Investigating Online Business Models For GOGAL Designs
Drivers for Gogal to Enter Online Domain
Investigate online business models to identify a suitable model for GOGAL Designs.Identify and discuss a suitable marketing and promotion strategy and discuss the benefits and challenges of your recommended strategy for GOGAL Designs.Develop a wireframe (using the tools provided on the Study Desk) of the proposed website with at least three pages that shows how it will present to potential customers.Describe and discuss the implications of the legal and ethics issues that might arise in conducting this business online.Explain the technology infrastructure, including the hardware requirements, which would be required.Identify and explain the purpose and function of the type of software that would be suitable for GOGAL Designs.Identify the advantages and challenges of taking this organisation online.
In this era of globalization, organizations have expanded beyond domestic boundaries. There was a time when suppliers and customers were limited to a single geography only. That was the time when majority of the business was done in brick and mortar shops. With the advancements of technology and spread of Internet and e commerce there has been a trend of online shopping. With the penetration of mobile network and smart phones, online shopping has got further push. The companies like Amazon and e-Bay have been able to expand themselves in different parts of the world. This expansion has been possible only because of e commerce (Houghton, 2006). There has been a tremendous growth in ecommerce and digital channels. It has become important for companies to adapt to online channel.As mentioned in the case study, Gogal Design has got appreciation from customers and most of the customers of Gogal are in the age of 18 to 45 years. This is the segment that has huge presence on web and internet. Customers of Gogal have also encouraged Gogal to come online. It is important that Gogal should develop its website through which customers would be able to buy the product. Developing website and starting the distribution would involve certain risks. It is important for management of Gogal to overcome the risk by effective planning.
There would be both internal and external risks to this project. The external risks could be managed by IT Development Company but Gogal would have to manage its internal risks. One of the most important issues would be the change management issue. It is important that Gogal should convenience its employees that this change is for good (Ballantine, 2005). Moreover, Gogal has witnessed a decline in revenue. This could be possible because company has not been able to expand in online domain. Therefore it is important that Gogal should expand into online space and launch its website. The objective of this report is to investigate online business models to identify a suitable model for GOGAL Designs. This report would also focus to discuss legal, ethical and technological challenges that should be taken care of. This report would also highlight the various software, hardware and environmental requirements.
One of the most important drivers for Gogal to enter into online domain is the targeted customers. The company has targeted the customers from 18 to 45 years. This is the technology oriented crowd that focuses to buying products online. This is the crowd that would always want to save some cost and save can be cost using online medium. Today people may not prefer to go around searching some items if they can get those items by a single click on their smart phone. E commerce or online shopping channel is a recommended medium because it is convenient and it is cost effective.
Market Analysis and Competitor Study
Gogal should be able to make up for the reduce revenue if it can gather a customer base through online channel. The company should ensure that it has a market entry strategy in place and it should ensure that it has the required support from internal and external stakeholders of the company. It is also important that Gogal should join hands with a logistic partner which can help Gogal to manage the distribution of goods. One of an important consideration in online business model is to manage logistics and distribution. Smart phones and tablets have further changed the environment of online shopping industry. Therefore it is important that Gogal must also have a mobile application that could be used by customers to make orders. The company must have an android and an i-OS application that could be downloaded by customers for free.
It is also important for Gogal to perform the market analysis and to study the competitors. It is expected that Gogal would have to reduce the prices of its products in order to match the prices of competitors. Therefore, it is important for Gogal to realize and define its revenue model in online channel. It could be possible that in the initial years, Gogal is not able to realize any profit from online channel. In, initial couple of years, Gogal would focus to increase the user base. The revenue model of Gogal in online space can be discussed as:
In business, revenue typically consists of the total amount of money received by the company for goods sold or services provided during a certain time period.Therefore, revenue models are a part of the business mode. Setting up an online business requires a great deal of effort (Rhee, 2010). One of the important concerns is to understand and conceptualize the way revenue would be generated.
It is important that Gogal should not make a sudden jump from brick and mortar business model to e commerce business model. It is important that Gogal must emphasis on e commerce business channel but this transition should happen in phases. The case study highlights that Gogal has presence in 50 cities. Gogal can start the pilot project in couple of cities and then the e commerce project can be rolled out in other regions also.
