Online Retail Shopping

Table of Contents 1

. Introduction........................................................................................................ 4 1.1

Scope............................................................................................................. 4

1.2

Methodology.................................................................................................. 5

1.2.1

2

1.2.2

Method of administering the questionnaire:...............................................5

1.2.3

Tabulation and Data analysis:.....................................................................6

1.3

Objectives of the Report................................................................................6

1.4

Limitations..................................................................................................... 6

Literature Review:................................................................................................ 6 2.1

Impact of Internet.......................................................................................... 7

2.2

Online Shopping............................................................................................. 9

2.3

Purchasing intention:................................................................................... 10

2.4

Factors Influencing Consumer`s Purchasing Intention.................................10

2.4.1

Security................................................................................................. 10

2.4.2

Time Saving........................................................................................... 11

2.4.3

Website Design/ Features......................................................................12

2.4.4

Convenience.......................................................................................... 13

2.4.5

Online Shoppers in terms of Demography.............................................13

2.5 3

4

Type of data obtained:............................................................................. 5

Return Policies............................................................................................. 13

Impact of Web in retail sectors of developed countries:.....................................14 3.1

Critical factors for determining Popularity in online retail shopping:...........16

3.2

Smartphone and tablet devices are adding a new dimension in retailing:...17

3.3

Shift from store-based retailers to non-store retailers:................................18

3.4

Consumers are being more influenced socially............................................19

3.5

Addressing target consumers individually...................................................19

3.6

Global variation in online retail....................................................................20

3.7

What may be the future scenario?...............................................................22

Overview of Online Shopping services and it’s prevalence in Bangladesh.........24 4.1

Bangladesh Economy Overview...................................................................26

4.2

Market structure of superstores...................................................................27

4.3

Internet and online shopping in Bangladesh................................................28 1

5

Service offering of the select physical and online stores...................................29 5.1

5.1.1

Aarong................................................................................................... 29

5.1.2

Meena Bazar.......................................................................................... 30

5.1.3

Agora..................................................................................................... 30

5.1.4

Rang...................................................................................................... 30

5.1.5

Shwapno................................................................................................ 31

5.2

6

Physical Stores............................................................................................. 29

Online Stores............................................................................................... 31

5.2.1

Rokomari.com........................................................................................ 31

5.2.2

Foodpanda............................................................................................. 32

5.2.3

hatbazarbd.com..................................................................................... 32

5.2.4

HungryNaki.com.................................................................................... 33

5.2.5

Chaldal.com........................................................................................... 33

Analysis of business players: Context in Bangladesh.........................................33 6.1

PEST Analysis............................................................................................... 33

6.1.1

Political.................................................................................................. 34

6.1.2

Economical............................................................................................ 34

6.1.3

Social..................................................................................................... 34

6.1.4

Technological........................................................................................ 35

6.2

GE MATRIX................................................................................................... 35

6.2.1

GE MATRIX............................................................................................. 35

6.2.2

Desirable feature of GE..........................................................................36

6.2.3

Criticism of the GE matrix......................................................................36

6.2.4

ANALYSIS OF GE MATRIX........................................................................37

6.3

BCG MATRIX................................................................................................. 39

6.3.1

Overview............................................................................................... 39

6.3.2

Question Marks:..................................................................................... 39

6.3.3

Stars:..................................................................................................... 40

6.3.4

Cash Cows:............................................................................................ 40

6.3.5

Dogs:..................................................................................................... 41

6.3.6

Limitations:............................................................................................ 41

6.3.7

ANALYSIS OF BCG MATRIX......................................................................41

6.4

ADL MATRIX................................................................................................. 44 2

6.4.1

ADL MATRIX OVERVIEW.........................................................................44

6.4.2

The advantages and disadvantages of the ADL matrix.........................47

6.4.3

Analysis of ADL Matrix...........................................................................48

6.5

Porter’s Five Forces Model:...........................................................................51

6.6

Resources and Capabilities:.........................................................................52

6.7

The 3C’s Model of Kenichi Ohmae:...............................................................52

6.8

Business Canvas Model:...............................................................................55

7

6.8.1

Brick Organization................................................................................. 55

6.8.2

Click Organization:.................................................................................56

Service Marketing Mix 7 P’s Analysis:.................................................................57 7.1

7 p’s Analysis for Click Organization:...........................................................57

7.2

7 p’s Analysis for Brick Organization:...........................................................58

8

Gap Analysis and Proposed Strategies to overcome Gap:..................................59

9

Recommendation:.............................................................................................. 62

10

Conclusion:..................................................................................................... 65

11

APPENDIX........................................................................................................ 67

11.1 QUESTIONAIRE............................................................................................. 67 11.2

References:.................................................................................................. 74

1 . Introduction Retail trade is one of the traditional businesses of Bangladesh. Its expansion is keeping pace with population growth and changes in consumption patterns, which are consistent with the growth of the economy. This expansion has not been structurally organized, 3

because, until recently, retailing had never been perceived as an industry, but rather as an individual or family business entity with a very limited scope of organized expansion. Little to no market information is available on the retail sector, but secondary sources indicate that the size of the food retail sector in Bangladesh could be US$12-14 billion, and the number of retail grocery shops could be around 1 million. Retail is one of the biggest sources of employment (12 percent), and it contributed 13 percent (wholesale and retail trading) to Bangladesh’s GDP. Retail sector, until recently, consisted of only physical stores such as Department stores, Supermarkets, Superstore, Convenience stores, Discount stores and off- price stores, but the advent of internet has changed the situation dramatically. Over the past few years, quite a number of online shopping portals or e-trading platforms launched operations, offering products and services from vegetables, clothes, computer accessories to books and travel tickets. The brick and mortar retail stores also reacted quickly to the changing situation. Many stores have introduced online ordering and payment system and home-delivery system to keep pace with the changed demand. So, apparently the Web has caused quite a stir in the retail sector of Bangladesh. In this report we tried to have an insight into the impact of web in creating service opportunities in the retail sector of Bangladesh.

1.1 Scope Our research endeavors to find out how introduction of internet is shaping the retail sector of Bangladesh. For this purpose we worked on select few physical and online retail stores. Most of these stores operate in Dhaka only while one or two operate in Chittagong and Sylhet also. Hence the conditions of the sector in other parts of the country fall outside the scope of this research. So, naturally our report is not a comprehensive one rather it gives a rough idea about the sector.

1.2 Methodology . In this report we worked with 5 physical and 5 online retail shops— Physical stores Aaron

Online stores Rokomari 4

Agora Meena Bazar Shwapno Rang

Foodpanda Hungrynaki Chaldaal Bdhaat

1.2.1 Type of data obtained:

Both primary and secondary data has been collected for the research purpose. 

Primary data has been collected from the respondents through the survey



questionnaire Secondary data has been collected from the different e-commerce websites and articles / journals

1.2.2

Method of administering the questionnaire:

Survey method: The survey has been conducted mainly among job holders, home makers and students residing in Dhaka, Chittagong and Sylhet metropolitan city. The questionnaire was developed using Google docs and its link was shared by email and different groups of face book likely to contain appropriate respondents. Nature of the questionnaire: The questionnaire has been developed to find out more on the research topic, probing into the objectives of research. The questionnaire includes two parts, multiple choice, and Likert scale questions. These questions have been put in the questionnaire in order to attain a more insightful understanding of the views and attitudes of the users regarding online shopping.

It contains several

questions asking the demographic information about the respondents as well. The questionnaire has been made with simple, direct, and familiar words keeping the respondents in mind.

1.2.3

Tabulation and Data analysis:

Since the questionnaires were created in Google Docs, all the data analysis were done by the program itself. 5

1.3 Objectives of the Report The specific objectives of this research are as follows:     

To analyse the overall situation of retail sector in Bangladesh To determine the relative position of select few online and physical stores in the retail industry To find out influence of internet on retail sector To point out the problems faced by the physical and online stores while conducting their business To suggest possible solutions to the problems

1.4 Limitations This paper has the following limitations: 

The concept of online shopping is still relatively new in Bangladesh and hence



there was a lack of relevant data. Time and resource constraints did not enable the authors to conduct a rigorous



market research. The survey sample was obtained online and is not the true representative of the retail sector of Bangladesh.

2

Literature Review:

In this review we synthesize the current knowledge based on academic literature. The impact of web in retail sector created an opportunity for various organization initially to provide marketing information about their products and services, customer support and later to conduct business transaction with customers. Retail is the sale of goods and services from individuals or businesses to the end-users. Qinghe; Wenyuan and 6

Kaiming (2014) explained that a retailer purchases goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. It covers a wide array enterprises in terms of size, business model and goods.Jhamb and khan (2010) identified the most appropriate retail formats for various items such as food and grocery-supermarket; Health and beauty care services-Supermarket; Clothing and Apparels’- Mall; Entertainment-Mall; WatchesHypermarket;

Pharmaceuticals-Hypermarket;

Mobile,

accessories

&

Services-

Hypermarket; Foot wares-Departmental store.

2.1

Impact of Internet

1990’s, the Internet was viewed as a disruptive transformational technology (Christensen, Anthony, and Roth 1994) with respect to the retail industry. Futurists envisioned that consumers would abandon brick and mortar organizations and buy most products or service over internet. Zwass (1996) predicted that store-based retailers would be replaced by Internet-savvy entrepreneurs who could harness this new technology to provide superior offerings to consumers. Internet is facilitating traditional store based retailers to complement their store offering through web. Wigand and Benjamin (1995) found that the Internet economic model is more efficient at the transaction cost level. Elimination of middlemen in the distribution channel (or disintermediation) also can have a big impact on the market efficiency (Michalski, 1995). Impact of web in retail market can result in additional sales at very low unit cost. Cassar et al. (2000) contended that in a long term perspective, online retailers are expected to achieve a significant cost advantage over their competitors that run their businesses in a traditional way. In addition to the lower cost, the Web also enables higher level of customization to the needs of individual clients (Choi and Winston, 2000). In this way organization is more flexible in to expand different product lines and markets quickly with low investment. It will reduce the communication gap with customer and organization will be able to provide better customer service. Brynjolfsson and Smith (2000) empirically examined prices for books and CDs offered by traditional and online retailers and found that the latter sell products that are on average 9-16 % cheaper. Similarly, Yan and Pei (2009), using a game theoretical model, pointed out that a firm’s 7

performance can be significantly improved after opening an online channel competing with the traditional retail channel. Conversely, Kotha et al. (2004) asserted that web site usability is not a source of competitive advantage, as it can be easily observable and imitated. Customer retention rate will increase with repeated order. Reichheld et al. (2000) stated that customer retention rate is highly and significantly related to a firm’s profits The rich interactive media and database technology of the Web allows for unconstrained awareness, visibility, and opportunity for an organization to promote its products and services (Chen, Motiwala and Khan; 2003). However, impact of web also caused some issues of an ethical nature. Whysall (2000) suggested some of them: customers’ privacy and confidentiality, tracing customers’ email and visited websites, and exclusion of some segments of customers lacking net access. Impact of web in retail sector introduced brick and mortar organizations to multi channel retailing. Levy and Weitz (2009) describe multichannel retailing as the set of activities involved in selling merchandise or services to consumers through more than one channel. That means introduction of web as another channel for retail sector besides physical stores. Impact of web is not confined only as another channel for reaching upto customer. It is becoming the most important tool for customer service. Harris and Ogbonna (2001) concluded that the major retailers try to differentiate themselves from competitors on customer services. Retail sector is facing new challenges and opportunities in the presence of web. The market for store based retailer is limited to the local trading area of the store. With the addition of web the retailer is enabled to exploit economies of expanding market without making any physical store. Aggarwal (2007) Highlights the emergence of organized retailing in India and views the Catalytic effects of retail on Indian Economy. Tusharinani (2007) noted the transformation of traditional and malls taking the lead in attracting consumers in the metro cities. Goyal and Aggarwal (2009) opine that In India, a consuming class is emerging as a result of increasing income levels and dual career families with high 8

disposable incomes. Urban class of Bangladesh is also experiencing the same socio economic growth. With retailers eyeing their presence in market, internet has brought a new dimension in attracting these new consumers. This led us to online shopping.

