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Tshepo Kgoboko
Abc20-027
Electronic Commerce Assignment
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Task One- Applied Theory
Introduction
Electronic commerce/ecommerce refers to the process of conducting business transactions or
the exchange of goods and services for money carried out through the internet. This type of
commerce opens up both businesses and consumers to a global market where they are spoilt
for choice with picking the type of goods and services to procure while taking into consideration
different quality of goods as well as the cost of those goods and services offered by different
businesses.
Types of Ecommerce
Though the development of electronic commerce has brought about vast changes to the
business world, it still has the familiar framework of traditional commerce, particularly when
determining the type of trade taking place. This brings us to the types of Ecommerce. The four
conventional models of this process include Business to Customer (B2C), Business to Business
(B2B), Customer to Customer (C2C) and Customer to Business (C2B) with the most common
forms of ecommerce being the B2B and B2C which will be further explained.
Business to Consumer (B2C) Model
The B2C model, where businesses offer their goods and services to the end-user with
transactions completed over the internet is the most recognized internet business model. This
mimic the traditional form of acquiring goods and services by customers from businesses by
offering a physical exchange of money for the goods and services. The simple act of ordering
food online from one’s favorite fast-food restaurant or even subscribing to an online streaming
service is an example of the B2C model of ecommerce. To facilitate this efficiently technologies
like Amazon Pay, PayPal, cryptocurrencies and Electronic Fund Transfer have been developed
so that customers have a safe and secure way of procuring goods and services over the internet
from the comfort of their home while giving businesses the opportunity to trade with anyone
regardless of their geographical location. Communication between the business and consumer
has also been developed to almost instantaneous forms with electronic mail services and
messenger application like Facebook Messenger allow the customer to enquire about goods
and services they want and businesses are afforded the opportunity to spend less on traditional
forms of marketing and focus on developing their online presence to appeal to the global
community.
Business to Business (B2B) Model
The B2B model is the second most common model of ecommerce. This is mainly because while
consumers are the end-user of the goods and services produced by these businesses, business
need to trade with each other to exchange raw materials and services that will be used to
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produce their goods and services for the end-user. This model has a higher order value as the
result of businesses buying raw materials in bulk and more repetitively to use in the production
of their own goods and services. An example of a B2B model would be a mining company selling
its unprocessed diamonds to a specialist business that focuses on making processing and
designing custom made jewelry for the end-user.
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FarmersBay
After explaining the two most common models available for use by a business seeking to
venture into ecommerce, analysis shows that it would be advisable to adopt both the B2C and
B2B models of ecommerce to maximize the company’s profits and reach of the ever-expanding
global market.
The B2C model provides FarmersBay access to the end-user by retail sale of their products to
not only consumers located where FarmersBay has its branches located but to anyone around
the world. This business model would also give FarmersBay the opportunity to achieve two of
its goals of promoting agriculture and agri-business and providing public awareness, promotion
and publicity on agriculture through direct interaction with its customers. This is made possible
through targeted marketing where adverts and interactive content is made available to the
public through social media platforms available thereby promoting agriculture on an almost
personal level. The traditional marketing approach would have the business do in-person
marketing which doesn’t have as great a reach as digital marketing as its limited to geographical
location and working hours.
The B2B model gives FarmersBay the opportunity to expand and increase their wholesale
services, providing retail businesses with quality products which are up to standard in larger
quantities. With the already assured established quality of goods and services assured by the
already existing branches, this model gives FarmersBay access to businesses looking to procure
goods and services from trusted suppliers. FarmersBay will then be able to achieve its goals to
protect both producers and consumers involved in agriculture as producers being the main
suppliers of raw materials are given the assurance of having a recurring customer while
consumers are promised quality goods and services sold by FarmersBay have its promise of
quality. This model also helps promote agriculture and agri-business as people will venture into
agriculture knowing FarmersBay will sell their products for them. Agri-business is also
encouraged as people are likely to start their businesses with the intention to retail goods from
FarmersBay empowering the community as a whole.
Value proposition
This is the analysis of how a business’ goods and services fulfill the needs of its customers’
needs. In this value proposition, the B2C and B2B models are given a proper definition of how
these models will help FarmersBay fulfill its customers’ needs.
B2C
With the need for third party involvement replaced by FarmersBay directly providing retail
services to its customers, customers save money as FarmersBay provides the products they
need at prices that haven’t been marked up by resellers to make a profit. FarmersBay stands to
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have an upper hand by adopting this model as it appeals to customers that are looking to make
lower quantity purchases.
