Walmart and Business to Business transactions

E-Commerce

Walmart and Business to Business transactions

Business to business (B2B) e-commerce transactions are the most rapidly growing segment of the e-commerce field. B2B transactions help two companies to interact between each other over the internet in order to complete transactions. It is beneficial for the businesses as it cuts down the cost. (Bidgoli, 2013)

Walmart is an international retail giant, which has a humungous retail chain in USA and abroad. Walmart uses B2B e-commerce arrangements in order to replenish its stocks and order stocks of new products from its suppliers. To control the replenishment of stock and making the buying process more efficient, Walmart has made B2B arrangements with its suppliers. As a result, it shares data related to stocks with its suppliers and in turn, it also gets information about new products. (Lussier, 2009)

Nature of Transactions

The nature of transactions that Walmart makes is ordering supplies. As Walmart and its suppliers share information, the restocking and payment process get smoother. The suppliers get the information about the stock that is depleting, as a result, they can send in more units of the product. Walmart, gets information about the new products of the supplier and thus it can order new products over the internet. (East & Wright et al., 2008)

In addition, the Walmart could avoid promotions from the supplier side, this made it easier for them to order products and eventually made the supply and demand interact with ease. The suppliers could easily supply the products according to the demand and as a result, Walmart’s restocking system improved a lot. Walmart enjoyed a stock that would not deplete and its suppliers would get a customer that would be in a constant need of products. (East & Wright et al., 2008)

This B2B arrangement helps Walmart and its suppliers to meet the consumer demand without any delay and shortages. It also helps to eliminate any intermediary and therefore the cost of ordering and supplying is cut to minimum. (East & Wright et al., 2008)

Technical Architecture

With the evolution of B2B e-commerce, the need for better software architecture, which can cope up with speedy and huge transactions, has increased. The transactions of Walmart are also in a large amount and therefore a suitable technical architecture is necessary in order to ensure the smooth ordering and supply process. (Bianco & Kotermanski et al., 2007)

The technical architecture that supports the transactions of Walmart is Service-Oriented Architecture (SOA). Service-Oriented architecture does not have a specific definition but it can be described using a set of characteristics. SOA consists of two parties normally. One is the provider of service whereas the other is the user. These two parties can perform a host of tasks using the SOA. These tasks are: (Bianco & Kotermanski et al., 2007)

The service users can send massages to the service providers.

A service provider can also become a service user and can send messages to other companies.

A service user can look up for several service providers in the service providers directory.

An Enterprise Service Bus can also act as a mediator between the service users and service providers. (Bianco & Kotermanski et al., 2007)

The first characteristic of SOA is that it is a complete independent unit in itself. This means that it can be deployed independently without connecting to any other system. Secondarily, the SOA is modular and thus it contains several components. These components are the part of the SOA. The users of a service enjoy a specific interface provided by the SOA. The users do not have to worry about the implementation. Moreover, the service users and providers can have different languages and styles according to their preference. (Bianco & Kotermanski et al., 2007)

There are many uses for the Service-Oriented Architecture. Different organizations opt for SOA to accomplish one of the following tasks:

Incorporation with older systems

Corporate mergers

Altering relations with business partners. (Bianco & Kotermanski et al., 2007)

The SOA supports Walmart’s transactions as Walmart alters its relations with its suppliers by giving them more information about the stock so that the suppliers can send the product themselves when they are at a low level. (Bianco & Kotermanski et al., 2007)

Advantages and Disadvantages

The use of B2B e-commerce transactions has advantages and disadvantages as well. The first advantage of these transactions is the cost efficiency it brings. Traditionally, the buyers and sellers used to meet after going through a lot of advertisements, meetings and confirmations. All of the aforementioned steps used to take a lot of time and money as well. With the advent of B2B e-commerce, Walmart can easily; order supplies and find new suppliers without worrying about the above-mentioned steps. In addition, e-commerce also omits the need of hard copies and paper-based presentations. All of these things accumulate and make the whole process cost effective. (Lucking-Reiley & Spulber, 2001)

Apart from getting saving costs, e-commerce also gives an advantage of optimum stocks to Walmart. As the suppliers have information about the stocks, Walmart enjoys optimum stock levels and easily avoids shortages. (Lucking-Reiley & Spulber, 2001)

Moreover, Walmart enjoys better relationship with its suppliers and gets a better customer service without any delay. B2B e-commerce transactions helps Walmart to focus on its own customers without worrying about suppliers and depleting stocks. It can therefore be more efficient in fulfilling the demands of its customers. (Lucking-Reiley & Spulber, 2001)

On the other hand, there are disadvantages of B2B e-commerce as well. Despite the fact that Walmart can easily get optimum stock levels, not all the supplying companies offer the e-commerce facilities. Therefore, the market of B2B e-commerce is limited. (Sun & Finnie, 2004)