2.2 Online Shopping Ghayel and Dhingra (2012) affirmed online shopping as the act of purchasing products or services over the internet having the product or service delivered directly to the consumer themselves. The consumer can find information about different models of an item, different colors choice, and different brand choice doing their comparisons before leaving the house. Birkin, Clarke, & Clarke, (2002) described online shopping as a single, homogenous activity, the selling of goods and services via the World Wide Web (www). The low adoption of internet to make purchase in retail stores by Bangladeshi consumers is a big challenge for the industry growth. The use of the web for shopping is culture bound and, therefore its adoption from one country to another is influenced by culture. This view is corroborated by Rogers (1995) who explained that the degree of compatibility of the information technology and its various uses with the values and norms of a social system influences its diffusion pattern in that social system. Suki, Ahmad, & Thyagarajan, (2002) have also indicated that one of the obstacles which limit the development of online retail locally is related to the culture or the behavior of customers when it comes to buying goods and services through web. In Bangladesh the Internet is not compatible with the retailers’ culture of selling through physical stores and consumers’ entrenched behavior of physically visiting the stores, touching, feeling and comparing products before actual purchase is made. Al-Fadhli, (2011) contended that inability of consumers to inspect a product prior to purchase hinders online shopping in Malaysia.

2.3 Purchasing intention: According to business dictionary purchasing intention defined as a plan to purchase a particular good and service in the future. According to Fishbein and Ajzen, purchase

9

intentions are defined as decisions to act (Ajzen, 1975). As studied by Eagly and Chaiken (1993), purchase intention is defined as psychological states which represent the individual’s perception to engage in a particular behavior. According to Howard and Sheth (1967), in its simplest form, predicting purchases rests on the stage preceding actual purchase, and is referred to as “intention to purchase”. There are some various theories results with, purchase intention helps predict following purchase. Sarigiannidis and Kesidou (2009) contend that product involvement positively affects consumers to shop online and It is concluded that privacy have no effect over consumers intentions towards online shopping.

2.4

Factors Influencing Consumer`s Purchasing Intention

2.4.1

Security

A further barrier the adoption of the Internet to make transaction in the retail industry is security concerns by the prospective and actual shoppers. Security is defined as a set of procedures, techniques, and safeguards designed to protect hardware, software, data, and other system resources from unauthorized access, use, modification, or theft (Davis, Bagozzi, & Warshaw, 1989). The impact of web on retail industry is negatively affected by the online shopper’s concern regarding fraud and security. Ratnasingham, (1998) highlighted that fear of online credit card fraud has been one of the major reasons customers have not done more extensive online buying. In addition, Lee & Turban [2005] lamented that consumers cannot physically check the quality of a product or monitor the safety and security of sending sensitive personal and financial information while shopping on the Internet. From the foregoing, security challenge is a real one that should be tackled headlong to encourage more Bangladeshi to adopt online shopping. As users get accustomed with new technology, they learn the usefulness and risks associated with the technology. Torkzadeh and Dhillon (2001) defined perceived risks an assessment of uncertainties or lack of knowledge about the distribution of potential outcomes. Perceived risk is a major challenge for the growth of online shopping in retail sector. De Ruyter, Wetzels, & Kleijnen (2001) argued that while there are other factors 10

affecting consumers’ adoption behavior on the Internet, perceived risk is a barrier to the repatronage and purchase on the Internet. Similarly, Salisbury, Pearson, Pearson, & Miller (2005) affirmed that perceived risk may influence the attitude and behavior of consumers towards the Internet services. Uncertainties about how customers’ financial information is treated by retailers will increase perceived risk associated with online transactions, and reduce their willingness to adopt online shopping. Yang and Jun (2008) found that reliability was the most important dimension for Internet purchasers even when compared to access, ease of use, personalization, security, and credibility. Internet non-purchasers, in contrast, consider security as their most critical concern. Customers actually evaluate a website’s reliability based on whether it provided them with reliable information and safe transactions. Yen and Lu (2008) identified some variables such as efficiency, system availability, privacy and fulfillment as the dimensions of e-service quality. Then they examined the linkages among dimensions of e-service quality, customer satisfaction and loyalty. Results revealed the dimensions of e-service quality directly influence customer satisfaction. Subsequently, customer satisfaction positively affected loyalty. Nevertheless, Cuneyt and Gautam (2004) claimed trust in the internet shopping with advanced technology, and frequent online shopping to the internet being secured as a trustworthy shopping channel.

2.4.2

Time Saving

Time saving is one of the most contributing factors for online shopping. Online shopping can reduce people’s effort and save time. Rohm and Swaminathan (2003) asserted that online shopping saves time during the purchasing of goods and it can eliminate the traveling time required to go to the traditional store. Notwithstanding of that, some argue that the delivery of products or services over online is time consuming. Similarly Corbett, (2011) pointed out that time saving is not the motivating factor for the consumers to shop online because it takes time receiving goods or delivery. But time saving factor can be seen through different dimensions i.e. “person living in Florida can 11

shop at Harrod's in London (through the web) in less time than it takes to visit the local Burdines department store” have concluded that time saving factor was reported to be primary reason among those consumers who have already experienced the online grocery buying (Alba et al. 1997, 2000). So the importance of the time saving factor cannot be neglected as motivation behind online purchasing. Additionally Goldsmith and Bridges emphasize that there is a discrimination between online shopper and non online shoppers, online shoppers are more worried about convenience, time saving and selection whereas non online shoppers are worried about security, privacy and on time delivery (Bridges, Goldsmith and Bridges (2000)). A study by Kamariah and Salwani shows higher website quality can highly influence customers to shop online (Salwani, Online shop, 2005).

2.4.3

Website Design/ Features

Website design and features is one of the most vital influencing factors of online shopping. Shergill

& Chen (2005)

point out that Website

design, website

reliability/fulfillment, website customer service and website security/privacy are the most attractive features which influence the perception of the consumer of online buying. Kamariah and Salwani (2005) claims the higher website quality, the higher consumer intends to shop from internet. Web design quality has important impacts on consumer choice of electronic stores, stated by Liang and Lai (2000). Website design one of the important factor motivating consumers for online shopping. Almost 100,000 online shopper’s surveyed by (Reibstein, 2001) shows that web site design was rated as important factor for online shopping. Another study conducted by Zhang, Dran, Small, and Barcellos (Barcellos, 1999, 2000), and Zhang and Dran (2000) indicated that website design features of the website are important and influencing factors that leads consumers satisfaction and dissatisfaction with a specific website. A study conducted by Yasmin and Nik (2010) shows a significant relationship between online shopping activity and website features. Website design features can be considered as a motivational factor that can create positive or negative feelings with a website. A study by Li and Zhang (2002), if website is designed with quality features it can guide the customers for 12

successful transactions and attract the customers to revisit the website again. However, worse quality website features can also hamper online shopping. According to Liang and Lai (2000), web design quality or website features has direct impact on user to shop online. 2.4.4

Convenience

Convenience factor cites that it is rather easy to browse or search the information through online than the traditional retail shopping. Consumers can easily search product catalog through online but if the consumer look generally for the same product or item in a traditional store manually it is difficult to visit physically and time consuming also. Convenience has always been a prime factor for consumers to shop online. Darian (1987) mention that online shoppers carry multiple benefits in terms of convenience, such as less time consuming, flexibility, very less physical effort etc. Bhatnagar and Ghose (2004) claims for convenience as one of the most important advantage for online shopping. Wilsonz, (2007) affirmed that the major motivation for online purchasing is convince in terms of shop at any time and having bundles of items delivered at door step.

2.4.5

Online Shoppers in terms of Demography

Another aspect of online shopping in retail sector is shoppers in terms of demography. We would like to study demography in terms of age, gender, income and education to identify the purchase behavior related to these terms. Studies have shown that online shoppers mainly consist of people with Higher education and income and working in middle to senior management or professionals (Qinghe; Wenyuan and Kaiming 2010). Miller (1996) claims cyberspace is the domain of young people. Sim and Koi (2002) states as main discriminating factors appeared to be gender and income. Customer segmentation is important for electronic commerce success. Miller (2010) has focused on demographics to show the profile of Internet users.

13

2.5

Return Policies

Product return is an important component of organization’s customer relationship management strategies. Click organizations can differentiate their service by implementing product return policy. Similarly, Petersen and Kumar (2009) point out that current return behavior has an inverted-U relationship with the likelihood of future purchases and customer lifetime value. It is also shown that increase in leniency of return policy enhances trust and convenience and hence leads to a higher likelihood of repeat purchases. However, it also leads to a higher likelihood of repeat returns (Wood 2001). Similarly, Anderson, Hansen, and Simester (2009) show that as the option value of returns is increased, customers are more likely to make repeat purchases. Kushwaha and Shankar (2007b) assert that ignoring customer return behavior in marketing resource allocation decisions may lead to suboptimal outcomes.

3 Impact of Web in retail sectors of developed countries : Online shopping has become an integral part of most consumers’ day to day behavior. Forrester Research, Inc. conducted a survey which shows that more than 40% percent of the population in Western Europe purchase goods online. Moreover, 50% of consumers of Germany, Switzerland and France are doing so. This trend is set to 14

continue with the European average set to rise almost 10 percentage points to 49% by 2015. In the UK and the Netherlands this figures are projected to approach 70% by 2015. In the US, 67% of consumers shop online and online sales are projected to achieve a 10% compound annual growth rate, generating $279 billion by 2015. In developed countries consumers use a number of different channels to make a single purchase. An example of this kind of transaction is researching a product online and then buying it in store. Sue and Lisa (2012) found that more than 80% of all respondents conduct online research before they buy electronics, computers, books, music, and movies. Eighty-eight percent of US respondents said that they research a product online via their PC before

buying (vs. 80% globally) ― and 73% of US

respondents report that they research online when buying clothing, footwear, toys, and health and beauty products (vs. 60% globally). In other words, online research doesn‘t just lead to online purchases, it‘s also critical in leading to purchases through other channels and in driving traffic to physical brick and mortar outlets. One of the major findings from Sue and Lisa (2012) was the self-described sophistication of the online shoppers they surveyed. Many of their respondents considered themselves to be highly capable in terms of researching and purchasing online. In fact, 72% of US respondents consider themselves to be either confident or experts in this regard (fig X) slightly besting the 69% of their global respondents that consider themselves to be at this same level. Why is this so relevant for retailers? As we‘ll see, this online savvy comes with increased demands for faster service, more selection, and more transparent information in the shipping and tracking of goods. While retailers' online operations are evolving, consumers are being forced to find ways to make the system work for them. Regardless, online sales are growing at the expense of traditional retail outlet sales. According to Forrester Research, Inc., 70% of the overall growth in online sales in 2010 came from existing shoppers simply buying more online.