B2B
This model gives FarmersBay the upper hand in being a wholesale supplier for smaller business
by providing the simplicity of purchase to retailers. The broad spectrum of products FarmersBay
is dedicated to supplying, with livestock feed, fertilizers, seeds and agricultural tools and
implements as examples, retailers are provided a one stop shop for all the products they may
be interested in buying for retail purposes. The online store would provide these businesses
with a medium of making their own custom orders of the supplies they need while making
informed decisions on buying cost and accessibility of what they wish to buy instantaneously.
REVENUE MODEL
This is the analysis of the ways FarmersBay stands to make profit from the launch of their
online shop.
The most profitable revenue model would be the use of direct sales model. FarmersBay stands
to make the most profit from this model as they’re not only selling to individual farmers but
retail businesses as well which means that orders and payments can be done instantaneously,
increasing FarmersBay’s overall profits. Given the wide range of products offered by
FarmersBay’s catalogue, a broad spectrum of consumers is reached regardless of geographical
location which guarantees increased profits.
FarmersBay should also employ the use of the affiliate income model in the design of the online
store. In cases where a particular product is unavailable on the FarmersBay’s catalogue, referral
links can be used to redirect customers to retailers that stock FarmersBay products. FarmersBay
makes profit from these referrals by seeking remuneration from these businesses in the form of a
percentage from that particular sale. FarmersBay can also partner with organizations they work
with to provide a space to advertise these organizations’ products on FarmersBay’s online store
and receive a small percentage of sales completed by customers that come from the
FarmersBay website.
Another revenue model FarmersBay should incorporate into their online store is the
subscription service model. Through this, customers can be given the opportunity to pay a
discounted fee for a particular order of products they purchase. The subscription service would
ensure that the customers are guaranteed the delivery of those products as they’re paid for
ahead of the time they need them. Subscription terms could be set to monthly, bi-annually or
even annually. This gives FarmersBay the promise of recurring revenue and a higher customer
lifetime balance. Production efficiency I also increased as the exact number of goods to be
produced for sale in a particular time period can be established.
Market Opportunity
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Adopting the B2C B2B business models means that not only will FarmersBay make profits from
sales to individual farmers but to other retail businesses as well, increasing FarmersBay market
share. Dealing with both ends of the wholesale and retail chain ensures multiple streams of
income for FarmersBay.
Competition Environment
An analysis of the competition environment gives us a clear visual of FarmersBay’s main
competitors and how their position as distributors of the same products as FarmersBay sways
the decision of the sector’s client base with regards to the most attractive offers available.
FarmersBay stands to be in direct competition with the Agrifeed Botswana family of stores as
they offer the same goods and services in the same geographical locations as FarmersBay.
Setting FarmersBay apart, however, is the high quality of their goods and services which gives
FarmersBay a higher customer lifetime balance. Other competitors include Opti Feeds
Botswana which provide the same products as FarmersBay at a retail level. FarmersBay’s
biggest competition however stands to be the state-owned Botswana Agricultural Marketing
Board which has been established to provide farmers with agricultural assistance in the form of
seeds, fertilizers and veterinary services as examples at highly subsidized prices.
Venturing into the global agricultural scene through ecommerce by way of an online store
means that FarmersBay’s global competitors are companies that have established a name for
themselves in their native countries which means that it’ll be significantly harder to
breakthrough to those markets and contend for market share in those countries. One example
of this competition is the Nukor Group which has been in the service of providing agricultural
tools and implements for over 60 years with the Tractor Supply Company being the leader of
agricultural wholesale and retail business with their profits reaching into billions.
Competitive Advantage
FarmersBay’s adoption of the B2C and B2B models of ecommerce will give the company an
advantage over their competitors by targeting both ends of the wholesale and retail chain.
FarmersBay will not only make profit from making low quantity sales to individual farmers but
also from selling in bulk to other retail businesses. This dual model gives FarmersBay the upper
hand in expanding their client base over companies that adopt a single model.
FarmersBay being a privately owned company with government parastatals as their main
competitions gives the company the ability to sell its products and services at a global level
where state owned organizations are limited to the borders of their country.
Marketing Strategy
To promote FarmersBay’s products and services to cater for existing customers, new clients
brought by the online store and those without access to internet services, it is advisable to
employ both traditional and digital forms of marketing to appeal to the public at large.
