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Task 1 of the coursework

1 Understand different online business activities

• Week 1: Range: eg direct online selling of goods; direct online selling of

services; government services; information; internet services; advertising and

marketing; education

• Week 2: Sector: eg public; private; voluntary/not-for-profit sector

• Week 2: Levels/types of online presence: passive brochure ware;

complementing offline services eg mail order; inviting online transactions;

offering interactive customisation eg digital image processing; providing

information only

ASSIGNMENT

TITLE 1. Online business operations

ASSIGNMENT

OBJECTIVES In this assignment, you should:

P1 describe three different business organisations and activities

operating online

WHAT YOU WILL

DO IN THIS

ASSIGNMENT

You will study three different websites, two from private businesses and

one from a public sector organisation. Try to select businesses doing

significantly different things. For example, one may sell iron gates and

another might be offering garage services.

You will study the websites, making notes on and describing interesting

features from the sites. What can people do from the site? Can they get

information, book a service or buy something? Can they complain, ask

questions or register? Are there forums or channels for visitor

discussion? Can visitors view products? Try to discover how the

business, or the service offered by a government organisation, achieves

its purposes through its website.

Then prepare a presentation using either PowerPoint or a poster display

to explain and describe what you have found.

WHAT YOU WILL

LEARN IN THIS

ASSIGNMENT

In doing this assignment, you will learn that the internet hosts contain

many kinds of commercial business activities and that these offer a

range of features for consumers and clients.

HOW THIS

ASSIGNMENT

WILL BE GRADED

(the grading

criteria)

To achieve the P1 grading criterion, you should examine the online

operations of three different kinds of businesses or organisations,

describing what they do online. Using the evidence from each website,

you should describe the various ways in which customer needs appear

to be met.

GUIDANCE NOTES

This is a descriptive piece of work. You should aim to choose three

websites which have varied online activities. These activities could

include selling, promoting, informing, entertaining, offering service,

helping and persuading.

Week 1

Direct online selling of goods

What do you think we mean by this term?

Is a direct transaction between the customer and the company… eg buying a flight of ba.com and not opodo.com

NO MIDDLE COMPANY TO DEAL WITH

Can you name one website that does this?

NOT EBAY! AMAZON.CO.UK, HMV.CO.UK, ARGOS.CO.UK, TOPMAN.CO.UK,

JOHNLEWIS.COM, TESCO.CO.UK, OCADO.COM, MARKSANDSPENCERS.CO.UK,

APPLE.COM/UK,

What are some of the key characteristics that you would expect to see?

CLEAR PRICES, VAT CLEAR, SEARCH, ASSISTANCE, BASKET, LOG IN,

SECURITY (HTTPS://), TELEPHONE SUPPORT,

How would the company / organisation make money?

ACTUALLY SELLING THE PRODUCT / ADVERTISING SPACE ON THEIR WEBSITE

What is the competition like for this type of business?

THERE IS A GREAT DEAL OF COMPETITION

THE COMPETITION IS WORLDWIDE!

What unique features do companies add to their website?

UNIQUE PRODUCTS, MAKE THE SITE ATTRACTIVE (MINI.CO.UK)

List the websites that you researched here: •

•

•

•

• •

•

Direct online selling of services What do you think we mean by this term?







•

•

•

• •

•

•

Government services What do you think we mean by this term?







•

•

•

• •

•

•

Information sites What do you think we mean by this term?







•

•

•

• •

•

•

Internet services What do you think we mean by this term?







•

•

•

• •

•

•

Advertising and marketing What do you think we mean by this term?







•

•

•

• •

•

•

Education What do you think we mean by this term?







•

•

•

• •

•

•

© Edexcel 2007 BTEC in a Box BTEC First Business Unit 8 Page 1 of 25

ASSIGNMENT TITLE 1. Online business operations

ASSIGNMENT

OBJECTIVES

In this assignment, learners should:

P1 describe three different business organisations and activities operating

online

WHAT YOUR LEARNERS

WILL DO IN THIS

ASSIGNMENT

Learners should select two commercial businesses that operate in different

markets and operate online either wholly or in part. They should select a public

sector site too. They will investigate the websites of these contrasting

organisations in terms of the features offered to site visitors. They will describe

the nature of the online work: what is sold or offered online, how customers

make a purchase or take advantage of a service, and the choices they have.

WHAT THEY WILL LEARN

IN THIS ASSIGNMENT

In undertaking this assignment, learners will appreciate that the internet is a

vast space containing a wide range of business activities. They will learn that

different business organisations, doing very different things, can make effective

use of the World Wide Web.

GRADING SCHEME

(what is required for

each grading level)

For learners to achieve P1

This is a purely descriptive piece of work that should contain a full outline

explaining how being online is helping three businesses to achieve their

objectives.

GUIDANCE NOTES This assignment will be most useful if learners are encouraged to select

different types of business. There is a tendency for learners to choose online

retail outlets (Top Shop and McDonald’s are particular favourites), but try to

steer them towards businesses offering different types of products.

The term “describe” is broad. Encourage learners to focus on any interesting

features on a site, such as plenty of product choice, good use of images, user

menus, feedback opportunities, “about us pages”, etc.

We seem to live in a PowerPoint world and learners usually enjoy putting

together a presentation. Stress that this is a business presentation, and learners

should not use overly garish colours and flying animation. If the technology or

software is not available, a poster display can do the job.



ASSIGNMENT OBJECTIVES In this assignment, you should:

P1 describe three different business organisations and activities operating

online

WHAT YOU WILL DO IN

THIS ASSIGNMENT

You will study three different websites, two from private businesses and one

from a public sector organisation. Try to select businesses doing significantly

different things. For example, one may sell iron gates and another might be

offering garage services.

You will study the websites, making notes on and describing interesting features

from the sites. What can people do from the site? Can they get information,

book a service or buy something? Can they complain, ask questions or register?

Are there forums or channels for visitor discussion? Can visitors view products?

Try to discover how the business, or the service offered by a government

organisation, achieves its purposes through its website.

Then prepare a presentation using either PowerPoint or a poster display to

explain and describe what you have found.

WHAT YOU WILL LEARN

IN THIS ASSIGNMENT

In doing this assignment, you will learn that the internet hosts contain many

kinds of commercial business activities and that these offer a range of features

for consumers and clients.

HOW THIS ASSIGNMENT

WILL BE GRADED (the

grading criteria)

To achieve the P1 grading criterion, you should examine the online operations of

three different kinds of businesses or organisations, describing what they do

online. Using the evidence from each website, you should describe the various

ways in which customer needs appear to be met.

GUIDANCE NOTES

This is a descriptive piece of work. You should aim to choose three websites

which have varied online activities. These activities could include selling,

promoting, informing, entertaining, offering service, helping and persuading.


TASK NUMBER AND

TASK DETAIL

Task 1

Choose three different and contrasting organisations that are operating online.

Select one that sells products or services to private consumers such as

www.diy.com, another that sells to other businesses such as www.rswww.co.uk,

and a third that offers a service online. Ideally, this third organisation website

should be a public sector site, such as a local authority, or a government site,

such as www.dti.gov.uk. This would offer a good contrast with the first two

business websites.

Examine the websites of your chosen online organisations and prepare a full

description of what they offer. Prepare a presentation for the MD and her fellow

partners to show what you have found out.

GRADING CRITERIA P1 describe three different business organisations and activities operating online

GRADE / LEVEL The answer below would successfully complete Task 1, thereby leading to the

achievement of P1.

SAMPLE ANSWER The three organisations that have been selected to illustrate the ways that the

internet can be used are:

! B&Q Direct (www.diy.com)

! RS Components (www.rswww.com)

! Department of Trade and Industry (www.dti.gov.uk)

B&Q Direct

The diy.com website is the online channel provided by B&Q. This is a DIY retail

outlet that offers a wide range of products to both private consumers and trade

customers.

The website first of all has information about product offers. These are placed

prominently on the home page in the form of a banner. Across the top of the

home page there is a menu selection that provides links to other pages on the

site. These include Appliances, Room Solutions, Wall & Flooring, Heating &

Tools, and Materials. These are also shown on selections down the left-hand side

of the home page.

The Room Solutions page shows a number of images to illustrate what can be

achieved using B&Q’s product range. The site user can view rooms and get

ideas. This helps customers because they can see easily the effects that can be

achieved. B&Q is able to promote a wide range of products.

On the left-hand panel of the Room Solutions page there is a series of links that

let the user choose according to price range and promotional offers. This makes

things easier because people do not spend a long time looking at things that are

out of their price range.

The same left-side panel lets the user choose according to the room being

considered, such as kitchen or bedroom.

At the base of the Room Solutions page there is a series of helpful links. These

offer a range of other services from B&Q. One of these is the Interactive Kitchen

Planner. This lets people who are planning a new kitchen try out some design

ideas using the software provided on the website. To use this service, customers

need to register with the B&Q site.

Other features offered from the B&Q website are Store Finder, About Us,

Shopping Brochure, DIY Advice and Services pages. Shoppers place the items

they wish to purchase in an online shopping basket, and the site calculates the

value of the items in the basket as shopping progresses.

Conclusions

B&Q offers a detailed website that carries lots of information about a wide

range of products. All these products can be ordered and paid for online. The

site reassures customers about payment methods.

By using images, B&Q displays its products and customers can compare product

features. The interactive aspect of the site lets customers work with a variety of

products to create the room they prefer.

By using the online sales channel, B&Q gives customers many services that they

can use. Not only does diy.com sell a wide range of products online, it offers

help and advice — just what amateur DIY home owners need.

RS Components

RS Components is an electrical parts distributor that sells both to the electrical

trade and to private consumers. RS Components has a website that gives details

of lots of products.

The RS website has links arranged across the top of the home page. These take

the site user into Automation and cables, Power and connectors, Products and

tools, and IT test and safety equipment. Above these, another row of links offers

services such as order tracking.

The home page gives users the option to register with the business. This means

that they can gain access to all of the services and make purchases directly from

the site. Parts are listed according to codes.

There are also links to other specialist RS Components websites to deal with

things like automation or electronic products.

At the base of the home page there is a series of links to lists of services,

products and news. These show details of offers, news and events. The

services section lists eleven separate sections offering specialist services from

RS Components, and these include catalogue requests and brochures. There is a

section offering specialist help to public sector buyers.

Another important link on the home page takes users to a technical help page.

This gives advice and support on matters such as the European Directive on

environmental responsibilities.

Conclusions

The RS website makes very detailed and forward-thinking use of the internet.

There is a huge range of information for trade and private buyers. The links

from the home page take users into specialist pages and there are details of all

products.

RS Components does not merely use its site to sell products and services. The

website also tries to offer help to users and even goes so far as to allow for

software downloads to help other companies make better use of e-business.

dti.gov.uk

This is the website of a national government department, the Department for

Trade and Industry. This site is not selling anything. It is an information site that

attempts to improve the level and quality of services that are offered to

industrial and business users. The internet is a great way to send, store and

organise information. The site arranges information in a way that is convenient

and useful.

The home page shows 11 links to further subsections of the site. There is

support for growing businesses, and advice and guidance about new laws. On the

top of the main home page there is a News Room and a Government Reports

link.

Another feature on the home page is a “most popular pages” link — when users

press the Go button, they are taken to a list of the pages most visited. When I

checked these, the most popular pages were Better Regulations, Consumer Fact

Sheets and Energy Review. This list shows that other popular pages are

Ministers’ Speeches and Ministers’ Blogs.

On the left-hand panel of the home page there are 17 links to specialist advice.

One of these offers businesses help and guidance about employment law. This

means that an employer can enter the site and get detailed information about

the current regulations. Other areas that are important are redundancy, pay,

holidays and discrimination. When managers are planning workplace changes

they can look at the DTI site and get the facts about the law.

Other services are designed to spread good practice and to encourage businesses

to make decisions that are based on the right information.

At the top of the home page, there is a “breaking news” rolling news item. This

gives the appearance that the site is always changing according to what is

important at that time.

When a website is kept up to date, it means that people who need the services

can be confident that what is shown on the site is reliable. This type of site is

expensive to maintain, but because the DTI is a government site, there are

funds made available to pay for this service.

Conclusions

The DTI website is aimed at industry and business users. It is a government

information and advice service. There must be a big team of people behind this

site to make sure that it is always up to date and that it contains accurate

European as well as UK business information.

One of the main purposes of this government website is to promote and further

the work and policies of the Department for Trade and Industry. By offering

better information services, the department promotes the work that it does and

becomes more useful.