The business model for Gogal in immediate future would be to start with e commerce in couple of cities. Once the website is ready and company has identified the logistics partner for these cities it should expand in other areas. The business model for short term and long term can be defined as:
All brick and mortar
In next 6 months
20% e commerce, 80% brick and mortar
In next 18 months
50% e commerce, 50 % brick and mortar
The 18 months’ time frame would also enable Gogal to review its expansion into Gogal. The advantages and disadvantages of phased transition can be discussed as:
- The phased form of transition from brick and mortar shops to online space would enable Gogal to learn from its mistakes. For example, Gogal can learn from the mistakes from its pilot project in 2 cities. The company would ensure that the same mistakes are not repeated.
- It would be less costly to have a phased and systematic approach of transition. This would Gogal would be able to use its money effectively.
- Overall it would be less risky to have a phased approach of transition. In this approach, Gogal would always have an option of reverting back to original state. This option may not be present in big bang approach of transition.
- One of the disadvantages with this approach is that it takes a longer time to reach the targeted state of being an established e commerce player.
- Another disadvantage is that competitors would realize the strategy of Gogal and they can change their offerings accordingly.
- This option would include offshoring and outsourcing. This is also a risk.
The above model suggests that in the initial period revenue would be realized with a combination of offline and online medium. This business model is less risk and an effective because model as in the initial period offline business model would be able to provide the investment on online medium space.
Revenue Model for Gogal in Online Space
Marketing and Promotional strategy
It can be said that marketing and promotional strategies would be the key that could determine the success of Gogal in online medium. The designer clothing company is a competitive industry and it is important that Gogal should understand that marketing should not be considered as an overhead function. Marketing would be crucial to popularize the website of Gogal.
It is important that Gogal should focus on internet marketing and social media marketing. Again the targeted customers for Gogal lie in the age group of 18 to 45 years. This is the customer set that uses social media websites like Facebook and Twitter. It is important that Gogal should target customers through social media channels (Anthony, 2007). The media persons of Gogal would have to be heavily involved to support marketing activities of Gogal.
It is also important that Gogal should define a powerful marketing mix that would act as the baseline for marketing strategy of Gogal. The marketing mix that should be used by Gogal in order to perform marketing in online channel and social media channels can be discussed as:
Gogal is known for its high quality products. The products of Google are appreciated by customers. The company would not be changing its product in online channel. The firm has to focus on market development and not product development. Though, it is important that Gogal should ensure that quality of product is not getting compromised in online channel of distribution.
It can be said that pricing strategy is one of the most important strategy. The competition is already high in this industry and it is important that Gogal should focus on pricing strategy. It is important that Gogal should focus to reducing the pricing of its products. It is important that the prices of the product should be kept lower than the prices of competitors. The pricing strategy of Gogal should also focus on discounting pricing. It is important that company should give discounts to customers who would buy the product using online marketspace. It would help Gogal to increase the customer traffic on its website.
E commerce channel or Internet channel would the most important thing for Gogal. It is important that Gogal should shift its focus from offline, brick and mortar space to online space. At present, 100% of revenue is coming from offline sales, it is important that Gogal should visualize a future state in which 80% of the revenue would be coming from online space.
It is important that Gogal must be able to use online channel of promotion. The company should focus heavily on Internet marketing and social media marketing. The company should launch promotional events on social media challenge. The objective of the firm should be to increase the brand awareness through promotional activities.
The wireframe of the website or the website index can be shown as:
The three pages of the website can be shown as:
Contact us Page
Phased Transition for Gogal
The online medium of business would be a good thing for Gogal but there are certain legal and ethical issues that have to be addresses. It is important that the website of Gogal should comply with all the local laws of the states and the national laws. It is important that the website of Gogal should be as per the cyber rules of each of the state in which it would operate. Knowingly or unknowingly, the website of Gogal should not break any legal law. It is also important that all the content put on the website of Gogal is genuine content. The content should not be copied content. It is also important that Gogal should protect its legal right by copyrighting the content on the website. Copyright would ensure that no other competitor can copy the content from the website of Gogal. It is also important that Gogal should not use the copyrighted images while developing the website.
In an e commerce business or electronic business, there are certain ethical concerns that should be handled by the team. The data and privacy concerns of employees should be the most important ethical concerns. It is important that the data and information of the employees of Gogal should be kept confidential. It is also important that Gogal should focus to protect the data of its customers. The personal information of customers would be captured when any user would create the account on the website of company. It is important this information is stored in an encrypted form. It is important that any hacker should not be able to hack into the system of Gogal. The company should have high ethical standards in order to ensure that the personal information of customers is not shared with other companies. The information of all the stakeholders that would include customer and employees should be kept confidential so that customers and employees can continue to trust Gogal.
