THE IMPACT OF E-COMMERCE: Analysis of Marks & Spencer and FEDEX
Dr. Tanvir Orakzai
July 07, 2006
The arrival of information technology has given rise to countless applications in a variety of fields. This world without borders provides every thing, ranging from finding free information to shopping online, trading stocks and entertainment. Information is the most important battlefield of business as we move into the next century. Electronic commerce provides the capability of buying and selling products and information on the Internet. Electronic commerce is buying and selling of goods and services and the transfer of funds, through digital communication. According to the United States Department of Commerce (2002) the volume of business-to-business commerce increased from US $38 billion in 1997 to US$300 billion in 2002. Jupiter Communications mentioned that the growth of consumer-to-consumer commerce has grown from US $7 billion in 1996 to US $41 billion by 2002. The online consumer market in Europe alone will grow from €29 billion in 2003 to €117 billion in 2009. At present, 61 percent of the European Internet users are buying online; and spending an average of €843 per buyer. The reason for this growth is improved broadband connections and easy access to information.
Marks and Spencer
Marks and Spencer started business as a chain of "penny bazaars" founded by Thomas Spencer, but with the passage of time it became a household name. In the 20th century it made a reputation of selling only the British made goods. M&S entered in stronger relation with the local manufactures selling local goods under “St Michael” brand. The company main emphasis is on quality with a reputation for fair value for money.
Looking at success M&S decided to sell online. The management believed that they already have 24 million customers; tapping only on friction of them will create extra revenue. Marks ventured into E-Commerce in alliance with Confetti Network. M&S traditional strategy is customer focused. It also made alliances with Microsoft, Open and Tele-west with the intention of attracting more customers and making itself a multi-channel retailer. There were a number of planes to develop more products and commitments over the Internet, however within a year, excluding other losses, M&S lost about 690 jobs; while the losses related to direct catalogue amounted to 38.6 million pound. For M&S this E- adventure proved a fatal blow even though it was riding the waves of success for the last 100 years. Being unable to cop with its E-Commerce, it signed a three years agreements with MSN and the BBC in 2000 to take care of the problem.
There have been several reasons for this failure. The first reason was M&S assumption that 24 million customers will automatically come online which did not happen. Marks and Spencer normally deals in women clothing making it a major segment of their business. Women are more particular about their dress. No matter how nice clothing looks over the Internet, it lacks tangibility. In traditional shopping; it is easy to check and re-check, change the color and feel the quality of the garment; which is not possible over the Internet. M&S sell casual dress; but its market share is not that high to pull the youngsters from other brands. The Internet shoppers are normally younger people, who are more at ease to check the price on various websites, before plunging into shopping. The middle age group and women are normally less interested and less experienced in
E- Shopping. It was M&S in-ability to understand, how customers shop online that it lost its E-adventure.
FEDEX
Frederick Smith established the company in 1971. In 10th year of its inception, FedEx revenue reached US$ one billion, which made FedEx the first US Company to reach the mark of billion dollars. At the end of 1997 FedEx revenue reached $10.3 billion; in 1998 FedEx became the undisputed leader of package and delivery business with 43 percent market share. The emergence of Electronic Commerce in late 1990s set a new stage for supply chain management goals.
By launching E commerce FedEx allowed to fly lobster to flowers and surgical equipment across the globe in no time. Even though its competitor UPS and DHL were not behind, but FDX was ahead of them due to its excellent business strategy added with information technology. FedEx pioneered Web based package tracking. It initiated online catalogs which enabled its customers to incorporate directly from the site through. This real time global tracking and tracing systems allowed retailers and customers to track their package progress. By using E- Commerce technologies FedEx encouraged the growth of content-driven technologies integrating it in many Web sites under merchant brands. It was this strategy that opened new markets for FedEx to control the cost. In early 1990s FedEx also worked with Marimba to build industrial-strength package delivery monitoring capabilities for merchants. Thus we can say that FedEx use of IT has made it success story.
The use of IT is offering manufacturers, supplier and customers opportunities to shorten the time period and bypass the middleman making transactions and delivery swift. It is also shortening the distributions channel helping to develop new products and services for current and potential customers. The impact of E-commerce is enormous and future will bring many more possibilities for all the business sectors. There will be failures as happened in the case of M&S, but we must remember that E- commerce needs right business strategy with right people and right timing, if all click together, successful E-commerce takes place.
Marks and Spencer
Marks and Spencer started business as a chain of "penny bazaars" founded by Thomas Spencer, but with the passage of time it became a household name. In the 20th century it made a reputation of selling only the British made goods. M&S entered in stronger relation with the local manufactures selling local goods under “St Michael” brand. The company main emphasis is on quality with a reputation for fair value for money.
Looking at success M&S decided to sell online. The management believed that they already have 24 million customers; tapping only on friction of them will create extra revenue. Marks ventured into E-Commerce in alliance with Confetti Network. M&S traditional strategy is customer focused. It also made alliances with Microsoft, Open and Tele-west with the intention of attracting more customers and making itself a multi-channel retailer. There were a number of planes to develop more products and commitments over the Internet, however within a year, excluding other losses, M&S lost about 690 jobs; while the losses related to direct catalogue amounted to 38.6 million pound. For M&S this E- adventure proved a fatal blow even though it was riding the waves of success for the last 100 years. Being unable to cop with its E-Commerce, it signed a three years agreements with MSN and the BBC in 2000 to take care of the problem.
There have been several reasons for this failure. The first reason was M&S assumption that 24 million customers will automatically come online which did not happen. Marks and Spencer normally deals in women clothing making it a major segment of their business. Women are more particular about their dress. No matter how nice clothing looks over the Internet, it lacks tangibility. In traditional shopping; it is easy to check and re-check, change the color and feel the quality of the garment; which is not possible over the Internet. M&S sell casual dress; but its market share is not that high to pull the youngsters from other brands. The Internet shoppers are normally younger people, who are more at ease to check the price on various websites, before plunging into shopping. The middle age group and women are normally less interested and less experienced in
E- Shopping. It was M&S in-ability to understand, how customers shop online that it lost its E-adventure.
FEDEX
Frederick Smith established the company in 1971. In 10th year of its inception, FedEx revenue reached US$ one billion, which made FedEx the first US Company to reach the mark of billion dollars. At the end of 1997 FedEx revenue reached $10.3 billion; in 1998 FedEx became the undisputed leader of package and delivery business with 43 percent market share. The emergence of Electronic Commerce in late 1990s set a new stage for supply chain management goals.
By launching E commerce FedEx allowed to fly lobster to flowers and surgical equipment across the globe in no time. Even though its competitor UPS and DHL were not behind, but FDX was ahead of them due to its excellent business strategy added with information technology. FedEx pioneered Web based package tracking. It initiated online catalogs which enabled its customers to incorporate directly from the site through. This real time global tracking and tracing systems allowed retailers and customers to track their package progress. By using E- Commerce technologies FedEx encouraged the growth of content-driven technologies integrating it in many Web sites under merchant brands. It was this strategy that opened new markets for FedEx to control the cost. In early 1990s FedEx also worked with Marimba to build industrial-strength package delivery monitoring capabilities for merchants. Thus we can say that FedEx use of IT has made it success story.
The use of IT is offering manufacturers, supplier and customers opportunities to shorten the time period and bypass the middleman making transactions and delivery swift. It is also shortening the distributions channel helping to develop new products and services for current and potential customers. The impact of E-commerce is enormous and future will bring many more possibilities for all the business sectors. There will be failures as happened in the case of M&S, but we must remember that E- commerce needs right business strategy with right people and right timing, if all click together, successful E-commerce takes place.