ANY ILLUSTRATIVE

MATERIAL REQUIRED

These reports and presentations could be illustrated with screen shots from the

websites being reviewed.

- 1 -

Coursework 2 guidance

In this assignment, you should:

P2 describe the planning and implementation issues a

business organisation would need to consider to go online

M1 explain the planning and implementation issues for a

business organisation going online

You will either gain a PASS or a MERIT

Look at the difference between the two

One is describe and the other is explain

MAKE SURE THAT YOU EXPLAIN!

THERE ARE FOUR KEY STAGES IN THIS TASK……

INTRODUCTION

PLANNING

IMPLEMENTATION

CONCLUSIONS

- 2 -

ASSIGNMENT

TITLE

2. Planning and implementing an online business

ASSIGNMENT

OBJECTIVES

In this assignment, you should:

P2 describe the planning and implementation issues a

business organisation would need to consider to go online

M1 explain the planning and implementation issues for a

business organisation going online

TASK

INTRODUCTION

You work for a giftware business (shvah ltd) that is actively

intending to go ahead with an online sales strategy. Management

has plans for a fully transactional website — in other words, a

website that offers sales opportunities. The idea is that

customers would be able to log into the website and be invited to

register as site users. From this point, they would be able to

browse product ranges and place any products that they wish to

buy into a virtual shopping basket. (VERY MUCH LIKE AMAZON

AND CO.)

Louise Abdullah, the managing director, has commissioned a web

designer to work on site design, look and feel. From

management’s point of view, there is great excitement at the

prospect of the website. Yet, at the same time, there is great

anxiety. The business sells not only to private customers but also

to many very important retailers that stock the business’s

products in large quantities.

“We have to get this right,” says the MD.

TASK 1 You have been asked to examine two key features of this

project: planning and implementation. Based on what you

know about planning and implementing an online business,

describe the issues that must be considered.

Present your ideas in a written report, with separate sections

headed “Planning” and “Implementation”. Within each section,

detail what the business must consider in order to make the new

website have a good chance of success.

TASK 2 Write a further section of the report, headed “Conclusions”. In

this section, explain why each of the issues you detailed in the

planning and implementation sections needs to be considered

carefully. Say why you think these issues are important, and give

some explanation of what the consequences might be if they are

ignored.

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ASSIGNMENT TITLE 2. Planning and implementing an online business

WHAT THEY WILL

LEARN IN THIS

ASSIGNMENT

Learners will understand that any online transactional business must be capable

of dealing with increased market interest. The business must be able to take

online payments, deal with queries and respond to customer complaints. It must

have internal systems that can handle information and can update the website.

When an order is placed, the business must be capable of fulfilling the order.

There needs to be stock, delivery systems and good relations with delivery

services. The business must plan for and be able to fill heavy orders. It must be

prepared.

The website for implementing the online business should be well organised and

give a good impression. It should help customers and reassure them that all

payments will be secure.

GRADING SCHEME


each grading level)

The distinction between describing and explaining the planning and

implementation issues is the key to the achievement of P2 and M1. Although two

tasks are listed in this assessment, only one report is required. The conclusions

section in the report allows the writer to express his or her own views and

opinions, and it is here that merit grade work (M1) will logically fit.

Teachers should therefore be careful to explain to learners that the report can

either be purely descriptive in the main findings section (P2), or it may go into

sufficient detail, showing stronger understanding thereby, in the conclusions to

provide evidence for M1.

GUIDANCE NOTES The planning and implementation issues concern preparing the business so that

online customers are satisfied. The overall aim of planning is to ensure that an

online sales strategy is likely to be a success, with a full awareness that getting

it wrong online can be a disaster for a business. The so-called “viral effect”,

whereby bad news spreads fast in the online world, is dangerous. It is worth

stressing to learners that online customers are very demanding, and the

company is unlikely to get much repeat business unless it can ensure prompt and

accurate delivery.

WHAT YOU WILL LEARN

IN THIS ASSIGNMENT

You will learn that any business that wishes to succeed with an online operation

must plan and implement its strategy carefully. There are several things to

consider. Will customers benefit from the site? What will they need? How can

the business be organised to respond to the demands that arise from an online

presence? Will staff cope?

HOW THIS ASSIGNMENT

WILL BE GRADED (the

grading criteria)

To achieve the P2 criteria, you should give a good description of the issues that

are faced. To achieve the M1 criteria, you should use the conclusions section in

your report to explain these issues and say why they are important to a business

going online.

- 4 -

Key notes you will need

STRUCTURE OF THE TWO TASKS

Introduction

• Give your coursework a suitable introduction

• Why are you writing this report?

• Who has asked you to write this report? • What are some of the interesting points in the write up?

- 5 -

Planning pages 8 to 11 Business Suitability

• Is the business a suitable one?

• Why is this important? o If it’s not suitable….. waste of time and the business will collapse.

An example of a company that would not work online would be

Subway unless they delivered it by courier. Glass items would be

tricky to sell online because of the delivery implications. • What might happen if a business wasn’t suitable?

o The website would still exist, but, they would not be successful

• Why do some businesses fail on the internet?

o No enough publicity (advertise, adwords)

o Not enough visitors o Quality of the website

o Unsuitable products

o Taking on the big companies

o Too expensive products / delivery o Limited information

• What are some of the issues that need to be discussed? Eg

o Can the product be stored? Yes, they can be stored ok

o Can it be delivered? o Does it need ‘physical’ TV / Fridge or ‘non physical’ sending? iTunes,

Serial Number

• What businesses can not sell online? .org (charity) illegal products! Some

websites are legal in some countries and illegal in others (gambling in US) • So, is the internet suitable for this business? Yes, write a short sentence

stating this

Domain Name

• What is the domain name? Is where you files / website is stored

• Where is it typed? In to the address bar

• Why should they be carefully chosen? Clash with others,

• Should they use the business name? Why? Why not? Not all the time…. Sometimes it may be available.

• What about availability? Any endings hard to get? .com is the most

popular ending for a website (no mix of letters less than 5 live)

• Suggest a web address for the business www.shvah.com available

Web Set Up

• Who can set up a website? Anyone! Using either simple or advanced

programmes to suit your need • What are the benefits / negatives of each method? (put these in a table)

• Is the business likely to have suitable staff? Why not? • Who will make the website?

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• The website for implementing the online business should be well organised and give a good impression.

• It should help customers and reassure them that all payments will be

secure (tel number, help section, customer feedback)

Coping with Demand

• Why might the business see an increase in demand once they go online?

o More people that can find out about the website / company

o Before, just one shop in one town (local customers) NOW National Customers

• How must they prepare?

o They must have a lot of stock ready to post

o Have to talk to Royal Mail (pick up orders) / Suppliers • Why must they ensure a quality service?

o Satisfied customers

o They come back

o Use the service again o Easy money (people who return)

o Loyal customers

o Bad service = Unhappy customers = bad reviews = less sales

• How should they deal with queries from the website?

o Email is the best method (quick, easy, free, same question twice – resend email)

• What are the benefits / negatives of each method?

o Email + majority do have email - wrong email address, lose very

young / old customers • What is the impact of a customer having a bad experience?

o Customer might not come back (1 customer)

o Bad reputation amongst them and friends

o Lost customers o Could go to media (watchdog, local news)

o Decide to hack the website!

o Loss in sales, go to a rival!

o If rival gets all sales, they can begin to dominate the market • Preparing for increase / decrease in demand

o Keep suppliers friendly to you

o Give supplier bonuses for delivering on time

o You will need a stock room (rent / buy this)

Staff Skills

• Why must the business have staff who can run the website?

o Keep it up to date with the latest products o Easy to use / make changes

o Modify the site

o Update the site with important information

o Be cheaper (don’t have to hire a web company to update it) • Which members of staff should be briefed about the website?

o Everyone should be TOLD about the website

- 7 -

o Why? Because when somebody phones in, you can tell them to go on the site

• How many staff should the company train for their new website?

o Two people should be trained (in case one is ill / leaves the

company) o Cheap

There needs to be stock room, delivery systems and good relations with delivery

services

The business must be able to take online payments – web host / designer

- 8 -

Implementation (making, building, constructing) pages

12 to 22

Technical and Design Skills

• How would the company be involved in the design of the site?

o Come up with ideas (what they want on the site) o Layout of the site (how they want it)

o What should be on the website

o Colours of the site (company colours)

o The feel of the site o Interactive (t-mobile) / static pages (amazon)

• Why must they understand about good web design?

o Because, web sites need to follow a strict approach to design (eg

home page in top left, links – change colour or underline) • What might happen if they did not get involved?

o The web site would be built but not to their taste!

• Money / cost element

o Pay a lot to get a top site o Medium cost would be best

Customisation

• Why is it important to be able to customise the site? o To keep the website interesting and up to date

o Inform customers of the latest news / happenings

• How can this keep customers returning?

o New things to look at each time they visit o Each time they visit, they will see something new

• Give an example of a company that does this well

o Myspace allows users to fully customise their site

o Mevou.com • Why will the new company have to make considerable investment to this?

Interactivity

• What elements of interactivity could be added to the site? • How would this help the company? The customer?

• Give an example of a website that offers interactivity

Partner Relations

• Might other partners to the company be disadvantaged by the company

going online?

• How can you ensure that they do not miss out? • Why is it important to involve all clients?

Other

• Quality of website….why is this important?

- 9 -

• Which websites could they get ideas from?

There needs to be stock, delivery systems and good relations with delivery services. The business must plan for and be able to fill heavy orders. It must be

prepared.


give a good impression. It should help customers and reassure them that all payments will be secure.

- 10 -

Conclusions

• Explain why the different issues are important

• Insight to the consequences of poor planning and inadequate preparation

• Why do some businesses succeed on the web and some fail?

• Should the company go on to the web? • What are the potential benefits / negatives?

• Go through each heading above and comment briefly on the importance

- 11 -

Planning for e-commerce

E-commerce plays an increasingly important role in the way in which products

and services are purchased.

E-commerce systems such as your website can be used to market and sell to

customers, and to provide after-sales support. E-commerce can also be an

important part of strengthening relationships and improving the efficiency of

your dealings with suppliers and other key trading partners.

Identifying e-commerce opportunities

There are several different ways you might use e-commerce in your business.

Direct sales

Many businesses use e-commerce for the direct selling of goods or services

online. For some businesses such as those selling software or music, the actual

sale and delivery of goods can be made online. However, for most the supply of

goods will continue to require a physical delivery.

If you plan to sell online, you may need to rethink many of your business activities. This is because you will fundamentally change the way in which you

interact with your customers - for example, if customers place orders online

instead of talking to a salesperson. You will also need to work out how every

aspect of a transaction is handled - including order confirmation, invoicing and

payment, and deliveries and returns.

Pre-sales

You can use your website for pre-sales activities - exploiting the widespread use of the Internet to generate sales leads. At its most basic this can be through the

use of "brochureware" - having an online version of your promotional materials

on your site. Other options include email campaigns or online advertising to

attract visitors to your own website where you can promote your products.

Post-sales support

You can also use the Internet to automate aspects of your customer support to

reduce the number of routine customer service calls. This can be achieved by using your site to answer the most frequently asked questions, or by putting

technical information online.

However you decide to use e-commerce, it is important to define your

expectations from the outset. What level of sales are you hoping to make? How

many sales leads are you looking to generate? What percentage reduction in

customer telephone calls are you expecting to achieve? Ensure that targets are

- 12 -

put in place so that you can measure the success, or otherwise, of your e-

commerce facility.

Making an e-commerce site easy to use

The ease with which a customer is able to use an e-commerce site is an

important part of its success. It's also an important part of your online brand

image.

There are three elements of the shopping process that influence how easy and

enjoyable the customer finds it to shop on an e-commerce site - the shop front,

shopping cart and payment software.

Shop front

The shop front is the interface presented to the customer. This often incorporates an online catalogue that enables them to browse for products and

identify those they wish to purchase.

Customers should be able to find the product they are looking for quickly. An

eight-second guideline is frequently cited; if customers are unable to find the

product within that time, they are likely to go to an alternative site.

The design of the shop front should make shopping intuitive, with the customer

knowing at all times what stage of the buying process they are at.

Shopping cart

This is the software that facilitates easy selection and payment for products

purchased by a customer from an e-commerce website. Once the goods have been selected, the customer should find the checkout clearly signposted, so that

they can proceed to pay for the goods.

The system should process the order speedily and provide you with a summary,

including any packing and shipping requirements. It should also generate a

printable receipt and allow you to send a confirmation email to the customer.

