Value of E-Commerce in Business Success
The demands for online shopping are increasing day by day and it has a great contribution to the economy, focusing on this aspect, this present report has aimed to analyse the contribution of E-commerce to the business success of Woolworths and compare its business process before and after using E-commerce. In this particular context, the key features and value of E-commerce is also discussed in this report.
Table of Contents
In the present era, E-commerce has become one of the most important parts in the economy and in operating online business. Through the implementation of E-commerce, it becomes possible for a business to reach more customers in national, international and global contexts as well. Taking it into consideration, in this present resort, the key features and values of E-commerce are going to be discussed in the context of a renowned retail organisation in Australia, namely, Woolworths. The main objective of this report is to analyse the contribution of E-commerce to the business success of Woolworths and compare its business process before and after using E-commerce.
E-commerce refers to buying as well as selling of services and products online using the internet both nationally and internationally. The key features of E-commerce include larger customer reach, interactive platform, information density, ubiquitous in nature, universal standard and so on (Laudon, and Traver, 2021). Woolworths has launched a new E-commerce platform, namely, ‘Everyday Market’ to enhance its online business process (Woolworths Group, 2021).
An organisation is benefitted from its E-commerce business in a diverse manner. For instance, helps business organisations to provide better customer services by improving brand image and simplifying and increasing efficiency of the business process (Hammersley & Hammersley, M., 2018). E-commerce helps to deliver quality products to the customers in a shorter time and at affordable cost. For example, Woolworth has achieved greater success from its E-commerce business and in 2020, around 500,000 online consumers and since the Covid-19 pandemic period, these customers visit this organisation more frequently than ever before (Woolworths Group, 2021). Although the organisation focuses on technology improvement, focusing on the dramatic positive change in its E-commerce sales and falls in in-store sales, this organisation has put more consideration in its Information Technology (IT) and technological innovation. As a result, this organisation has increased its investment in e-commerce to $103 million from $65 million in the previous financial years (ItNews, 2021).
Contribution of E-commerce in business success
This organisation started its E-commerce based business in 1992 in Sydney. As in this period, there was a limited number of households having computers, it was difficult for this organisation to encourage its customers for online shopping. As per the statistics, till 1996, 34% of the households worldwide owned a computer and only one ninth of them had access to the internet (Australian Bureau of Statistics, 2021). As for this reason, at this time, this organisation has not achieved success from online business. However, after 2000, the number of people accessing computers and the internet has increased and as a result, from this time; mainly from 2000, Woolworths has started to achieve success from its online or E-commerce business. After introducing E-commerce in the business process, the online grocery sales of Woolworths doubled up in 2010 (Australia Food Timeline, 2021). Focusing on this success, this organisation has considered online shopping as a concerning market thread and based on this, it has started to invest on its online business section.
Figure 1: Sales revenue of Woolworths
(Source: Statista, 2021)
The online sale of Woolworths Group has climbed to $3.5 billion in Fiscal Year (FY) 2020 with a 41.8% increase from the previous year (ItNews, 2021). This organisation has announced that its newly introduced “X” digital innovation has helped to increase its sales as it doubles its online capacity. In this similar context, it has been reported that in FY2021, this organisation has recorded $3.5 billion sales in its E-commerce business that is 75% increase year-on-year (ItNews, 2021). Focusing on this success, this organisation has planned to further invest more on its online business operations. On the basis of the success and demands for online sales, this organisation has converted its three stores in Melbourne to online delivery hubs in 2020 (Woolworths Group, 2021). During this pandemic period, this organization has installed micro-fulfilment technology in this eStore to deliver products and service faster by improving accuracy in its online picking process in the panic buying crisis (Woolworths Group, 2021). As a result, Woolworths has become able to achieve significant success based on increased online sales in FY21. Apart from that, along with increasing investment and innovation in the E-commerce section, the online sales of this organisation have also been increased (Statista, 2021). In this particular context, as per the Transaction cost theory, it can be stated that this company has archived economic efficiency by minimising its costs with the help of its E-commerce business model (Wang and Lee, 2017).
Before introducing E-commerce, Woolworths operated its business only in its stores and at this time it also had a smaller business size. Before 1992, this organisation had realised that there was a lack of efficiency in the business process and in reaching customers worldwide. During this time, this organisation was only dependent on its offline stores and it has created a barrier in internationalisation (Woolworths Group, 2021). Focusing on this issue, it has introduced E-commerce business to reach more customers. Since this time, it has diversified its business more and simultaneously offer online and offline sales. From this point of view, it can be stated that the overall business process of this company has improved after starting E-commerce process compared to previous time. On the contrary, Woolworths has blamed technical issues as concerning problems in the ordering process and overall E-commerce services mainly on Monday morning (ZD Net, 2021).
It can be concluded from the overall discussion that E-commerce has a significant and positive contribution to the business successes of Woolworth as it increases its online sales since 2020 in a continuous manner. By implementing E-commerce, this retail group has benefited from different aspects such as faster delivery, customer satisfaction and so on. It has also been found that frequent technological innovation has become a core component of its business for improving effectiveness and efficiency of its E-commerce process. However, it has been understood from the overall analysis that, Covid-19 pandemic crisis has played roles as a driving factor for improving the E-commerce based business process of Woolworths. In this similar context, it has helped the society by providing necessary products on time during the pandemic crisis and other critical situations.
It has been seen that mainly technical issues are associated with E-commerce operations in this organisation. Therefore, it can be recommended that, based on the diversification or category of products and services, this organisation can innovate new systems or websites for online shopping. As a result, the capacity of sites can be increased which in turn can help to solve the technical issues during critical situations.
Australia Food Timeline. 2021, 2010 Online grocery sales gain momentum, Available at: <https://australianfoodtimeline.com.au/online-grocery-sales/> [Accessed on: 2nd December 2021]
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ItNews. 2021, Woolworths keeps watch on e-commerce as in-store shopping rebound, Available at: <https://www.itnews.com.au/news/woolworths-keeps-watch-on-e-commerce-as-in-store-shopping-rebounds-561446> [Accessed on: 2nd December 2021]
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Statista, 2021, Total food sales of the Woolworths Group in Australia in the financial years 2016 to 2021, Available at: <https://www.statista.com/statistics/1058341/australia-total-sales-of-food-of-woolworths-group/> [Accessed on: 30th November 2021]
Wang, Y. and Lee, S.H., 2017. The effect of cross-border e-commerce on China’s international trade: An empirical study based on transaction cost analysis. Sustainability, 9(11), p.2028.
Woolworths Group. 2021, Homepage, Available at: <https://www.woolworthsgroup.com.au/page/media/Latest_News/Woolworths_Food_Group%E2%80%99s_plan_to_get_customers_to_put_us_first> [Accessed on: 2nd December 2021]
ZD Net, 2021, Woolworths blames ‘technical issues’ for online ordering system being down, Available at: <https://www.zdnet.com/article/woolworths-blames-technical-issues-for-online-ordering-system-being-down/> [Accessed on: 1st December 2021]