E-commerce

Question 1

What are the advantages of e-commerce?

Answer 1

1. Start up costs allegedly ‘lower’
2. Get products to market faster
3. Can browse and compare - consumer +ve
4. Worldwide market as geographical barriers reduced
5. Carry bigger and more varied stock

Question 2

What are the disadvantages of e-commerce?

Answer 2

1. Inability to touch, test etc. - consumer -ve
2. Website development and maintenance costs
3. High returns rates
4. Consumer denied ‘landscape of consumption’ (shop, high street etc.)
5. Economies of distribution - costs more to despatch and deliver than product price
6. Problem estates - certain areas don’t get delivered to due to risk to safety delivery drivers
7. 25% unhappy with delivery time
8. More waste due to more packaging

Question 3

How much is the UK online market worth?

Answer 3

Roughly £50bn. = 15% retail sales

Question 4

How much of the grocery market is online?

Answer 4

5/6% = £7bn

Question 5

How many shop closures were there in 2012?

Answer 5

1779

Question 6

What are the online market shares for the big grocers?

Answer 6

Tesco = 37%
Sainsbury's = 17.4%
ASDA = 17.2%
Ocado = 12%
Waitrose = 3.9%

Question 7

What are cross-mode relationships?

Answer 7

Weltevreden, 2006

1. Neutrality: no interest in e-commerce
2. Modification: Loyal to physical store, occasional e-commerce
3. Complementarity: equal use
4. Substitution: shoppers almost solely e-commerce users

Question 8

What is the ‘e-society’ (Longley et al., 2008)?

Answer 8

Created a geodemographics classification system purely for e-commerce to assess the likelihood that individuals of certain characteristics will use it

Question 9

Who said e-commerce was the death of geography?

Answer 9

Cairncross, 1997

Question 10

What are the 3 factors that mean there is geography to e-commerce?

Answer 10

Age
Income
Urban/Rural dominance

Question 11

How does age affect e-commerce?

Answer 11

Elderly have less internet access - but likely to be less of an issue in the future
Need to know age structure of locations

Question 12

How does income affect e-commerce?

Answer 12

Positive correlation between wealth and e-commerce use: wealthy have greater access to internet

> 90% households with income >£75,000 have grocery shopped online

Question 13

What are the two arguments for urban and rural dominance in e-commerce?

Answer 13

Innovation-Difusion hypothesis

Efficiency hypothesis

Question 14

What is the Innovation-Difusion hypothesis?

Answer 14

E-commerce will be more dominant in urban areas due to greater technology and tech. start ups

Question 15

What is the Efficiency hypothesis?

Answer 15

E-commerce will be more dominant in rural areas due to greater distance from physical stores

Question 16

‘The Client’ case study for understanding e-commerce data:

Answer 16

Clarke et al. (2015)

Sample taken (40% pop.) but includes all stores in Yorkshire and Humberside

Results: high % in rural areas

Found inverse relationship between store accessibility and e-commerce use - geodemographics important influence

Knowledge on access to competitor’s stores important e.g. Flamborough Head: low internet use and poor access to client’s stores, BUT good provision by competitors

Question 17

What are the key drivers for e-commerce use?

Answer 17

Geodemographics (AB group)
Rural effect
Distance to any store
Distance to company store

Question 18

How much of the ‘click & collect’ market does the grocery market occupy?

Answer 18

88%

Question 19

Why have ASDA not entered the convenience market?

Answer 19

Fear it is becoming saturated, so aiming to win the ‘click and collect’ battle - want 1000 stations

Question 20

What are the current ‘click and collect’ locations?

Answer 20

Store car parks
Drive-through stores - Tesco saves £2 a shop doing it this way
Unique collection points e.g. Business park, Reading

Question 21

What are the potential ‘click and collect’ locations?

Answer 21

Petrol stations
Transport hubs e.g. airports, underground
School/Universities
Independent shops: Collect +
Park & Rides
Sports Clubs

Question 22

Why is the underground an emerging new location for ‘click and collect’?

Answer 22

Huge consumer market - targeting commuters who don’t have time to do a shop in an actual store

Question 23

How many ‘click and collects’ are there in undergrounds?

Answer 23

Tesco: 7 initial, plus 8 new ones
Sainsbury’s: 7
Waitrose: 6 - temp. controlled lockers i.e. refrigeration
ASDA: 6

BUT: Tesco and Sainsbury’s set to pull out due to poor sales - surprising as seems prime location

Question 24

What are pop-up stores?

Answer 24

Temporary stores erected for a sole purpose and will then leave
Enter food deserts
Potential for use at events and festivals etc.

Question 25

What are Dark Stores?

Answer 25

Warehouse stlye stores with a supermarket layout open 24/7 for company staff to do online grocery orders

Question 26

Why are Dark Stores becoming more popular?

Answer 26

Idea that can decrease costs from £18bn to £12bn due to economies of scale

Question 27

What is the potential down side to Dark Stores?

Answer 27

Predominantly in the SE - little national expansion - but this means there is room to expand
Now becoming mechanised therefore won’t need staff and costs can be reduced BUT unemployment

Question 28

What did De Blasio (2008) say, contradictory to Clarke et al. (2015)?

Answer 28

Higher e-commerce use in urban areas as those living far away don’t like that can’t test, try etc. before buying

Only time e-commerce use is higher in rural areas is when buying leisure/cultural products e.g. CDs