Payment software

Most customers will wish to pay for their purchases with credit or debit cards.

There are three options for accepting such payments - you can:

• open a merchant account

• use a payment processing company

• set up an online shop within a virtual shopping mall

- 13 -

Trading partner relationships

As well as offering new ways of doing business with customers, e-commerce

also provides new ways of building closer links and improving business

relationships with key trading partners.

These Internet-based technologies and processes also allow you to improve

your own business efficiency. Some of the key technologies are listed below.

Intranets

These are private internal company networks that use the same browser-based

technology and network protocols as the Internet. Intranets:

• are protected from unauthorised use by a firewall

• improve efficiency by enabling employees to search the business' knowledge and information store from their own desktop, regardless of

location

Extranets

This is a shared intranet that allows users to share key trading data such as

inventory levels and sales trends. Extranets can:

• be made available to selected external partners, such as vendors,

contractors, suppliers and key customers

• be used for exchanging data and applications, and sharing specific business information

• improve supply chain management

Supply chain management

The concept of supply chain management revolves around having the right

product in the right place, at the right time, and in the right condition.

The key aspects of supply chain management include the ability of businesses

to:

• exchange information on stock levels

• fulfil orders more quickly

• minimise excess inventory • improve customer service

• use a networking infrastructure to ensure good response times and speed

- 14 -

E-marketplaces

There are many online exchanges that enable suppliers, buyers and

intermediaries to come together and offer products or services to each other,

according to set criteria. Buyers and sellers work interactively with bids and offers. When a deal is made, it is a match between the buyer and seller on

variables such as price, volume and delivery costs.

Reverse auctions are buyer-controlled events and are used to attract bids, with

the lowest bid winning. Buyers post details of the goods they want to buy and

suppliers compete to provide them.

- 15 -

Implementing e-commerce

The key tool for delivering e-commerce services is the business website. This

must be specified, designed, hosted and maintained.

Specification

The website specification should clearly identify what the site is trying to

achieve and how its various components will contribute to this. An

understanding of the intended user audience is required for both technical and

marketing purposes.

Domain name

Domain names are an enormous help in the branding of a business. Your domain name should be easy to remember and spell, and should show what

your business is all about. If not, then potential customers will surf elsewhere

and possibly find your competition.

Website hosting

If you purchase your own domain name you can either host your own website or

have an Internet service provider (ISP) host it on your behalf. If you choose to

host the website yourself, you will require a fast Internet connection and a

suitable PC. However, ISP hosting is relatively cheap and straightforward.

The type of Internet connectivity and the available bandwidth will be an important consideration, irrespective of which hosting solution is selected. Most

businesses choose some form of broadband connection.

Software options

An important early decision to consider is whether to use a "shop" package or

build the software from scratch.

Shop packages allow you to configure product information and the look and feel

of the shop. However, they can provide limited opportunities for tailoring them

to your back office processes.

Alternatively you can get a third party to build the software for you, or develop

it yourself.

- 16 -

Recognising the ongoing commitment

Even in the planning stages of an e-commerce project, it is important to

understand how the website will be maintained on a day-to-day basis. There are

also various marketing and security issues that need to be taken into account.

Site maintenance

Changes in product details, product ranges, special offers, up-to-date

advertisements and sales information will all need to be maintained throughout the life of the site. In addition, you should consider redesigning the site on a

periodic basis in order to improve the features offered to customers and keep

the site looking fresh.

Customer feedback

It is important that the site evolves to meet the needs of your customers. There

are a number of actions you can take to encourage customer feedback,

including carrying out surveys and putting feedback forms on the site.

Marketing

No matter how well designed your e-commerce site is and how competitive your

products and prices are, if the customers are unaware of its existence then you

will fail to exploit its potential.

Popular methods of promoting a website include:

• e-mail advertising campaigns • web adverts

• digital coupons offering discounts

Don't forget to take full advantage of search engines by ensuring that they pick

up all of the key terms that you think your customers will use to find your site.

Security considerations

Using the Internet for business purposes is fraught with risks to security.

Hackers can attack systems at any time. Whatever your business, there's a real

risk that your system may become the target of an attack that could affect your

organisation.

You should recognise the need for effective security controls to prevent your site

from falling victim to hackers or fraudsters.

Contingency planning

- 17 -

The more successful your e-commerce service becomes, the more reliant you

will become upon it. You should consider what risks and threats your e-

commerce site might be open to and have contingency plans to ensure that you

can continue trading should anything go wrong.

Who is involved in an e-commerce project?

E-commerce impacts upon almost every function within a business. Externally, a

variety of suppliers will also need to be involved within an e-commerce project.

The range of specialist skills required will be dependent upon the scale and complexity of the proposed e-commerce system. However, these skills are likely

to include experience of:

• servers - Microsoft, Sun, Linux etc

• firewalls and security

• graphic design and production

• HTML and XML coding • programming languages

• database technologies

The interested parties within a business include:

• board-level management

• purchasing

• inventory management

• manufacturing • service provision

• direct sales

• sales channel management

• fulfilment • post-sales support

• marketing and PR

• accounting

• training

• legal

External parties with a potential involvement in an e-commerce project include:

• existing hardware and software suppliers • specialist Internet hardware and software suppliers

• programmers, web designers and consultants used on an "as required"

basis

• Internet service providers • domain name registrar

• telecommunication providers

- 18 -

• major suppliers

• major customers

• advertising/marketing design agencies • specialist business media

• accountants/auditors

• solicitors

• training companies

Related web sites you might find useful

Find out about planning and implementing e-commerce at the National

Computing Centre website

http://www.ncc.co.uk/webservices/ncc_webservices.cfm

Check if the domain name you are planning to use has already been taken at the Nominet website

http://www.nominet.org.uk/

Common e-commerce pitfalls

Despite the rapid growth in the use of e-commerce by both consumers and

businesses, not all e-commerce developments are a success. The reasons for

this vary and are often dependent upon a particular set of circumstances or

issues. Nevertheless there is some commonality between many of the problems

and pitfalls experienced by e-commerce systems.

This guide will give an overview of some of the more common e-commerce pitfalls. It obviously cannot cover all potential problem areas but, it will provide

you with some useful pointers in terms of what not to do, and things to take

account of, as you develop your own e-commerce offerings.

Lack of planning

Mistakes at the planning stage of an e-commerce project can mean lower

chances of success. Here are some of the key issues you need to consider from

the outset when planning for the introduction of an e-commerce system.

Set realistic targets

• Set clear goals - for example, to bring in new business or cut the cost of

each sale.

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• Agree specific, measurable objectives for what you want to achieve, such

as a percentage increase in sales or new customers.

• Ensure that any targets you set are realistic and achievable.

Have a clear business focus

• Pursue possibilities offered by e-commerce, but don't lose your focus on what your business is actually about.

• Understand how e-commerce will integrate with your overall business

objectives. Will it increase sales or improve margins? Have a clear view on

where it will add value.

• If you find that e-commerce is creating conflicts within your operation, re-examine your goals and rethink how e-commerce can best fit into your

business.

Don't overlook the hidden costs

• Don't just add up the costs of hardware, software, and hosting services.

Look at the total cost of ownership, including training, services,

maintenance and support, upgrades, marketing and communications, and

administration. • Be realistic about the likely costs from the start and ensure that you keep

your budget under control.

Consider the site specification

• Draw up a site specification that clearly identifies what you are trying to

achieve and how the various components of the site will contribute to

this.

• Build reliability and scalability into the solution from the start to ensure that your site can grow in line with your business.

• Don't view your e-commerce solution in isolation. Ensure that you take

account of the need to integrate it with your main corporate systems and

overall IT strategy.

Design and usability concerns

One of the key factors of the success of your e-commerce site will be how easy

or difficult customers find it to use. So make sure that you consider these

important issues.

Don't over-design the site

• Aim to create a common theme of colours, fonts, graphics and page

layouts. This can be achieved without the need for spectacular graphics.

- 20 -

• Ensure your web designer only uses effects that will add value for the

user.

Consider download speeds

• Download times are key - users expect pages to load in less than ten

seconds. If your site is running slowly you may have to upgrade it. • If download speeds are slow due to the size of individual pages, remove

large images, graphics or animation from key pages like the home page.

Support multiple browsers

• Design web pages that can be displayed by different browsers. The more

common browsers include Microsoft Internet Explorer, Mozilla Firefox,

Netscape Navigator and Opera.

• Test your web pages in as many browsers as possible during the

development process to ensure that they will display properly.

Don't underestimate the importance of usability

• Ensure that navigation buttons are clearly presented and the words or images behind these links are clear, concise and relevant to the

information they are leading to.

• Include a site map and a search facility to help the user locate the

required information.

• Take account of the "three-click rule" that enables users starting at your

home page to get to the information they require in three mouse clicks.

Get feedback on usability

• Many e-commerce operators don't get usability feedback from anyone beyond those on their development team, who are often too close to the

process and biased toward the chosen design and infrastructure.

• Consider getting some sort of outside perspective - employees not

involved in the design, a focus group, or your spouses or friends. This can be crucial to the site's development and performance.

• Ensure that you get such feedback before the full launch of the site. Once

it is launched any problems will be highly visible to both your customers

and competitors.

Content problems

First impressions are important. The quality of the content on your site can help

create an immediate impression and also ensure that customers keep returning.

Ensure information is accurate

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• Your customers will be put off by out-of-date or incorrect information.

• Make sure you provide accurate information, especially when it comes to

prices, and monitor the information you provide on a regular basis. • Make sure that any photographic images on your site are accurate and

show products in their best light.

• Your contact details, including phone numbers, email and postal

addresses, or a prominent link to them, should be on the home page of

the site.

Make the content easy to read

• Ensure text is easy to read - web users rarely read whole pages, so write more simply than you would in printed publications.

• Break text up with headings and bullet points. Remember also that

English is a second language for millions of potential customers.

Keep content fresh and interesting

• People expect sites on the web to be constantly changing. If the content

of your website remains static, there is little incentive for users to revisit it

and any opportunity to promote new products or services may be lost. • Keep the content as up to date as possible. If you have a news section or

announcements about new products then they should reflect the current

situation.

• Remember to change the notice on your website stating when the site was

last updated.

Check the links on your site

• Regularly check internal links on your site. If they don't work, or a page has been removed, it reflects very poorly on your site.

• Users like links to other sites, so you should consider providing them.

However, if there are too many links, or they appear too soon, you risk

sending customers away from your website.

Marketing considerations

Marketing is all about promoting your goods and services and trying to sell

them. You need to draw the attention of potential customers to your products

and services in order to convince them to purchase them and to turn first-time

purchasers into repeat purchasers.

No matter how good your site is, if people don't know about it they will not visit

it. So, you need to consider various marketing strategies.

Develop a marketing plan

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• Whether it is advertising on the web, direct mail or other forms of offline

promotion, if you want to attract new and existing customers to your site

you must have a solid marketing plan. • You need to give people a reason to return to your site, such as news,

product launches or promotions.

• Your marketing plan should identify the target markets you plan to

address and profile each target group so that you can pitch your costs and benefits at the correct level.

• Make sure that your marketing budget is realistic and is capable of

funding all of the activities you plan to undertake.

• Equally, the cost of your plan should be justified by the levels of sales you

expect to generate.

Use the most appropriate marketing techniques

• There are various online and offline marketing techniques you can use - select the most appropriate ones for your particular needs.

• Ensure that the marketing approach you use does not annoy or

antagonise the customer - excessive spam following on from a purchase is

a common complaint amongst e-commerce shoppers.

Measure the effectiveness of your marketing efforts

• You must measure the success, or otherwise, of any marketing initiative

you undertake. This can help show what works well and where resources have been wasted.

• Use tracking and site analysis tools that can help to tell you more about

your site visitors - where they came from, what they did while they were

on your site and where they went when they left.

Shopping cart problems

Your checkout procedure must be as quick and simple as possible, since

industry research shows that 60 to 75 per cent of shopping carts are actually

abandoned because of slow or unclear checkout processes. Here are some of

the techniques that you can employ.

Ensure there are no surprises

• Provide details of delivery costs early in the process, so customers are not surprised during final checkout.

• Show stock availability on the product page, so that customers do not

have to wait until checkout to find out that a product is actually out of

stock. • Include some text about the buying process, explaining how long it will

take and how many stages there are.

- 23 -

Make it easy to select and amend orders

• When an item is placed in the shopping cart, include a link back to the

product page, so customers can easily jump back to make sure they have

selected the right item. • Make it straightforward to change quantities or delete an item from the

shopping cart.