15

Fig. X: 72% of the US sample consider themselves accomplished online shoppers. According to Sue and Lisa (2012) not only do global online shoppers consider themselves experts, but they are also buying across all product categories. Staggeringly, more than 90% of global online shoppers buy books, music and films, clothing and footwear online. Even the categories at the bottom end of the online purchase scale, such as jewelry, watches, sports equipment and outdoor goods, attract over 60% of online shoppers.

3.1 Critical factors for determining Popularity in online retail shopping: Sue and Lisa (2012) claimed a great deal of global consistency in the top five factors which determine attractiveness about online shopping, regardless of nationality or geography. The conventional wisdom is that the issue of price is the driving force for the growth of online shopping, and indeed, it does feature among the top three reasons cited by their survey respondents (Fig.Y). Interestingly, however, the top factor given is 24/7 access to shopping, or the convenience factor cited by 28% of the online shoppers we surveyed. Online shopping is all about freedom and being able to shop wherever and whenever you want. As for selecting a specific online outlet― after embracing the 16

convenience factor of the online shopping model―the key factors include reasonable pricing, free and fast delivery, and a wide range of products from which to choose. Retailers really need to integrate these key consideration factors into their business models. According to PwC's Experience Radar 2011: Insights for the US Retail Industry, retailers can gain an additional margin opportunity of 8% to 12% by offering free shipping, yet 59% of retailers charge for shipping products. Perhaps even more impactful is the fact that 2 out of 3 US consumers say they are likely to cancel a purchase without free shipping.

Fig. Y: When it comes to online shopping, the convenience factor rules

3.2 Smartphone and tablet devices are adding a new dimension in retailing: According to Richard Levis (2013) the movement of online retail activity from desktop PCs to Smartphones and tablet devices represents a new phase in the evolution of retail. The pace of change has been dramatic. Since the first fully internet-enabled mobile phones hit mass market in around 2007, the number of smartphone users in the UK alone has exploded to over 26 million people and continues to rise, according to 17

data provider, comScore. Around half of smartphone users are using them for some kind of shopping activity, which principally means browsing retail sites, researching and comparing prices, but also ordering goods for delivery or collection. In the United States meanwhile, the proportion of ecommerce being carried out using mobile or tablet devices has grown from almost zero to around 10 per cent in just a few years (Fig Z).

Fig Z: Percentage of total US ecommerce dollars spent via mobile or tablet device Source: comScore Mobile Measurements, August 2012

3.3 Shift from store-based retailers to non-store retailers: On the spectrum of online integration, retailers range from store-based, ‘bricks and mortar’ at one end, to online only, ‘pure-play’ at the other. Between the two extremes lie retailers who combine physical and virtual retail elements to varying extents, most often labelled ‘multi-channel’. These broad categories have existed for years, but According to Richard Levis (2013) the balance is increasingly shifting away from traditional ‘bricks and mortar’. Store-based retailers are leading the change by integrating the internet into their business models as a part of multi-channel strategies. In the UK and US, for example, online retailing is dominated by store-based legacy retailers that have moved to multi-channel, according to retail consultants, Javelin Group (Fig A).

18

Fig. A: Ecommerce sales for the UK’s leading multi-channel retailers, 2011-2012 Source: Javelin Group, November 2012

3.4 Consumers are being more influenced socially According to Debbie Oates (2011) the purchasing decision used to be a relatively private affair potentially informed by manufacturer or retailer driven information and canvassing close friends or relatives’ opinion. Nowadays consumers now actively seek recommendations/reviews about brands or particular product pre-purchase. Debbie Oates (2011) suggested that this is particularly relevant for commodity type purchase groups where 20% of purchases are influenced by reviews. People are also influenced by what friends within their social networks are saying about particular products they have purchased, this varies between 5-10% in category purchasers with Books, Music and Games and Clothing most influenced. Taking this one step further, 5% have actively sought feedback on a potential product purchase from Twitter or Facebook followers on their mobile – again demonstrating how online behaviors will begin to infiltrate the High Street.

3.5 Addressing target consumers individually According to Richard Jenkings (2011) today’s consumer is better informed, more discerning and more focused than was the case in the past. Retailers are taking these 19

changes into account as they try to optimize store and online range selection. Fulfillment is also a major issue. Some things are being sold or delivered in a different way, but other goods are not being able to benefit from the same degree of flexibility. Clearly, consumers having the ability to research the products in which they are interested, even if they don’t go on to buy them in the store, is a very important factor. Experian has analyzed consumer behavior in this area, looking at how it differs by market sector. Experian Hit wise can measure who goes where, what they do, whether or not they buy and predict how different groups of consumers are likely to react to marketing campaigns. The most exciting thing what technology made available today is the ability it gives marketers to tailor marketing materials, to ensure that targeted consumers receive material that is as relevant as possible to their needs, desires and preferences. The traditional practice was to send most people in the country a brochure in the post. Now retailers can target consumers who have responded to similar approaches in the past, or those whose profiles reveal the right sorts of lifestyles and the ability to pay for the goods or services on offer. With more people using more intelligent mobile devices, marketers now have the ability to create ever more sophisticated tailored communications, targeting particular groups of people and the type of communication methods they prefer; and bringing geography into the structuring and planning of marketing campaigns.

3.6 Global variation in online retail We see that the extent of online retail penetration varies significantly from country to country. Richard Levis (2013) claimed that the UK appears to have one of the most advanced online retail sectors, with sales rising as a proportion of overall retail spending from 3 per cent in 2007 to over 9 per cent in 2012. Internet sales growth is clearly outpacing retail sales in general (Fig. B). In the USA, official data show internet sales approaching 5 per cent of total sales in 2010, up from around 1 per cent just ten years previously. Unofficial surveys place the figure closer to 9 per cent for non-food retail in 2012. Again, online sales are growing significantly faster than all retail sales (Fig C). It seems that mainland Europe is lagging behind, with only around 3 per cent of sales occurring online overall. But there is huge variation across European countries, with a 20

broad division between the ‘northern core’ and southern states (see Fig. D). According to Richard Levis (2013) online retailing is growing at an explosive rate. In China, for example, by 2012 the ecommerce market is expected to have grown from virtually zero to over 1 trillion Yuan (approx $160 billion USD) in under a decade.1 the extent to which online and multi-channel retailing penetrates traditional store-based retailing is related to a range of pre-existing conditions. The countries most exposed are likely to be relatively affluent and have fast, high-quality digital and transport infrastructure. A global comparison of e-readiness and logistics performance provides a top-level indicator of those countries most pre-disposed to online retail penetration (Fig. E).

Fig. B: UK internet sales vs. all retail sale Source: Thomson Reuters DataStream

21

Fig. C: US quarterly retail sales growth – total and ecommerce Source: US Census Bureau, Q3 2012

3.7 What may be the future scenario? We have seen that online-only sales are growing rapidly in many countries. It is difficult to predict how far online-only retail channels will grow, but the UK provides us with a useful indicator of how it may progress in other countries. According to Richard Levis (2013) by 2020 around 20-25 per cent of retail sales will occur online (up from around 10 per cent today)? This estimate includes sales as part of multi-channel retailing. Aside from the physical and economic barriers described above, limits to the growth of onlineonly retail channels mainly relate to distribution costs and practicalities. Richard Levis (2013) suggested a huge potential efficiency gains through, for example, the standardization of packaging, subscription-based delivery models, night-time delivery options and purpose-built collection/return facilities, such as lockers. Potentially, these could significantly increase the penetration of internet-only retailing above current assumptions; with more serious implications for traditional retail property. Richard Levis (2013) proposed a large change further ahead by emergence of 3D printing. This technology has the potential to turn current models of the manufacturing and distribution upside-down by providing the ability for consumers to find, buy and produce goods at

22

the place they are consumed. This would have significant consequences for retail and distribution property as we know it today.

Fig. D: EU percentage of individuals making online purchases in the last three months Source: Eurostat, December 2012

23

Fig. E: E-readiness vs. logistics performance by country, 2012 Source: World Bank, World Economic Forum, Aviva Investors, January 2013

4

Overview of Online Shopping services and it’s prevalence in Bangladesh

Bangladesh Online shopping along with the online shopping is the process through which consumers directly buy goods or services from a seller in real-time, without an intermediary service, over the Internet. It is a part of electronic commerce. As technology is becoming an everyday accessory and rate of Internet penetration is increasing like wild fire people tendency to on-line shopping is on rise. The total number of Internet Subscribers has reached 44.081942 million at the end of October, 2014. (Source: BTRC)The most important reason behind a rise in on-line shopping trend is time scarcity of modern life style. We are now living in an age of scarce time. Shopping regularly for daily products is a luxury to this time scarce society. As the trends show in near future the rate and extend of on-line shopping will be increased in manifold. Online shopping is going to be a boom and one of the most growing business sectors of country. Taking indicators like increasing Internet penetration, life style change, time scarcity into consideration it can be a safe prediction that online shopping will be a 24

phenomenon in near future. Realizing the demand a number of on-line shopping sites have been started their journey to make life easier and lazier. An online shop, e-shop, estore, internet shop, web shop, web store, online store, or virtual store are used as the physical analogy of buying products or services instead of bricks-and-mortar retailer or in a shopping centre. The process is called Business-to-Consumer (B2C) online shopping. In Business-to-Business (B2B) online shopping, a business buys from another business. The largest online retailing corporations are eBay and amazon.com both based in the USA. One of the first known Web purchases took place in 1994. It was a pepperoni pizza with mushrooms and extra cheese from Pizza Hut, a somewhat appropriate purchase for the early days of the Internet. When Amazon came on the scene not long after, selling books online was a curious idea. The timeline below highlights the emergence and evolution of online shopping year by year: Time 1990

Emergence & Evolution Tim Berners-Lee created the first World Wid Web server and browser.

1991

Internet Commercialized National Scien Foundation releases its grip on the Internet

1994

One of the first products to be sold on line wa a pepperoni and mushroom with extra chees by Pizza Hut.

1995

EBay, Dell and Amazon.com, the future Giants of online shopping were Founded

an explosion is created with google.com social networking sites nowadays nothing off-limits for selling online Table 1: Emergence of Online Shopping

1999 onwards

4.1 Bangladesh Economy Overview 25

The economy of Bangladesh is a rapidly developing market-based economy. Its per Capita income in 2013 was estimated to be US$2810(adjusted by purchasing power parity; Source: World Bank). According to the International Monetary Fund, Bangladesh ranked as the 63rd largest economy in the world. The economy has grown 5-6% per year since 1996 despite political poor infrastructure, corruption, insufficient Sector Wise GDPinstability, Change over the Decade power supplies, and slow implementation of economic reforms. Bangladesh remains a 70overpopulated, and inefficiently-governed nation. Service sector’s growth rate had poor,

been 60increased from the birth of our country and it reached maximum around 60% in 2000. 50 Now it is 52%. Though it has declined but again we are very much52optimistic about 40 the intensification. It is a good sign for our country because in developed countries service sector contributes more share in total GDP 30

than other sectors.

