Electronic communications have also given rise to many exciting new business and rev‑
enue models that we evaluate in the second part of this chapter. We will use the Business Model Canvas which is an excellent framework for reviewing the business models for both online start‑up businesses and existing businesses who are developing new propositions.
Throughout this chapter we mainly consider the sell‑ side elements of e‑commerce rather than the digital business as a whole. (A review of the entire supply chain is completed in Chapter 6 .)
Our Digital business in Practice interview with Michael Welch of online start‑up Blackcircles.com gives an example of what a well‑ managed, customer‑ focussed online busi‑
ness can deliver.
Online marketplace analysis
Understanding the online elements of an organisation’s environment, which are shown in Figure 2.1 , is a key part of situation analysis for digital business strategy development.
There is also the need for a process to continually monitor the environment, which is often referred to as environmental scanning .
Knowledge of the opportunities and threats presented by these marketplace changes is essential to those involved in defining business, marketing and information systems strategy (which we cover in Chapter 5 ). In this chapter we introduce a number of frameworks for analysing the immediate marketplace of the micro‑ environment.
To inform e‑commerce strategy, the most significant influences are those of the imme‑
diate marketplace of the micro‑ environment that is shaped by the needs of customers and how services are provided to them through competitors and intermediaries and via upstream
Online marketplace Exchanges of information and commercial transactions between consumers, businesses and governments completed through different forms of online presence such as search engines, social networks, comparison sites and destination sites.
Path to purchase The different sites, channels, devices and information sources that consumers use to inform their purchase decision for a product or service.
Also known as conversion pathways on a site.
Multiscreening A term used to describe simultaneous use of devices such as digital TV and tablets.
Destination site Typically a retailer or manufacturer site with sales and service information.
Intermediaries such as media sites may be destination sites for some.
Online intermediaries Websites which help connect web users with content they are seeking on destination sites.
Includes new online intermediaries such as search engines and shopping comparison sites and traditional brokers, directories and newspaper and magazine publishers that now have an online presence.
Online marketplace analysis
Situation analysis Collection and review of information about an organisation’s external environment and internal processes and resources in order to inform its strategies.
Environmental scanning and analysis The process of continuously monitoring the environment and events and responding accordingly.
Introduction
suppliers. (In Chapter 4 we examine the issues of the broader e‑commerce environment in more detail using the SLEPT framework to examine Social, Legal, Economic, Political and Technological issues.)
Figure 2.1 The environment in which digital business services are provided Organisation
Real‑world Digital Business The Smart Insights interview
Michael Welch of Blackcircles.com on creating a new online business
Overview and concepts covered
Michael Welch created Blackcircles.com (Figure 2.2) as a new way for consumers to buy tyres at competitive prices either over the Internet or on the telephone. From the site, consumers can find the best deal from a network of over 1,400 local dealerships.
Blackcircles.com now has a turnover of £30 million and is growing rapidly, so we thought it would be interesting to learn the approaches its founder, Michael Welch, has used to grow and sustain the business.
Q. Which factors were important to the initial success of Blackcircles.com?
Michael Welch, Blackcircles.com: At the very beginning it was mainly about hard work, determination and not ‘taking no for an answer’. If I’m honest there was no real difference between me and the next guy walking down the street – I just wanted it more.
A key factor in the company getting to where it is today, though, was also having a strong USP (unique selling point). There were a couple of other companies around at the same time with a similar USP and there are now countless smaller operations that seem to have modelled their USP on ours.
Providing a culture of excellent customer service is an obvious way to go; back when you are a new company – at times – it is all you have. When brand awareness is zero to slim, you have to work as hard as possible to show the customers at first use that you – and in reality you are taking a gamble – that you give a damn and that their gamble has paid off. I worked hard to make sure customers came first.
Q. Which marketing activities are important to your continued growth?
Michael Welch, Blackcircles.com: The base of our continued growth actually hasn’t altered much from those early days. Customer satisfaction is still very much key, the desire to make the company a success is there and our USP is just as strong as it was back at the start of the last decade.