• If a product comes in multiple sizes or colours, make it easy for the

customer to select or change values in the shopping cart.

Indicate customer progress

• Ensure that the customer always knows at exactly what stage they are in

the checkout process by including an indicator, for example "You are in step 3 of 4".

• Make sure that customers don't get lost by including a prominent "Next

Step" or "Continue with Checkout" navigation button on each checkout

page.

Show clear information

• Keep all information on a single screen on each checkout page, so

customers do not have to frequently scroll down. • If the billing information is the same as the shipping information, include a

box that customers can tick to automatically fill in the same information.

• If information is missing or filled out incorrectly during checkout, make

sure that a meaningful error message is displayed that clearly describes

what needs to be corrected.

Order fulfilment issues

Recent research indicates that a large proportion of the complaints made by e-

commerce customers relate to fulfilment issues. In order to tackle such

problems you need to address various issues.

Product delivery problems

• Late delivery of products is a frequently cited complaint, so e-commerce providers must be realistic about the delivery promises they make to

customers, especially when demand is high.

• Increasingly, the delivery of products purchased via e-commerce sites is

contracted out to third-party distribution services. The importance

attached to on-time delivery by customers means that you must select your outsourced service very carefully.

• Some e-commerce providers believe that they can lure customers by

offering a product at low cost, whilst charging a relatively high delivery

- 24 -

rate. This practice rarely works and is more likely to cause problems in

customer relations.

• Depending upon the nature of the product you are supplying, you need to

ensure that your packaging is robust enough to ensure safe delivery.

Failing to keep the customer updated on progress

• Successful e-commerce sites make a point of confirming orders

immediately by email. Customers are entitled to written confirmation of

their order under the Distance Selling Regulations 2000. They can be

generated automatically via email and are expected by most customers.

• The customer should be provided with a way to track down the progress and availability of their order. Many carriers now use email to notify a

customer that an order has been dispatched, whilst others have

implemented online tracking systems that enable the customer to log on

to their website in order to check on progress.

Having an acceptable returns policy

• You should aim to put in place an acceptable means of handling customer

returns and ensuring that any customer dissatisfaction is professionally resolved.

• This is commonly achieved by giving a 100 per cent no-quibble money-

back guarantee if they don't like or want the product.

Security weaknesses

Regardless of the size of your business, you should protect against people

stealing or hacking into your data. There are a variety of ways in which misuse

of information and hacker attacks could jeopardise your business, so security

must be at the forefront of your e-commerce plans.

The threats posed by the lack of adequate security measures range from losing the confidence of your customers to the non-availability of your e-commerce

site.

Hackers gaining access to privileged information

• Inadequate security controls can enable hackers to gain access to your

sensitive business data such as price lists, catalogues and valuable

intellectual property. The motives may be malicious or to gain competitive

knowledge.

• Hackers may also gain access to the financial information of your business

or your customers, with a view to committing fraud.

Loss of customer confidence

- 25 -

• Security breaches can damage the confidence that your customers have in

the e-commerce service you provide.

• A lack of customer confidence is potentially fatal to the success of your

online venture.

Denial-of-service attacks

• Denial-of-service attacks deny access to authorised users of a website, so

that the site is forced to offer a reduced level of service or cease operation

completely. Some businesses never recover from such attacks.

No contingency measures in place

• There are many possible threats to the operation of your e-commerce

system, both malicious and natural. Consider the most likely risks and

take steps to minimise them, such as virus software, password protection

and firewalls. • Contingency planning is intended to put measures in place to enable your

systems to continue operating, perhaps through locating to a back-up

site.

• Some e-commerce providers have no such contingency plans in place - you need to consider how your own systems would continue to operate in

such circumstances and the likely effect that this would have on your

business.


Find out how to develop a website specification at the Web Style Guide

website

http://www.webstyleguide.com/process/specify.html

Compare UK broadband providers at the Broadbandchecker website

http://www.broadbandchecker.co.uk/broadband-checker.html

Find information on how to check HTML pages for errors on the HTML Writers Guild website

http://hwg.org/resources/?cid=28

Read e-commerce site building tips at the Actinic website

http://www.actinic.co.uk/users/m_starting.htm


ASSIGNMENT

OBJECTIVES

In this assignment, learners should:

P2 describe the planning and implementation issues a business

organisation would need to consider to go online

M1 explain the planning and implementation issues for a business

organisation going online

WHAT YOUR LEARNERS

WILL DO IN THIS

ASSIGNMENT

Learners will consider a small business in the giftware business. This business is

working on an online strategy. It is aware of the need to consider how to best

plan and implement the online sales channel. Learners will write a report that

describes and, to achieve M1, fully explains the issues which should be

considered by the giftware business.


IN THIS ASSIGNMENT

Learners will understand that any online transactional business must be capable

of dealing with increased market interest. The business must be able to take

online payments, deal with queries and respond to customer complaints. It must

have internal systems that can handle information and can update the website.

When an order is placed, the business must be capable of fulfilling the order.

There needs to be stock, delivery systems and good relations with delivery

services. The business must plan for and be able to fill heavy orders. It must be

prepared.


give a good impression. It should help customers and reassure them that all

payments will be secure.

GRADING SCHEME


each grading level)

The distinction between describing and explaining the planning and

implementation issues is the key to the achievement of P2 and M1. Although two

tasks are listed in this assessment, only one report is required. The conclusions

section in the report allows the writer to express his or her own views and

opinions, and it is here that merit grade work (M1) will logically fit.

Teachers should therefore be careful to explain to learners that the report can

either be purely descriptive in the main findings section (P2), or it may go into

sufficient detail, showing stronger understanding thereby, in the conclusions to

provide evidence for M1.

GUIDANCE NOTES The planning and implementation issues concern preparing the business so that

online customers are satisfied. The overall aim of planning is to ensure that an

online sales strategy is likely to be a success, with a full awareness that getting

it wrong online can be a disaster for a business. The so-called “viral effect”,

whereby bad news spreads fast in the online world, is dangerous. It is worth

stressing to learners that online customers are very demanding, and the

company is unlikely to get much repeat business unless it can ensure prompt and

accurate delivery.


ASSIGNMENT OBJECTIVES In this assignment, you should:

P1 describe the planning and implementation issues a business

organisation would need to consider to go online

M1 explain the planning and implementation issues for a business

organisation going online

WHAT YOU WILL DO IN

THIS ASSIGNMENT

You are asked to think about the situation facing a small to medium-sized

business that wants to sell online from a website.

You will write a report that describes and examines the various planning and

implementation issues that face the business that is considering selling online.

WHAT YOU WILL LEARN

IN THIS ASSIGNMENT

You will learn that any business that wishes to succeed with an online operation

must plan and implement its strategy carefully. There are several things to

consider. Will customers benefit from the site? What will they need? How can

the business be organised to respond to the demands that arise from an online

presence? Will staff cope?

HOW THIS ASSIGNMENT

WILL BE GRADED (the

grading criteria)

To achieve the P2 criteria, you should give a good description of the issues that

are faced. To achieve the M1 criteria, you should use the conclusions section in

your report to explain these issues and say why they are important to a business

going online.

GUIDANCE NOTES

In your report, you should outline the two sets of issues — for planning and for

implementation — as they relate generally to the business that has taken a

decision to mount an online presence. For the M1 criteria, you should offer

explanations of why the different issues are important. This might include

insights into the consequences of poor planning or inadequate preparation

during the implementation phase of the online strategy.


TASK NUMBER AND

TASK DETAIL

Task 1 (P2)

You have been asked to examine two key features of this project: planning and

implementation. Based on what you know about planning and implementing an

online business, describe the issues that must be considered.

Present your ideas in a written report, with separate sections headed “Planning”

and “Implementation”. Within each section, detail what the business must

consider in order to make the new website have a good chance of success.

Task 2 (M1)

Write a further section of the report, headed “Conclusions”. In this section,

explain why each of the issues you detailed in the planning and implementation

sections needs to be considered carefully. Say why you think these issues are

important, and give some explanation of what the consequences might be if

they are ignored.

GRADING CRITERIA P2 describe the planning and implementation issues a business organisation

would need to consider to go online

M1 explain the planning and implementation issues for a business organisation

going online

GRADE / LEVEL The answer below would successfully complete Tasks 1 and 2, thereby leading to

the achievement of P2 and M1 respectively.

SAMPLE ANSWER Planning and implementation issues facing a business going online

Introduction

I was asked by Ms Louise Abdullah, MD of XYZ Giftware, to write this report in

order to describe and explain the various things that should be considered

before the business opens up an internet-based sales channel.

In order to get the information I needed, I have looked at all of the factors that I

think are important and reported them to XYZ Giftware.

Planning

1: Business suitability

The first thing that must be considered by any business that is thinking about

improving its performance by trading online is whether the business is a suitable

one. This is because not all businesses can trade successfully over the internet.

Managers need to think about the kind of product that is being offered. Is it a

physical product? If so, what is it? Is it capable of being stored and delivered

easily over long distances? What will be the costs of storage and distribution,

and can distribution be handled by external partners? Products in digital format,

such as software and music, can be easily sent to the customer online. Services

such as insurance can also be easily offered on the web.

Not all businesses can trade online. A distribution business like a courier service

would only be able to take bookings and track parcels online. However, even

these things can improve the service for customers. A takeaway food shop can

only make minimal use of the internet to promote its menu and services.

For a business like XYZ Giftware, a website can certainly display its goods and it

can allow for transactions to be completed online. Customer registrations can be

acquired from the site.

2: Domain name

The domain name is the web address. This is the text that is typed into the

address bar on the browser, so that it knows where the web user wishes to go.

Domain names should be chosen carefully by a business, so that people

recognise who the website belongs to.

Some online businesses have the name of the business as their domain name.

Tesco uses Tesco.com, and Sainsbury and other major e-retailers use their own

name within their domain names.

Domain names ending .com and .co.uk tend to be more difficult to get than

others such as .eu or .net. Domain names have to be registered and there is an

annual charge to keep it.

3: Web set-up

A choice must be made as to whether to ask your own staff to set up the

website or whether to commission an external web design business to do the job

for you. It can be expensive to use an external agency. However, the fee will

include an initial design consultancy to produce a website based on the

business’s preferred look and feel. The fee may also cover ongoing content

maintenance. This is vital because a business such as a giftware shop will want

to have the stock details always kept up to date.

A small business such as XYZ Giftware is not likely to have staff with the skills to

develop and maintain a transactional website. These services will have to be

commissioned from an external design service.

4: Coping with demand

A business that opens an online store and invites customers to buy from a

website has a chance of attracting many additional enquiries, and demand for

goods is likely to increase. This means that it must have the capacity to store

products in sufficient quantity to ensure that they can be quickly made available

to customers, wherever they are located. The online hardware trader B&Q gives

priority to its online business when it is allocating products for delivery.

Dealing with enquiries is also important. People will either call or make e-mail

enquiries. Customers expect to have enquiries dealt with promptly and the

business must have the resources to do this.

If customers have bad experiences with an internet business, they are very

quickly able to send out messages to other potential customers. This can have a

dramatic effect on a business’s image and reputation. It is a PR disaster for an

online firm to fail to satisfy its customers. Therefore, it will be crucial that the

giftware business fulfils customer orders, if its website is to succeed. This will

mean having a full stock of products to fulfil orders and excellent delivery

services at all times. Online customer service must be good.

5: Staff skills to run the online business

The business must employ staff who know how to update the databases that

provide the information to the website. Staff must be able to operate systems

that hold information and be able to update the website if required. Staff also

have to be informed about the website content and systems so that they can

answer any customer enquiries. It helps to have staff that know how the website

works and who can operate all the digital systems that link to the internet.

XYZ Giftware should train at least one member of staff to keep the content of

the website up to date.

Implementation

1: Technical and design skills

When a business begins its online operation, it is very important that staff have

the design skills and the technical know-how to develop a site. Even if the web

design work is contracted out, staff must be able to explain what they need with

designers and at least have an idea of what is going on.

2: Customisation

A website can be a fairly static thing that just sits there with the same

information for all users. However, it can be altered to meet the information

needs of individual users. This is what Amazon, the well-known online trader,

does. Amazon’s site remembers the last purchases of each registered users.

When the customer next visits Amazon, the website makes fresh

recommendations. In other words, the site is “customised” for each users.

A new business will have to make a considerable investment to have this kind of

facility on its site. The giftware business could customise its site for each

registered customer, but it would have to consider whether this additional

service would justify the extra cost incurred.