In addition to that, the goods ordered over the internet via e-commerce may have quality issues. Although the goods may have a guarantee, the time taken by the goods to be sent back and return creates a gap, which may lead to shortage. Moreover, the delivery of goods may also get delayed. (Sun & Finnie, 2004)

Effects of E-business on Project Management

The field of e-business is so vast that is has affected almost all the aspects of the day-to-day activities. Project management means managing the resources and personnel that are engaged in completing a project. The advent of e-business has changed the conventional ways of project management. There are positive and negative aspects of the changes in project management. (Fong & Fong et al., 2002)

First of all, a lot of physical equipment has been eliminated. Nowadays, the project managers only have to work using computers on different websites. This makes it a less tedious job to perform. In addition, costs are also cut as the use of printed information is also reduced. (Fong & Fong et al., 2002)

Secondly, the projects can also be tested before final deployment. Conventional project managers had to be very careful about mistakes and errors, as it would ruin the project. With the advent of e-commerce, a project can be tested before it starts working and therefore, the designers and managers get a chance to rectify errors that are found. (Fong & Fong et al., 2002)

E-business projects are also flexible when compared to conventional projects. Softwares can adapt to changes in hardware and therefore the system shows a level of flexibility. These systems are also made flexible so that they can cope with the constantly changing technology. (Fong & Fong et al., 2002)

On the other hand, these projects also have risks associated with them. The first risk is the security of data. As data stored on computer nowadays is more vulnerable to theft than the one stored in lockers. Therefore, there is a risk of hacking. (Fong & Fong et al., 2002)

In addition, compatibility can also become a problem for project managers. Sometimes hardware and software may not be compatible with each other and may result in increased time consumption. (Fong & Fong et al., 2002)

Lastly, the e-commerce project have seriously affected the system reliability. The conventional systems were reliable as they normally did not depend on chips and other electronic equipment. Increased dependence on this equipment has adversely affected the system reliability. (Fong & Fong et al., 2002)

Effects of E-business on supply chain management

E-business will also affect the supply chain management as it will directly affect the three flows that make up the supply chains of different organizations. E-business affects the physical flow by making sure that information reaches the two parties via virtual means. Therefore, the companies will be able to explore more markets without physically travelling to them. This will reduce the cost of ordering supplies. (Rekha, 2007)

The information flows are affected by the E-business as it can provide information to a company 24 hours a day, seven days a week. This reduces the use of traditional paper-based systems which had to be prepared and presented to the management so that they can make decisions. (Rekha, 2007)

Lastly, e-business also affects the financial flows by eliminating the need to pay the client using cash. Using e-business, companies can pay their suppliers almost instantly. (Rekha, 2007)

E-business, however, reduces the level of reliability as the system depends a lot on things that have a probability of crashing. As a result, backups are made to ensure that important data is not lost. (Rekha, 2007)

The advent of e-commerce has also brought in a security risk. As huge sums are transferred via internet, there is a chance of theft and hacking. (Rekha, 2007)

Effects on Retailing

Retail businesses have also benefitted from e-business. As the cost of supplies is reduced, the retailers can offer a lower price to customers online and can therefore get more customers and profits. (Steel & Daglish et al., 2014)

In addition, the retail businesses can provide the customers with a wide range of products online. As keeping a wide range requires physical space, the benefit of e-commerce to retailers is that instead of displaying the stock, they can stack it and can show a picture on the website. In this way, the demands of the people will be met efficiently. (Steel & Daglish et al., 2014)

Product availability is also improved after the advent of e-business. As mentioned earlier, the retailers can get a smooth supply of products using e-business and therefore they have optimum stocks all the time. As a result, more customers are attracted towards them. (Steel & Daglish et al., 2014)

On the other hand, e-business has somehow damaged the goodwill of the retail business. In conventional retail business the customer used to go to the shop, buy a thing and pay for it but in e-business there is a great chance of fraud and therefore people do not trust it. (Steel & Daglish et al., 2014)

Effect on Entertainment

E-business has enhanced the performance of entertainment industry as the industry has now got a global market. DVD’s and other entertainment items can be sold over the internet to a wider range of customers. (Hoffert, 2000)

In addition, different web hosting services have also started. They provide the service of online entertainment to the audience and are used by a lot of people. In addition the number of people following these websites is also increasing day by day. (Hoffert, 2000)

On the contrary, the e-business has also made copyright infringement easier. The copyrighted material can be changed easily if it is made available on the internet. Therefore care must be exercised in this matter. (Hoffert, 2000)

