Phenomenon or Context of Research. The growth of ecommerce for the past decade

Phenomenon or Context of Research
Even after being modernized, some substantial time after the so called internet revolution, electronic commerce (e-commerce) remains a moderately new, rising and constantly shifting area of business management and information technology. The spread of high-speed internet among communities and the propagation of electronic commerce (e-commerce) among businesses create both opportunities and challenges for business in a small town and rural areas. E-commerce have played a role in reducing several disadvantages coupled with a secluded location by decreasing marketing, communication, and information costs and making an increase in access to lower cost suppliers and services. On the other hand, geographically isolated businesses have found stiff competition for their local (traditional) customers from nonlocal internet businesses. This section seek to look at hoe e-commerce growth was in last decades, whether ecommerce will be taking over physical store in time, and look at how e-commerce will be in the next 5 to 10 years among other fundamental factors related to e-commerce.
Information and communication technology (ICT) has become a threat to many rural businesses which have left them with no option but to adapt to e-commerce strategy. If one is to define e-commerce in a simple way, one can say that it’s use of the internet to market and sell goods and services. On the other hand it’s much broader and includes the electronic exchange of information, goods, service as well payments and creation and maintenance of web-based relations (Plunkett, 2011). E-commerce have suited the business in a perfect manner since it may even be involved in the design, finance, marketing, production, invention as well distribution and service aspects of a business activities.
The growth of ecommerce for the past decade
Before one digs deep into ecommerce, it is vital to understand different terms that are applicable as well asses their origin and usage. According to Vladimi chief editor of the international journal of electronic commerce states that electronic commerce is sharing business information, maintaining the business relations as well conduction the transactions by means of telecommunications networks. Though this mode of business is being known to many in the modern days, electronic commerce existed for over 40 years, where it originated from electronic transmission of messages during the Berlin airlift in 1948 (Jennings,1998).
E-commerce then rose to another level of electro data interchange (EDI) and in the 1960s there was the first attempt of suing common electronic data format but at this time, the format could only be used for purchasing, finance data and transportation, and they were used basically for intra-industry transactions but later in 1970s that work began for national Electronic data interchange (EDI) which developed well in 1990s
For the past decades, ecommerce was presented inform of EDI which was electronic transfer of a standardized business transaction between a sender and a receiver computer over some kind of private network or values added network(VAN). During this epoch, both side ought to have the same application software and the data would be exchanged in an extremely meticulous format. Though there were challenges in learning that mode of business, electronic commerce is moving at a rapid speed to the use of the internet where e-commerce have taken another dimension and change is felt in business.
In the modern days, e-commerce has taken place in business and the question on whether it will take the physical store starts to mingle in peoples mind. E-commerce has made it possible for small retailers to find a more suitable business since they are in a position to sell their products online within the growing e-commerce market. Some of the reason why e-commerce business in moving at an alarming rate, is due to its free-style where anyone interested fits the market. For instance, one can find new clients through more widespread advertising opportunities, communicate with clients more efficiently via customers email lists and newsletters, buy and sell products to and from wider market.
Though people may like to dwell in the world of market as it grows, it is crucial to note that for one to do well in e-commerce, one must have knowledge in computer and have the software’s, be able to apply technology to sales and marketing and this can be achieved by designing websites and develop a capacity that fill the ship orders, response to return and replace inventories (Timmers, 1999).
Growth in e-commerce is still intense since this method of trading has enabled small business to expand their selling capabilities beyond local downtowns as well across the nation. Just by creating websites and introducing the products online, many business men and women have benefited from it a product of introduction of e-commerce in the world of business which has made it possible to unite people from all ethnic to a single world “internet world”.
According to statistics, online shopping has become increasingly popular for the past decades. For instance, during the year 2012, the U.S. e-commerce sales amounted to 289 billion U.S. dollars different from that of 2011 where sales was 256 billion U.S. dollars. The websites that seemed to have generated more than one third of the U.S. e-commerce were travel and flight booking websites in the year 2012 where the websites earned 186.2 billion U.S dollars. According to e-commerce market forecast, online retailing in the Unites States will reach 3671.9 billion U.S. dollars in 2016 simultaneously the U.S. digital shoppers is also expected to grow from 137 million in 2010 to 175 million in 2016 according the estimate by the Marketers.