Bangladesh’s growth was resilient during the 2008-09 global financial crisis and 20 recession. 10 0 1941-1950 1951-1960 1961-1970 1971-1980 1981-1990 1991-2000 2001-2011

Retail trade is one of the traditional businesses of Bangladesh. Its expansion is keeping pace with population growth and changes in consumption patterns, which are consistent with the growth of the economy. Of the retail trade, the newest type is the superstores 26

which have only began appearing around the year 2000. Since then, their expansion has been rapid. This expansion has not been structurally organized, because, until recently, retailing had never been perceived as an industry, but rather as an individual or family business entity with a very limited scope of organized expansion. Little to no market information is available on the retail sector, but secondary sources indicate that the size of the food retail sector in Bangladesh could be US$12-14 billion, and the number of retail grocery shops could be around 1 million. Retail is one of the biggest sources of employment (12 percent), and it contributed 13 percent (wholesale and retail trading) to Bangladesh’s GDP in 2001/02.The annual turnover of the superstores now stands at around Tk 15.0 billion (1500 crore), according to Bangladesh Supermarket Owners Association (BSOA). (Source: Internet)

4.2 Market structure of superstores In Bangladesh, organized retail outlets are relatively few and remain concentrated in the major cities. The off-take by consumers is limited (less than 5 percent of total food consumption comes from these outlets).They usually procure their products from importers or distributors for imported items, and from distributors or suppliers for the local products. Organized sector retailers normally maintain established supply lines (drawing

from establishments with storage

capacity) for

imported products, and

access both established and casual supply lines (“once-in-a-while” suppliers with no storage) for local products. Depending on the size of the outlets, they engage 200 to 400 distributors or sub-distributors (dealers) for consistent availability of their commodities. Most importers source their goods in mixed containers from the country of origins or from consolidators in Dubai or Singapore, except those that arrive in high volumes, like fresh fruits.

27

Figure 1 The Market Structure of the retailing industry of Bangladesh. (Source: USDA Foreign Agricultural Service, 2013) Included in the category of supermarkets, around 30 medium-sized super stores, and 200-250 other convenience stores are located in the posh areas of Dhaka and other big cities. The share of imported food products currently handled by these outlets is very small, and items include fruit juice (both powdered or liquid); canned fruits, vegetables, and fish/meat; jam/jelly; sauce/ketchup; edible oil; dry milk powder; salad dressings; spaghetti/vermicelli; olive oil; coffee; fresh fruits; and chocolates, biscuits, and cookies. The biggest constraint facing this sector is the extreme scarcity of space in the appropriate areas: land is almost unavailable and is very costly.

4.3 Internet and online shopping in Bangladesh In 1996, the first VSAT base data circuit was introduced through 2 Internet Service Providers (ISPs) connecting Bangladesh to the world wide web for the first time. By 2005 there were about 180 registered ISPs operating in Bangladesh. The First ecommerce site clickbd.com started operations in 2006 which was the same year that Bangladesh got connected with the latest technology of a submarine optic fiber cable. In 2007, Cellbazar, an MIT Lab project inaugurated operations bringing the bazaar to the hands of 20 million GrameenPhone Subscribers. In 2008, Broadband and Wimax internet services were first introduced in Bangladesh which improved speed, penetration and user experience •An influx of e-business sites opened up 

Rokomari.com 28



Foodpanda.com



Hungry naki.com



Chaldal.com



bdhaat.com



Hutbazar.com

            

Aarong.com meena bazar.com shwapno Rang BdGiftz.Com Giftinbangladesh.com Deshigreetings.com Hutbazar.com Egiftbd.com Arfigift.com Giftzhaat.com Bangladeshgiftcorner.com Ekhoni.com

5 Service offering of the select physical and online stores 5.1 Physical Stores

5.1.1 Aarong

The word Aarong means ‘village fair’ and the Aarong brand is meant to invoke a deeper connection to its rural roots. Born out of a humble resolve to empower the marginalized rural women and enable them to realize their full potential, Aarong is one of the 18 social enterprises of BRAC - the world’s largest development organization. It has been working towards BRAC’s mission of poverty alleviation through economic development and human capacity building, with a specific focus on the empowerment of women. Aarong was initiated in 1978 as a project to ensure poor silk farmers, block printers and 29

embroiders in Manikganj in central Bangladesh were paid upon delivery of their products. The purpose was to provide a platform for rural artisans where they could sell their products and get a fair market price. Starting its journey with providing employment for a limited number of rural women, Aarong rapidly extended its support by working with many other artisan and crafts. 5.1.2 Meena Bazar

Meena Bazar is a well reputed retail supermarket chain in Bangladesh with International standards. It started its operation in 2002 and runs outlets in Dhaka, Chittagong and Khulna division. Every Meena Bazar outlet carries almost 6,000-8,000 products to sell. It provides convenient shopping experience, friendly customer service along with easy parking provisions for its customers. Meena Bazar is a subsidiary of Gemcon Group. It also produces organic products, dairy items, prepared food & herbal products. Meena Bazar is the first retail superstore in Bangladesh that has a website to shop online. They launched their website in April, 2012, and now they deliver in Dhaka, Khulna and Chittagong. They took this initiative to make customer life easier. Online shopping with Meena Bazar saves time and it is also very convenient for our customer as we face more more traffic these days. 5.1.3 Agora

With outlets in major locations throughout Dhaka, and many more being planned in Dhaka and other major cities, Agora is endeavouring to fulfil the everyday needs of its customers by providing the right quality, assortment and price through stores of various forms and sizes.While Agora mainly focuses on food items - ranging from a wide variety of fish, meat, vegetables, fruits, bakery, dairy, and grocery - it also carries a vast array of other grocery, personal care, and various other consumer goods and household utensils. 5.1.4 Rang

Since 1994, Rang has been contributing to the growth of handloom and handicraft industry. With the motto of painting time Rang has introduced a new dimension of novelty in the trend of clothing. Rang’s concept of fashion has evolved round the quest for and celebration of national heritage. The predominant ingredient of our products being indigenous colours and fabrics, the ideology of Rang is to spread an aesthetic 30

experience among our people. Going beyond the typical point of commerce and being urged by the values of our heritage and a clear sense of commitment Rang arranges special programmes to observe festivals and rituals. Ahead of all such occasions our customers now wait with keen interest to see our response to every socio-religious festivals. At the centre of Rang’s concept of fashion is the spirit of variety and variation in our application of colours. The same urge has been essentially reflected in most of our products. Through the simultaneous motivation of flourishing our handloom and handicraft industry and introducing ever new products Rang has come to be esteemed as one of the leading fashion entrepreneurs of the country. 5.1.5 Shwapno

Best Price with Quality and Value- this was the premise with which ACI launched its mega retail operations Shwapno. On 0ctober 2008, Shwapno embarked on its journey with a network of 40 outlets across Dhaka, Chittagong and Sylhet and till date it holds the

position

of

the

largest

neighborhood

supermarket

chain

in

the

Bangladesh. Shwapno outlets across Bangladesh are strategically located to ensure a wide range of customers have easy access to them. Shwapno’s diverse range of products, both local and international, means it has the capacity to cater to the needs of clients from all walks of life. Meticulous product and service placement is done to guarantee the outlets meet the needs of the locality and these demands are met effectively.

5.2 Online Stores 5.2.1 Rokomari.com

Rokomar.com is a Bangladeshi Online Shopping Portal. Rokomari.com launched in January 19, 2012 as an online bookstore and it will soon start selling eBook, Mobile Phones, computers and accessories, cameras, consumer electronics, CDs/DVDs, paintings, tickets, handicrafts, home appliances, apparels, gift items, food, toys and directly imported goods. Rokomari.com is an ecommerce venture of Onnorokom Web Services

Ltd,

a

sister

concern

of

Onnorokom

Group.

They have introduced some path-breaking services like Cash on Delivery all around Bangladesh, Order by Phone, Minimal shipping charge (Only 50 Taka shipping cost on 31

any amount of purchases), Discount. They want to deliver WOW through our Customer Service. Their team makes your online shopping easy & fun with a user-friendly shopping interface. They maintain highly customer-centric practices, including great products and multiple payment options to make shopping with Rokomari.com as an easy,

smarter

and

hassle

free

experience.

Rokomari.com is on a mission to drive Bangladesh’s most comprehensive virtual business that helps customers make informed choices and extract the best value for their money. 5.2.2 Foodpanda

They are a small team of problem solvers, designers, thinkers and tinkers, working around the clock to make Foodpanda the most powerful online tool for ordering food in the universe. They believe that ordering food should be easy, fast and definitely fun! They

wanted

something

simpler,

so

they

made

it.

Foodpanda has online menus from the staggering selection of delivery restaurants around us. Anybody can avail good food simply entering his/her area and search for cuisine type, restaurants or even price range. The restaurant index also includes address and delivery hours. No online food delivery is too difficult for Foodpanda! Ordering food filtered to your needs has never been made easier. Foodpanda Bangladesh is part of Rocket Internet group. 5.2.3 hatbazarbd.com

hatbazarbd.com is an online marketplace featuring discount deals with popular businesses like Internet services, Luxurious restaurants, Hotels, Transports, Beauty parlors, Fashion houses, Theme parks, Gymnasiums, Furniture shops, Sports & Recreation centers, etc. They provide consumers with quality and demand able products in cheap, and the businesses with a ton of customers. Businesses need customers & profit also, Customers need products but at low cost, and hatbazarbd.com solves this riddle. Their mission is to increase sales of our merchants and create wonderful buying experience for their consumers. They create happiness for both their merchants and consumers.

32

5.2.4 HungryNaki.com

They are a team of dedicated, food enthusiasts who welcomes us to order food online and have it delivered to our doorsteps. They truly aim to serve other food enthusiast long term and in international standards. Customers no longer have to wait in queues for takeaways or sit in traffic jam while the food gets cold or even carry hot packed food. They will do all that for us. Their goal is to facilitate customers to get food without having to spend a sweat. They help customers find the right restaurant, café, and any other eatery in customers’ neighborhood, to order food online. They have people’s favorite nearby restaurants listed down to order food online.

5.2.5 Chaldal.com

Chaldal.com is an online shop based in Dhaka, Bangladesh. It is a service rooted on the idea that shopping for necessities should not be a burden. At Chaldal, we believe time is valuable to our fellow Dhaka residents, and that they should not have to waste hours in traffic, brave bad weather and wait in line just to buy basic necessities like eggs. This is why Chaldal delivers everything customer needs right at his/her door-step and at no additional cost. Chaldal is a work in progress, and they hope to get better over time. They are firm believers in using technology to improve Bangladesh, and they will continue to invest all our effort in pushing the boundaries of technology in this country.