Effect on manufacturing

E-commerce will also have an effect on the manufacturing sector as this sector is required to be more flexible. The customer may demand more of one product and may also demand some customization as well. As E-commerce can make the customers more demanding, it can also make the manufacturers more flexible by ensuring quick delivery of raw materials etc. (Soliman & Youssef, 2003)

E-business can make the business relationships better and as a result, supply of raw materials to the manufacturers is improved. Therefore, the cost of manufacturing is cut down and the manufacturers get extra profit. Therefore, e-business is advantageous to the manufacturing sector. (Soliman & Youssef, 2003)

On the other hand, the use of e-business creates some problems as well. The companies have to be very competitive as a minor mistake can replace them with a more efficient manufacturer as the progress of all manufacturers will be clear to the other companies. Lastly, due to increased transparency, the manufacturing companies may also find it difficult to act according to their strategy. (Soliman & Youssef, 2003)

Analyze e-business operations from each of the following four perspectives:

Online Payments

Online shopping is increasing in volume and profit everyday as the people prefer using the internet to go shopping rather than using a car. Despite the fact that the notion of online shopping is cozy, some problems arise in the case of e-payments. These problems are discussed below. (Paunov & Vickery, 2006)

The first and foremost issue that a customer and the vendor is worrdied about is the security of the funds that are being transferred online. From the customer’s point-of-view, the information and funds of the credit card, which is being used to make payments, are very sensitive. The customers are reluctant to give their credit card numbers because of the high risk of fraud and theft. (Paunov & Vickery, 2006)

The vendor, on the other hand, is worried whether the customer is real or not. If a product is bought online, the customer should be real or else the company will face losses. In addition, the sellers have to make sure that the customers are going to pay for the things they are buying. In case of e-checks, the vendors may not get the funds they were promised from the bank. Moreover, in the cash on delivery method, the vendor is always at risk that the customer may deny placing an order. Therefore there are security concerns on both sides. (Paunov & Vickery, 2006)

In online shopping, the customers are not able to see the product before buying it. This makes them concerned about further frauds. In addition, the customers are also made subject to credit card and shipping charges, which, increases the cost of goods bought online. Many credit card companies charge a transaction fee of up to 2.25% on average. (Paunov & Vickery, 2006)

Customer Satisfaction

E-commerce has created a new way of buying and selling goods. It has transformed the market from a place where people used to go, into a place that comes and visits people at home. This convenience makes people prefer online shopping to the normal one. There are, however, some drawbacks, which are latched on to e-commerce. (Khatibi & Ismail et al., 2003)

The people expect a lot from e-commerce websites nowadays. The level of expectation was quite low when in the beginning but nowadays; people expect these websites to be picture perfect. This leads to dissatisfaction when a company fails to fulfil the expectations of a customer. In addition, the customer does not need to stick to one company as there are a lot of companies operating in e-commerce sector. (Khatibi & Ismail et al., 2003)

Secondly, a huge number of companies is dealing in e-commerce these days. This makes the internet rather overcrowded. A customer looking for a commodity over the internet will get so many options that he may get confused. This eventually leads to customer dissatisfaction as the customer has to leave the marketplace empty handed. (Khatibi & Ismail et al., 2003)

Moreover, some customers also have a knack for shopping malls and super stores. This kind can never be satisfied by e-commerce, as they will always prefer going out to shop. (Khatibi & Ismail et al., 2003)

Supply Chain Management

Supply chain management is improved drastically with the coming of e-commerce. The direct link between suppliers and retailers lead to optimum level stocks. Therefore, the customers return with what they wanted almost all the time. However, the supply chain management is faced with some problems after its integration with e-commerce. (Yang, 2012)

E-commerce has created a great deal of transparency in the operations of suppliers and retailers. As a result, there is a fierce competition between different companies. If a supplier is not able to meet the demand, it is replaced with a more efficient one. The companies, however, might not always have a competitive edge over each other and in that case, the decision making becomes difficult for the management. (Yang, 2012)

In addition to that, e-commerce demands the business partners to be very cooperative. It requires the companies to change with a greater speed than the market and the result is a lag between the two. As the market conditions may not always support cooperation between business partners, the supplier and the retailer will then be paranoid about their partners as there will be little or no reliability. (Yang, 2012)

Lastly, the smooth application of e-commerce on supply chain management requires the two business partners to share information as well. As mentioned earlier, market conditions may not always support the exchange of information as well and in these conditions, the management cannot fully reap the benefits of e-commerce. (Yang, 2012)

Advertising

Although e-commerce has provided the companies with a whole new platform to advertise their products. This affect the advertisements and the marketing process positively. However, there are some challenges that should be kept in mind. (Gao & Koufaris et al., 2004)