3: Interactivity

Interactivity allows users to change things or do things with website content. For

example, an interactive website might allow people to change content by

making selections. Another example is the B&Q site. Here users can change

bedrooms and kitchen designs. They can see what rooms would look like if they

made their choices of paint, wallpaper and fittings.

XYZ Giftware will probably have no need for interactive elements in the initial

stages of its online business.

4: Partner relations

Sometimes a business that is considering going online has to think about the way

it currently does business offline. Are there any business partners who may be

placed at a disadvantage by the online activity?

For example, a business that uses a delivery company may cut out this partner if

it decides on a purely online set up. A business that chooses to sell directly may

no longer need to use a wholesaler. These are examples of “channel conflict”,

and this happens when online operations reduce the role of offline business

partners. This might be especially hard when some partners have worked with

the business for a long time. Any business going online must treat its offline

partners sensitively as they may still be needed to maintain aspects of its

operations.

Conclusions

Without proper planning, an online business can not only fail to work well online

but it can be a seriously damaging venture for the entire business. This is why it

is worth first of all considering what is to be gained from going online.

Some businesses fit nicely into an online channel and there will be great

potential to increase sales revenue. The costs of trading online can be lower

than purely physical operations. I think that the managers of XYZ Giftware

should look at the kinds of selling they are planning. How will the internet help

them to promote the company’s goods and services?

The question of taking payments needs to be thought about too. Customers will

want to know that their card and personal details will be secure and that

payments will be safe. This is where agencies such as WorldPay and PayPal can

be a help. If customers are unsure whether payment methods are secure, they

will be reluctant to make online purchases from the site.

The choice of domain name should be a quite straightforward decision and it

should not be too expensive to register. It should be chosen carefully, because

this is the easily recognised identity that an online business will have.

I would personally suggest that XYZ Giftware would do best to get design service

from an external, well-established, web design company. There is a danger that

an in-house set up will look amateurish and will deter customers. The website

should look and feel attractive to customers. It should have the necessary

features that will attract and keep users’ attention. Images should not take too

long to download, nor should the site itself. It should be accessible to everyone

and work in all browsers. If the website does not meet good design criteria,

potential customers will not linger long on the site or return for subsequent use.

An increased level of demand is a problem that any online business hopes to

have. The important point is that it should have the internal set up to deal with

such an increased demand. It should be able to handle lots of enquiries and

orders from a wide area. Call centres can be used, or their services bought in, so

that the business gives a good impression by always dealing with enquiries and

satisfying orders promptly.

Staff skills will need to be looked at. Steps might have to be taken to make sure

that the business has the in-house IT literacy skills and internet-know how to

support the website. I would suggest training will help, possibly from the

external designers. If this is not provided, staff may not understand the online

business fully, and indeed may lack motivation, and this is bound to impact on

customer service levels.

When the online business is implemented, the site traffic should be monitored.

Customer feedback should be obtained to make sure that the business gets to

know what people think about the online operation. This should be a part of the

design process. The site has to do the job of both selling and giving a positive

impression. Getting better knowledge about customers is a crucial part of

running a successful online business, and one of its big advantages.

Customisation and interactivity are very advanced features that a newly online

business might not think is needed at the outset. However, they need to be

considered for the future to help give the business a better image.

Customisation might be possible through having a registration system. The

business can send out brochures or e-mailed information once it knows who

online customers are.

Finally, the business might want to consult with existing partner businesses

about its plans to implement an online sales channel. Managers should establish

views and try to “sell” the idea as good for all parties. It will be damaging to

have bad relations develop as a result of going online.

A Learner

(Date)

GRADING COMMENTS This work clearly outlines the two sets of issues (for P2) as they relate generally

to any organisation that has taken a decision to mount an online presence as

well as linking comments to the giftware business. In the conclusions, for the M1

grading criteria, there are explanations of why the different issues are

important and insights into the consequences of poor planning and inadequate

preparation during the implementation phase of the online strategy.

BTEC Business Unit 8 Coursework 3

- 1 -

INTRODUCTION

Having examined the various planning and implementation questions that must be considered before taking steps to create a functioning

website, the XYZ Giftware business you work for is now at the stage

where the new website is almost ready to go

“live” on the internet.

Led by managing director Louise Abdullah, the business’s management

is now putting the final touches on the plan. The business is working

with an external web design company.

The business must now analyse the potential risks involved in going

online, so that it will be ready if anything does not go as planned. In

addition, managers must look at how the new strategy will affect the

staffing, finance and distribution functions of the business.You are asked to prepare the important groundwork for meetings to talk about

these issues.


- 2 -

Task 1 a Prepare information, in the form of clear notes, on the operational

issues and risks for the online business. (P3) You should use either

PowerPoint (PC) or KeyNote (Mac)

Prepare a brief introduction to the task that outlines what you

are going to be discussing in the task

! Remember, operational issues are the issues that a business may

encounter when it makes the decision to trade online.

! Why is it important to recognise these risks? ! What might happen if they didn’t account for these risks?

! How will you report these risks?

Payment security

! Why is it important to have payment security?

! Are there established companies that can be used?

! How can the website display that it is ‘secure’? ! Name three methods of payments that Shvah Ltd could use on

their website

! What are the associated costs?

! How will the customer benefit?

Risks associated with payment security

! What are the risks of paying for something online

! Name three companies who have been ‘hacked’ of personal information

! Should Shvah staff be told of the payment methods?

! Should Shvah staff be told how the payment methods work?

! How can the customers be reassured?

Unfamiliar trading conditions

! Why will some customers feel like they are in an unfamiliar purchasing condition?

! How can you make the shopper feel confident?

! Find one company who you feel makes the process less hassle

! How might Shvah become more visible to external competition?

! Why might is be hard to match competitor online offers ! How might there be an increase in consumer interest

! How might there be an increase in consumer complaints?


- 3 -

Risks associated with new trading conditions ! What risks are there with paying online? (fraud and theft)

! What might happen to customer confidence if information is

stolen?

! How might Shvah be priced out of the market? ! How might larger competitors put pressure on Shvah?

Errors in ordering ! How can errors occur?

! Are they likely to be personnel (ie person) or hardware (ie

computer)

! How can these errors be limited? ! Why is it important to limit these errors?

Risks associated with ordering

! How might customers become frustrated? ! Why would this cost Shvah money? (think about time taken to

correct mistakes)

! What costs are associated with dealing with complaints?

! How can this damage the image of Shvah?

Potential misuse of personal information

! Could the staff misuse personal information ! What information would be tempting?

! How should management make sure that this does not take

place?

! Would any other company be interested in order history / email

addresses?

Risks associated with misuse of information

! What’s the Data Protection Act? ! Would Shvah have to think about this?

! What would happen to Shvah if they misused personal

information?

! Would the business image be damaged? ! What would happen to customer confidence?


- 4 -

Vulnerability to hostile attack

! Discuss: hacking, phising, viruses, denial of service

Risks associated to hostile attack

! What can happen under a hostile attack?

! Could it lead to fraud? Data theft? Corruption ! Would the website have to be shut to correct the problem?

! What’s the impact of this?

Task 1 b

Conclusions on the operational risks

! This section should be written and not in bullet points ! Think about the following points:

o Why are operational risks important to think about?

o What impact would operational errors have on a business?

o How should Shvah try to maximize confidence in the website?

o Where can Shvah go to for extra information?

o What role should managers play?

o Why is it important to have trust in workers?

Analyse the advantages and disadvantages involved in the

operational issues and risks for the online business

! This section should be written and not in bullet points


- 5 -

Task 2a

Presentation slides (P4)

Again, either use PowerPoint or Keynote. This time, however, do not

worry about going on to more than one slide per topic:

Staffing issues

! Need to consult and inform about online strategy

! Need to audit staff IT and internet skills

! Need to consider recruitment of new staff for website maintenance, customer relations and possibly other tasks

! Staff may need training

! Staff may object

! Need to consider how staff will interact with external web design staff

Financial issues ! Budgets need to be drawn up.

! There will be initial costs of hardware and software.

! There will be costs for web design and maintenance.

! There will be staff costs.

! Cash flow may be disrupted due to initial costs, but then revenue should start to increase.

! Budgets need to be monitored as cash flows become uneven.

! Managers need to be aware of new systems.

! Business performance needs to be monitored. ! Taxation liabilities in different national rates and systems need to

be considered.

Distribution issues

! Storage and warehousing — whether handling this internally or

outsourcing the operation, there are costs linked to both options

! Logistics — including location of storage ! Product availability

! Relationships with distributors

! Call centre operation for customer queries

! Dealing with range of products, some of which might be fragile

! Handling expertise and packaging


- 6 -

Task 2b

! Why would these issues have to be dealt with before going online?

! What might happen if staff were not involved?

! Should the new online store be mentioned in staff training?

! Should customers feel like they can ask questions? What is the

best way to do this online?

! Why is finance important for a business going online?


- 7 -

Task 2c

In this task, you will be suggesting ways in which a business could prepare for and overcome some of the risks associated with running an

online business.

Put your general recommendations in extended bullet points

e.g.

! What should Shvah do before the website is designed? ! How should the site reassure visitors?

! How should staff be informed / trained / kept up to date

! The payment system

! How often should the site be checked ! Who should monitor competitors?

! What systems should be put in place for complaints

! What software should be installed to the website?

! What contingency plans should be in place?

Then, suggest ways that Shvah can offer a world class service on their

website to create money for the business.


- 8 -

Maintaining your web content and technology

A successful website should be implemented effectively and maintained

professionally.

The maintenance factor is absolutely crucial. Although the technology may be outsourced to an Internet service provider, it is the responsibility of the website

owner to ensure that the content of the site is accurate and updated regularly. This

will help in promoting a positive image for the business, and attracting and retaining

visitors to the site on a daily basis.

This guide will provide advice on the key phases in implementing a website, including the requirement for integration with back-office systems, together with the ongoing

maintenance issues that need to be addressed.

Implementing your website

Implementation means putting your website into operation. There are several phases

that you will go through during the implementation process.

Implementing the website

When you implement your website, you will also need to train your staff. You should try to encourage staff involvement and feedback, as staff buy-in can make or

break a technology project.

You should also consider setting up a cross-departmental taskforce to manage the

implementation process - it will help with staff buy-in. It will also help ensure that the

website is compatible with other systems throughout your business - for example

your accounts package or customer database.

System testing

Before making the website accessible on the Internet, you should test it to see how well it responds to visitors. Poor testing or no testing is extremely risky. Errors that

appear later can be expensive to correct.

The main purpose of testing is to assess the response times experienced by users and

verify how the site functions under peak loads. It is also useful to see how easily

users can access the site and navigate through the site.

Planning the rollout


- 9 -

Decide whether you will have a soft launch to existing customers, or simply make it

available on the Internet to as wide an audience as possible.

Other issues to consider include:

• how you will market the site

• whether staff will need training in how to maintain web content

• deciding who will handle customer orders and queries

• working out which staff will require training and how much time it will take for

them to adjust to the new system

Launching the website

At the launch of the site you should encourage existing customers to use it. You also

need to ensure that you promote the web address (URL) and make the site easy to

find on search engines.

Integrating your back office systems

Linking your back-office and online systems together improves efficiency and could

ultimately lead to greater customer satisfaction.

What are back-office systems?

Back-office systems run all your business administration processes. They are

commonly an automated set of processes run by a piece of software on your

computer. A back-office system, using an accounting package or database, will:

• record all sales transactions

• record all purchases • update inventory records accordingly

• generate all appropriate paperwork - ie invoices and receipts

Many back-office systems can also carry shipping information and can produce

reports that are invaluable in monitoring business performance and predicting future

trends.

What is integration?

In practical terms integration means connecting your online e-commerce system with

your back-office accounts and database systems, so that whenever a customer places

an order online, your web store and back office deal with the sale as one. The online system accepts the order and then relays all this information back to the customer,

while the back office records the transaction, adjusts inventory levels, generates an

invoice and fulfils the order.


- 10 -

Benefits of integration

Benefits of integration include:

• greatly improved customer service

• faster response times

• enhanced capacity - greater automation allows you to deal with much larger

volumes of business

• reduced costs in the medium and long-term • improved accuracy - with web store and back-office accessing the same data

the chances of errors are greatly reduced

• better use of staff time

Integration solutions

The three main options for achieving integration are:

• purchasing off-the-shelf software that includes built-in back-office functionality

• employing a specialist software firm to create an interface between your

systems

• using an application service provider

When looking for software solutions, make sure they support open standards such as

XML (Extensible Mark-up Language).