6 Analysis of business players: Context in Bangladesh 6.1 PEST Analysis PEST analysis gives a larger picture of the macro-environment of the industry. The analysis is done so that the industry can prepare itself for the future changes withchanging factors in the business environment. The PEST model will help by categorizing

the

macro-environment

in

to

political,

economic,

social

and

technological.We did PEST analysis of the retail sector of Bangladesh and tried to figure out which factor has the highest effect on the industry environment.

33

6.1.1 Political

Government stability:In Bangladesh the government and political situation is very unstable which has some direct effects to some extent in the industry. Political Disruptions: This service is affected negatively during political unrest like Hartal, Strike, and Blockades etc. Taxation policy: For both B2B and B2C the value added tax (VAT) is 15%. VAT is applicable for all items (except some of the unprocessed agricultural products) &thirty five listed services. VAT is leviable at the time of supply of goods and services. Turnover tax @ 2 per cent is leviable where turnover amount is less than 1.5 million taka. Tax returns are to be submitted on monthly or quarterly basis. 6.1.2 Economical

Inflation: Inflation rate is 6.60% in November 2014. The reason for the rise was mainly for the rise of the food prices. The consumer price index is 206.81. (Source: BBS-2014).

GDP total: $129.86 billion, GDP per capita: $625.34, Total exports: 208.10 BDT billion, Total imports: 281.24 BDT billion, Total FDI: $1300 million, and Forex reserves: 1698.90 BDT billion. (Source: BBS-2014). This high rate of inflation poses problems for an online store because this means that prices will tend to fluctuate and may cause loss of sales or disgruntled customers. 6.1.3 Social

Projected Population

Total

Male Female

July 2015

July 2019

158.96

167.39

81.63

85.86

77.33

81.51

34

Gender Ratio

106

105.34

As we have a constant growth on population and our country has growing economy there is a huge potential of online superstore. There are some activities going on social networking sites which are providing online product to some extent. We have a total of 44.081942 million people who have internet access. They are potential buyer of online superstore which indicates a huge market of this business. Bangladeshi people are getting busier day by day. The time to go to shop for shopping is getting difficult for people like corporate executives. In the metropolitan cities, which are considered in this business model, the corporate executives and other job holder people are more inclined to shop online rather than going there physically, which provides the potential of a huge market. 6.1.4 Technological

Internet: Bangladesh is one of the emerging countries in Internet usage in the world. The number of IP addresses is proportionate to the number of people. The usage of the Internet has spread through the country and the number of Internet attacks and viruses, is quite low. Access to smart phone and internet has brought a revolutionary change in the service sector. Introduction of 3G and availability of cheaper data package has also expedited the growth.

6.2 GE MATRIX 6.2.1 GE MATRIX In

the early 1970s, the management consultant McKinsey & Co in conjunction with

General Electric in the USA developed a comprehensive portfolio planning tool (Hax & Majluf, 1990b; Aaker, 1995; Jobber, 2007). The General Electric (GE) model was inspired by the need to develop a method of evaluating the plans of GE different business units in order to fund the plans with the greatest potential for success and also by the need to overcome the limitations of the BCG model (Byers et al, 1996). 35

Like the BCG matrix, it is plotted on a two-dimensional grid. But unlike the BCG, which classifies a business unit on only two criteria (relative market share and market growth rate); the GE model employs composite measures in classification of business units. SBUs are plotted against two dimensions: Market attractiveness on the vertical axis and business strength on the horizontal axis. 6.2.2



Desirable feature of GE

It allows for immediate ranking between high and low, and between strong and weak



It incorporates explicit consideration of a much wider variety of strategically relevant variables



It stresses the optimal allocation of corporate resources with a view to achieving competitive advantage and superior performance.

6.2.3



Criticism of the GE matrix

The GE matrix looks at the current position of SBU but does not take into account how their future positions might change due to changes in the industry. It does not also consider how their positions might change due to change in their lifecycle (Hill & Jones, 1989).



The selection and weighting of factors and the subsequent development of both firm’s position and market attractiveness are subjective process. Individual bias and historical perspective cannot be ruled out in the process (Aaker, 1995).



Many factors are involved in determining both indicators on which the matrix is based. Aggregation of the indicators is difficult.



There is no standard list of critical external and critical success factor to be used by all business units. This creates inconsistencies and ambiguity in the classification of business unit.



The result of the analysis is sensitive to the definition of the business market.

36



Like the BCG matrix it ignores the interdependence of the SBUs in a company’s portfolio.

6.2.4

ANALYSIS OF GE MATRIX

In order to calculate the marketing attractiveness we have considered six factors as follows overall market size, market growth rate, industry profitability, industry rivalry, promotion, technological innovation. Factors

Weight

Rating 1-5

Value

Overall market size

0.2

3

0.6

Market Growth Rate

0.25

3.5

0.875

Industry Profitability

0.1

2.5

0.25

Industry Rivalry Promotion

0.2 0.15

3 3.5

0.6 0.525

Technological Innovation

0.1

2

0.2

Total

1.00

3.05

Table: Market Attractiveness These factors are assigned with weight based on the significance of the factor on market attractiveness. From this analysis we

have calculated the market

attractiveness and the value is 3.05. For calculating the business strength we have considered factors like market share, service quality, privacy, brand equity, front stuff personal, information technology, service charge return policy. Factors Market Share Service Quality Privacy Brand Equity

Weight 0.15 0.15 0.15 0.125 37

Rating 1-5 4 4 2.5 3.5

Value 0.6 0.6 0.375 0.4375

Front Stuff Personnel

0.05

3

0.15

Information Technology

0.125

3.5

0.4375

Service Charge Return Policy

0.1 0.15 1

4.5 2

0.45 0.3 3.35

Factors Market Share Service Quality Privacy Brand Equity

Weight 0.15 0.15 0.15 0.125

Rating 1-5 4 2.5 2.5 3

Value 0.600 0.375 0.375 0.375

Front Stuff Personnel

0.05

3.5

0.175

Information Technology

0.125

3.5

0.438

Service Charge Return Policy

0.1 0.15 1

3 2

0.300 0.300 2.938

Table: Business Strength (Food Panda) These factors are assigned with weight based on the significance of the factor on business strength. In this analysis we have considered two business organizations Rokomari and Foot Panda. Both of the organization are providing retail service through online. The business strenght for Rokomari is 3.35 and for FOOD Panda 2.98.

BUSINESS 5.0

MA RK ET AT TR AC TIV EN ES S

Stron g

PROTECT POSITION

Medium

Weak

INVEST TO BUILD

BUILD SELECTIVELY

Stron g 3.6

38

BUILD SELECTIVELY

2.3

SELECTIVITY/MANAGE FOR EARNINGS

LIMITED EXPANSION OR HARVEST

Medium

Rokomari (3.35, 3.05) Food Panda (2.938, 3.05) PROTECT AND REFOCUS

MANAGE FOR EARNINGS

DIVEST

Weak 1.0 5.0

2.3

3.6

1.0

Both of the organizations are in medium position in terms of market attractiveness and business strength. The strategic concern for this particula position is as follows: 

Protect existing programs



Concentrate investment in segments where profitability is good and risks relatively low

6.3 BCG MATRIX 6.3.1 Overview

The BCG matrix, invented by the Boston Consulting Group, is a tool that allows to classify and evaluate business organizations in a particular industry. It is a decision making tool in order to balance the activities of a company among those which make profits, those who ensure growth, those which constitute the future of the firm or those who are its heritage. With this tool one is able to define the development policy of the company. The matrix will position the organizations in two ways: 

The Market Growth Rate



Relative Market Share

The BCG growth/share matrix is divided into four cells or quadrants, each of which represent a particular type of business.

39

6.3.2 Question Marks:

These are products or businesses, that compete in high growth markets but where the market share is relatively low. A new product launched into a high growth market and with an existing market leader would normally be considered as a question mark. Because of the high growth environment, they can be a “cash sink”. Strategic options for question marks include.. 

Market penetration



Market development



Product development



Which are all intensive strategies or divestment.

6.3.3 Stars:

Successful question marks become stars. i.e. market leaders in high growth industries. However, investment is normally still required to maintain growth and to defend the leadership position. Stars are frequently only marginally profitable but as they reach a more mature status in their life cycle and growth slows, returns become more attractive. The stars provide the basis for long term growth and profitability. Strategic options for stars include.. 

Integration – forward, backward and horizontal



Market penetration



Market development



Product development



Joint ventures

6.3.4 Cash Cows:

These are characterized by high relative market share in low growth industries. As the market matures the need for investment reduces. Cash Cows are the most profitable products in the portfolio. The situation is frequently boosted by economies of scale that may be present with market leaders. Cash Cows may be used to fund the businesses in the other three quadrants. 40

It is desirable to maintain the strong position as long as possible and strategic options include: 

Product development



Concentric diversification

If the position weakens as a result of loss of market share or market contraction then options would include. 

Retrenchment (or even divestment)

6.3.5 Dogs:

These describe businesses that have low market shares in slow growth markets. They may well have been Cash Cows. Often they enjoy misguided loyalty from management although some Dogs can be revitalized. Profitability is, at best, marginal. Strategic options would include. 

Retrenchment (if it is believed that it could be revitalized)



Liquidation



Divestment (if you can find someone to buy!)

Successful products may well move from question mark though star to Cash Cow and finally to Dog. Less successful products that never gain market position will move straight from question mark to Dog.

6.3.6 Limitations:



Definition (qualitative and quantitative) of the market is sometimes difficult.



It assumes that market share and profitability are directly related.



The use of high and low to form four categories is too simplistic.

41



Growth rate is only one aspect of industry attractiveness and high growth markets are not always the most profitable.



It considers the product or business in relation to the largest player only. It ignores the impact of small competitors whose market share is rising fast.



Market share is only one aspect of overall competitive position.



It ignores interdependence and synergy

6.3.7 ANALYSIS OF BCG MATRIX

In the BCG matrix we analyzed four organizations in two business segment. We considered Food Panda and Hungry Naki in the sector of online service of food. In other segment we considered Rokomari and BD haat.

Organizatio

Market

Market Share of

Relative

Market

n

Share

Largest Competitors

Market Share

Growth

Hungry Naki

7%

19%

0.37

10%

Food Panda

19%

19%

1.00

17%

Rokomari

43%

43%

1.00

40%

BD Haat

8%

43%

0.19

15%

42

The market growth rate is shown on the vertical (y) axis and is expressed as a %. The range is set somewhat arbitrarily. The overhead shows a range of 0 to 40% with division between low and high growth at 20%. Market Growth Rate indicated individual growth rate of each organization. Rokomari has the highest market growth rate among all the organization. The horizontal (x) axis shows relative market share. The share is calculated by reference to the largest competitor in the market. Again the range and division between high and low shares is arbitrary. The original work used a scale of 0.1, i.e. market Leadership occurs when the relative market share equals 1.0. In the online service for food sector we considered Food Panda as the largest competitor and in the later segment we considered Rokomari. From the Analysis we deducted that Rokomari is in the star position in the BCG matrix. With a high market growth rate and high market share Rokomari is the market leader. Nevertheless investment is still required to defend the leadership position. Rokomari will provide long term growth and profitability. Rokomari’s strategic option would be market 43

integration forward, backward and horizontally. Market penetration will be another strategically important decision for Rokomari. Apart from that Rokomari can introduce new product or service with collaboration or joint venture. The analysis shows that Food Panda is cash cow in this industry. Food Panda is doing business with a relatively low market share in a high growth market. The necessity of investment reduces as the market gets mature. Food Panda is the most profitable business in the sector. It is desirable that Food Panda will maintain its position. Food panda’s strategic option would be product/ service development and diversification. To diversify Food Panda’s service it can add more restaurants into its list covering more geographical areas. In the BCG matrix Hungry Naki and BD Haat are in the position of dog with a relatively low market share in low growth market. Profitability is at best marginal in this scenario. Sometimes dogs can be revitalized. So the strategic concern would be retrenchment. If not then divestment means if there is someone to buy.

