Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
1
E-Business
Management Summary
The main purpose of this report is to review and analyse one of the worlds largest retail online
grocery in the UK, Tesco.com. The report would show the various E-business strategy used by
Tesco since the launching of their website in year 2000. It will show how Tesco has been using ebusiness to expand, to save and to increase customer service in the UK.
This report first shows a brief summary of the history of Tesco such as when Tesco was founded and
by whom, how Tesco got its name and when Tesco launched its website, Tesco.com. A SWOT
analysis was also conducted of to see their strength, which is their customer service, their weakness,
which is their high dependency of the UK and Europe countries, their opportunities which is the
growing demand for online shopping, music and video and lastly their threats which are their
competitors.
A PEST analysis was also done to access the market for Tesco.com, along with a competitor
analysis in which Porters Five Forces were used to analyse the treats that can take place with the
online grocery. It also, shows the e-business strategy that they have adopted and are planning to
adopt along with the legal and ethical issues that they must take into account when running an
online grocery site.
With their tagline Every Little Helps Tesco.com has proven to be the best when it comes to
customer service and has been very successful over the years, with extremely high profits that has
been increasing. Tesco.com needs to continue to striving for excellent service and good prices in
order to remain above their competitors.
2
E-Business
1.0 Introduction
1.1 Tescos History
Tesco was founded in year 1919 by Jack Cohen from a market stall in East London which made a
profit of 1 from the sales of 4 on his first day. Which in those day were considered to be a lot. In
1924 he created Tescos brand name from the initials of a tea supplier, Thomas Edward Stockwell
(TES) and the first two letters of his last name, Cohen (CO). He later opened of the first Tesco
named store in 1932. (Tesco PLC, 2012).
However, it was in year 2000 that Tesco launched its e-commerce business, Tesco.com, expanding
its range of products selling clothes, electrical and personal finance products, online. By September
2005 Tesco.com received 170,000 orders per week with sales of 401 million for the first half of the
year (Chaffey, 2009). Although Tescos primary dot-com operations are based in the U.K.,
particularly in the greater London area, Tesco has also successfully exported their dot-com strategy
to other countries including Poland, Czech Republic, Thailand and South Korea. (Wulfraat, 2014)
Tesco.com allows customers to place orders from any computer, tablet, smartphones and even
virtual shopping walls in subways. Customer has the option of click and collect or pick up later at
the local store drive thru or delivery at their door. (Wulfraat, 2014)
Services
Financial Services
Broadband Internet
Phone Services
Music downloads
Petrol
Electricity
Clothing
DVD rentals
Flight and Holidays
Club Card
Printing Services
Health Services
I.T Support
Beauty Consultation Services
Table 1.1 showing the products and services offered by Tesco.com (Tesco, 2014)
3
E-Business
Tesco
Direct
(2006)
Music
Download
(2004)
Grocery
(2000)
Phone
Services
(2003)
Clothing
(2005)
Beauty
Consultaion
Services
(2014)
curb their spending were possible. (Peston, 2015) This may affect Tesco.com positively since goods
bought online are most times cheaper than in store goods, causing an increase in their online sales.
This can also affect Tesco negatively since some customers may choose not to spend at all or spend
very little on item that they do not really need.
Social
With the current age we live in, people are becoming busier than before with work and personal life
and do not always have that extra time to go store to store shopping. This can be a big advantage to
Tesco.com since people now prefer the convenience and comfort of shopping at home. (Rigby,
2011) Especially the elderly that are becoming more technologically advance but are less mobile
and cannot move around as usual. This beats, having to face the heavy traffic on the roadways and
lowers the chances of customers being affected by crime. Online shopping can be a huge benefit to
them because goods are now delivered at customers door steps, therefore increasing sales at
Tesco.com tremendously.
Technological
We live in an era where technology is the norm. Everyone is using it, from the youngest to the oldest
and it is making our lives a lot easier. With this rise of technology and digital capabilities,
consumers are changing the way they shop. Customers want to be able to shop however, whenever
and wherever they want. They want to shop across store formats, on smartphones and on tablets.
They are no longer choosing just a simple trip to a store, but are making much more dynamic and
complex journeys to purchase. (Tesco, 2014) Tesco now has their online shopping mobile app that
allow customers to purchase goods and services right in the palm of their hands. It also allows your
phone to act as an electronic membership card that allows customer to scan their phones at the tills
to get discounts and obtain their loyalty points. (Tesco. 2014)
E-Business
Barriers to entry
Rivalry amongst existing competitors
6
E-Business
10.1
Internet Users
Non-internet Users
89.9
Figure 2.2 showing the percentage of the UK that uses the internet
Some of the barriers that would prevent Tescos in store customers from shopping online would be
that customers may not like the idea of waiting at home for an hour for goods that they did not
choose themselves, especially with fresh produce. (Ruddick, 2014)
In order to overcome this barrier, Tesco can encourage online customer by reassuring them that
quality goods would be delivered at their door steps.