Make sure your solution has the flexibility to deal with moving into new markets by

having the ability to price in other currencies, for instance.

Reviewing your website for errors

It is important to keep your website up to date and error free. Sites lose credibility if

their content is not updated or links do not work.

There are a number of actions you should undertake regularly as part of your website

maintenance to ensure that the image of your business does not suffer because of

the poor performance or user perception of your site.

Checking links

You should regularly check the links on your website to ensure that they all work. If

there are significant numbers of links, consider checking a portion of them per week

as a rotating maintenance operation.


- 11 -

Ensure that any time-sensitive links are removed when no longer relevant. It is

annoying for your users to click on a link and find that the topic is no longer there or

the special offer has expired.

Don't forget to check links to your own pages to ensure that every page is fully

functional.

Checking advertising or sponsorship banners

If your website carries advertising or other types of sponsorship banner, then you

need to check that the affiliate is still active. A common problem facing many website owners is a discontinued sponsor link, with your user clicking through and failing to

reach the affiliate's home page.

Spelling and typos

Web designers will commonly use a syntax-checking program to catch errors and

typos before the site is fully operational. However, you should also carry out such

checks regularly once the site is live as content is added.

Maintenance tools

There are several popular tools you can use to assist in carrying out the various

checks on HTML validation, links and spelling on your website.

Updating your website content

There is an expectation that websites will be constantly changing. If the content of

your website remains static, users may not revisit it and you may lose opportunities

to promote new products or services.

Your website should look fresh and appealing, and promote an image of success and

stability in order to attract and retain visitors on a daily basis.

Approach to updating

Keep the content as up to date as possible. If you have a news section or

announcements about new products then it is vital that these reflect the current

situation.

If you have old news stories that you feel will be of interest to your visitors, then

place them in an archive and allow this to be searched by interested parties.

Ensure that all the photos on your site are recent and include only your current staff.


- 12 -

Content management

If the number of pages on your website and the frequency with which they change is

significant then you may wish to consider using a content management system.

Content management software has been developed to assist in the collection,

assembly and management of content on a website, an intranet or an extranet.

Such software is particularly valuable where the content is dynamic and parts of it

must be capable of changing depending upon circumstances such as the identification

of the visitor, the day of the month, the price of the product, or the requests of the

visitor.

Update notification

Remember to change the notice on your website stating when the site was last updated. Current information and articles will attract readers far more frequently than

material that was last updated months ago.

Website monitoring

It is important to monitor how your website performs and the way visitors use it.

Performance monitoring tools

Many websites are affected by slow performance, major outages, content errors,

transaction failures and slow loading pages.

To address these problems consider using website performance-monitoring tools.

These measure the response times of specific transactions or pinpoint the location of

bottlenecks that slow down the website, such as the application server, a specific

database, or a network router.

Some tools also identify the causes for slow page loading speeds, such as loading too

many banners, too many high-resolution graphics files, or disk space problems.

Monitoring website traffic

One of the more important aspects of website maintenance is tracking how users find

your website and what they do once they get there.

As part of monitoring the website traffic you need to know how many visitors click on your pages, how many pages they visit and which pages they spend most time on. All

of this information is necessary to identify a need to upgrade the site or customise

features to address visitor needs.


- 13 -

The information that can be gathered as part of a traffic-monitoring exercise

includes:

• the date and time that each visitor accessed your site

• the individual Internet protocol address of each visitor's computer

• how they have arrived at your site, for example if they were referred to it by a search engine

• the number of pages that every visitor viewed, shown by the time they

accessed each page and the length of time spent viewing each page

• the type of browser and operating system used by each visitor

This information also forms valuable feedback on your marketing activities. It can

help indicate the success or otherwise of a marketing campaign as well as showing

where specific promotional activities should be focused.

Your Internet service provider should provide you with a range of traffic-monitoring

options as part of the service they offer.

Website maintenance options

Although you have several options for how maintenance activities on your website are

undertaken, there are four main approaches.

Do it yourself

You can carry out the maintenance in-house using a variety of inexpensive tools.

These allow you to carry out a range of routine maintenance activities such as

validating your site's HTML code and checking for broken links.

Updating a site's content can be time consuming. If you don't have a dedicated

webmaster, then you must ensure that the person given responsibility has sufficient

time.

Ad-hoc basis

You can pay your Internet service provider (ISP) on an "as required" basis to carry

out maintenance and updating activities. This is a viable option if the changes are relatively infrequent. However, as the volume of content on your site grows it will

become less cost effective.

Maintenance agreement

The most common approach is to set up a maintenance agreement with your ISP or

website developer. This will take account of the need for regular and frequent


- 14 -

updates to the content and ongoing checking and monitoring activities. The fee will

usually be fixed on a monthly or quarterly basis.

User tools

The final option is provided by an increasing number of suppliers who offer easy-to-

use tools, such as simple content management software, that enable end users to

update parts of the website themselves. Such tools can be used on their own or as

part of a general maintenance contract.

Maintenance budgets

Whichever option you decide to adopt, ensure that you have fully budgeted for it -

there will be a charge even for routine updates to your site.

You also need to take account of more significant upgrading or redesigning of the site, which is time consuming and expensive. Assign a budget for more radical

changes to the site in addition to the routine maintenance.

Evaluating progress

An essential part of the overall website maintenance activity is to periodically review

the performance of the website, in order to establish whether it is achieving the

hoped-for benefits, and help identify areas for potential enhancement.

Set targets

At the outset of any e-commerce or website development project you need to set

specific targets in terms of your expectations of the new system. For example you

may decide to:

• set goals for your e-commerce website - ie to bring in new business or cut the

cost of each sale • agree specific, measurable objectives for what you want to achieve - ie a

percentage increase in sales or new customers

Evaluate

As part of the evaluation process you should:

• monitor and review the impact on your business against your initial set of

targets and objectives

• continue to benchmark your site against those of your competitors and market

leaders in order to assess any developments they have made and decide whether these are appropriate for your own site


- 15 -

• get feedback from staff, customers and suppliers on any changes you have

made in order to ascertain how well they have been received

• review the success, or otherwise, of any marketing activities you have

undertaken

Ideally you should look to evaluate the impact after six months and again after one year. Have you achieved your overall objectives? Document the lessons you have

learned and look at how you could improve things further.


Find out about e-commerce websites at the National Computing Centre

website

http://www.nccmembership.co.uk/POOLED/articles/bf_webart/view.asp?Q=bf_webart

_113154

Find information on how to check HTML pages for errors on the HTML

Writers Guild website

http://hwg.org/resources/?cid=28

Read about the challenges of back-office integration in e-procurement at the IBM website

http://www-

1.ibm.com/services/uk/index.wss/mp/igs/xs/a1007982/8?cntxtID=a1006899

Compare the prices and functionality of content management vendors at the

Eric Hartmann website

http://tools.hartman-communicatie.nl

Review summaries of the main content management packages currently on the market at the CMS Watch website

http://www.cmswatch.com

View a sample website analysis report at the Analog website

http://www.chiark.greenend.org.uk/~sret1/stats/

ASSIGNMENT TITLE 3. Operating an online business

ASSIGNMENT

OBJECTIVES

In this assignment, learners should: P3 prepare information on the operational issues and risks for a business organisation operating online P4 describe the staffing, financial and distribution issues that a business organisation operating online should consider M2 analyse the advantages and disadvantages of the operational issues and risks for a business organisation planning to go online D1 make and justify recommendations for a business organisation considering going online D2 suggest ways in which a business could prepare for, and overcome, some of the operational risks associated with going online

WHAT YOUR LEARNERS

WILL DO IN THIS

ASSIGNMENT

Learners will create notes on operational issues (for the P3 criterion) and provide additional analysis within the notes (for the M2 criterion). They will make a presentation about staffing, financial and distribution issues (for P4). Optional recommendations and suggestions for the business managers can be included (for D1 and D2 criteria).


IN THIS ASSIGNMENT

In undertaking this assignment, learners will appreciate that running an online business involves a number of new risk. A business needs to be aware of these risks and have in place some form of planning to meet unforeseen events. Learners will also see that there are implications for staffing, finance and distribution in operating online.

GRADING SCHEME


each grading level)

The notes and handout material for P3 and P4 will describe the various risks and operational problems that might arise as a business goes online. The potential staffing, financial and distribution problems will be outlined fully. The notes and handout will be well organised into a logical and clear presentation.

For M2, there will be an analysis of the significance of these risks and operational problems, bearing in mind the consequences of each potential risk and the gains to be anticipated from an online strategy. D1 and D2 are reserved for those learners who attempt to evaluate of the risks and operational problems in comparison to the possible gains from the strategy.

GUIDANCE NOTES This is potentially a very hefty assignment, covering five grading criteria. However the ‘issues’ covered are closely interconnected and follow on quite logically. It should be within an average learner’s capacity to describe the operational risks of being online as well as the staffing, financial and distribution issues (for P3 and P4). From this point M2, D1 and D2 follow, for the more able and more enthusiastic learners. This assignment therefore facilitates a clear degree of differentiation through the M2, D1 and D2 extension tasks.

The assignment scenario is intended to offer a realistic setting for the problems of going online to be resolved within a genuine business context.


ASSIGNMENT TITLE Operating an online business

ASSIGNMENT OBJECTIVES In this assignment, you should: P3 prepare information on the operational issues and risks for a business organisation operating online P4 describe the staffing, financial and distribution issues that a business organisation operating online should consider M2 analyse the advantages and disadvantages of the operational issues and risks for a business organisation planning to go online D1 make and justify recommendations for a business organisation considering going online D2 suggest ways in which a business could prepare for, and overcome, some of the operational risks associated with going online

WHAT YOU WILL DO IN

THIS ASSIGNMENT

You will consider a new online sales channel that is being planned by the a XYZ Giftware business. A new website will list and display a range of products. Customers can register on this website and order products online.

You will prepare notes that describe the various risks in running this type of online business as well as various problems that might arise.

You will create a presentation that describes the internal staffing, financial and distribution questions that need to be addressed.

In this work you have the chance to go further and achieve M2, D1 and D2 grading criteria. You can do this by analysing in detail the important potential problems and making recommendations and suggestions for management about how to deal with them.

WHAT YOU WILL LEARN

IN THIS ASSIGNMENT

In undertaking this assignment, you will learn that doing business online can create problems as things progress and that staffing, financial and distribution functions need to be monitored carefully.

ASSIGNMENT TITLE Operating an online business

TASK NUMBER AND

TASK DETAIL

Task 1

1a Prepare information, in the form of clear notes, on the operational issues and risks for the online business. (P3)

1b Analyse in the notes the advantages and disadvantages involved in the operational issues and risks for the online business. (M2)

Task 2

2a Prepare a presentation that describes the staffing, financial and distribution issues that need to be considered by the business. (P4)

2b Make and justify recommendations for the online business based on the various factors you have described in your notes and presentation. (D1)

2c Suggest ways in which a business could prepare for and overcome some of the risks associated with running an online business. (D2)

GRADING CRITERIA P3 prepare information on the operational issues and risks for a business organisation operating online

P4 describe the staffing, financial and distribution issues that a business organisation operating online should consider

M2 analyse the advantages and disadvantages of the operational issues and risks for a business organisation planning to go online

D1 make and justify recommendations for a business organisation considering going online

D2 suggest ways in which a business could prepare for, and overcome, some of the operational risks associated with going online

GRADE / LEVEL The answer below would successfully complete Tasks 1 and 2 in full, thereby leading to the achievement of all five grading criteria available.

SAMPLE ANSWER Task 1

Notes on the operational issues for an online business (P3)

Operational issues are potential problems that a business may encounter when it decides to trade online. By having plans in place to deal with these problems, a business will be able to deal with them more effectively. These are the main issues and risks that should be considered.

Payment security ! Customers need reassurance that payments carried out online will be

secure. This could be done on the website itself. ! Check that payment methods are done by established payments

systems. ! If third party payments services are used such as WorldPay or PayPal,

ensure that all staff know the systems well.