Online marketing is becoming more often to people more so in the United States. For instance, statistics shows that United States increased to 175 million in 2005 from 170 million while the population is about 300 million. This proves that over half the population of the United States is shopping online as the numbers increase at an alarming rate, which predicts total different in five years to come, perhaps everything will be done online.
Amazon.com is also another popular online shopping that was founded in 1995.the site work on bookstore. Due to the increased number on internet shopping, the site has as well diverted from a single business to that is shopping to other retail goods and consumer electronics. The market in Amazon has increased its profit online, since they were in a position to generate more than 61.9 billion U.S dollars in revenue from 2007 to 2012 which shows that the revenue has more that tripled within a period on 5 years.
Research Problem and its Significant
However, given the predicted growth and strong outlook of the online shopping, luxury brands may not be utilizing the e-commerce business model effectively and there are common inconsistencies amongst different luxury brands. For example, Gucci only sells their leather goods online, which is only one category within their entire product offering. While Tiffany & Co has a solid e-commerce platform where customer can browse and purchase any items online.
Research Objective
Okonkwo (2010) contribute to the problem by studying the best practices to be implemented to ensure luxury brands can sustain online. In addition, Okonkwo also explored the common barriers to entry including the protection of luxury brand’s heritage and exclusiveness. Furthermore Mcmahon, Kay & Morley (2011) also studied touched on how luxury brands can adopt certain online strategies that will enable luxury brands to strength their position in the market. These studies only provide a general overview as it does not explore specific elements as to why there are different approaches of different brands.
To address these limitations, the objective of the propose study is to: (i) explore the different internet strategies of luxury brand owners (ii) identify reasons as to why different brand owners use the internet differently. By formulating a clear concept map on elements to be considered on a website, the study will involve a survey study to understand what elements are considered from different brand owners to penetrate the market or enhance the brand image. The study will also examine whether or how the online strategy can will impact the structure and composition of luxury online websites as well as the marketing strategies it undertakes indirectly or directly.
Research Stakeholders
Luxury Brand Owners – will provide useful information that will enable brand owners to better formulate an ecommerce platform and improvement in marketing
Luxury Brand Consultants – research questions that will further contribute to the best practices for luxury brand owners
Research Questions
To explore the above objectives, the study will seek to answer the following research questions:
What are the main reasons why luxury brand owners establish an online platform?
Why is there a different approach in internet marketing strategies amongst different brand owners?
Do luxury marketers tend to focus more on brand building in developing markets (e.g., China) as compared to developed markets (e.g., Europe)?
Do luxury marketers of hedonic products tend to focus more on brand building in developing markets as compared to utilitarian products?
Do heritage luxury marketers tend to focus more on brand building in developing markets as compared to contemporary luxury marketers?
1.5 Proposal Outline
The structure of this proposal is to introduce the research scope in chapter 1. Following with Chapter 2 where current literatures of similar topics will be explored and evaluated. Chapter 3 will build on the literature reviews and to come up with a concept map of this study and research paradigm. Chapter 4 will include a detailed description of research methods, work plan and associated design components. This will be followed by an outline of expected deliverables in Chapter 5.
Literature Review
There are many literature and touches on the idea of enhancing luxury online and a various number of internet strategies used in the cyberspace. The idea of this chapter is to explore what areas has been explored and approach taken by previous studies and also what current implications has been bough to attention to the current state.
Elements that will impact luxury experience for luxury brand owners
In the past few years, luxury goods companies such as Burberry, Dior, Armani, Dolce & Gabbana, Gucci and Louis Vuitton have focused substantial attention on online marketing and sales channels to tangible effect. Kapferer (2012) stated that at first, many were worried and feared that e-commerce may diminish their brands’ integrity or that consumers would be less likely to purchase expensive products without seeing them first. However, that was not the case and customers are perfectly comfortable in buying all manner of luxury items online, and their online experience plays an important role in their buying decisions. Prior studies do discusses the elements of an e-commerce website that will impact luxury experience for luxury brand owners and the positive impacts on brand are also discussed.
