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Competitiveness of the e-shopping Industry
E-shopping has gained momentum in the business environment, where more and more business is opting to conduct their businesses directly to their customers through the internet. This has developed stiff competition between online businesses, manufacturing businesses who exclusively deal their goods on their online shops and the new entrant into the market. E-shopping is a fast growing and most popular competitive industry. This is an electronic form of business that allows customers to directly access goods and services from their preferred seller through a web browser in the internet (Morke and Storz 112). Amongst the top online corporations are Amazon.com, eBay and Alibaba. These online retailing corporations are largely international as they serve the global market. This paper will analyze the scale of competition in this industry through the use of a defined and credited data. The discussion on the data will explore how the e-shopping industry is competitive, with a view of illustrating that it is a competitive industry.
These international corporations have shown the high amount of revenue inputs to their respective countries as they serve the global market. Statistics indicate that in the United States had recorded revenue of $364.66 billion in 2012. However, this amount was superseded by the Asian-Pacific that had recorded a $433 billion of revenue indicating a difference of about $69 billion to their counterparts in the United States (Moerke and Storz 113). This has placed Asia-Pacific at the top of all e-shopping revenue sales. In this regard it is important to note that exports play an important part of these international corporations as they strive to reach the global markets and maximize their sales. Statistics further revealed a further 30% increase in sales in these international corporations in the following years (James 50). This indicates a positive trend and a growing industry in the world of business.
The above data illustrating company sales indicates the positive trend that is being adopted by more and more companies as well as the shoppers. It is plausible to state that these companies are investing in developing and creating effective internet strategies through setting up effective online shops that are in their main corporate websites. These data also has encouraged more businesses to embrace and transfer most of their core activities to the internet. This is possible through developing unique and effective online shops that mainly acts as their main distribution channel. Hence online business is increasingly becoming a popular and important part of modern businesses.
In the United States product sales made from e-shopping amounted to a total of $142.5 billion, which is about 8% of product sales in the retail businesses. In the year 2014, about 8% of the total domestic market bought $26 billion worth of clothes (Morke and Storz 115). It has become one of the most popular forms of shopping to 72% of the female shoppers in the United States. Forrester research came up with figures indicating that e-shopping is projected to grow to about $279 billion in this current year, 2015 (Morke and Storz 115). This trend by many shoppers has continued to wear down the conventional methods of retailing. This has been indicated by drop in annual sales from some major and popular retail shops. There is a significant shift of the methods of shopping as more and more people prefer online shopping. This shift was seen in China that recorded a significant 242 million people preferring online shopping to conventional methods in 2012 (Fry 71).
Therefore it is convenient to say that there are many reasons that explain this particular shift. The most notable factor that has led to more consumers preferring online business is the shift of power from the sellers to the retailers. This is important to note considering there are 77 out of 100 people who are connected to the internet in developed countries. Hence more online businesses have taken the advantage of online shoppers who are more conversant with digitally connected lifestyle as well as the online activities. The inflated online shoppers have caused by the reduced costs of switching suppliers in search of specific products and services. A single click drives the consumers to the next supplier hence indicating competitiveness in online shopping. However it is important to note that competition is heightened as more and more online consumers, prefer a one-stop shopping destination that offers them accurate information and advice.
Moreover, e-shopping has opened a new but competitive paradigm of existence. In this context, there is no barrier of entry in e-shopping. However, there are competitive characteristics that make an e-shopping business effective. One major trait of an e-shopping business is one that has an effective and user friendly website where customers are able to navigate through the website and search for goods or services easily (Fry 68). In addition, that website should be effective enough to have a low bounce rate such that the customer finds it an ideal destination. This can be achieved through customer engagement services through offering various choices of products. Finally a sustainable e-shopping business is that which is able to convince a customer to come back through a valid and viable reason (James 60). Therefore, there is a stiff competition to able to sustain the business without losing money. Online retailers are thus tasked with investment spending in developing new and improved channels that are strategically placed to compete effectively with the new online retail entrants.
E-shopping is comprised of predominantly the comparable online retailers with similar assortments of services and products competing for the same market segment. For this reason there is a great need for these businesses to have affective and attractive product differentiation (Cornelius 120). Amazon online store stands at the top of the list literal offering millions of products to a variety of consumers. It is important to note however that online stores collectively offer affordable and lowest prices on products to customers everywhere. In this regard, they dominate the differentiations of assortments, low prices and convenience.
Global online survey of 2014 indicated Alibaba to hold the largest global market share of 23.7 percent. Amazon being a popular online retail store in the United States closely followed with 22 percent (Fry 67). Online stores thrive on product differentiation to attain a competitive advantage through differentiated techniques by new services, trained staff and creating new levels of customer experiences like in apple online store. In this regard one ca competently conclude that product differentiation is more important than it appears in the surface as it aids consumers in making purchasing decisions. This is due to the fact that there exist more information regarding the type of product that the consumers are searching for.
Vertical integration is another aspect that is continually improving the competitive advantage of online stores. This is mainly aimed at increasing the company’s power in the market by owning the distributions and retailing of products (Moerke and Storz 132). Vertical integration has been employed mostly by a whole new generation of online businesses that have emerged to compete for market share. The retail value chain, branding and distribution are continually being vertically integrated with these web-only brands. This is mostly achieved by completely eliminating conventional stores from supply chain and being able to deliver products directly to the consumers from the manufacturers or factories (James 70). It is very important to note that competition has stiffened more in the online businesses where manufacturing companies are opting to keep and market their products exclusively in their own online stores. This further avoids the stiff price competition of similar products from rival companies such as Amazon.
Vertical integration in any vertical market are normally similar in their activities in that they share the same objective that is solving common problems. The overlapping focusing of the services and products which are provided to the consumers make this strategy competitive. One particular case study that fully embraced vertical integration is the Chinese-based online store, Alibaba. The company employed this strategy in order to increase its market share as well as its profits. It built its headship in the global market by steadily acquiring complementary companies that offer a variety of services that basically include payments and delivery. Vertical integration has proven to be beneficial to Alibaba Company making it the most profitable online company in China and a market leader in online shops across the globe.
Finally persistence research and innovation in e-shopping business has enabled businesses to compete more effectively through product diversification. This is aimed at reaching more customers from every available angle to maximize on revenue collection (Fry 72). One major online giant that has successfully incorporated this competitive advantage is the Alibaba’s online store. Alibaba was able to diversify its products by focusing its attention to the mobile apps. This is due to the shift in customer’s behavior of engaging more through their mobile devices. Alibaba was able to edge more into e-shopping and social media to get new more avenues for engaging new clients and venture into new revenues (Moerke and Storz 132). This type of product diversification is an integral part of gaining competitive advantage in the online business.
In conclusion, e-shopping offers a unique new ways of doing business through innovative customized services that are aimed at achieving unbeatable competitive advantage. This industry employs the structural performance dimension in gaining its competitive edge. There is no doubt that this unique way of doing business offers a vibrant environment for competition in delivering goods and services.
Works Cited
Scott, James. International Businness. Ohio. Western Cengage Learning. 2014. Print
Cornelius, Peter. The Global Competitiveness Report. New York. Oxford University Press. 2006. Print
Fry, John. Regional Trends in Economic Integrations. Washington DC. USITC Publication. 2014. Print.
Moerke Anddreas, Storz Cornelia. Competitiveness of New industries: Institutional Framework. New York. Routledge. 2014. Print