De-Kare Silver ES Test
This is a test that is done to access the extent to which consumers are likely to purchase a retail
product using the internet. (Chaffey, 2009). The factors according to De-Kare Silver that are
involved in this test are:
Product Characteristics this access if the product need to be physically touch or tried on
before being bought.
Familiarity and confidence- this access the degree of confidence and familiarity the customer
has with the product.
Consumer Attributes- this access consumer behaviour with in terms of access to technology.
Out of a score of 50, products scoring over 20 is considered to have good potential. De Kare-Silver
states that any product scoring over 20 has good potential, since the score for consumer attributes is
likely to increase through time. Given this, he suggests companies such as Tesco will regularly need
to review the score for their products. (Chaffey, 2009)
8
E-Business
Products
Grocery Items
Fresh Produce
Frozen Food
Baby Items
Books
DVDs
Electronics
Wines
Furniture
Music downloads
Clothing
Health Services
Product
Characteristics
(10)
7
8
8
8
10
10
9
8
10
10
8
5
Familiarity and
confidence (10)
9
4
6
9
10
10
9
8
10
9
7
5
Consumer
Attributes
(30)
20
18
18
21
25
25
20
18
19
22
16
15
Total
36
30
32
38
45
45
38
34
39
41
31
25
Internal
External
Strength
Weaknesses
(Chaffey, 2009)
Tesco.com has
between
developed
themselves
and
trust
customer service.
Tesco.com offers
home
delivery,
their
9
E-Business
Opportunities
Threats
competition.
international markets
There is an increase in the amount of
of
Tescos
Opportunities
Growing online
market for music and
video
Increase in the
opportunities in
growing market
Decreased in overall
business expense
SO
Weaknesses
High dependency in
the UK and Europe
market
Online shopping is
not convenient to all
shoppers
Fulfilling dot-com
orders at retail stores
is highly inefficient
and labour-intensive.
(Wilfraat, 2014)
WO
Seek to expand
Tesco.com, beyond
the UK market
Ensure that new
markets are properly
analysed before
venturing out
Open more dedicated
10
E-Business
dot.com depots
Threats
Competition
Business Takeover
ST
Maintain a higher
value than
competitors
Maintain strong
relationship with
customers and
suppliers
WT
Figure 3.1 showing the business model for Tesco.com (Tesco, 2014)
11
E-Business
Market penetration where an existing product is used to achieve growth and increase market
share.
Market development where and an existing product is exposed to a new market.
Product development where a new product or service is created for an already existing
market segment.
12
E-Business
Diversification where firm create new businesses offering new products and services for new
market segments
AR2: An e-mail is sent five days after customer makes purchase, with link to an online customer
satisfaction survey asking about quality of service.
AR3: A direct mail offering tips is sent two weeks after first purchase, on how to use the 5
discount on next purchase. This is intended to encourage re-use of website.
AR4: A Monthly e-newsletter is sent to customers with online exclusive offers encouraging crossselling.
AR5: Bi-weekly alert with personalised offers for customer.
AR6: After two months - 5 discount for next shop.
AR7: Quarterly mailing of coupons encouraging repeat sales and cross-sales.
Trigger event 3: Customer does not purchase for an extended period
AR1: Dormancy detected reactivation e-mail with survey of how the customer is finding the
service (to identify any problems) and a 5 incentive.
AR2: A further discount incentive is used in order to encourage continued usage to shop after the
first shop after a break. (Chaffey, 2009)
Customer extension- Tesco.com ensures that customers comes back to shop on their site by
offering them discounts on new goods and on goods already bought online, as a way to encourage
them to continue shopping at their website.
Profile Information- this is information about a customers characteristics that would be used for
segmentation, such as age, date of birth and sex.
Platform Using Information- this is information collected from site users when browsing through
different site. This is information on type of computer, browser and screen resolution used by these
site users.
Behavioural Information (on a single site) - This type of information includes purchase history of
customers
Behavioural information (across multiple sites) - This shows information on how a user accesses
multiple ads across sites.