Several elements on a luxury brand’s website have an impact on the luxury experience for luxury brand owners. The first one is Personalization – Okonkwo (2010) pointed out that an integral part of luxury marketing is personal touch. It is imperative for luxury brands to create a compelling and personal experience online. Personalization simply means delivering the most relevant and engaging content such as product information, articles and images, for all the visitors to the website page in real time, or for all recipients of an email from a luxury brand. Generally, personalized offers tempt consumers to make further purchases online as customers look for more direct online relationships with the brands they buy. Few companies do true personalization in the luxury space for instance Louis Vuitton. Louis Vuitton’s use of personalized e-commerce clearly shows how luxury brands can preserve their elite and exclusive the shopping experience and aspirational brand image online. Using its Mon Monogram application, Louis Vuitton has been able to offer its traditional personalized service to its community of users in face book. Users discuss product purchase to much greater extent compared to other post topics, and this suggests that the application is helps to maintain Louis Vuitton’s luxurious brand image (Kapferer, 2012).
Visuals – Sight is not only the most effective, but also the most powerful medium of catching the interesting of the web-shop visitor. Typically, visual tools consist of picture, color scheme, video films, color scheme, interactive media, text font, 3D product view, possibility to zoom, full screen mode and graphics (Okonkwo, 2010). The homepage needs to be designed such that it creates a high-impact and strengthens the brand’s luxury features, like heritage and personality, because this is the first contact the site visitor has with the brand together with its web-shop. In addition, this page must be updated frequently and keep a consistent level of unique features. When redesigning or updating the website, shutting it down or replacing it with a coming soon message is not a good alternative, since this would affect the customer’s experience with the brand negatively. The messages on the homepage have to be coherent and consistent with the brand’s offline communication strategies or else it may lead to confusion for the consumers.
Dahlen, Lange and Smith (2010) observed that videos are also essential since they add excitement and color to the web-shop, awakens the online visitors’ attention and in turn, make him/her stay longer on the website. Moreover, the use of video also adds to the customer’s recollection of the website and return visits. The clips have to be short and understand, and have a quick downloading time. The use of interactive animation is also an essential way of enhancing the web atmosphere. Interactive animations may include online flip-open catalogues and providing an avatar that the online visitor can modify to her own preferred size and see how a garment/apparel fits. Another visual element is color, and it is primarily vital because product features are most enhanced by not only the quality of their images and their position, but also by their color scheme. The appropriate color chosen for the homepage has to be applied on the sub-pages to ensure there is a balanced result. The website should be stylish and clean, and contain good and clear photographs, and most importantly have the typical colors of the brand. For instance, for Burberry, the expected colors should be red, beige and black. All the products should be shown in a neat and informative way, and there should be no flash, and the website should have an English countryside influence since it is an English brand. Moreover, there should be some empty space left on all or many of the web pages to achieve a harmonious effect.
Close to the product, there are usually some information presented, and this text ought to be short, precise and easy to read. In addition, the language, tone, text size and font have to be consistent throughout the entire website and appropriate/suitable for that particular brand. Furthermore, a product text should not exceed three sentences. Some essential tools used for selling luxury goods online include zoom and 3D since they provide a much greater visualization of the item, and also empower the customer to see the item as they like to (Kapferer, 2012).
Sound – In any physical store, music is often used to evoke the customers’ subconscious feelings as Okonkwo (2010) observed. Various feelings are evoked different sorts of music for instance, funky and loud music stimulates customers to purchase on impulse whilst fast music causes high shopping traffic. In addition, well-known sounds like waterfall and bird singing could evoke emotions that help to enhance purchasing or buying. This tool can be applied in online luxury stores. The most effective way of using sound is to ensuring that it is appropriate for the brand’s personality and what it is associated with. Nevertheless, it is imperative to have clear control tools to allow the visitor do adjustments.
Usability – Clarke and Flaherty (2005) stated that the foundation of a website is usability, concerning functionality, interactivity and navigation. These qualities can have a major effect on a luxury web-shop’s atmosphere. Functionality in e retailing involves the consumer experiencing the basics of the website for instance the ease of navigation, quick-downloads, uncluttered structure, and speedy and secure transactions. In general, the website should work really well.