6.4 ADL MATRIX 6.4.1 ADL MATRIX OVERVIEW

The ADL matrix from Arthur D. Little is a portfolio management method that is based on product life cycle thinking. It uses the dimensions of environmental assessment and business strength assessment. The environment assessment is an identification of the industry's life cycle and the business strength assessment is a categorization of the corporation's SBU's into one of five competitive positions, these five competitive positions by four life cycle stages. To assess the competitive position held by a company that operates in a given market, Florescu, Constantin & Malcomete (cited in Tudor & Valeriu, 2011) gave the following list: • Supply factor: long-term contracts, labor costs and payment terms;

44

• Production factors: production flexibility and capacity, experience, technical skills, environmental protection, quality of management, skill of expertise, labor productivity and production cost; • Commercialization factors: the power and quality of distribution network, credit conditions, the image of the product, product range, market share, sales force and price; • Financial factors: profitability, financial stability, cash flow and technological protection Tudor & Valeriu (2011) pointed out that these “performance indicators represented by market competitive position are valued by reference to competition, using qualitative and quantitative variables, which make up a set of determinant factors of success (p.755)”. On the industry life-stage, each specific stage within the product life-cycle is identified, assessed, quantified and characterized by a system of indicators, added, Tudor & Valeriu (2011). Popa (cited in Tudor & Valeriu, 2011) explained that the competitive position are weighted and scored and this results in several competitive positions according to company forces in relation to competitors on a given market. What Popa is saying, explained Tudor & Valeriu (2011) is that these factors change over time, the business gain or loss ground in terms of competitive advantage, and eventually they will identify with one of five competitive positions. Wilson and Gilligan (1992) gave these categories of competitive positions as: 1. Dominant: This is a comparatively rare position and in many cases is attributable either to a monopoly or a strong and protected technological leadership. The implications are that the firm is able to exert considerable influence over the behavior of others in the industry and has a wide variety of competitive position. 2. Strong: By virtue of this position, the firm has a considerable degree of freedom over its choice of strategy and is often been able to act without its market position been unduly threatened by competitors. 3. Favorable: This position, which generally comes about when the industry sis fragmented and no one competitor stands out clearly, results in the market leaders

45

having a reasonable degree of freedom. Companies with a favorable market position often have that can be exploited by particular strategies and hence a greater than average opportunity to increase market share 4. Tenable: Although a firm within this category are able to perform satisfactory and can justify staying in the industry, they are generally vulnerable in the face of increased competition from stronger and more proactive companies in the market. The opportunities for an organization to strengthen its position tend to lower than average. The profitability of tenable firm is best achieved and sustained through a degree of specialization. 5. Weak: The performance of firms in this category is generally unsatisfactory although opportunities for improvement do exist. . Often, however, the firm is either too big and inefficient to compete with any real degree of effectiveness, or it is too small to cope with competitive pressure. Unless he firm changes, it is ultimately likely to be forced out of the market or exit of its own accord.

The Life Cycle Stages Embryonic: introduction stage, everything is new. Growth:sales increase, many customers start to know the product. Mature: market is stable, have many customers and a lot of competition. Aging: Demand decreases, the companies need to use strategy to add something new to attract the customers or abandoning the market.

46

6.4.2 The advantages and disadvantages of the ADL matrix

Unlike other models of product portfolio analysis the ADL matrix is based on an enhanced applicability because it fits to all situations of competition encountered in a marketplace. Also the ADL matrix can be applied to the fragmented industries, holding a small competitive advantage but with a large number of ways of obtaining it (provides multiple ways of differentiation). As such we can say that the ADL matrix has a high degree of adaptability to situations of a qualitative nature. A first disadvantage is that the matrix does not take into account a number of phenomena that can generate long-term involution in the products life cycle of a company. Another weakness is related to the high level of difficulty in terms of objective evaluation of the ADL model variables. This is often the case for the competitive position indicator. In other words, the difficulty lies in the fact that some factors are qualitative in nature and there is a high risk of bias in their use. In conclusion, we can say that the ADL matrix provides clearer results as a company is more diversified and enable synchronization on decisions relating to competition. 47

6.4.3 Analysis of ADL Matrix

Plotting the ADL matrix against the two principal dimensions, the position of the SBU is

LIFE CYCLE STAGE represented by the circleINDUSTRY sizes proportionate to the size of the industry where they Competitive

Embryonic

Growth

Mature

Position

C O M P E TI TI V E P O SI TI O N

Dominant Strong

AARONG SHWAPNO

Favorable

RANG AGORA

Tenable

MEENA BAZAR

Weak belong,

48

Aging

INDUSTRY LIFE CYCLE STAGE Competitive

Embryonic

Growth

Mature

Aging

Position

C O M P E TI TI V E P O SI TI O N

Dominant

ROKOMARI

Strong FOOD PANDA

Favorable

BDHAAT

Tenable

CHAL DAL HUNGRY

Weak

NAKI

TABLE: ADL MATRIX FOR PHYSICAL RETAIL STORE

The analysis consists of two segments, one for online retail service providers and

C O M P E TI TI V E P O SI TI O N

another for physical retail stores. In Physical retail store we considered AArong, Swapno, Meenabazar, Agora and Rang. All the physical retailers are in their mature stage in their industry life cycle. The analysis found out that AARONG is in “strong” position in terms of competitive position. In this particular position aarong strategic concern would be to   

Cost optimization, Diversification Hold Position.

Aarong has to cut cost; it should bring diversification in its product and service. This diversification can be attained with the use of internet. With the increased use of web AARONG can diversified its service more efficiently. The growth of the AARONG will be simultaneous along with the industry. 49

SWAPNO and Rang both are in “favorable” position in terms of competitive position. Strategic options for both of them will be as follows    

Focus Differentiation Attack small competitors Find Niche and protect it.

Agora and Meena Bazar are in tenable position in terms of competitive positioning. The strategic concern for them would be as follows:  

Maintain or Retreat Find a niche

Agora and Meena Bazar both are targeting niche markets. They are operating in the higher middle class or higher class areas of the Dhaka city and their target customer is mainly from the upper class of the society. All the online retailers are in the growth stage in the industry life cycle. Rokomari is in dominant position in terms of competitive positioning. The strategic concern for the Rokomari is as follows:   

Defend position. Act offensive. Cost leadership.

Rokomari will face rapid development as the industry is still at growth stage and itself holding a strong position in the market. Rokomari is already at cost leadership by offering 50 taka per delivery across the whole country. Food Panda and BD Haat are in favorable position in terms of competitive positioning. The strategic concern for both of them would be   

Differentiation Attack small competitors Cut Cost. 50

Chal Dal is in a tenable positon in terms of competitive positioning. The strategic option for Chaldal is as follows:   

Maintain or Retreat Identify a niche Aim Growth

BD Haat is in a weak position in terms of competitive positioning. The strategic option for Chalk Dal is as follows:  

Find a niche Retreat.

6.5 Porter’s Five Forces Model: Competitive Force

Impact of Internet

Threat of entrants

new Internet reduces barriers to entry such as the need for a sales force, access to channels, and physical assets; it provides a technology for driving business processes that makes the other things easier to do. Rivalry among Widens the geographic market, increasing the number of competitors, and reducing differences among competitors; makes it existing more difficult to sustain operational advantages; puts pressure to competitors compete on price. Bargaining of buyers

power Availability of global price and product information shifts bargaining power to customers.

51

Bargaining power Procurement over the internet tends to raise bargaining power suppliers; suppliers can also benefit from reduced barriers to entry of suppliers and from the elimination of the distributors and other intermediaries standing between them their users. Threat of substitute Enables new substitutes to emerge with new approaches to meeting products or needs and performing functions. services

6.6 Resources and Capabilities: Yes

Inimitabilit y No

Exploited by Organization -

Competitive Implications Temporary Competitive Advantage

Economic Performance Above Normal

Yes

No

-

Temporary Competitive Advantage

Above Normal

Organization

Valuable?

Rare?

AARONG

Yes

ROKOMARI

Yes

Valuable resource of Aarong is the introduction of online shopping. Other apparel distributers provide online services but they neither have the variety nor the coverage

52

that aarong has. Aarong enjoys a huge supplier base especially for handicraft products which at present none of its competitors have. So this is a rarity for Aarong. Valuable resource for Rokomari is the service delivery charge (50 BDT) for whole Bangladesh. The huge and diversified collection of books made rokomari unique in their line of business.

6.7 The 3C’s Model of Kenichi Ohmae: Foodpanda 3C's model of Kenichi Ohmae Corporate-based strategies Selectivity and sequencing: android and iOS on tablets and mobile devices Make or Buy: $ 20 billion since hello food press Cost-effectiveness: base ordering amount—food items worth Tk 300 Customer-based strategies Segmenting by objectives: can set different rates for party and individual use Segmenting by customer coverage: operates in Dhaka, Chittagong and Sylhet. Resegmenting the market: can expand their business by bringing other cities outside these three under their coverage Competitor-based strategies Purchasing:

they partner with 240 restaurants significantly more than any of their

competitors Design: their website is better designed than its competitors and ease of use is more Service: can take steps to lessen the present service time of 1 hour 10 min.

53

54

6.8 Business Canvas Model: 6.8.1 Brick Organization

Figure: Business Canvas Model for Brick Organization.

55

6.8.2 Click Organization:

Figure: Business Canvas Model for Click Organization.

56

7 Service Marketing Mix 7 P’s Analysis: 7.1 7 p’s Analysis for Click Organization: Marketing Mix

Rokomari

Chaldal

Product

Books, CD-DVDs, Souvenir, T-shirts

Price

same price like a retailer shop, Up to 20% commission on the stated price, shipping charge 50tk/delivery Delivery anywhere in Bangladesh

Grocery, sweets, electric appliances, health care, personal care, pet care, baby care Lower price than that of major superstores in the Dhaka city, Free deliveries all over Dhaka city. Serving all of Dhaka city, except certain parts of Old town. Through Website, direct mail, word of mouth,

Place

Promotion

People

Process

Physical Evidence/ Servicescape

Advertising on Facebook (active page with more than 800000 fans), use of banners all over Dhaka city, Campaigning in different festivals like Boimela, Eid, Birthdays of writers. Delivery stuff, Tech savvy Call centre operators, book readers, internet users delivery personnel, comfortable with e-commerce convenient E-commerce users Online order (through cart) Online order delivery delivery payment or payment / on request send bKash prepayment. credit card machine with delivery representative. Well decorated webpage, Detail information of goods in ease of use, high page web page , lucrative web site. speed, customers review, clearly displaying product reviews, similar product recommendation.

