Online_Shopping_vs_Retail_Shopping

Dustin Fernandes ST0008323 Business Strategy Group Assignment Group 2 London SAM Introduction With the growth of the internet retail sector and the availability of almost all products on the internet for direct purchase it is becoming increasingly difficult for retailers to maintain their customers many retailers are looking at selling off their retail divisions and repositioning themselves as online retailers .U-link is one such company that has planned a future strategy to reposition itself as an online retailer of mobile phones. This makes it important to look into the advantages and disadvantages of this step especially since the CEO is strongly opposed to the suggestion of selling of the retail division as he feels the shop based approach to selling phones formed the original business model of the company. It is broadly seen that the leading retailers in the mobile phone industry such as Phones4u or Carphone Warehouse use a multichannel retailing model where they operate from both the physical and online divisions ensuring they give the customer no reason to look anywhere else. A side by side comparison of buying online vs. in a store.. In terms of customer urgency: Online purchases require credit card, pay pal account or some other online financing medium, and the delivery time depends on various factors such as distance and holidays and mode of delivery chosen. Sometimes the wait can be endless. Retail is the easiest place to purchase a product if u have money. There is no waiting involved. In the mobile phone industry however, some customers need to be connected urgently...these customers prefer the retail outlets where all they need to do is carry their identity proof and a mode of payment such as cash or credit\debit card.Instead of waiting for delivery or the activation procedures.Hence in terms of cutomer urgency...retail has advantage over online shopping in the mobile phone industry. Selection of product and availability of a product: Online shopping offers all the available products and offers from all the various brands and network providers all info regarding price, insurance, payment schemes, etc are all available. Also, if a customer cannot find a particular product on one website he can always surf to another one that may have it. Online shops have unlimited shelf space and thus availability of products are much higher than retail outlets. The customer can also use user reviews access video reviews on the phone they are interested in and also tutorials on how to use them. This almost mimics the real world sales representative in a store. Retail shops on the other hand are limited to selling products that are sold at a local level however a customer can fully test and handle the product before buying it they are still limited to availability of the product in the store they visit. Possibility of getting the best deal and best price: Online sellers usually offer lower prices because they don’t have the overheads like renting a shop or electric bills and they don’t have to pay staff. Some websites offer discounts after a customer meets a minimum purchase requirement. Retail shops compete with online purchasing, retail outlets are slashing their prices introducing discounts and this makes their prices as low as online shops. In terms of getting the best deal and price online has a better advantage Sales tax and shipping costs: depending on where the customer lives and the store the product is purchased from the customer might not have to pay sales tax but shipping costs can be very expensive this however will not serve as a problem to u connect as we do not deal in international telephone network providers thus mostly shipping costs will be negligible, retail outlets however charge sales tax and do not provide delivery thus leaving transportation of the product to the customer himself or they may charge an additional fee to deliver in terms of sales tax and shipping costs retail and online have equal advantages and disadvantages Customer service and warranty/return exchange after sales service: This is the main argument against online purchasing. While most companies excel in service, the customer sometimes has bad experiences when returning or claiming warranty for products purchased, they might need to pay shipping costs to send the product back or may even have to pay restocking fees or may have to buy items with no return schemes. When the customer service is hard to get through to and when there is no personal attention to hear out grievances Retail outlets on the other hand are easy to deal with when returning or using the warranty or exchanging products as customer service is driven to retain business at any cost hence in terms of after sales retail has an advantage over online Security While some people have mixed ideas about the security involved in online purchasing for years people believe that their credit information is at stake however this is now a thing of the past as online retailers now use a 128 bit encryption and so are as safe as banking sites. Retail shops have the same security issues and may also fall prey to identity theft issues all in all its safe to say that the security of online shopping has become almost full proof with the use of third parties such as banking sites etc. Conclusion… From the above we can easily see that there are no particular advantages to retail or online retail that make them work on their own. A company that has started off as an online retailer can maintain its position. However as u-link company has been operational for the past 25 years it is obvious it has some old and regular customers that may not be very pleased with the company’s decision to shut down the retail outlets on the other hand financial information shows connex direct and connex insure divisions are prospering this indicates that the company can do well if it positions itself as an internet retailer for mobile phones But it will lose out on the customers that are not comfortable with online shopping or do not have the means to shop online some customers do not have the required apparatus to carry out an online transaction and this will allow other phone companies who have both an online retail and retail outlets to attain competitive advantage over u-link company. My suggestion to u-link company would be to reduce the amount of retail outlets it has to just the ones that make a effective difference but retain the retail outlets and concentrate on the online retail market creating value to the customer. It’s important for the company to position itself based on what is profitable for them but also keeping the customer in mind When it comes to sustainability online shopping offers greater product selection and maintains lower overhead costs along with an unlimited consumer base. Over the years 2008 and 2009 the percentage of the world’s population that has made online purchases has increased by 40%.88% of customers made purchases online thus giving the online sales growth 14% growth rate annually the newer generations of customers demonstrate comfort in shopping online. Online shopping provides a private shopping experience and empowers the customer to make a choice after seeing exactly what is being offered. Online retailers are a hybrid between a shopping site and a comparison shopping research tool. It is important to understand that if retailers continue to evolve from brick and mortar to click and mortar by implementing better online services, we can definitely see customer satisfaction and increase in profit. the ideal configuration for u-link company should be a multichannel retailing operating both physical stores and online shopping as we sometimes tend to overestimate the impact of technology in the short run and underestimate it in the long run.