Risks associated with payment security ! Fraud and theft ! Loss of customer confidence

Unfamiliar trading conditions ! Visibility to external competition ! Matching competing online offers ! Increased consumer interest ! Possibly more complaints and feedback ! Maintaining website and keeping it up to date

Risks associated with new trading conditions ! Priced out of market ! Unfair pressure from larger businesses ! Customer disillusionment caused by inaccurate website information is

a disaster

Errors in ordering ! Dealing with incorrect or misinterpreted order details

Risks associated with ordering ! Customer frustration ! Staff time taken to rectify mistakes ! Costs linked with dealing with complaints ! Damage to image ! Possible health and safety problems ! Possible trading standards problems

Potential misuse of personal information ! Payments details such as card numbers ! Addresses, personal details ! Order history ! E-mail address, telephone numbers

Risks associated with misuse of personal information ! Data Protection Act and misuse of personal information regulations ! Business image damaged ! Customer confidence undermined

Vulnerability to hostile attack ! Hacking of a website ! Phishing and viruses, denial of service

Risks associated with hostile attack ! Fraud and/or data theft ! Corruption ! Loss of service — what is the effect of this on the business?

Conclusions on the operational risks (M2)

One of the most basic risks linked with internet business is ensuring that the site is always available and that people can find it. These things must be dealt with. If a business fails to support its website — for example, by not providing accurate, relevant and up-to-date information — customers will leave and find better, alternative sites. The website will lose credibility. This happens because

there is little chance to remedy a customer’s poor experience.

All of the other issues and risks that have been listed in the presentation (above) are important for the online business. The aim is to acquire and keep customers. Potential customers must find something of interest and there should be enough on the site to retain their interest. If the site is poorly designed, they will not return. Managers must have a clear idea of the kind of site that they want and must be able to communicate this vision to the web designers.

Once customers are attracted and are happy to make purchases online, they must feel well looked after and secure. The site should pay attention to customer security and invest in a reliable payments system. There should be clear assurances that payment is safe and secure.

If trade is to be conducted over a very wide area, and particularly across national boundaries, the business should be aware of the legal factors. The government websites at DTI and Business Link offer plenty of help and advice.

Task 2

Presentation slides (P4)

Staffing issues ! Need to consult and inform about online strategy ! Need to audit staff IT and internet skills ! Need to consider recruitment of new staff for website maintenance,

customer relations and possibly other tasks ! Staff may need training ! Staff may object ! Need to consider how staff will interact with external web design staff

Financial issues ! Budgets need to be drawn up. ! There will be initial costs of hardware and software. ! There will be costs for web design and maintenance. ! There will be staff costs. ! Cash flow may be disrupted due to initial costs, but then revenue

should start to increase. ! Budgets need to be monitored as cash flows become uneven. ! Managers need to be aware of new systems. ! Business performance needs to be monitored. ! Taxation liabilities in different national rates and systems need to be

considered.

Distribution issues ! Storage and warehousing — whether handling this internally or

outsourcing the operation, there are costs linked to both options ! Logistics — including location of storage ! Product availability ! Relationships with distributors ! Call centre operation for customer queries ! Dealing with range of products, some of which might be fragile ! Handling expertise and packaging

These staffing, financial and distribution questions have to be dealt with before the business goes live online. If staff do not feel they are part of the digital side of things, they may obstruct the success of the online business. The online activity of the business should be a feature of staff training. Customers should feel they can speak to people who are aware of the website content and services.

If finance is not available, the business may have cash flow problems. If distribution fails, the business fails because customers will not be happy and they will not return. All of these things are vital for an online business.

Recommendations and suggestions for the XYZ Giftware business

These would be my general recommendations for XYZ Giftware’s online business.

! That before the website is designed, the management and designers have a meeting and establish the secure payments system.

! That the site reassures customers that payments are secure. ! That staff are aware of the payment security system. ! That website content is checked every day. [D2] ! That staff monitor competitors. ! That systems and procedures for dealing with orders are set in place

and everyone knows about them in the business. [D2] ! That firewall and internet security software is installed. [D2] ! That staff passwords and authentication are always required. [D2] ! That cash flow monitoring is done carefully to keep tight control of

finance. ! That a training programme is designed to give staff confidence and

awareness. ! That managers get training about changes. ! That customers are kept in touch and allowed to give feedback. ! That storage of products, distribution of products and order fulfilment

is set up to guarantee customer satisfaction. [D2] ! That the business has contingency plans to meet a disaster and reduce

possible business damage. [D2}

I believe that these suggestions are all necessary for an online business. On the internet, customers expect excellent, prompt service. There are many competitors and lots of chances for hostile customers to post badly damaging material if they are not happy with the service they receive. All the risks and possible problems should be anticipated and prepared for.

By careful planning, including building in contingency plans to be used in the event of a major problem with the online operation, a business can ensure that:

! an online service is effectively delivered and the business gains a return on its investment

! its reputation is enhanced ! it will operate efficiently and cost effectively.

GRADING COMMENTS This work shows useful descriptive content (for P3 and P4), thoughtful analytical discussion of potential risks and problems (for M2), and relevant and useful

recommendations (for D1 and D2). Note that the recommendations cover both D1 and D2 criteria, as the issues are so interlinked; however, the clear D2 operational issues are indicated in the sample answer.

ASSIGNMENT TITLE

4. Benefits of doing online business

ASSIGNMENT OBJECTIVES

In this assignment, you should: P5 describe the benefits to a business organisation

marketing a product or service online M3 explain the potential benefits for a business planning to go online.

TASK INTRODUCTION

The giftware business you work for has carefully considered the implementation of its online sales channel and it has assessed the operational risks and potential problems that might arise.

Now, the management is determined to continue this thorough approach. Louise Abdullah, the founder of the business and present managing director, asks you to help prepare the staff for the changes that are to come.

“I want staff to have a good appreciation of why we believe we will benefit from having a website” she tells you. She then sets you the following tasks.

TASK 1 Prepare a handout that describes the benefits to a company such as Shvah Giftware in marketing products and services online. (P5)

TASK 2 Explain the potential benefits for the business in being online. (M3)

ASSIGNMENT TITLE 4. Benefits of doing online business

ASSIGNMENT

OBJECTIVES

In this assignment, learners should: P5 describe the benefits to a business organisation marketing a product

or service online M3 explain the potential benefits for a business planning to go online

WHAT YOUR LEARNERS

WILL DO IN THIS

ASSIGNMENT

Learners will investigate the marketing opportunities that arise from having an online presence and they will explain these in a carefully set out handout. The handout can use imaginative ways of presenting some of the perspectives, such as images, so long as these are explained in text.

To achieve the M3 criterion, learners may extend their work by giving a fuller explanation of the wider benefits to be gained from being online.


IN THIS ASSIGNMENT

Learners will appreciate that the internet affords significant marketing benefits for the business and that these may outweigh the potential risks. They will also consider the wider potential benefits and see that these may be the difference between succeeding and growing, and failure.

GRADING SCHEME


each grading level)

For learners to achieve P5

Learners will offer a general overview describing the marketing benefits of the web for business. The work will relate specifically to the XYZ Giftware business context and focus upon what the business is attempting to achieve by going online.

For learners to achieve M3

The learner will go significantly further by explaining the potential benefits that this or any business might achieve from an online marketing strategy.

GUIDANCE NOTES The marketing benefits available, such as market intelligence, wide-scale promotion and PR, market reach, potential of increased sales and better customer service, are well established. The point should be made that there is much online marketing support.

The Business Link service at www.businesslink.org.uk is a good source of information, as is the DTI website. The Daily Telegraph has an excellent business section that often contains relevant material.

For M3, the whole spectrum of benefits from an internet presence must be opened up. Learners should be encouraged to consider the wider digital world but always focus on the XYZ Giftware scenario. This business is an ideal subject because, while it has lots to gain from trading online, there are also dangers.

One approach that may well be useful is to require a verbal explanation for the M3 aspect. Care should be taken, however, to ensure that verbal evidence is recorded either on tape or video, together with an observation record or witness statement.


ASSIGNMENT OBJECTIVES In this assignment, you should: P5 describe the benefits to a business organisation marketing a product

or service online M3 explain the potential benefits for a business planning to go online

WHAT YOU WILL DO IN

THIS ASSIGNMENT

You will consider the small giftware business context given in the assignment and consider what benefits in marketing terms the business might gain from a new website presence. You will design and produce a useful handout for the staff of XYZ Giftware.

To go further you will explain the potential wider benefits for the business should it continue in the longer term with its website sales strategy.

WHAT YOU WILL LEARN

IN THIS ASSIGNMENT

In undertaking this assignment, you will learn how marketing opportunities arise online that could help the business to grow. There are also a range of other benefits to be gained from being online.


TASK NUMBER AND

TASK DETAIL

Task 1

Prepare a handout that describes the benefits to a company such as XYZ Giftware in marketing products and services online. (P5)

Task 2

Explain the potential benefits for the business in being online. (M3)

GRADING CRITERIA P5 describe the benefits to a business organisation marketing a product or service online

M3 explain the potential benefits for a business planning to go online

GRADE / LEVEL The answer below would successfully complete Tasks 1 and 2, thereby leading to the achievement of P5 and M3 respectively.

SAMPLE ANSWER Benefits of marketing online (P5)

Why are we going online?

Marketing is about satisfying customer needs and making profits by doing so. This is the UK Chartered Institute of Marketing definition. By being online and having a website that can create sales, our business can instantly reach a bigger market. This is called “market reach”. Customers in Germany can order if they wish, just as local people can.

The website can contain information about the range of products. There can be images and descriptions. Prices and features can be shown. By giving extra benefits in the form of information or guarantees, products can be “extended” to make them more appealing to potential customers. The site can also have “About us” information. It can include PR material, so that interested users can find out about the business. All managers and directors can have pen portraits on the site.

When people want to become customers, the business can ask them to register on the site. This means they give their details such as an e-mail address. Then, leaflets and brochures can be mailed to them, as can further offers. In this way, we can build a relationship with our online customers.

When the website is online, we can place “affiliate” links to other businesses on it. Similarly, we could place our link on others sites. This is a good way of generating sales and revenue.

The internet has much information about market trends in particular industries. By being online, this information can be accessed and used to plan marketing campaigns. The site can be assessed using “web analytics”. This means that we can find out which parts of the site work best. For example, we can find out where customers click through to, and where they have come from. This enables the site to be modified and updated in an informed way.

If we have business partners that we deal with often, we can link closely with them and make sure that we are always in touch. Our suppliers, for instance,

might find it easier to deal with us if we are online. We could set up systems where we auto-respond to e-mails so that suppliers do not feel that they are being ignored. Our customers can easily keep in touch with us, and we can keep

in touch with them. By using databases, we can have all the data we need available quickly.

The online presence means a business is available 24/7. This means that our “shop” is always open. We will be able to offer online customers good deals because costs go down. We will also be able to see the competition and make sure that we are offering something better. Because of this, our sales revenue should almost certainly increase, subject to getting our service right.

The website will be well organised, easy to use and access, and it will have something that is of value to users. It will allow us to help, advise and listen to what our customers want. We will encourage, and always respond to, feedback from customers.

Potential benefits of being online (M3)

How can we benefit overall in the longer term?

First of all we have a chance to compete. If we didn’t go online, we would most certainly fall behind competitors that do have a web presence. The benefit of this is that we will keep our existing customers and hopefully gain new ones. This will help us to keep revenue flowing into the business and generate more profits in the longer term.

One major benefit of going online is that, because we reach wider markets, we have a chance of entering new ones. We have usually sold B2B to the retail trade. By having the website, we can attract interest from private individuals and become a bigger B2C operation.

All of this means that we should be able to grow as a business. As our reputation improves because we are pleasing more and more customers, we can increase profits, take on more staff, invest more in the business and perhaps expand into new product lines.

If things go according to plan, we will sell more products and be able to offer an extended product range. Staff will gain job security, and we will be able to invest in new equipment to further lower costs. Profitability should improve.

Because of an online presence we will be able to promote our offline (physical) business as well.

The B2B relationships that we have will be enhanced because other businesses will know that we are online, and we will appear just as big as all of our competition because online there is no physical distinction. If we offer products that are just as good as our competitors, and match this with better online customer service, we will attract bigger businesses to deal with us.

As a business operating online, we will be able to keep better informed about the market we are operating in. We can monitor trends and keep track of online competitors and adjust our plans accordingly.

Finally, over the longer term, staff will be happier, they will develop more skills and they will have more interesting jobs. The business has a great deal to gain by properly running an online channel.

GRADING COMMENTS Pass level work will offer a general overview, describing the marketing benefits

available from the web for a particular business. The work will relate specifically to a business context known to the learner and focus upon what the online business is attempting to do in an online marketing effort.

Merit level work will go significantly further, by explaining the potential benefits that this or any business might achieve from an online marketing strategy.

1: DVLA

The DVLA is the Driver and Vehicle Licensing Agency. It is a government organisation. It is called

an agency because, while it is not actually part of the national government, it is working on

behalf of the national government and receives its funding direct from government.