57

7.2 7 p’s Analysis for Brick Organization: Marketing Mix

Aarong

Meenabazar

Product

Men’s wear, women’s wear, children’s wear, home décor products, jewellery, wedding product Value based pricing

Grocery, health care, personal care, pet care, baby care products

Place

serves through 13 retail stores across the country

serves through 18 retail stores across the country

Promotion

Billboard, print media, social media, electronic media, Shelves, POS displays, Visual product presentation, word of mouth. Cultural minded people, sales people, cash people

Banner, poster, displays at point of sale, leaflet, visual product presentation, product placement by creating HOT ZONES & COLD ZONES. Upper middle and middle class people, sales people, cash people Product selection physically payment through Visa Card/Master card or physical money

Price

People

Process

Physical Evidence/ Servicescape

Product selection physically or via internet) delivery payment through Visa Debit/Credit/Gift Car/Master Debit/Credit/Gift Card/bKash /COD (Cash on delivery) Spacious and colourful decorated outlets, printed brochures, invoice, fast-paced music when overcrowded like before EID, PUJA etc. slow music when less crowded, well designed website.

58

Competitive pricing,

Lucrative physical locations with increasing visibility, red and orange colour in meat section, green colour in vegetables and fruits section, troylleyology, white colour in stationery section and the rest section with fluorescent colour.

8 Gap Analysis and Proposed Strategies to overcome Gap: The basic characteristic of the Gap model is that it actually puts an accent upon the over-sights in the quality between the guest and service provider and are directly connected with the attitudes towards the perception and expectations. This model demonstrates the process of the development of the service quality (Ljubojević, 2004) Market Research Gap– Variation between actual expectations of customers and the way how the management understands their expectations (management does not understand what customers expect from a service). Design Gap– Represents variation between perceptions of the management about the expectations of customers and specifications of service quality, i.e. management of a company realized the actual customers’ expectations but has not developed a system of measures which will enable the delivery of a desired quality. Conformance Gap– Represent difference between specification of service quality and attributes of the process of service production and delivery, i.e. difference between what managers have defined as standard of service quality and the way how a service was actually delivered. Communication Gap– Represents variation between delivered service and what customer was actually told about the service itself. Customer Expectations and Perceptions Gap – Represents difference between customers’ expectations regarding the service and their perception about the specific service. The last gap is the result of all the previous gaps. Service Quality Model consists of five dimensions. 59

   

Perceptibility– presence of physical elements; Reliability– capability of a promised service to be delivered in a specific manner Responsibility– carefulness, willingness to help and offer a fast service; Safety– knowledge and politeness of the employees and their capability to be



trusted at; Empathy– offer of a personalized service, observing a customer as an individual.

Dimensions

Reliability

Item Instruments

Experience

Perception Determined and

Satisfactory

Return Policy.

No Satisfactory

time promised. Keeping customers

Ensuring by

informed about when the

calling on

service will be performed Providing Prompt service

mobile

to customers Willingness to help customers Responsiveness to

Empathy

Service Provider

Delivery of promises.

Delivery of services at the

Responsiveness

Customer

customers' requests Providing customers with individual attention Convenient operating hours Dealing with customers in a caring fashion Having the customers' best interest at heart 60

Dedicated No One hour and 10 minutes. Ensuring by email or calling on mobile

Agreed

Determined

Agreed

Determined

Fully

Try their best to be

responsive

responsive.

Satisfactory

Determined

Not Satisfactory

Plan to make it 24/7

Satisfactory

Determined

Moderate

Determined

Understanding the customers' requirements Making customers feel Assurance

Tangibles Market Research Gap:

Satisfactory Not

Determined Ensured

safe in their transactions Knowledgeable staff to

Satisfactory

Answer customer

Satisfactory

Ensured

question. Ordered Food

Moderate

Determined

Management has defined minimum order for taka 300. But customers think it should be lower than it. Service charge per delivery taka 70 in Dhaka City is also high to customer. But management thinks service charge is low. Management can minimize this gap by conducting a in depth market research Design Gap: Management understood the customer expectation regarding the quality control of the food that Food Panda supplies to consumers. Notwithstanding of realizing this particular expectation, Food Panda is not able to provide the guarantee of the food they supply. Management can minimize this gap by setting goal regarding customer expectation and standardizing the service quality. Conformance Gap Customers often find it time consuming to order a food by phone as they have to try several times to get the customer representative. Apart from that wait time is ballooned from five minutes to eight minutes. This gap can be curtailed by designing appropriate order of service and customer service stuff training. Communication Gap: Food Panda offers that customers can avail different cuisines from different restaurants described in the website. But in dept interview with the consumers reveal that sometimes some of those cuisines are not available vai order. This gap is due to

61

exaggerated promises in advertising. This gap can be lessened by providing information to contact personal to give customers. Customer Expectations and Perceptions Gap Distorted information provided by contact personal and management are responsible all the gaps mentioned above. They can ensure better service through the use of survey.

9 Recommendation: For “brick-and-mortar” organizations: 

Service is the most crucial part for the success of brick-and-mortar retailers and technology is the great enabler of service. Utilizing wireless network and access to online presence on the cloud system, retailers can give customers access to all the information they need streaming video demonstrations, up-to-the-minute inventory information, personalized coupons or offers and more—right at the point of sale. Customers can be served with a team of sales associates enabled and empowered by mobile technology. One key is making certain that sales associates have as much, if not more, information about products as the customer has. Another is making sure associates have the same customer data—from demographics to purchasing history to shared likes and dislikes—to help them deliver more

thoughtful, more personalized service.  Collecting and leveraging customers’ personal information have long been staples of online retailers to provide personalized recommendations. Brick-and-mortar stores can catch up this method effectively & quickly. By more closely integrating their online and in-store operations, they can enhance their knowledge and understanding of customers through integrated data collection and analytics. For example, when a woman logs onto to a garden center’s WiFi network, the system can see that she has recently purchased vegetable seeds and send coupon for 25% off fertilizer to her smartphone. A home improvement store associate can see that a customer is an avid birder so he shows him the store’s new shipment of birdhouses. A pharmacy can inform a loyal customer that her prescription medication has become an overthe-counter drug and offer her a personalized introductory discount. The system can 62

gather information ranging from demographic and psychographic data to purchasing histories and personal shopping behaviors and make this information available to sales associates on the floor. In the era of information technology the key to success is to make sure that every store and every associate has access to the crucial customer information network has accumulated. The more the system and employees know about customers, the more it will be possible to provide more personal, more consistent, more satisfying and more differentiating customer experiences.  One of the key elements to increase customer satisfaction can be mobile application. After entering the shop customers can be accessed through the guest WiFi network. Mobile applications can enable a variety of customer interactions ranging from greeting a loyal customer to enabling her to check prices with a barcode scanner to pushing coupons based on her past purchase history. Mobile applications can include check out capabilities that allow associates to accept payment using smart handheld devices, eliminating the frustration of waiting in long, inefficient cash register lines. Mobile applications can even provide customers with value when they’re not in store. Some of the other mobile app features can be shopping list aggregation,

viewing a store map, getting product information by

scanning shelf or kiosk barcodes, accessing selected social networking tools such as likes and peer reviews, finding online help, seeing limited price matching from respected retailers, requesting associate assistance and streamlining electronic payment.

 Mobile application is not the only option for retailers looking to personalize their marketing tactics. Interactive displays and digital signs can also be used to collect information about customers and make individualized recommendations based on that knowledge. For example, a cosmetics retailers and brands can start using interactive displays that allow shoppers to “try on” makeup virtually, using facial recognition software to determine how a particular product and shade will look on a 63

shopper based on her skin tone, eye and hair color, and other factors. These displays can deliver then targeted advertisements and special offers based on a user's customized results. Such platforms can be expanded in the future to link to other databases detailing Internet browsing history, social media presence and other elements of Big Data—even pinpoint individual identities—to tailor marketing messages even further. Moreover interactive video displays and apps may allow customers to more easily navigate store.

 On the other hand, employees are one of the most important parts of service. They’re the ones that will keep customers coming back to store. Brick and mortar retailers have to make staff the best part of the experience. They have to ensure that they have a solid team of experts that are engaged with customers at the right level from the minute they walk in the shop’s door

For “click” organizations:  Demand of ebooks is increasing day by day. Ebooks can be delivered almost instantaneously. It is very simple and easy to purchase and download ebooks through the Internet. So besides physical books online retailers should initiate ebook selling.  Search Engine Optimization (SEO) is a very viable marketing outlet that can, in concert with effective landing pages and content, bring a business qualified leads and customers. Moreover, studies have shown that SEO can have a better ROI than traditional forms of marketing like TV and print ads. SEO can provide a business visibility, branding, traffic, a high ROI, credibility, and insight into customer behavior. So online retail stores should invest heavily on SEO.  Online retailers have to foster relationship with consumers by helping them make decisions through recommendations of items based on past purchases, user reviews and ratings and suggested complementary purchases. Consumers should have many options for forging a personal bond with the brand, including 64

user profiles, reviews and ratings, wish lists and Listmania lists for recommending favorite products.  Running a blog associated with product bring about limitless potential of content marketing. By producing free, valuable content, online retailers can create trust in their brand and keep people informed. Blogging also gives something to share on social media and helps rank in search engines. A simple yet highly effective way to get started with content marketing for business is to think of all the startingpoint queries people have about products and industry. Using blog, online retailer can answer these queries as individual articles. Additionally, retailers can use blog to offer tips, tutorials, and resources related to their products and the lifestyle around their products. If retailers can create epic content on a fairly regular basis, they will begin to see the power of content marketing via social media shares, search engines, and so forth.  Retailers should provide an easy interface for customers to register their complaints. They should make sure that all queries and complaints are addressed immediately. If some problems cannot be addressed due to any limitation then at least customers should be apprised about the unavoidable circumstance.

Having customer complaints in their own interface will allow

retailers to use customer feedback on products and packaging. Retailers may adopt the policy to offer their customer a return option for gift orders.

10 Conclusion: Traditional physical retail stores are facing their biggest challenge since the dawn of the World Wide Web some 25 years ago. The face of retail has changed; today, retailing means going into shopping centers, going online and going mobile. Digital technologies in the form of smart phones touch screens and information infrastructure has revolutionized retail outlets. With a burgeoning tech savvy population and rising income in urban areas, the web will continue to shape the business model of online as well as physical retail stores of Bangladesh. This research looked into the impact of web on the retail industry of Bangladesh, the survey report showed something really interesting; 65

even through people do have reservation about shopping online a large population is willing to adapt. With a proper business model and right strategy online shopping can become a trend for both physical and online store alike. For that to happen many major issues are to be addressed; like security and customer’s trust. With constant upgrading of technologies and proper management; it is not that far, that most people would be doing business online, redefine conventional way of shopping altogether.

