Analysis of the Benefits of E-Commerce on Netto - Paper Example

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University of California, Santa Barbara
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Netto is a multinational discount supermarket headquartered in Denmark. According to Golden (2015), Netto values diversification and considers expansion of its business operations into new market niches as one of the most critical strategies for increasing the company's sales as well as satisfying the unlimited and evolving needs of its customers. As of November 2016, Netto supermarket had already launched its operations in the following 5 countries including Poland, Denmark, Sweden, Germany, and the United Kingdom. However, Netto operated as a stand-alone venture in the United Kingdom before being acquired by Asda in 2010 which later became a joint venture with Sainsbury from 2014 to 2016 (Franco & Regi, 2016).

Asda is therefore responsible for the operation and management of over 193 Netto stores located in the United Kingdom. In the remaining markets, Netto is owned and operated by Dansk Group of Supermarkets whose 19% of its shares are owned by Maersk Group of supermarkets (Tontini & Picolo, 2013). The supermarket also operates an express type of the store in Denmark referred to as Dogn Netto. This Netto's subsidiary operates on a 24 hour and 7 days system but sales fewer products when compared to the regular supermarket stores. However, there are underway plans to revise these stores into the regular Netto supermarket stores to increase the convenience of customers (Golden & Regi, 2015). This paper analyses the benefits of e-commerce for the multinational chain supermarkets and uses different models to analyze the Netto's internal and external business environment.

Benefits of E-commerce for Netto

According to Bansal (2010), the term e-commerce in business organizations refers to all types of its business activities and overall transactions carried out electronically on the internet. Successful business organizations are those that can engage their customers through online platforms while carrying out their sales through the use of a chain of stores located strategically in different places where customers can have a wide access to their services. E-commerce provides wide coverage to a variety of businesses, ranging from consumer-based retail stores, through music or auction sites, to businesses that entail the exchange of goods and services among customers and related corporations (Golden, 2015).

Today, e-commerce is one of the most technological advancement in terms of business operations (Bansal, 2010). The entire technological concept has expanded rapidly over the last decade and is projected to continue at this rate or even increase. Netto provides the best example of a business organization that anticipates continuous blurring of the gap existing between conventional and electronic commerce as most of the company operations continue to be carried out using the internet (Golden & Regi, 2015). Today, the multinational discount Supermarket is increasingly demonstrating the continuous use of B2B strategy to avail its products and services to a large number of customers located all over its market reach.

Bartikowski and Llosa (2003) define Business to Business (B2B) as a unique form of electronic commerce between two or more business organizations as opposed to the traditional exchange of goods between business organizations such as Netto and their customers. B2B companies usually deal with numerous business organizations serving as either customers or suppliers of the goods being manufactured, distributed and sold to the final consumer (Franco & Regi, 2016). Netto's decision to conduct these transactions through e-commerce creates more competitive advantages as opposed to the traditional techniques. A study conducted by Tontini and Picolo (2013) found that e-commerce is usually cheaper, faster and highly convenient than the out-dated techniques which entail battering of goods and services.

Bartikowski and Llosa (2003) argue that the benefits and advantages associated with e-commerce can only be realized in a given business organization if the implementation process occurs properly. These electronic transactions have been in use for over a long period of time in the form of Electronic Data Interchange (EDI) which requires each business that acts as a supplier of a given type of product or service to establish a dedicated data link with its customers. In this case, the e-commerce technique can be a cost-effective system which can lead to the development of automated marketplaces where business suppliers and potential customers meet to carry out mutually beneficial business transactions (Golden, 2015).

Golden and Regi (2015) ascertain that e-commerce has numerous benefits not only to the organization but also to the firms existing and newly acquired customers. To gain a better understand these benefits, this section first explores the advantages of using e-commerce to the business such as Netto and before providing a comprehensive analysis of the benefits that accrue to the company's customers. First, e-commerce benefits the company by increasing its customer base (Franco & Regi, 2016). It is important to understand that customer base is always the most issue of critical concern for many business organizations despite their presence on online platforms.