Until the widespread availability of the internet, people had to visit local offices of the

licensing authorities in person, or send paper applications through the post, in order to get a

driving licence, a tax disc or a vehicle registration document.

Now, the DVLA website offers services online. The website of the DVLA is www.dvla.gov.uk.

! The DVLA is part of the “public sector”. What does this mean? Why should a public

sector organisation be online?

! What, as a young driver, can you do on the DVLA website?

! What other features, apart from gaining access to services, are there on the DVLA

website?

! Why should non-profit-making bodies like the DVLA be online? Surely it’s a waste of

taxpayer’s money!

2: Gaz’s Wine

Gaz is a hard-working sole trader, operating a wine shop in a former coal-mining town. The

town has a population of around 18,000, though this is falling as people move away to find

work. The main high street consists of several small businesses, selling everything from pets to

holidays. The biggest retailer in the street is Woolworths, located right next door to Gaz’s Wine.

Gaz is far from satisfied with the turnover of his shop. Yes, there are customers but trade

isn’t brisk. Gaz has tried to increase sales by starting an interesting new line in wine kits. He

sells the kits and then makes up the wine for his customers. All in all, Gaz is making a living, but

that is all. Being a sole trader is hard work.

Gaz has a word with his nephew, Scott, who has taken a couple of IT courses at college.

Scott seems “very clued up” about the internet and web design, and he says “no problem” when

Gaz asks if he can build a website for the business. After paying a few pounds for a domain

name and virtually nothing for his site, Gaz goes online.

By design, the website only allows for e-mail enquiries. The site cannot be used for any

transactions, as there is no means for customers to make payments. On the first Monday after

going online, Gaz opens his mail box and finds four e-mails. He issues a press release to

generate interest. By the following Wednesday he has 20 e-mails. He replies to these customer

enquiries by e-mail with no problems.

The Mail on Sunday contacts Gaz to ask if the paper can do a piece about his new online

wine shop. Gaz happily agrees. The story is printed the next Sunday. By Monday morning Gaz

has 12,000 e-mails and more coming as he looks. Gaz panics, and he pulls the plug — literally —

on his PC.

! Assess Gaz’s actions and discuss with a classmate what he did wrong.

! What problem did Gaz have? Why do you think he panicked?

! What would have made things better for Gaz?

! Write a letter summarising how you would help him do it better.

! Is Gaz’s business the type that possibly could do well online? Why?

3: Acme Whistles

Acme Whistles is an online shop. Its website (acmewhistles.co.uk) has several features,

including the chance to sample the tone of various whistles that can be used for different

purposes.

The website of the Acme business also has much more information for site users. This

website shows that even the most basic of products is capable of being promoted effectively

online. It also shows the power of the web to communicate and promote a business.

! Investigate the Acme Whistles website. Would you say that this business is making

effective use of the web?

! What features does the website have that are likely to make it a success?

! Work with a classmate and together list at least six things that you think makes this

a site that users will want to come back to again.

! Is there any way that you feel the site could be improved? Justify what you

suggest.

! Paper diaries are better than electronic systems because you can carry them

around. Do you agree?

4: B&Q Direct

B&Q sells DIY (do-it-yourself) materials in stores and hypermarkets all over the UK. Everything

from screws and nails to entire kitchens and bedrooms can be bought from the shop.

B&Q is owned by the Kingfisher Group. In 2001 the group established a separate company

called B&Q Direct. This is the arm of the B&Q brand that is responsible for the group’s fully

transactional website (www.diy.com).

The B&Q Direct site uses web technology to offer several features. Not only can customers

view products directly on the site, they can also register and then interact with the site content

to design a kitchen or bedroom using the products available online.

B&Q Direct employs call centre personnel and warehousing staff to stock and handle a vast

range of products. The group’s policy on stock, at least in the first two years of the website,

was to give priority to web orders. B&Q Direct management were given targets for sales each

year. In fact, sales exceeded expectations and the web-based channel has been a success for

B&Q.

! Visit the diy.com website and make notes about its major features. Locate the

interactive kitchen and bedroom planner. What can you do from this facility? What

other businesses might be able to use such a feature?

! B&Q previously only had physical outlets for sales. What problems do you think

management might have had in setting up an online sales channel alongside its

stores?

! What kinds of staff skills do you think B&Q Direct needed to start and maintain its

diy.com website?

! Interactivity is just a gimmick, nothing more. Do you agree? Justify your response.

5: PayPal — online payments

When a business wishes to open up a new online selling channel using a website, the major

concern straightaway is how customers will pay. Many people visit online retail sites but do not

make purchases because they are afraid of security problems and losing money.

People hesitate to give their credit or debit card details because it means typing the

numbers into the computer and sending these details over the web. They feel that not only can

the number be stolen easily, but also that their identity and their cash will be stolen.

PayPal is an online secure payments service that is available for both private individuals

and businesses that wish to buy and sell online. The PayPal website is www.paypal.com.

! Visit the PayPal website and, with a classmate, prepare a short presentation

that outlines how the system works.

! What are the benefits for an online retailer in using this kind of service?

! What other payment services exist online?

! What would you put on a new website that might reassure potential customers

that they could safely make payments via your site?

! The internet will never be secure and it is not worth trying to convince people

anything else. Do you agree?

6: Any-Firm Ltd — global cultural differences

Any-Firm Ltd sells its products across Europe. The firm has decided that it needs to keep up

with the competition by going fully online and managers have studied the government’s advisory

website, available from the DTI (Department of Trade and Industry).

Managers want to ensure that Any-Firm’s website not only gives a first rate impression of

the company’s operation, but also that it works well across several cultural boundaries.

The marketing manager is Carmen Courth, who is German. During a planning meeting she

says: “We must remember that people have different ways of working in places like China and

Eastern Europe, and, of course, language is a problem.

“Many businesses have made mistakes in translation, and this could be costly for us. There

are several examples of companies getting caught out by making poor translations of their

product’s names in Germany. Take the word mist, for example. Companies have launched

products in Germany called Irish Mist (an alcoholic drink), Mist Stick (a curling iron from Clairol)

and Silver Mist (a Rolls Royce car), but they should have known that mist in German means dung

or manure. Fancy a glass of Irish dung?”

People at the meeting laughed, but they knew that this was a serious point.

! Any-Firm Ltd hopes to use the internet to gain sales across national boundaries.

What do you think is meant by “cultural differences”? How might these affect

the business’s plans for its web strategy?

! Investigate web translation services. Could these help?

! Write a statement in which you advise Any-Firm about how to avoid cultural and

language difficulties.

7: Save and Drive

Save and Drive is a motor accessories retailer located at Silksworth on the outskirts of

Sunderland in north-east England. The proprietors, father and son Dave and Stuart Robson, have

operated the business for many years.

Years ago, motorists often repaired and maintained their own vehicles

by themselves. However, modern cars and vans are much harder to fix by non-professionals.

Engines tend to be “black boxes”, and have computer modules in them. Fully trained motor

engineers these days simply plug a computer cable into a module and carry out electronic

diagnostics on cars.

As a result of this use of new technology in engines, the car parts market has diminished.

This has impacted on businesses such as Save and Drive. For Dave and Stuart Robson, the choice

is simple — find new ways of doing business or shut up shop.

Fortunately for Dave Robson, his son Stuart is fully computer literate and familiar with the

both the internet and website design. Dave and Stuart decided to open an online sales channel.

Today, Save and Drive sells directly from a fully transactional website

(www.saveanddrive.co.uk).

Within 12 months, Save and Drive grew from selling one roof box to selling 17.

! Save and Drive has altered its business strategy by using the internet to reach

new markets. What problems do you think Save and Drive would have needed to

think about before starting trading online?

! Prepare a brief summary explaining the issues as they relate to their business

and then verbally outline your ideas to your class. Structure your notes and

presentation using these headings:

" staffing

" finance

" distribution.

8: Bells Fish & Chips

Bells is a successful fish and chip takeaway, located near Durham. Proprietor Graham Kennedy

took over the shop in 1996 and he has worked hard to successfully compete with city centre

takeaways and attract customers from miles around. Kennedy’s philosophy is to offer the best

products available at the most competitive price.

Aware that the internet is a great vehicle for carrying information, Graham Kennedy

decided it would be useful for Bells to have its own website. Fish and chips on the internet?

Obviously the product could not be sold on the web, but he felt that the business should have an

online presence. “If I didn’t do it, someone else would,” he said.

Kennedy asked a local web designer, Scott Oliver, for advice and then commissioned him to

design his site (www.bellsfishshop.co.uk).

“I am happy with the site. Scott and I had a couple of disagreements, but finally agreed on

the way the site should look. It takes a bit of planning to get it right, and a small business like

Bells needs to communicate what we want carefully. Now I feel we have a good site that

represents us quite well. I want people to know about us, even if they can’t stand fish and

chips! I can change the content whenever I want to get our message right.”

! Investigate Bells and at least two other websites from small or medium-sized

businesses. What are the advantages and disadvantages of being online for these

businesses?

! What advice would you give a small business before it went online?

! What is meant by the statement that “some businesses are just not suitable for

being online”? Do you agree? Why?

9: RS Components

RS Components is an electrical trade supplier with a sophisticated e-business approach. RS

makes extensive use of its website (www.rswww.com) in order to trade with a range of

businesses and public sector organisations.

The primary aim of RS Components is to achieve “service”. The company aims to stock a

replacement part for every job.

RS Components’ original market focus was on the electrical trade. Through using the web,

RS has discovered that a new market — the private consumer market — has opened up.

RS does not simply concentrate its e-business efforts on its own internal processes: it

encourages partner businesses to join the web-based trading community too. RS has an active

policy of offering free software to businesses so that they can purchase easily and effectively

from the company.

On the website, the RS InfoZone aims to give technical and legal support to partner

businesses.

! In pairs, investigate the RS Components website. Outline the features of the site

that you feel are designed to encourage customers to trade with RS.

! What does it mean to “discover a new market”?

! How does RS Components offer better customer service through its website?

Give at least three examples.

10: Black & Decker — using web analytics

Black & Decker is a leading global manufacturer of power tools and accessories, hardware,

home improvement products, and technology-based fastening systems.

In 2000, the company invested significantly in the development of its consumer website

(www.blackanddecker.com). The business aim was to maximise the number of visitors that

registered on the site. The second challenge was to monitor effectively what the business was

doing online in order to build relationships with the registered customers.

To do this, Black & Decker used a web analytics service available from WebTrends. In

particular, it is using WebTrends Reporting Center as one of its primary analysis tools. The

information provided by this analysis is used to make better informed business decisions.

Using WebTrends Reporting Center analytics, Black & Decker has increased site registration

by 40 per cent.

! In your own words, describe what is meant by the term “web analytics”.

! What use can be made of web analytics? How do you think a business like Black &

Decker benefited from these tools?

! Do you think that web analytics can help a business improve customer service?

! Using web analytics is an excellent way of finding out whether a website is well

designed. Do you agree with this statement?

11: Card Corporation

Card Corporation (www.cardcorp.co.uk) was launched on 1 May 1998 and has been fully online

since. It has developed dramatically over the last few years. The company now serves many

thousand of business users.

Its customers are not just large companies. Individuals and small businesses use the site for

everything from a mini label or a large poster to baby announcement cards. The company has

won several awards and it is used in benchmark studies and case histories by the Department for

Trade and Industry (DTI).

Visitors to the Card Corporation website can choose from dozens of products, all displaying

many different templates that help the customer specify a design that meets their

requirements. These templates can be personalised with the website’s very easy-to-use

WYSIWYG (what you see is what you get) design editor.

All products are printed in full colour, on high-quality materials and are delivered within

three working days of ordering.

! In what ways do you think that the Card Corporation website can be described

as an innovative use of the internet?

! What potential benefits for an online business do you think that the Card

Corporation case study illustrates?

! Can you suggest any ways in which the Card Corporation could improve its

marketing effort online?

12: Apple

The Apple online store is at www.apple.com. It offers a large range of products, everything

from iPods to televisions.

The Apple website has many features that are designed to offer help and support to

customers, wherever they are, at any time. Not only is this a trading website, it is also an

exercise in customer relations.

! Investigate the Apple website. With at least one other classmate, research and

explain the major features of the website that offer effective support to Apple

customers.

! To what extent would you say people can expect “rapid responses to orders and

enquiries” from the Apple website?

! Which of Apple’s products could be described as “new devices to access the

web”?

! Prepare a presentation that describes at least three ways in which people can

access the internet today.

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