How does adopting the latest e-commerce developments affect business and their performance? A case study of Sainsbury’s

(Extracted from full dissertation)

1. Introduction:

In the midst of increasing market competition, despite the emergence of the global economy, two new trends and captions have taken their place in the minds of business activists, i.e. e-business and e-commerce. Recently, businesses have fallen in love with e-business and e-commerce; these have become the underlying requirement for any business that is thirsty for success. They have become the required nutritional ingredient of any business strategy and play their due role as a catalyst in economic growth (Pombriant, 2006). This new direction has not evolved on its own and the birth and rise of Information Communication Technologies (ICTs) have only spurred on the process of evolution. The introduction of ICTs has changed the way colleagues interact and collaborate with each other; it has altered the relationship between the individual employees and organisations. The introduction of ICTs in organisations has altered the way that business is done and has increased efficiency and, ultimately, the productivity of organisations. It has also enhanced the interaction between the customers and business. It has taken the customers’ participation in the business processes to new levels and this, in turn, has made possible mass customization for firms. Adoption of ICTs has also helped organisations to reduce working costs and increase efficiency (Lager, 2006).

The competition among different competitors in the business world and market exchanges has been greatly impacted upon by the invention known as the internet. The internet and, in particular, the World Wide Web (WWW) has acted as a catalytic ingredient and has played a part in spurring on the role of e-commerce in- and its importance to business strategy. At the same time, these new technologies have helped to reduce the differentiation between emerging electronic markets and traditional market places with regard to the amount of capital these businesses require (Beasty, 2006). While the internet and web-based technologies reduce the operating costs for a business, they also increase its value chain efficiency and assist it in developing positive and extensive customer relationships. They help to develop platforms where business and fashion ideas and information can be exchanged. However, the most important benefit is that the internet helps a business to strengthen its brand name and helps it to have an extensive presence in the minds of customers. This ultimately leads to an increased value and revenue generation (Rohm & Sultan, 2004).

Businesses have been quick to realise that the secret of success in today’s cut throat and ever-changing business world is to position themselves and their brands strategically. This is unlike the old traditional way whereby the product would be placed and promoted as it was. The strength of any business lies in its ability to identify the new and emerging markets or hidden routes. It also needs to develop ways to use these huge prospective arenas which present enormous business opportunities. But the most important tactic is to use the available human and financial resources in the most efficient way in order to exploit these openings and make the most of the presented opportunities. This calls for an efficient and shrewd business strategy which not only focuses on the functional level and follows the traditional norms but is flexible enough to adapt to the new trends of e-business. It calls for an e-business strategy which is easy enough to understand and apply but also practical and flexible enough to adjust to changing market trends and norms in an evolving business context. It must also be quick enough to produce results and returns on investment (Beasty, 2006). This has led to businesses adopting e-business strategies, not from only choice or because of current trends but also because of business requirements and the call of the market (Feinberg & Kadam, 2002).

The proof of this can be seen in the results of online retail markets sales which have been growing at an attractive rate and are expected to grow even further. The value of online retail sales in 2005 was $172 billion and this figure is expected to reach $329 by the end of 2010 (Beasty, 2006). E-business has played a major role in levelling the business playing fields where there were once different playgrounds for big businesses and SMEs. Now the differences have been wiped out and there is an opportunity for SMEs to go all out and compete with the big sharks of the business world. And in order to do so, they have to adopt the latest e-commerce trends, mould and blend them into their existing business strategy. They should try to reach as many customers as big businesses do and become competitive. It is this that forms the basis of this research thesis.

1.1. Aims and objectives:

The aim of this research is to analyse the current e-commerce trends and then investigate how businesses are adopting these practices in order to increase their business efficiency and productivity. The objective of the study is to look at the relationship between e-commerce and business strategy using a case study of one company. It will evaluate how this company has adopted e-commerce practices and merged them with its existing business strategy to increase the profits of the company.

1.2. Research questions:

Keeping a close eye on and paying attention to the research aims and objectives of this study and based on a critical analysis of the literature, which will be presented in the next section of this research thesis, the following research questions were generated; these are according to the requirements of the study and to help the researcher successfully achieve the objectives of the study. These questions would serve as milestones for the researcher and help him to stay on course while finding the answers to the overall research objectives; i.e. to study and analyse the latest e-commerce practices and trends and evaluate how adopting them would help any business. The example of a retail giant will be used as a case study. The research questions were:

• How do businesses perceive and adopt the latest e-commerce practices and trends, moulding them and fitting them into their existing business strategy as a complementary e-business strategy?
• What advantages/disadvantages do companies have as a result of adopting these e-commerce trends?