Most of the business organizations such as Netto do not have to worry about getting a wide access to the best products in town (Tontini & Picolo, 2013). Similarly, the company utilizes e-commerce technique to provide a large variety of goods and services to its customers. Most of these customers can also come back upon the need to purchase or utilize the service offered by Netto. Secondly, e-commerce benefits Netto supermarkets and its retail stores through continuous growth in the company overall sales. Online platforms which are depended on e-commerce systems ensures that business organizations such as Netto do not suffer from the challenges of managing an offline store and increases their sales volume to generate higher net profit margins due to having a wide access of online consumers (Bartikowski & Llosa, 2003).

According to Bansal (2010), e-commerce enables Netto to distribute its products to cover all its online and offline stores to increase the efficiency and convenience of consumers' experience. The fact that e-commerce enables the company to have a worldwide presence result in increased sales. Thirdly e-commerce systems are beneficial to Netto supermarkets as it helps the company to ensure that its goods and services are available throughout the year and can be easily accessed (Golden, 2015). E-commerce does not expose a business to weather and physical challenges associated with the traditional mechanisms of distributing goods from manufacturers to the final consumers thus helping to ensure that the company profits continue increasing.

The fourth benefit of e-commerce on Netto's business model is the continuous expansion of the companys business reach (Tontini & Picolo, 2013). E-commerce allows the business to get a wide access to different online language translation tools which helps in transforming the business model and business activities of the company into different languages that can be understood by the company customers located in different regions of the world. Therefore e-commerce helps Netto Supermarkets to get access to the most appropriate marketing tools which helps in ensuring that each and every customer around the world get access to the supermarket's website, products as well as the company information without necessarily leaving his or her home (Franco & Regi, 2016).

Nevertheless, e-commerce also provides a wide opportunity for business organizations with an online presence such as Netto to conduct surveys that can enable them to set recurring payment models which enables them to find a manufacturer that best suits their demands (Franco & Regi, 2016). This initiative allows the billing process to be conducted in a recurring manner as payments are also received in a similar way. Lastly, e-commerce systems allow Netto to conduct instant transactions which help the company to save on the time wasted while waiting for the check to clear or waiting for more than one month for other types of company payments to mature (Tontini & Picolo, 2013). An E-commerce system requires transactions to be cleared immediately or approximately three days for the money to mature through the ordinary banking systems.

Comparatively, there are numerous benefits that accrue to customers of a given business organization using e-commerce in its business model such as Netto group of supermarkets (Franco & Regi, 2016). First, e-commerce is a convenient system when it comes to Netto customers' experience. In this case, most of the products needed by the customer are always readily available on the internet. As a result, customers are required to search for their preferred products through the use of the most appropriate search engines as every alternative of the required products presents itself in a well-structured list. This process can only take few seconds as the customer moves forward to order, pay and order for the delivery of his preferred product (Tontini & Picolo, 2013). Customers experience is also made convenient in the manner that this electronically enabled system allows consumers to exchange goods and services without incurring any form of barriers in terms of time and distance.

Secondly, integration of e-commerce systems in the company processes results in time-saving which is a great advantage to its customers (Franco & Regi, 2016). In addition, the customer does not need to leave his or her home to visit the nearest supermarket in a given town to purchase the products he or she needs. The integration of e-commerce in Netto's stores saw the company move its business transactions online which enables them to provide their full line as well as utilizing online warehouses where customers can locate their preferred products without wasting time. Thirdly, the use of e-commerce in Netto's system provides a variety of alternatives and substitutes that customers can choose from (Tontini & Picolo, 2013).

According to Bansal (2010), consumers do not need to visit one store to another to compare the quality, quantity, and the price of different products since e-commerce offers a wide opportunity to source information regarding a company product, carry out the necessary comparison and make viable decisions on whether to purchase the product or not. The online store usually contains a full stock of the products demanded by a customer when compared to physical stores which usually suffer from the challenge of limited space hence cannot store all varieties of a given product demanded by a customer. The fourth benefit that accrues to customers whose company values e-commerce is the option to carry out easy and faster comparison (Franco & Regi, 2016). Online products are usually presented with all specifications which enable customers to carry out simple and fast analysis and keep on coming for more of the same product.

Nevertheless, e-commerce increases the probability of a customer to find reviews regarding a given product being offered by a business organization such as Netto (Bartikowski & Llosa, 2003) Customer reviews come as a result of high competition between different companies and enables customers to make the best choices regarding different products. These reviews can be either good or bad based on the experience of the customer. Lastly, online business transactions provide customers with a large opportunity to land for different forms of coupons and deals. These deals come as a result of stiff competition be...

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