Opening an Online StoreResearch Paper

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Starting a Business Online

Every company needs to have an online presence, but that is not the same thing as actively engaging in e-commerce. For a bricks-and-mortar retail outlet, like our store on the Jersey shore, there is an opportunity to move into e-retailing as a means of expanding our reach, and selling to customers out of season. This paper will examine how a company can and should move into the world of online retailing.

Basic Technology Elements

There is nothing all that easy about starting a business online. The basic idea of business is the same -- you start with a product and a target market. But then you need to build a site and drive traffic to that site. Then you need to fulfill orders, take payment and provide customer service. There is infrastructure needed for each of these things, just as a starting point for the online business (Moon, 2015). So the company needs to register a URL, and then build a website. The site needs to be able to process payments. The site needs to have a checkout function. The site needs to have content -- photos and descriptions of inventories. Then, there needs to be a means of communicating with the customers, and a social media presence as well. There will also need to be a marketing strategy for how the company will drive traffic to the website -- this is the same as the bricks and mortar maxim "location, location, location" -- a great store is worthless if nobody walks in the door.

SWOT Analysis

Starting a business online is tricky, especially for the company that has never done it before. You need to know your strengths that you already have, the ones you want to acquire. The company right now has relationships with suppliers, and the store can be used to process orders in the short run, especially since the business is seasonal -- during the slower winter season the store's space is utilized better by running the online business from there. The management team has some retail and marketing skill as well than can be put to good use. From the offline store, the company already has a pretty good understanding of its target market.

There are several weaknesses at this point. First, this is a single store, so it has no brand name outside of the immediate community. The URL will not drive traffic without help. The company has no experience online. This means that it is prone to making basic mistakes as part of the learning process -- and there are many pitfalls to a new Internet start-up (Barr, 2014). So the company has to learn about online retailing -- and fast.

That said, there are always opportunities. Online retailing has very few barriers to entry, so the company can get started without much cost. There is already an existing business model for online, and the company can benchmark against companies that excel in the field, like Amazon (Oxford, 2013). An online business increases the geographic scope of the business -- the company can limit this to the U.S. Or to New Jersey but it does not have to. It can also hold more inventory so can expand its product lines. There are further opportunities also to add depth to the product line, as well as breadth.

There are many threats in the external environment as well. Among them are the threat of changing fashions -- any clothing store faces this, and must always ensure that its merchandise is always up-to-date with the latest fashions. As the inventory grows with an online business, trend analysis becomes that much more important (Capozzi, 2015). There is also economic risk, as retail activity declines when the economy dips into recession. It is important, therefore, that the company keeps this in mind. Another threat is the competitors. While a good location can insulate a store from competition, there is no such benefit online. The store is competing against absolute everybody, and consumers are likely to price check if they think that they can get the same item at a better price somewhere else.

Communications Concepts

An Internet business uses the Internet as intermediary between the company and its customers. The Internet is literally a web of interconnected networks. You access this with your computer and your server, which stores the information contained on your website (Tyson, 2015). The server manages the flow of traffic, and the computer is used to manage the content of the site. The company will need both. The end user connects to the Internet at his/her end, and when typing in your address accesses your site, stored on either your server or a third party server. This process is done over phone lines, high speed Internet lines and via wireless technology. This is why so many devices can access the Internet.

The devices that the customers are using are varied, as are their methods of getting online, but they will be accessing your server, where the information on your website is stored. The site might also connect to third party sites -- for example a payment processing site that offers secure payment. So the store's website might actually contain links to third parties, and therefore a variety of different servers. Website design addresses who the different features, content and designs are incorporated into the company's website.

International Commerce

International commerce is something that operating online creates the possibility for. But there are many issues that the company will need to know about before it goes online and actively markets to people around the world. First, people in different cultures have different levels of trust in online commerce. Americans are accustomed to buying things online, and the UK is reportedly the most developed e-commerce market in the world, but other countries sometimes present challenges (Basil, 2013). There are differences in the shopping culture that can challenge an American company trying to sell things overseas. If Google can struggle in China, imagine was a less well-equipped company will do, for example. Language barriers, trade barriers, and problems with infrastructure can all be issues. For example, there needs to be a trusted method of shipping goods to consumers -- not an issue in Canada but do people in Egypt feel the same about their post office?

The best way to manage the international dimension of the business is first to build slowly. Avoiding international business altogether is probably the best option. The company is just learning about e-commerce from scratch, and that will be a steep enough learning curve without worrying about targeting other countries. Canada will be the first international market, when the company feels comfortable going international, because the e-commerce system works the same there as in the U.S. You can just use your regular shippers, charge U.S. dollars, and aside from the possibility of customs duties on the product there is nothing all that different about selling in Canada. But in general, the company should walk before it runs, and that means cutting off international sales unless there is overwhelming demand for a specific country.

Legal Issues

The company will have to work with the laws of New Jersey. Basically, online business might span into other jurisdictions, but by contract law, the transaction takes place at the company's site, and that is New Jersey. So all U.S. sales are subject to the laws of the state of New Jersey, and the federal laws regarding interstate commerce, which is a new element vs. The old bricks-and-mortar store. Communications are much faster, and customers online demand service. If the company cannot deliver 24/7 service, then it needs to state as much on its website, on the Contact Us page, so that the consumers know this. Otherwise, they will expect instant communication feedback from the company.

Legal & Ethical Issues

Being that this is not a criminal organization, it should be easy to operate within the law. However, customers need to be protected against possible fraud, and the web site's security needs to be tight so that keystroke reading software is not installed, or other such security breach that threatens the customers. The company will need to spend money on an Internet security consultant to get this right, and be up-to-date on all the latest scams. This type of phishing scam can compromise a small company's reputation quickly.

In addition to phishing, the company is at risk from identity fraud. This is where a fraudster pretends to be a real customer, perhaps with a stolen credit card number, orders goods and then the credit card company reverses the transaction when the fraud becomes apparent. If the goods have already been shipped, the company is out of luck. This type of fraud demands a stringent test of identity verification to defend against.

Conclusion

There are many challenges to taking a store business into the online marketing sphere. There are many opportunities as well, and the ceiling for online retailing is quite high. As such,… [END OF PREVIEW]

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