The degree of the website’s usability is typically evaluated or assessed by its application of tools, which facilitate the navigation, operation speed and the entire web-atmosphere. Among other things, navigational tools consist of suitable layout and design of the website, as well as elements such as full-screen mode and the possibility of returning to the homepage from all the sub-pages. Features involving functionality add to the easiness and simplicity of the shopping process. Interactive tools should be used with a total focus on the brand’s equity and personality. Besides, the selection of usability tools should reflect the brand’s core values and purpose, and enhance the online visitor’s experience (Scholz, 2012). In addition to visual effects, sound and usability, the website for the luxury brands should not contain any commercials such as blinking advertisements and banners, since these will make it look cheap and in turn, lower the brand status.
Positive impact to brand
One of the important positive impacts of these elements is that they will facilitate a memorable experience, which supports and establishes an emotional connection with the customers. Secondly, these elements create a sense or feeling of satisfaction with regard to the brand. This is primarily because the easy navigation and the use of suitable colors among other elements, tempts consumers to buy items from that site. Thirdly, these elements help to increase or improve the brand value and status in the mind of the consumers. Fourth, these elements play a vital role in enhancing consumer experience with the website, and they are more likely to visit it again. This is because the elements create an eagerness to purchase an item and also increases the frequency of store visits (Dahlen, Lange & Smith, 2010). The fifth impact is that the elements also aid in maintaining the heritage of the luxury brand whilst keeping up-to-date with the current trends in fashion.
Moreover, the elements, such as personalization/customization help in maintaining the position of the brand as an exclusive and elite luxury brand that is aimed for a particular audience. Furthermore, the elements allow the brand to maintain its premium price for its high quality products, since luxury goods consumers are often interested in high quality items rather than low price, and this in turn enhances the brand’s image and perception with regard to the customers (Okonkwo, 2010).
Luxury Online
The book ‘Luxury Online’ by Uche Okonkwo provides an analysis of online strategies for luxury industry starting with the development of the internet as means of communicating and distribution products. It provides invaluable insights on the development of luxury online strategies. The book contains a comprehensive evaluation as well as critical assessment of necessary tactics that are needed to ensure proper management of luxury brands on the internet. The author took an objective approach in presenting the reasons that has made the luxury sector to be much reluctant in embracing the internet.
Moreover, Uche tries to clarify some of the misconceptions facing luxury sector whenever it tries to go online, as an effect, the author provides concrete recommendations on how luxury brands can be successful in diving into e-business, apart from highlighting pitfalls that ought to be avoided. As an effect, the book can be considered as being the ground breaking instrument in outlining e-business in luxury fashions from a strategic perspective. It is a guide to those intending to understand how modern luxury industry works, as it is very essential in explaining the business of selling luxury fashions. As an effect, the book has given the luxury industry what it has been lacking for many years. This is because; there have been no competing strategies in luxury fashion industry, so, Uche’s insights on brand management, provides a competitive aspect of brand management in the luxury market both locally and internationally. As an effect, this book contains the most comprehensive analysis of the luxury business for any business person who wants to understand a real luxury business. In reviewing this book, I will follow the outline set by the author by looking at the current state of luxury online fast, then deal with the implementation strategies.
The Current State of Luxury Online
The author has clearly stated the changes that are occurring in business as a result of digital revolution. Such changes are being felt by both technology driven and non-technology driven business sectors. First of all, there have been dramatic changes as a result of technology that are not only taking unexpected forms, but also interconnected forms. This has made the luxury e-business to struggle for its lateness in e-retail adoption.
Moreover, there have been challenges posed by digital, mobile advancement and social order advancements. This is because; current businesses are undergoing drastic transformation as a result of consumer mindset in the determination of their state in luxury. As an effect, luxury clients are demanding the concrete definition of luxury brands that are transcending services, products as well as brand names. However, according to Koiso-Kanttila (2005), the current evolution scenarios shows that the internet is an indispensible media that is encouraging growth prospects as a result of its ability to help in understanding client psychology, behaviors as well as reaching international clients in a cost friendly manner.
Currently, massive opportunities presented by the internet as a way of doing business as well as a tool of encouraging creativity has not yet been utilized by luxury brands. This is because, for many years, luxury industry has been decried as being a late comer in the adoption of internet along with other interactive digital technologies that can be used in marketing. However, Koiso-Kanttila (2005) puts the blame on the lack of commitment in the integration of advanced business strategies into practice in luxury industry. Though luxury industry is renowned for creativity and innovation, luxury brands and digital technologies have not being advancing together as compared to other industries as stated by Uche (2010).
