Week 6 - Digital Markets
a) What experiences have you had with shopping online?
Haha well I'm a big window shopper even online, I don't buy much online at all, some of my family members buy me gifts from online places and those have all been good experiences.
I did however recently buy a Kogan simcard, on Kogan.com.
It was fairly quick process, but I was then annoyed to find out that the average standard shipping time was six to eight weeks!
Like what the heck!
But seriously Kogan probably have one of the best phone usage deals going around in Australia.
For $29 a month they give you unlimited calls and text and 6gb of internet download, (maximum of 400 mb a day) and they operate on the Telstra network (the provider with the best phone coverage/reception in Australia).
b) Describe a good experience.
A good experience? well I haven't had one, I've had a decent experience.
I bought a Wii U from JB Hi-Fi online.
They gave a special pre order price so I thought it would be good to save some money.
It took weeks to work out, their administration system was slow to confirm transactions, unlike Ebay or Kogan where it instantly withdraws the amount from your account.
When the Wii U came out in JB Hi-Fi stores the first week, it was the same price as the pre-order price, I was really ticked off but I learned a valuable lesson, do not believe JB-Hi-Fi's pre-order price marketing scheme,
if you walk into their store on the first week they stock the new product, then you will get the same price.
JB Hi-Fi say their offer a lower pre-order price in order to increase early demand, which will increase flow of inventory.
However JB Hi-Fi betray customer trust by offering the pre-order price in the first week the product is available in store.
Another reason this is a problem is because JB Hi-fi online is slow compared to their larger competitors because much of their online administration and inventory management is
performed manually, instead of automatic and instantaneous macros (automatic programs that perform a whole series of actions - http://www.webopedia.com/TERM/M/macro.html).
This means that some pre-order customers have to wait longer to receive their product , compared to first week sale customers, because of their slow online store system.
Transactions are completed every second or third day,
which means the money to pay for your online purchases isn't withdrawn from your account until two working days after you have confirmed purchase, unlike Ebay, Amazon or Kogan where payment is instantaneous.
JB why should I bother waiting around for it to come in the mail, when I could get it in store in the first week for the same price!
But I was happy once I had it in my hands and got to test out, so the product itself and its perfect condition, prevented me from seeing it as a negative experience.
c) What did you like about the online store you used?
Well Kogan I believe did a pretty good job of making the transaction process easy, similar layout to Ebay , but one difference is that Kogan clearly ask for feedback and evaluation.
d) Describe a bad experience in online purchases.
Most of my experiences have been bad or at most slightly positive, I bought an album card that had a download code for a pay drop box, I used the code, downloaded the zip file and then my computer crashed, and when I checked my downloads all that was there was an empty link.
I can tell you what though that wouldn't have happened if I was using iTunes instead.
e) What problems did you have with the online store?
Getting back to talking about my order with JB Hi-fi online,
my problem was that it wasn't as responsive as I had hoped.
I was expecting the transaction process to be as fast as Ebay or Kogan.
But no it seems JB Hi-Fi have their employees do the process manually which is why it took three days for my transaction to be processed.
It took longer than that though because I had to make sure I didn't spend too much from my account within that time period, the order had to be re-processed several times because of this.
So I was dissapointed by their system to compete with Kogan or Ebay they need to have a faster transaction speed, it needs to be more sophisticated and automatic.
f) What features make an online store more appealing?
A simple transaction process and a quick money withdrawl.
g) What features make an online store less appealing?
Like I said a store that is slow to confirm purchase and ship product.
Also a store that makes a transaction seem overly complicated, and pop up advertisements that get in the way of eyesight when purchasing a product.
h) Should we expect to see the prices of goods and services rise or fall due to the migration of consumers online?
It will fall, physical retailers can't compete price wise, Kogan have a saying for this "Cheaper than Harvey Norman or JB Hi-Fi guaranteed or it's free!"
If Online stores like Kogan can torment large retailers like JB Hi-Fi by saying they stay competitively cheaper than large retailers, than these trends can only continue.
a) The dispersion of prices (that is, the spread between the lowest and highest price for a particular product) will narrow.
Let's look at buy.com a website considered to be an epicenter for online shopping.
Buy.com use their large and fast search systems to compare and analyse prices for products across the web, to bring the consumer the lowest price on the web.
The use of technology to search and analyse prices will become more widely available in the future, although the internet already provides sufficient price transparency.
Such a quick response rate to price updates through increased internet speeds and automated programs will cause retailers to have to stay up to date with price changes to compete.
b) The importance of brand names will decrease.
There will always be a place for brand name position, however there will be a reduction in sales for leading brands, due to the mass copying and replication of products by mass producing countries like China and Taiwan.
This is already happening, here is an example: Are you shopping for a TV?
Which brand came first, Panasonic or Palsonic?
c) Price competition will make all products cheaper.
There will always be a few to the exception, products that are original and have a patent will likely continue to market at the price they want.
Such examples are, Brooklyn Freerider and the Yike Bike, their unique and original patented design removes most of the pressure to lower their price to substitute products.
d) Digital markets will become dominated by a handful of mega-sites, like Amazon.com.
This is true many small business are drawn to the power that sites like Ebay and Amazon hold.
Only businesses that have a unique product for a niche market (e.g. the Yike Bike) will contain the rest of the digital market in a small percentage.
Small business must be aware that sites like Amazon have giant search engines that are constantly comparing and analysing prices of every other competitor in the digital market.
e) How do you think the balance of power between buyer’s and seller’s will change?
The will is being swayed to the buyer's side, however sellers are coming up with new ways to increase profits, one way is by setting a non negotiable postage cost, unique bids auction system, and offering extended warranties.
Once a buyer has a made a purchase the seller can entice the buyer to buy more, for example you have just bought a laptop from Kogan.com, once you have completed the transaction it shows you accesories you can add to your laptop.
Cases, speakers, mouse, battery life extender,
you initally were only going to buy the laptop, but the website has shown you attractive add on products right after your purchase, this is done to try and prolong your interest in browsing through their store, the longer you browse the more you spend.
f) Prices are clustered online.
Yes this tends to be the case, name brands still need to make a profit and so do their dealers, so price will start from a minimum price, as seen with the ipad mini. http://www.macrumors.com/2012/10/20/ipad-mini-pricing-to-begin-at-approximately-329/
g) Online prices are elastic. ( i.e. immune to change up and down with demand)
Prices online are seasonally elastic.
Price for popular products always rise in the weeks leading up to Christmas.
Why? because retailers know that there is always more demand around Christmas time.
The reason retailers can be assured of increased demand during this season , is because there is a relatively stable cultural pressure, and urge to buy people gifts for this holiday season.
h) Online prices are generally transparent (the extent to which prices for a given product or service are known by buyers in the marketplace.)
Like I said earlier prices are transparent online due to online technology.
Anyone who has common sense does not put a product online without showing a price.
You can not logically put a product for sale online without showing its actual or negotiable price.
Trust is much more sensitive online than a physical store, a person browsing a product that is for sale online without a price tag could assume its a scam.
It's simple no one will hand over their credit card without knowing the amount that will be taken out.
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