The revolution which drives contemporary business to increase their profits, market share and survive in today's extremely competitive environment is known as e-commerce (ref). On the other hand, consumers are increasingly using the electronic communication medium of e-commerce for purchasing or even selling on online auction sites. The change in consumer shopping behaviour requires business to see e-commerce both as technology and strategic tool. Business want to increase the profit by providing customer online access of either product by passing the middle man and customers are looking for product at reduced prices. This means that e-commerce is not just world wide web presence ; it is a different way of doing business which require business to improve their operating models and strategies .
The term E-commerce, strategy, business and consumers are used above in a very board term. This report discusses a rather narrow branch of e-commerce known as business to consumer (B2C) in online retail market of physical goods and its impact on firm's logistics and supply chain strategies within the context of online shopping. The report is structured around a specific industry known as online super markets. In order to structure and discuss the report , it is vital to first understand the meaning of following terms
Retailing over the internet between business,government,consumer etc
Nariane R, 2003
B2B(Business to business)
Exchange business data to conduct business with their trading partners
Christopher bussler (oracle corporations)
B2C e-commerece (Business to consumer)
Business to consumer retailing over the internet
Efram Turban et al (2004)
Set of planned activities also referred as business process
The amount of physical channels that a product flow through to reach the end product
Cecil Bozart, and Robert Handfield, Operation and SCM (NJ: prentice hall,2003):page 103
A supply chain channel that ensures the effective and efficient delivery of goods from point of origin and point of consumption.
Logistix partner oy, Helsinki, FI,1996
Disinter-mediation is the removal of intermediaries between buyers and manufactures e.g. Dell
B2C IMPACT ON SUPPLY CHAIN STRATEGIES AND LOGISTICS:-
The classifications of B2C are based upon the number of channels the product is passed through before reaching the end customer.
For Example, in direct sales : a manufacturer provide products directly to the consumers e.g. Dell whereas in broker: a third party organisation facilitates the transaction between sellers and buyers e.g. EBay and PayPal. Therefore, each B2C classification highlights the complexity level of underlying supply chain for that business. For example, in an online intermediary version of B2C, the product will have to pass through an integrated supply chain of suppliers,manufacturers,retailers and buyers and hence will require more strategic planning.
In order to ensure the smooth delivery of the product through such a complex journey of supply chain distribution, businesses have to align their business model with everyone involved. This further offers the business and opportunity to carefully define their supply chain strategy and then optimise their business processes such as efficient delivery through an effective logistic system. It is only after going through above mentioned process, a business is able to achieve disintermediation to provide its customer direct access to the products that otherwise would require a mediator.
It can be urged that a well integrated and strategically aligned supply chain delivered by an efficient logistics channels will ensure a successful B2C operating model or a failing B2C model will expose weaknesses in the back end supply chain distribution and logistics. In any case , a moving from bricks to clicks will need to critically define its supply chain strategies and efficiently implements its logistics channels.
In comparison to B2B supply chain, B2C supply chain have neither more channels or in some cases a single channel of transportation. As mentioned above this report will discuss B2C sales
Tesco Case study:-
Tesco is well known leading food retail group with presence in Europe, Asia, USA has also been a pioneer online. TESCO Plc being the leader in the UK supermarket section of the retail sector has arranged the electronic commerce to reach a larger portion of customers in the UK. Tesco is generally distinguished as the world prime online grocer and it's annual revenue of £1 billion online in the uk and also has started in other countries.
Tesco Direct Launch:-
In 2006, Tesco initiate Tesco direct to competitor catalogues retailer such as Argos.
Over 8000 products will be available from sofas and beds through to electrical, kitchenware, cameras, sporting goods etc giving customer more products at cheap Tesco prices then they ever had approach to before. Customer can pick out the product they wish for on a new website or from a new catalogue or director and then order in one of three ways
On-line via the tesco.com website
In selected stores at the new Tesco direct counter
Tesco Direct Challenges in Supply chain project successes:-
One of the most productive retailer, Tesco needed to fulfil the assurance of the new internet retaining arm, Tesco Direct. However this required quick transformation of a tradional warehouse operation to carter for the very different demand of multi-channels retailing.
"We decided to use an existing site for most of the customer fulfilment", states Neil Ashworth supply chain director of Tesco.com. "And this meant transforming the operation in a very short space of time."
With Tesco direct retailing over 8000 products at launch, important tasks included deciding upon the running processes and size and scale of the fulfillment centre operation, which would be needed, based upon the foresee demand levels. From these, the detail design of a practical solution would be developed. What made the assignment more demanding still was the requirement to progress this while product mix and predicted activity levels are changing.
Tesco Supply chain management practice:-
Tesco is reputed for its best practice in Supply Chain Management, which included lean management and using RFID technology, the company has increased and sustained advantage over its competitors by integrating innovations in its supply chain like point of sale data , continuous replacement system generated by customer demand, key distribution ,cross dock distribution centers and use of a single vehicle to hand out several stores.
"Customer focus and commitment to value has propelled Tesco into a leadership position developing a dynamic 'virtuous circle' comprising scale, efficiency and innovation within the supply chain." 1
- Stuart Ross, Director, Supply Chain & Distribution, Tesco, 2005
B2C impact on Tesco:-
Alongside, boost in the competition in retail sector has evidently produced the need to identify a new method of performing business that can reduce the cost and as wells as reach the customer handily. This need was satisfied by the B2C electronic commerece over the internet. Company has well structured website that has classified its products professionally and also interactive help system that proficiently guides a new user to quickly get customized to the online shopping procedure in order to persuade the customer shop online.
Tesco has tactically scheduled the distribution of the product in such a way that the customer ordering the product can not only expect on time delivery but mainly fresh goods that are packed in the shops the very same delivery as opposed to the delivery through other logistics services.
Use of internet by the customer in 21st century that resulted in massive growth of the internet backed by the scientific moderanization was the biggest reason for the success of electronic commerece is justified in the case of Tesco plc where the supermarket giant has successfully applied the electronic commmerece for all kind of items through combination of the stores and the logistics fleet of the company. It was an acheivement mainly because of the handiness factor connect with the electronic shopping system. Less operating costs and the removal of the storage space has provided evidence that the electronic retailing is not only easy but also cost reducing feature as well.
The essential research has proved that the TESCO Plc has attained customer satisfaction and competent management of the Business-to-Consumer electronic commerce proect through the execution of state-of-art technology to effectively conduct the entire business process over the Internet quickly.
However we should also keep in mind that whole system has to be extremely efficient from beginning to the end user shouldn't have any flaws