The building foundation of luxury brands has been posing a great threat to the luxury industry, as well. this is because it is built on principles that can’t be ignored or compromised. As an effect, it requires that a culture should accommodate it. This is because, the function of luxury is deeply rooted in the client’s satisfaction based on social stratification. As an effect, the role of luxury brands which has been in place for many years is differentiating new stratification codes. Now, putting this context in the internet, where consumers have total control, there are chances that the move will face lots of resistance for top players, but confusion and anxiety in the bottom players. Though this has been used by Uche (2010) to explain the reason as to why luxury brands are reluctant in the adoption of internet, but Koiso-Kanttila (2005) states that, in the current times, resistance and confusion among clients is a thing of the past as economic recessions that are happening are leading to mandatory online investments as well as marketing strategies based on social webs.
Though luxury industry might adapt some changes occurring in the business arena as a result of technological development, but this should not happen blindly. Meaning, the industry has to reorganize in a manner that the change considers the fact that evolution of luxury industry is based on creativity and business, hence the change will not occur if a sound strategy is absent. However, Dejan, (2007) concurs with Uche that modern business applications are of great help in making luxury industry thrive well in the current internet and digital world. This is because they have ensured easier adaptability as well as application of e-business strategies. This has made luxury industry to show some commitments in adapting internet and digital strategies, for instance, they are using it in educating and reinforcing its client base particularly in China. However, there is a lot to be done especially on matters concerning customer experience along with customer reinforcement through engagement of clients who can access the internet (Xiao, 2008).
In some countries, like South Korea, internet penetration is so high to an extent that internet accessibility is very high. This has ended up improving business internet services like e-banking, as an effect, consumer accessibility is just a click. So, apart from controlling the marketing communication, and massaging, they also have the power to affect the interpretation of other consumers. This has been one thing that luxury brands have not yet accepted.
The concern for luxury brands should not only deal with building a website, or even having the richest content. They should think of coming up with exceptional websites for every one visiting as well as revisiting the site. Luxury should not only be known for being fanatical on matters concerning product perfection, but also on service provision. According to Koiso-Kanttila (2005), most luxury brand websites like RoseBeauty.com have no content, or concentrates more on retail brand forms. This has been adopted by most luxury brands. as it is believed that luxury clients can not be affected by online experiences, and that most of them visit the internet with the aim of saving time. As an effect, most of them have created websites with the aim of telling their clients that they are online, apart from disseminating information about e-retail. As a result, most of them have been failing because they have not considered what clients want. According to Scott (2008), most online customers want to see what the brand can offer on the website, as well as its ability to keep on monitoring its online presence, apart from influencing their perceptions towards everything offered by the brand.
As a result of many websites on the internet, the web users have become scanners in selecting valuable websites apart from filtering out those sites having little or nothing to offer. Basically, when doing this, they are looking for not experience, but exceptional experience. To ensure this exceptional kind of experience, Uche (2010) emphasizes that, the brand has to create a website with virtual kind of environment. This is because; the atmosphere of the website will be very influential in mood generation, which can be achieved through the use of specific tactics that are related to webmospherics.
Webmospherics is a strategy that is defined to be the online atmosphere which should blend well with the product or service offerings online. This is done through Luxemosphere which includes main features that touchs human sense as sight, hear, smell, touch and taste when developing a website. Luxemosphere’s elements mentioned as part of webmospherics should be in a position to influence senses, stimulate moods, apart from enhancing emotions through sensory technologies like animations, audio elements, like music among others.
Though the process of integrating luxemosphere in luxury brands used to be thought of being a very difficult venture, but due to various techniques the process has been implemented. Some of the important elements include, visual, which deals with attraction as well as steering clients towards any brand. This can be achieved by the use of colours, shapes, displays among other visual things. Brand’s essential visual elements include images, texts, home page, colours, and graphics. This is because; the influence of these cannot be under estimated. Other elements include Sound, scent, movement, and flavour.
These elements are very important in online luxury brand marketing. To start wi...