Traditional forms of marketing will include billboards, flyers and radio adverts with the
introduction of the online store included in the marketing to steer people towards use of the
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online store. Digital marketing will require the company to start social media accounts and hire
professional social media marketers to advertise the company’s products and inform the public
on the mission, values and goals of the company to their already established online community.
Organizational Development
This plan shows how work responsibilities will be assigned and the different departments that
will be needed to facilitate FarmersBay’s expansion into the ecommerce sector. A technical
team will need to be put together with experienced people in charge of running the company’s
online store, responding to the company’s computer hardware and software needs to keep the
online store running as necessary. An experienced financial team is also needed to help manage
the company’s foreign exchange transactions. With FarmersBay venturing into the global
market, a logistics department needs to be set up to help deal with the transport of goods to
wherever they may be ordered internationally.
Management team
A team of supervisors will be needed to with each supervisor heading the proposed
departments so that a definitive hierarchical structure is set up. This would help to keep track
of the goals that have been set for the different departments and have employees in those
departments have a skilled professional as an immediate consultant should they come up with
ideas to develop the company’s production, service delivery and global reach.
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Task Two- PESTLE Analysis
FarmersBay PESTLE analysis
A PESTLE analysis is a tool incorporated in the scrutiny of the strengths and weaknesses of an
organization taking into account external factors that affect the business’ running (Perera
.2017). This takes into account the Political, Economic, Social, Technological, Legal and
Environmental factors a business needs to consider to determine market attractiveness,
potential and local industry performance.
Political factors
This factor takes into account how the running of a country and its overall stability influences its
economy. Market attractiveness is determined by the level of peace maintained by a country as
FarmersBay seeks to protect their assets and conduct transactions without fear of losing their
goods and services to acts of war. The level of bureaucracy involved in the country’s regulatory
laws also affect the economy as the company has to take care to avoid dealing in economies
that have invasive regulations and laws which might decrease their profits. Businesses tend to
prefer countries with attractive regulatory laws aimed at providing businesses with a safe and
secure place to run.
Economic factors
Economic factors include the cost of transport, inflation rates and level of competition in the
country. Proper government intervention as with political factors ensures that businesses are
encouraged to set up their branches in those countries as analysis of the economy with taxes,
levies and incentives taken into account. FarmersBay should seek to conduct transactions
where their ability to make profits is maximized.
Social factors
The sociological factors that would affect the business are determined by the cultural values of
the people in the particular region the business wants to conduct business in. The attitudes of
the locals and their ethics towards particular types of businesses are to be considered to
determine the type of marketing a business should consider adopting. Consumer and
purchasing behavior towards the FarmersBay relies on the business’ ability to adapt to the
locality’s values. Education level of the people at large also affects how people will understand
and finally decide to adapt to new ways of commerce.
Technological factors
These factors rely heavily on the technological development of the region a business wants to
be involved in. This would include the advancement of the means of transport readily available
to the business while providing a cost effective and labor efficient way of transporting goods
and services to customers. The development of communication technology in a particular are
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also needs to be takin into account to help the business decide on the appropriate forms of
marketing with availability of internet services favorable to businesses in the ecommerce sector
as most of the business transactions take place online. Technical competency of a particular
area has to be analyzed to asses the type of hardware and software to be procured by
FarmersBay to allow the proper running of the company in that area
Environmental factors
These factors take into account the impact of a particular area on the operations of
FarmersBay. The climate of an area affects the measures taken to protect the goods and
services being transported from weathering. FarmersBay also needs to consider the
environmental standard of the locality they wish to expand to adopt environmentally friendly
practices when carrying out business in those areas. Waste management techniques and
employing the use of eco-friendly technology ensures the safety of the people living in the area.
Legal factors
These factors take into account the impact of a particular area’s regulatory laws as well as legal
protection of goods and services provided by FarmersBay. Intellectual property laws of a
particular area have to be analyzed to ensure that FarmersBay’s products and services cannot be
easily replicated without making sure FarmersBay receives remuneration. FarmersBay adherence
to the laws of a particular area also attracts business from organizations that hold the law as a
judge of character. Consumer protection laws also have to be analyzed to ensure that the
business is not taken advantage of by its consumers
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References
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Düerkop, S. and Huth, M., 2017. Transportation under Threat–A PESTLE Analysis for Critical Logistical
Infrastructures. ICTA2017, p.14.
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