Table of Contents
The Most Important Developments in the Retail Business
It is becoming increasingly difficult to ignore that the use of the Internet, social media, and other recent technologies enable retailers to find new models of marketing strategies, supply chain management, and logistics solutions. Needless to say, these trends are proactively obtaining their place within the global market of retailing, but it is still important to identify distinctly what recent business solutions are the most important in the segment of retailing. According to Forbes magazine, the experts can outline the following three business improvements: smartphone-based e-commerce, integrated trading, and social media platforms (Dishman 2013).
To speak about smartphone-based trading, it is necessary to admit that the majority of contemporary consumers rely heavily on their mobile devices, tablets, and other related gadgets. This factor has influenced customer behaviour considerably so that some consumers prefer surfing online stores while being in a real retail outlet in order to compare the quality of goods. It is certainly true, mobile devices provide consumers with a portable access to the goods that they need at the moment. A customer may choose and order any product by a couple of clicks on their smartphone instead of going to the real store and spend time choosing a desired item. To the greatest extent, it is essential to note that use of a mobile device as a tool for online shopping has become a trend. In such a way, a trend to make shopping via a portable device is a core of the described customer behaviour.
It is to be admitted that integrated trading is the most common solution among the segment of retail business. First of all, it can be explained by two following factors. On the one hand, consumers still prefer to make purchases in real stores as long as they are able to see a real product, check its quality, and ask related questions to the shop assistants. On the other hand, in case some item is not available or an individual refuses to buy it as she has second thoughts about it, it is still possible to order the product via online version of the retail store. As for social media e-commerce, it should be noted that social networks are quite popular nowadays so that the majority of the target audience use them on a day-to-day basis. Consumers are able to have access to any desired product, comment on it, discuss with other customers, and exchange information about it. Namely, consumers do all marketing work for the retailers. It is important to mention that such sort of a related advertising does not produce a negative effect on customers as long as they can skip it and even mark as unnecessary. What is more, consumers become aware of a certain retail shop mainly via social media that they usually run on their gadgets.
Differences in Logistics
Speaking about peculiarities of logistics of Internet-based home delivery, it is important to give an account to home delivery supply chain in general. First of all, it is worth admitting that this sector implies a high demand of the consumers as their behaviour can be explained by a need to get access to the desired product as soon as possible. Regarding a grocery and food segment, it is to be said that the central issue of the logistics is a delivery of low-scale products, which should be transported along relatively small distances (Gustafsson 2006). The majority of related companies consider this segment to be unprofitable as long as they associate high revenues with high-scale products and long distances. In addition, a question arises what factors determine a successful performance in terms of low-scale logistics. There is a common opinion about the aspect that branding, prices, and quality are the primary components, but this assumption occurs to be invalid due to the following issues (Gustafsson 2006).
The solution is rather simple as it refers to the use of standardized means of transport and logistics. In fact, applying the basic rules of logistics and supply chain management is efficient approach in dealing with food and grocery home delivery. What is more, there is no need in a big warehouse as long as goods are delivered fast and distributed across the related area. By the same token, a small area is eligible for a fast and effective employment of a supply chain. Those enterprises, which realized that peculiarity, managed to develop a meaningful network of localized food and grocery home delivery chains (Fernie & Sparks 2014).
As it has become increasingly apparent, the influence of the Internet on grocery and food home delivery keeps growing. The majority of online-based grocery stores run the integrated e-commerce so that citizens of certain areas are aware of potential companies that offer a home delivery service. To be more precise, nearly 80% of grocery stores suggest online ordering and home delivery of their items (Qin 2009).
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Regarding these peculiarities of e-commerce food home delivery, it is important to pay attention to a so-called rule of stock-out. Namely, consumers require a fast response to their needs as long as such products as food and grocery can be referred to the basic aspects of human life. Therefore, customers do not pay much attention to a brand or price because the primary factor is availability of a desired product. A customer will not wait for a certain brand; instead he/she will purchase the first available one (Fernie & Sparks 2014). Taking these points into account, a general model of a supply chain and logistics functioning consists of the components that follow. First of all, availability and urgency are the main factors that contribute much to a short-run success. Subsequently, quality of a product is a long-run factor as it influences a consumer’s decision to keep purchasing the same item. In such a way, availability, urgency, and quality comprise the main objectives of contemporary e-commerce of food and grocery so that the recent business solutions are particularly focused on the fulfilment of these goals.
On the contrary, a non-food segment of retail logistics is based on the legal requirement of internal communication. In other words, the companies are expected to cooperate in order to address the requirements of the market (Fernie & Sparks 2014). Integrated forms of trade are the most effective business solution because in case some item is not available in the store, it can be ordered later even though it is not currently present at the retailer’s warehouse. To return to the subject of online retailer’s challenges, it is pivotal to make mention of an intensive influence of a stock-out rule. In case of a non-food sector, a customer will not substitute an available product with a desired one because the purchase implies a long period of use; that is why the customer will choose a product that they surely knows well. Hence, a supply chain of a non-grocery sector should be stable, as well.