Privacy what information is held about the individual? Tesco holds personal information
such as, customers name, address, email address, credit card information etc. Tesco.com
reassures customers that they will never disclose information collected from them to anyone
outside the Tesco Group except where consent is given (Tesco, 2012)
Accuracy is the information that was collected accurate? In efforts to avoid fraudulent
Fletcher (2001), however, provides an alternative perspective by raising these issues of concern for
both the individual and the marketer. This includes:
Transparency who is collecting what information and how do they disclose the collection
of data and how it will be used? Data should only be disclosed on a need to know basis.
Security how is information protected once it has been collected by a company?
15
E-Business
Liability who is responsible if data are abused? Tesco takes full responsibility for
customers personal information
16
E-Business
6.2 Recommendation
Tesco.com has been doing extremely well. Even with the fall in Tescos profit for the last two years,
sales at Tesco.com has been on the raise. My recommendation for Tesco would be, to place higher
emphasis on their online service. They should continue to make their online shopping more
convenient to the all types of customers. We live in a world were technology is taking over and soon
enough in a few years times storefront might be extinct. So Tesco has to start putting things in place
to eventually run totally online.
References
17
E-Business
18
E-Business
Rigby C, 2011, Tesco to extend compelling multichannel, Internet Retailing, 19 April 2011,
(website) http://internetretailing.net/2011/04/tesco-to-extend-compelling-multichannel/
BBC, 2014, Tesco announces 6% fall in profits, BBC News, 16 April 2014, viewed 1 April 2015,
(website) http://www.bbc.com/news/business-27046105
Tesco, 2012, Tesco.com Privacy and Cookies Policy, Tesco, viewed 12 April 2015, (website)
http://www.tesco.com/termsandconditions/privacy.htm
Anderson R, 2014, Tesco Turns Stale as Competition Freshen up New Ideas, BBC News, 23
September 2014, viewed 12 April 2015, (website), http://www.bbc.com/news/business-29310445
Edward A, Steiner R, Tecso signals embarrassing retreat from the US after losing its 1 billion
gamble to take on supermarket Wal-Mart, MailOnline, 5 December 2012, viewed 12 April 2015
(website) http://www.dailymail.co.uk/news/article-2243327/Tesco-signals-embarrassing-retreat-USlosing-1billion-gamble-supermarket-giant-Wal-mart.html
Appendices
19
E-Business
Website Evaluation
Introduction
The purpose of this document is to evaluate five grocery related websites. One being Tesco.com
along with two other UK sites and two local sites. The four other sites that were evaluated besides
Tesco.com were:
www.Sainsbury.com
www.ASDA.com
www.Trinitrolley.com
www.Trinifood.com
These sites were evaluated depending on the following criteria and were scored out of 10, where 0 not available at all, 1 - extremely poorly represented, 10- extremely well represented
1.
2.
3.
4.
First Impressions
Navigation
Content
Making Contact
20
E-Business
Making contact- for this criteria, Tesco ranked first with a score of 48, followed by ASDA and
Sainsbury both gaining a score of 45 and 44 respectively. Tesco has an entire web page of contacts
numbers and forms for every department they had. This gave them the advantage over the other sites
that has contact numbers but very little. Trinifood ranked last again when it came to contact with a
score of 24 because there was one contact number available on the site and they were slow on
responding to messages sent via their form compared to the other sites.
Conclusion
From the total score of the evaluation sheet, Tesco ranked the highest with a score of 291, followed
by Sainsbury with 271, then ASDA with 282, Trinitrolley with 222 and lastly Trinifood with 172.
From the findings and analysis of both the local and the UK website, one can gather that the UK
sites are much better than the local. They are much larger, more user friendly and a lot livelier than
the local websites, when you visit those sites there is a feeling of wanting more. On the other hand,
visiting those local site makes you think twice before shopping, because it is boring, has little
content and because of the site has low popularity, it makes you question the security of the site and
its ability to conduct secure credit card transactions.
Social
21
E-Business
Economic
Falling economy can cause an increase
in the amount of goods customer buy
online since it is said to be cheaper
Technological
More customers are choosing to
purchase online
Tesco is providing customers with
online mobile app
Sainsbury
ASDA
Trinitrolley
Trinifood
URL
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
Contact details
10
10
10
100
83
97
74
54
Ease of use
Site map
10
10
10
10
10
10
Broken links
10
10
10
10
10
10
10
10
10
74
74
75
63
59
1. FIRST IMPRESSIONS
Internal links
23
E-Business
Level of interaction
10
10
Up-to-dateness
10
10
10
10
10
FAQs
10
10
10
10
69
70
65
48
35
10
10
10
10
10
10
10
10
10
10
10
48
44
45
37
24
291
271
282
222
172
4. MAKING CONTACT
Email and other details visible
Response time to enquiries
24
E-Business