The presence into online domain does require an initial IT investment. Therefore, it is important that management of Gogal should do a cost benefit analysis before starting the project. The company would have to procure certain tools and devices in order to ensure effective delivery through online channel. The technology requirements for Gogal can be listed as:
First most, it is important that the website of the company should be hosted on a secure server. The website of the company should support following browser
Web browsers – IE8, Firefox, Chrome, Opera and Safari.
At the very basic, the computer system of Gogal must have following configurations:
Vista/Windows 7/ Linux/ Mac as the operating system, 2GB of ram, 160GB of & Hard Drive and the CPU is a Celeron 2.2Ghz.It is also important that Gogal must have a high speed internet connection that would be used by staff of the company to access the online orders.An intranet would be established in the premises of Gogal that would ensure that different departments can communicate with each other using emails.Computers, Tablets or Laptops would be required by the staff.It is recommended that Gogal should establish a separate IT department that would look after the IT requirements of the company
Advantages and Disadvantages of Phased Transition
Software requirements-In terms of software some basic software would be required. These are:Microsoft Office: It would include, Microsoft Outlook, Microsoft Word, Microsoft PowerPoint and Microsoft Excel. It is important that Gogal must buy and procure the original licenses; otherwise it would open itself for legal battle.Adobe Acrobat reader would also be required.
One of the biggest advantages of online model of business is that it can help to reduce the cost. In an online business model, the selling would happen directly from warehouse. Gogal may not be required to maintain the inventory in its physical stores. This way the cost can come down. The inventory holding cost and operations cost would come down so that Gogal can sell the products at reduced cost. The online business has certain advantages but it also bring certain challenges. It is important for organizations to overcome these challenges in order to realize true benefits of e commerce platform. The advantages and challenges of online business can be discussed as:
With online business model, customers would be able to access and place the order 24X7. The customers may not be required to plan the timing and visit the store. They would be able to place the order from their home at midnight or early morning. In fact, customers would be able to place the order when they are travelling.The online business model is much more flexible than brick and mortar business model. The availability and flexibility increases the customer service through greater flexibility (Quinn, 2011).It would also result in heavy cost savings as the middleman would be removed.The online business model is process dependent business model and it is less dependent on people. Therefore online business model would bring more professionalism.The online business model is also environmental friendly as it results in paper saving.The online business model would also enable Gogal to handle the business model from anywhere.
One of the most important challenges in online business is that the competition is very high in this model. The companies have to be really efficient and responsive in order to maintain their businesses on online model.The online business model is totally dependent on technology. It requires a string technology support from back end in order to ensure that business is up and running 24X7 (Maqsood, 2009).It is always difficult to manage the logistics and distribution in online model of business. Gogal must have a partnership with specialized logistics vendors who can help Gogal to reach out to customers. It creates a dependency on third party.A great deal of marketing is required to increase the awareness about the online business model. It is always difficult to reach out to customers and marketing on Internet would have its own cost impacts.
The above paper discusses the online business model of Gogal. As discussed above, Gogal should go ahead with its decision of website development. Gogal should take a phased manner of transformation in which Gogal would start the pilot in 2 cities and gradually other regions would be added to the project of online expansion. It is also important that Gogal should complete the process of procurement before starting the project. At the same time, Gogal must also focus on training of its employees. It is important that the employees of Gogal must be given training of computer system and soft skills. With the above discussion it can be said that the decision to move online is a wise decision. Now, it depends on the way this decision is executed. It is important that a plan should be developed that would determine the actual steps for Gogal to enter into online domain. The cost benefit analysis and customer analysis would be key for Gogal to expand into online space.
Marketing and Promotional Strategies
The specific recommendations for Gogal can be discussed as:
- It is recommended that Gogal should focus on phased manner of transformation. It is recommended that the journey form brick and mortar space to online player should be competed in the timeline of 18 months to 2 years.
- It is recommended that company should focus heavily on social media marketing. Internet marketing would be a key for Gogal to expand itself into online domain. The company must focus on Facebook and Twitter as a medium to reach out to customers.
- It is recommended that Gogal should also focus on the mobile application development along with website development. Mobile phones and tablets would be the good devices to connect with customers.
- It is recommended that Gogal must have a strong CRM (Customer Relationship Management) system that would enable Gogal to collect feedback from customers. Probably, Gogal should also focus on incorporating an ERP system into its environment. To adjust to the high cost of ERP system, Gogal can take ERP as a service.
- It is recommended that Gogal must focus on the change management. It could be possible that the employees of Gogal may not like the idea of online expansion. It is recommended that Gogal must include its internal and external stakeholders while implementing this change.