1.3. Motivation for this research:

As mentioned earlier, in today’s dynamic business environment, every business is trying to find and exploit any new opportunities and adopting any new methods they can embrace in order to gain and reap economic profits and success. The entrance of the internet and web-based technologies has only helped the cause and made it possible. They have shown businesses a way by which this dream can be turned into reality. There are various business practices currently floating in the business world which are doing their job successfully; one such emerging concept is the merger of e-commerce and e-business strategies. This researcher’s interest in the concept arose from the fact that although, in today’s world, virtually all businesses, large and small, are adapting to and embracing this change they adapt them differently. The way the way they are implemented and blended into their organisational strategy varies according to their business demands and requirements for reaping gains and making profits. It is this that motivated the researcher to study how organisations accept and adopt these e-commerce practices according to their requirements and investigate what impact they have on an organisation’s business. The researcher was interested in whether they bring success or whether adopting these practices requires more than just practicing them alongside already established business practices and strategies.

1.4. Business environment and context of the research:

Both the consumers and business markets have been changing continuously over the last few decades. However, the rate of change in the retail industry and its markets during the last two decades has been unprecedented and no other industry has experienced the same level of change and evolution (Ingram et al., 2002). There are several reasons for this rapid change which are common to the factors that lead to the development of other industry sectors; technological advancements and the globalisation of world economies and market places has resulted in higher and increased levels of competition, increased awareness of consumers about the product and services available in the market, and a change in the nature of the relationship between the suppliers and the customers. The global markets have become one huge field in which several businesses dwell and breathe. The doors have been opened for suppliers from around the world (Dai & Kauffman, 2002).

Due to increasing exposure to different mediums of information, the awareness of consumers is increasing and so are their expectations from the businesses. In order to be successful, retailers have to be very efficient in responding to the customers’ expectations. They have to be in continuous touch with their customers and make concerted efforts to win customers’ loyalty. Adopting e-commerce practices is one solution. The recent changes in the market and business environments and the increasing customers’ expectations have forced these businesses to go back to the drawing board. They have had to re-examine and re-analyze their current strategies and implement a more customer-centered approach in their operations (Prahalad, 2004); and e-commerce helps them to achieve this target. So, this research aims to explore what current and new e-commerce trends are being adopted by the businesses in order to serve the changing demands and needs of consumers and win their loyalty. These are very important if any business is to succeed as there are many products and service options in the market.

In order to achieve the target, the UK retail market industry was used as the research environment and one of its major players, Sainsbury’s, was used as the subject company. Retailing in the UK is going through a transformation phase and, in recent times, has become more concentrated with the market giants gaining more and more market share and the number of retail outlets decreasing. The total number stores in the UK in 2002 was 314,646; these have been reduced to 295,124 (Teed, 2009). This provides clear evidence of the fact that the market structure in the UK retail sector is changing at a fast pace and increasingly the battle is becoming concentrated among supermarket chain-store giants instead of being evenly balanced between all participants. In the given competitive environment, these supermarket chains leave no strategic stone unturned and deploy any possible strategic move in order to win the race to podium place and beat their rivals. The strategic weapon of e-commerce has been identified by them and is being used to effective levels in order to gain customers’ loyalty and increased market share. Therefore, one of the leaders in the retail industry in the UK, Sainsbury’s, was used as the subject company. The researcher tried to analyse the latest e-commerce practices adopted by Sainsbury’s and how effective they were proving to be.

In summary, this study explored the impact of current Information and Communication Technologies, which are a big part of e-commerce strategy, on growth when businesses blend e-commerce and e-business strategies into their existing business strategy taking the retail industry as a sample and using one firm from the retail industry as the case study.

1.5. Structure of thesis:

The first section, i.e. the current section, of this thesis gives an introduction to the problem area. The researcher lays the platform for the research by identifying the problem area and giving the research questions to be answered. The context of the research is explained.

The second chapter is the literature review section in which literature related to the research topic is presented and analysed critically in the light of different viewpoints presented by different schools of thought. This chapter highlights the latest e-commerce activities which firms have taken up and explains that why these activities are important to any business in the current environment of technological advancement.

The third chapter is the research methodology section which explains the underlying philosophy taken up by the researcher when carrying out this research. It mentions the methods and techniques used by the researcher to gather data required for studying the subject organisation and its e-commerce practices and also highlight the limits of this research.

The next chapter is the Findings and Discussion section which presents the findings from the data gathered by the researcher and then discusses the findings and their implications in the light of the literature presented in Chapter two. The findings from the interviews are neither presented in order of the interview questions nor are they represented as the sole answers to the questions. In fact, they are grouped together to answer some of the e-commerce traditions mentioned in the literature review section and how Sainsbury’s has adopted them and uses them.

The last chapter is the conclusion section which summarises all the whole research and tries to give the researcher’s final thoughts on the topic.