.He isalsoof the belief thatbecause of the
highqualityof theofferingscurrentcustomerswillremainloyal tothefirmandinsodoingthe increase
profits. His rationale is rather simple…by negating the salespeople he will reduce costs and increase
profits.InadditionBill feelsthatcustomerswillprefertodeal withawell designedinteractivewebsite
which could be accessed 24 hours a day seven days a week. Furthermore, as the company’s main
competitorshave startedto use theirwebsitestosell products,he believesthatbyjumpingthe gun,
the company will outmanoeuvre its competitors and in so doing capitalise on the opportunity.
Although Mike Malan is very respectful of Bill’s bold and future-oriented thinking, he believesthe
strategy is too extreme and should be downgradedand incorporated into the current multiple sales
strategies. He is also fearful that besides him losing his job, there will be other implications and
11. ramificationsbydismissingthe salespeople infavourof using ecommercetogarnersales.He alsofeels
that the strategywill notbe inthe interestof the customersandcouldthereforeimpactnegativelyon
the organisation.Asthe situationisof greatconcerntohim, he hasdecidedtodiscussthe matterwith
Bill withthe hope of persuadinghimnotto adoptthe ecommerce strategyas the sole solutiontothe
organisation’s problems. If you were in Mike’s shoes, discuss the following:
1. The advantages and disadvantages of Bill’s proposed ecommerce strategy;
2. The best argument he can use to dissuade Bill from embarking on the ecommerce
strategy; and
3. Explain what strategy you would recommend to Bill van der Merwe.
Note that in order to provide a logical answer in a South African context you should use the Labour
Relations Act, the Basic Conditions of Employment Act and the Employment Equity Act to reinforce
your argument!!
Allocation of marks:
10% for presentation
10% for research
10% for referencing
10% for creativity
60% for the answers to the three questions