- It is also recommended that Gogal must focus on the security and cyber issues. It is important Gogal must comply with the local cyber laws. The website of the company should also be protected from outside attack through firewalls and antiviruses etc.
- It is recommended that under no condition Gogal shall share the data and information of its customers to outside vendors.
Anthony Eve, (2007) “Development of project management systems”, Industrial and Commercial Training, Vol. 39 Iss: 2, pp.85 – 90
Heidi Winklhofer, Kathryn Houghton, Thomas Chesney (2006), How Advanced are Websites of SME Exporters? An Investigation into Drivers and Inhibitors, in (ed.) International Marketing Research (Advances in International Marketing, Volume 17), Emerald Group Publishing Limited, pp.395-426
Michael R. Ward, Michelle Morganosky (2002), Consumer acquisition of product information and subsequent purchase channel decisions, in Michael R. Baye (ed.) The Economics of the Internet and E-commerce (Advances in Applied Microeconomics, Volume 11), Emerald Group Publishing Limited, pp.231-255
Patrick Scholten, S. Adam Smith (2002), Price dispersion then and now: Evidence from retail and e-tail markets, in Michael R. Baye (ed.) The Economics of the Internet and E- commerce (Advances in Applied Microeconomics, Volume 11), Emerald Group Publishing Limited, pp.63-88
Paul W. Ballantine, (2005) “Effects of interactivity and product information on consumer satisfaction in an online retail setting”, International Journal of Retail & Distribution Management, Vol. 33 Iss: 6, pp.461 – 471
Eddie Rhee (2010), Channel share prediction in direct marketing retailing: The role of relative channel benefits, in Kenneth D. Lawrence, Ronald K. Klimberg (ed.) 7 (Advances in Business and Management Forecasting, Volume 7), Emerald Group Publishing Limited, pp.111-120
Enrique Bigne-Alcaniz, Carla Ruiz-Mafe, Joaquin Aldas-Manzano, Silvia Sanz-Blas, (2008) “Influence of online shopping information dependency and innovativeness on internet shopping adoption”, Online Information Review, Vol. 32 Iss: 5, pp.648 – 667
Eun Young Kim, Youn-Kyung Kim, (2004) “Predicting online purchase intentions for clothing products”, European Journal of Marketing, Vol. 38 Iss: 7, pp.883 – 897
IrynaPentina, AliaksandrAmialchuk, David George Taylor, (2011) “Exploring effects of online shopping experiences on browser satisfaction and e-tail performance”, International Journal of Retail & Distribution Management, Vol. 39 Iss: 10, pp.742 – 758
Jennifer Rowley, (2009) “Online branding strategies of UK fashion retailers”, Internet Research, Vol. 19 Iss: 3, pp.348 – 369
Michael R. Ward, Michelle Morganosky (2002), Consumer acquisition of product information and subsequent purchase channel decisions, in Michael R. Baye (ed.) The Economics of the Internet and E-commerce (Volume 11), Emerald Group Publishing Limited, pp.231-255
Benz, M., & Frey, B. S. (2008). Being Independent is a Great Thing: Subjective Evaluations of SelfÃ¢â‚¬ÂEmployment and Hierarchy. Economica, 75(298), 362-383.
Cameron, K. S., & Quinn, R. E. (2011). Diagnosing and changing organizational culture: Based on the competing values framework. John Wiley & Sons.
Dess G.G., Lumpkin G.T. & Eisner A.B. (2007). Strategic Management: Creating Competitive Advantages. McGraw-Hill/ Irwin
Giessner, S. R., & Schubert, T. W. (2007). High in the hierarchy: How vertical location and judgments of leaders’ power are interrelated. Organizational Behavior and Human Decision Processes, 104(1), 30-44.
Lee, C. L., & Yang, H. J. (2011).Organization structure, competition and performance measurement systems and their joint effects on performance.Management Accounting Research, 22(2), 84-104.
Sasaki Kazuya, Ikeda Naomi, Shimizu Hiroko, (2004) “Handling evaluated by visual information to consider web-consumers”, International Journal of Clothing Science and Technology, Vol. 16 Iss: 1/2, pp.153 – 162
TayyabMaqsood, (2009) “Knowledge Management in Project-based Companies: An Organic Perspective”, International Journal of Managing Projects in Business, Vol. 2 Iss: 2, pp.318 – 320
Yingjiao Xu, V. Ann Paulins, (2005) “College students’ attitudes toward shopping online for apparel products: Exploring a rural versus urban campus”, Journal of Fashion Marketing and Management, Vol. 9 Iss: 4, pp.420 – 433