66

11 APPENDIX 11.1 QUESTIONAIRE FOR THE CUSTOMERS 1. What is your age? (a) 15 - 25yrs old (b) 26 - 35yrs old (c) 36 - 45yrs old (d) 45yrs + 2. Gender (a) Male (b) Female 3. Marital status (a) Married (b) Single 4. What is your average monthly Income? (a) No income (b) < 30000 (c) 30000-60000 (d) 60001- 90000

67

(e)>90000

5. Are you self-supported? (a) Yes (b) No 6. How many credit card(s) do you use? (a) None (b) 1 - 2 (c) 3 - 4 (d) 4 - 5 (e) More than 5 7. How many year(s) have you used a computer? (a) Never used computer (b) Less than 1 year (c) 1 – 3 years (d) 4 – 6 years (e) 7 yrs + 8. Indicate your ability to use the Internet (a) Not skilful (b) Somewhat skilful (c) Skilful

68

(d) Very skilful (e) Don’t use 9. What is your primary access to the Internet? (a) In your home/ Dorm room/ Apartment/ Work office (b) At university computer labs (c) Public facility (library, apt computer lab, etc.) (d) Other (e) No access

Strongly

Disagree

Neutral

Agree

Strongly agree

disagree 1

2

3

4

5

10. I am willing to give my personal information when shopping on the Internet. 1

2

3

4

5

4

5

11. I can save time by shopping on the Internet. 1

2

3

12. I trust the security of online payment methods such as credit card. 1

2

3

4

69

5

13. I can save money by shopping on the Internet. 1

2

3

4

5

3

4

5

14. Internet shopping is easy to do. 1

2

15. I am concerned about possible interception of financial information by an unidentified third party. 1

2

3

4

5

16. I found myself checking prices when shopping even for small items. 1

2

3

4

5

3

4

5

17. Internet shopping is convenient. 1

2

18. I would be more likely to shop on the Internet if credit card security was insured. 1

2

3

4

70

5

19. Internet promotions such as banner advertisement, sales, or free gifts are attractive to me. 1

2

3

4

5

4

5

20. Online shopping is safe for credit card use. 1

2

3

21. I would be more likely to shop on the Internet if the Web site was easy to use. 1

2

3

4

5

22. I shop online where I can reduce my efforts in traveling, walking, parking, waiting, and carrying as much as possible. 1

2

3

4

5

3

4

5

23. I enjoy shopping on the Internet. 1

2

24. I want to see and touch products before I buy them. 1

2

3

4

5

25. Online shopping is a way I like to spend my leisure time. 1

2

3

4 71

5

26. When the Internet retailers are not fully identified, I worry about whether they are reliable. 1

2

3

4

5

27. Internet shopping provides a better quality product. 1

2

3

4

5

28. I like to shop on the Internet where it is easy to compare many products and screen them in order to choose the one I like. 1

2

3

4

5

29. When shopping on the Internet pictures and colours are clear and representative of the products. 1

2

3

4

5

30. Internet shopping provides more variety of products. 1

2

3

4

5

31. I would be more likely to shop online if product returns were easier. 1

2

3

4

72

5

32. Traditional retail stores offer me better services than online stores. 1

2

3

4

5

33. When shopping on the Internet, I am satisfied with the delivery system. 1

2

3

4

5

34. I am satisfied with the return policyof Internet shopping. 1

2

3

4

5

35. I would be more likely to shop online if the pictures of the items were clearer. 1

2

3

4

5

36. I would be more likely to shop online if faster delivery was insured. 1

2

3

4

5

37. When shopping on the Internet, the store’s reputation concerns me. 1

2

3

4

5

38. I don’t like to pay returning postage when returning online purchases. 1

2

3

4 73

5

39. I would be more likely to shop online if more extensive descriptions of items were included. 1

2

3

4

5

11.2 References: 1. Choi, S., Winston, A., (2000), “ Benefits and Requirements for Interoperability in Electronic Marketplace,” Technology in Society, v. 22, pp. 33-44. 2. Michalski, et al., (1995), “ People are the Killer APP,” Forbes, June 5, v. 155, i.12, pp. 120-122 3. Wigand, R. & Benjamin, R. (1995), “ Electronic commerce: Effects on electronic markets,”

Journal

of

Computer

Media

ted

Communication,

1(3)

or

[http://www.ascusc.org/jcmc/vol1/issue3/vol1no3.html]. 4. Yao Chen , Luvai Motiwalla andM. Riaz Khan (June, 2003), “Performance Impact of E-Business Initiatives on the US Retail Industry,” College of Management, University of Massachusetts. 5. Shahriar Azizi, Masoud Javidani (2010), “Measuring e-shopping intention: An Iranian perspective,”. 6. Deepika Jhamb, Ravi Kiran (2011), “Organized retail in India - Drivers facilitator and SWOT analysis,” ASIAN JOURNAL OF MANAGEMENT RESEARCH Volume 2 Issue 1, 2011 . 7. Rachana Ghayal, Madhavi Dhingra (2012), “Impact of E-Business on the Retail Market: A Short Study,” 8. You Qinghe; Chen Wenyuan; Liu Kaiming (2014), “The online shopping change the retail business model: A survey ofthe people use online shopping in China,”. 9. Zwass, Vladimir (1996), “Electronic Commerce: Structures and Issues,” International Journal of Electronic Commerce, 1 (Fall), 3-23.

74

10. Christensen, Clayton M., Scott D. Anthony, and Eric A. Roth (1994). Seeing What’s Next: Using Theories of Innovation to Predict Industry Change. Cambridge: Harvard Business School Press. 11. Brynjolfsson, E., Smith, M.D. (2000) Frictionless commerce? A comparison of internet and conventional retailers. Management Science, Vol. 46, No. 4, pp. 563-585. 12. Yan, R., Pei, Z. (2009) Retail services and firm profit in a dual-channel market. Journal of Retailing and Consumer Services, Vol. 16, No. 4, pp. 306–314. 13. Kotha, S., Rajgopal, S., Venkatachalam, M. (2004) The role of online buying experience as a competitive advantage: evidencefrom third-party ratings from ecommerce firms. Journal of Business, Vol. 77, No. S2, pp. 109-133. 14. Whysall, P. (2000) Retailing and the internet: a review of ethical issues. International Journal of Retail and Distribution Management, Vol. 28, No. 1, pp. 481-489. 15. Reichheld, F., Markey, R.G. Jr., Robert,G., Hopton, C. (2000) The loyalty effect – the relationship between loyalty and profits. European Business Journal, Vol. 12, No. 3, pp. 134-149. 16. Harris, L., Ogbona E. (2001) Competitive advantage in the UK food retailing sector: past, present and future. Journal of Retailing and Consumer Services, Vol. 8, pp. 157-173. 17. Salisbury, W. D., Pearson, R. A., Pearson, A. W., & Miller, D. W. [2005]. Perceived security and world wide web purchase intention. Industrial Management & Data Systems, 101(4), 165-177 18. Torkzadeh, G. & Dhillon, G. [2001]. Measuring factors that influence the success of internet commerce. Information Systems Research, 12, 187-204. 19. Lee, M. K. O.,& Turban, E. [2001]. A trust model for consumer internet shopping, International Journal of Electronic Commerce, 6(1), 75-91. 20. Ratnasingham, P. [1998]. Internet-based EDI trust and security. Information Management & Computer Security, 6(1), 33-40.

75

21. Davis, F. D., Bagozzi, R. P., & Warshaw, P. R. [1989]. User acceptance of computer technology: A comparison of two theoretical models. Management Science, 35(8), 982-1002. 22. Al-Fadhli, S. [2011]. Critical success factors influencing e-commerce in Kuwait. Journal of Internet Banking and Commerce, 16(1). 1-7. 23. Suki. N., Ahmad, I., & Thyagarajan, V. (2002). Motivation and concern factors for internet shopping:A Malaysian perspective. The Electronic Journal for Ecommerce Tools and Applications. 1, 1-18. 24. Rogers, E. M. [1995]. Diffusion of innovations (4th ed.). New York: The Free Press. 25. Birkin, M., Clarke, G., & Clarke, M. [2002]. Retail geography and intelligent network planning. Chictster: Wiley 26. Yang, Z. and Jun, M. (2002). Consumer perception of eservice quality: From internet purchaser and no purchaser perspectives. Journal of Business Strategies, 19(1), 19-41 27. Yen, C. and Lu, H. (2008). Effects of e-service quality on loyalty intention: an empirical study in online auction. Managing Service Quality, 18(2), 127-146. 28. Petersen, Andrew and V. Kumar (2009), “Are Product Returns a Necessary Evil? Antecedents and Consequences,” Journal of Marketing, 73 (3) 35-51. 29. Wood, Stacy L. (2001), “Remote Purchase Environments: The Influence of Return Policy Leniency on Two-Stage Decision Processes,” Journal of Marketing Research,38 (2), 157-169. 30. Anderson, Eric T. and Duncan I. Simester (2004), “Long-Run Effects of Promotion Depth on New versus Established Customers: Three Field Studies,” Marketing Science, 23 (1), 4-20. 31. Kushwaha, Tarun and Venkatesh Shankar (2007a), “Single Channel vs. Multichannel Customers: Determinants and Value to Retailers,” working paper, Texas A&M University. 32. Miller. (1996). Buyers. Fuzhou: Rights. 33. Miller. (2010). Customer. Karawang: Internet. 34. KoiandSim. (2002). Customer. Foshan: China Daily. 76

35. You Qinghe; Chen Wenyuan; Liu Kaiming, University;Indonesia: “The online shopping change the retail business model: A survey of the people use online shopping in China,”. Journal of Business and Management (IOSR-JBM) Volume 15, Issue 5 (Jan. 2014), PP 77-110 www.iosrjournals.org 36. Kesidou. ( (2009) ). Online Shopping. Beijing: China Daliy 37. AjzenandFishbein. (1975). Intention. Semalang: Biaoming 38. Darian. (1987). Traditional retail shoppiing. Liaodong: 1987 39. Ghose and Bhatnagar. (2004). Shopping online. Dandong: Yanbian. 40. Wilsonz and Rettie. (2007). Shopping online. Heihe: Yanjiu. 41. Gurvinder S Shergill ; Zhaobin Chen: “WEB-BASED SHOPPING: CONSUMERS’ ATTITUDES TOWARDS ONLINESHOPPING IN NEW ZEALAND,”. Journal of Electronic Commerce Research, VOL. 6, NO.2, 2005 42. Nik Kamariah Nik Mat, Siti Salwani Meor Ahmad :” Determinants of Online Shopping Intention” 43. Na Li and Ping Zhang: “CONSUMER ONLINE SHOPPING ATTITUDES ANDBEHAVIOR: AN ASSESSMENT OF RESEARCH” 44. Ping Zhang, Gisela von Dran, Paul Blake, Veerapong Pipithsuksunt,: “A Comparison of the Most Important Website Features in Different Domains: An Empirical Study of User Perceptions” 45. Li, Na & Ping Zhang (2002), Consumer online shopping attitudes and behavior: an assessment of research, Proceedings of the Americas Conference on Information Systems (AMCIS’2002), Dallas, August 9-11, 2002 46. NikKamariahNik Mat, Siti Salwani Meor Ahmad, “Determinants of Online Shopping

Intention”

Proceedings

of

International

Conference

on

E-

Commerce2005 47. Eileen Bridges, Ronald E. Goldsmith, Charles F. Hofacker, “Attracting and Retaining Online Buyers: Comparing B2B and B2C Customers.”

77

78

79