Still, the majority of consumers prefer a low-price delivery as they consider the urgency to be an unnecessary advantage in this case (Rouibah 2008). This phenomenon can be explained by the fact that consumers satisfy their initial need in a certain product as soon as they have made the order. All these factors make the essence of the related logistics and supply chain management more complex, but it is important to admit that e-commerce suggests remarkable advantages so that all described challenges can be met as a standard set of processes. To the greatest extent, e-commerce upgraded traditional principles of logistics and supply chain management in the retailing business. However, the difference between grocery and non-food sectors exists. It should be admitted that logistics of food home delivery exists for a longer period and it has not been affected by the implementation of e-commerce. As a consequence, it became a profitable sector of retail business in the United Kingdom even though it remains simple. As for non-grocery sector, its logistics and supply chain are considerably complicated so that e-commerce became a powerful booster and a challenge simultaneously.
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Pure Internet and Integrated Retailing
Concerning totally online-based retail business, it is necessary to provide a case of Amazon UK as a typical and the most successful form of Internet retailing. The website collects these data and process in order to offer every single customer the related books that may become interesting for them (Reponen 2003). In such a way, the intelligence increases possibility of future orders. Still, the website is expected to render the same level of quality and clarity as it is the basis of its success. Generally speaking, a success of Internet-based retailing depends heavily on clarity of a website, reliability of delivery, and quality of products. In fact, clarity is the most important component because consumers will not deal with a website, which they do not clearly understand. That is why a 24/7 customer service, fair return policies, and legally-based dispute solutions should be in focus of any online retail store.
As for the main challenges of Internet retailing, it is worth saying that uniqueness plays an important role. Namely, an online outlet should offer products, which are not available in other shops at least temporally. In other words, online shops need to offer a maximal range of products so that they can satisfy any customer, whose preferences are so specific that it is possible to consider every single purchase as unique. Besides that, online retailers still have to obtain logistics. The most widespread logistics is based on the use of postal and parcel delivery services such as UPS, FedEx, and others. They are relatively cheap and it is possible to establish a partnership with them. Conversely, a problem of warehousing and handling emerges. Online retailers usually perform across big territories so that warehousing can become excessively expensive for the company (Laseter & Rabinovich 2012). For that reason, Amazon UK provides customers with so-called circles of national preferences so that any customer can view the most popular books in their area or in any other (Shepard 2006). Still, it makes possible to order the book that is not popular in customer's location and hence is stored in another warehouse.
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To speak about integrated retailing business, it is to be said that it is evidently more effective as an average size of integrated retail company is larger than a purely online-based one. Therefore, integrated retailing presupposes wider capacities and customer segment. Consequently, integrated retailing requires a more developed supply chain and logistics (Laseter & Rabinovich 2012). That is why integrated retail shops rely heavily on stable warehouses on a regular basis as long as supplies are also delivered at a particular frequency. These challenges can be justified by a higher level of reliability and, thus, customer loyalty. Additionally, integrated retail companies are more recognizable as they are related to real and virtual markets. The core of these challenges, however, can be referred to e-commerce side of the integration because it implies numerous complications and dilemmas that confuse many retailers.
The first concern is a division of inventory and other assets between real-based and e-commerce logistics. There is no denying that additional separation of the assets means extra costs. In the same way, supply chain management and logistics become more complex as they have to address needs of real shops and online stores simultaneously. Even though warehousing can be common for both segment of a retailing company, logistics is still different at least to the extent of transportation. A single product will not be delivered by a truck to a certain customer living in another area when service of the nearest post office can be used. Home delivery implies higher prices though, but many retailers express doubts about its high profitability (Heinemann & Schwarzi 2010). Except these challenges, best practices of integrated retailing witness the closest integration of online and real retailing. Customers need to be able to operate with equal preferences online as well as in a real store. For example, customers should be given an opportunity to order a certain product in the store in case it is not currently available or leave their contacts in order to stay informed about desired and new products to arrive in the shop. Still, online shops have to grow faster as they do not imply an immediate access to the ordered goods (Heinemann & Schwarzi 2010). Thus, online orders can create a pattern of customer behaviour so that future demands can be estimated.
Public Policies and Regulations
As long as the United Kingdom obeys main laws and policies of the European Union, it is to be said that the trading channels are mainly regulated by public issues of European Multi-channel and Online Trade Association (EMOTA). This organization positions itself as a union of progressive traders, which is striving for cooperation with the legislative representatives of the European Union. As it is only one proactively performing initiative within the territory of the European Union, it is commonly recognized. EMOTA initiates the majority of public-based policies and regulations so that it makes a meaningful impact on the related laws and policies (Association of Accredited Public Policy Advocates to the European Union 2015). Generally speaking, it is not focused on the prevention of illegal innovations in trading, but tries to establish a cooperative relationship with retailers and the EU governments. In fact, this organization has made a considerable contribution in the development of these relationships so that they are worth description.
Concerning regulatory issues and taxation, e-commerce should be referred to the direct cooperation with the government (Association of Accredited Public Policy Advocates to the European Union 2015). First of all, the government officially approves such sort of business and outlines particular requirements and standards. Second, e-commerce can follow the same policies as traditional retail stores do so that this segment of retail business is not discriminated and the government is acknowledged about its significance. As a consequence, the government considers e-commerce as a developing segment of retail business; thus, its success should not be thwarted by a strong taxation or any other limitations. That is why the basic requirements and standards are particularly aimed at guiding this segment of business. Still, the government and publicity should be protected from illegal use of e-commerce so that this segment does not have any special advantages before traditional trading from the legal perspective.