I suppose there has been a shift in that we were once the underdogs and now we are leading the pack. Implementing new ideas and technologies has played a major part in helping us to stay on top, i.e. making sure we are up to date with the best SEO techniques, embracing the world of social media and continually trying to offer more attractive services to our customers – the launch of car servicing being one such evo‑
lution on the original ‘tyre retailer’ tag that Blackcircles.com started with.
Underneath all that, though the company is supported by a foundation of ‘getting the basics right’.
Q. How do you manage and improve service quality?
Michael Welch, Blackcircles.com: It’s a vital ongoing process. The most obvious way in which we check on the site’s service quality is through customer feedback. This has been the backbone of many changes we’ve made over the years. Our customers are a great resource and I’m often surprised at the number of people I meet who don’t listen to what their customers are saying to them – it’s free advice, why wouldn’t you take it?
Figure 2.2 BlackCircles.com Source: Black Circles Ltd.
We recently placed Trustpilot on our website which is the online retail industry’s equiva‑
lent of Trip Advisor. This shows independent customer reviews and an overall rating. This is a further commitment from us and a great message to customers that we will be doing everything possible to give them a great service. We are passionate about great service.
On top of listening to what our customers are saying we also actively take part in user‑ testing. We’ve been working with a company recently which records anonymous users (which you can define, i.e. British person in mid‑ 30s who doesn’t often use the Internet to shop) on our site.
Not only are we able to see what they are doing, but they also giving a narration of their thoughts. Its early days but we’ve already discovered areas of the site that can be improved due to this.
The newest form of testing we’re just beginning to get involved with is a heat‑ map‑
style technology. Seeing where users are clicking and where they are not is great. It makes you ask why certain areas of a page are receiving attention while the rest is being ignored.
Q. How do you review the success of your site, which approaches do you use?
Michael Welch, Blackcircles.com: As far as I’m concerned, if you don’t include web analytics in your marketing plan, then quite simply, you don’t have a marketing plan.
Gone are the days when all website owners ever worried about was visitor numbers – good riddance too as it means we don’t have to put up with those horrible ‘visitor counters’ that you used to see bandied about everywhere.
Understanding not just how many visitors you have, but also how they are using your site is invaluable. We actively check out this information on a regular basis. A quick example would be: what percentage of our visitors search for tyres? From this, what percentage then adds a set of tyres to their basket and then how many actually end up on the payment confirmation page?
Looking at these stats we can see at what point in an order process people exit our site. Then we ask ourselves what content is on each page, are there enough calls to actions? Is there enough information? Is it easy to navigate? Could we add in new con‑
tent to encourage people to buy? If we come up with a potential change that we believe will help a page perform better, we then track to see the difference. If conversions go up, great – but how can we improve it further? If they drop – back to the drawing board.
Not only do we see the importance on an ‘order process’‑based analysis, but also using it for certain technical aspects. For instance, customers with one browser end up buying in greater percentages than those with a different browser. OK, so is there a piece of code on a page that is affecting the customers’ experience? Or is it even a demographic thing?
All this is just scratching the surface. Web analytics can answer so many questions you didn’t even know you needed to ask. The trick is not getting overawed – it is too easy to get lost in an ocean of statistics.
Q. Which new approaches in the marketplace are you reviewing currently?
Michael Welch, Blackcircles.com: The use of video is an interesting avenue that we are keenly pursuing at the moment. Audio and visual are right up there in terms of brand development and with the sheer number of opportunities available on the web online videos have never been more exciting. We’re still testing the water at the moment with a new ‘Blackcircles.com TV’ channel on YouTube, but I’m pleased with the results so far.
In a bit of a more traditional sense we are also enhancing our email campaigns.
However, I’m very wary of over saturating our customers with information that they will just mark as spam. The key goal for us at the moment is engaging our customers with the brand. Social media is playing a large role in this as well, as you would expect.