First of all, the huge influx of companies to e-commerce has created a plethora of advertisements. This adversely affects the advertisements of every company as it may get lost in the heap. Therefore, the advertisement may not reach the customer at all. (Gao & Koufaris et al., 2004)

Secondly, the attitude of customers towards online advertisements is getting worse. As there are many ads, the customers have gotten fed up and many customers may not even pay attention to the ads. In addition, the consumer preferences may also affect the things that the company wants to portray as some customers may think of something as funny while others might find it offensive. (Gao & Koufaris et al., 2004)

A New E-business

The business I have thought of is online mobile repairing and consultancy. The purpose of this business would be to provide the customers with a quick guide along with a practical example via video or image to get through the problems in their cellphones. As cellphones have become quite common nowadays, people have to go to places to get their mobile phones repaired. The business will deal in goods and services both as the customers will be able to order the parts they require for their phone as well. In addition, the customers will also get an option through which a representative will collect their mobile phone and deliver it after repairing. This business will be a retail business as we will be providing mobile parts and services related to it.

Competitive Advantage

Online mobile repairing service would be the first of its kind and therefore, it will attract customers. As the business would be the first one, people will experience it. This business will have an edge over other mobile repair businesses, as it will give the customers a facility to get their mobile phones repaired at home. They would not need to go to a shop and therefore, they will prefer this business due to the comfort it gives. They will also save the cost of fuel that they require when they go to a repair shop.

In addition, the customers will be able to accomplish the task of getting their mobile phone repaired without altering their schedules. They can take out 5 minutes to place an order and thus save their time. This will help the customers to indulge in other tasks without worrying about their broken down phone.

Main Contenders

The main competitor for this business will naturally be the conventional mobile repairers. As the people are used to getting their mobile phones repaired in a conventional shop, they will face certain amount of reluctance in deciding in favor of an online repair service. The people may prefer the conventional mobile repair shops to the online service due to security risks as well. Therefore, the traditional repair service providers will be the competitors the business will have.

Target Market

The target market for this business would be the middle class and the lower rich class. As the elite would not need to repair the mobile phones if they stop working. The medium level of income would trigger their decision to get their devices repaired. As the business would not be a very big one, the middle class market would be ideal for it.

In addition, the customer type that will be generally targeted by the business will be the ones who are interested in technology and have a knack for making their things work by applying different techniques. The customers must also fall in age group 25 to 35 as this age group normally belongs to the income class we are interested in targeting.

Moreover, the target customers will be the ones who prefer comfort over money. This would trigger their decision in favor of online mobile repair service and therefore they will be attracted towards our business.

Associated Risks

Every business consists of potential risks in the beginning. In this e-business, the first risk is that the people will be reluctant in trusting this service. As this service requires the customer to hand over their phones to the company and wait for it to be repaired, the people might be concerned about the security issues. The customers may also reject the service because they do not want to try it. Although it is new, it may not attract customers at all.

In addition, the company also concerned about whether the customer is authentic or not. If someone places an order and upon reaching the destination, the representative finds out that it was a false order, then the company will face losses.

Moreover, a check would have to be kept on the cost. Setting up this business will require many funds and therefore a check must be needed in order to ensure that the costs do not exceed the profits. Furthermore, there would also be a need to check the representatives as they have to be trusted with valuable devices.

References

Bianco, P., Kotermanski, R. & Merson, P. (2007). Evaluating a Service-Oriented Architecture. [report] Pittsburgh: Carnegie Mellon University, pp. 3-18.

Bidgoli, H. (2013). MIS 4. 4th ed. Stamford: Cengage Learning.

East, R., Wright, M. & Vanhuele, M. (2008). Consumer behaviour. Los Angeles: Sage Publications.

Fong, B.C., Fong, A. & Chan, C.H. (2002). E-Business Project Management: Managing The Planning Process. E-Business Project Management: Managing The Planning Process.

Gao, Y., Koufaris, M. & Ducoffe, R.H. (2004). An experimental study of the effects of promotional techniques in web-based commerce. Journal Of Electronic Commerce In Organizations (JECO), 2 (3), pp. 1 — 20.

Hoffert, P. (2000). “Impact of Internet & E-Commerce on Music, Film, & Book Industries,” paper presented at ALAI Copyright Convergence Conference,. Montreal, 25th November. Toronto: Paul Hoffert, pp. 1-6.

Khatibi, A., Ismail, M. & Ismail, H. (2003). The Effect of E-Commerce on Customer Satisfaction in Malaysia.J. Soc. Sci, 7 (3), pp. 201 — 208.

Lucking-Reiley, D. & Spulber, D.F. (2001). Business-to-business electronic commerce. Journal Of Economic Perspectives, pp. 55 — 68.

Lussier, R.N. (2009). Cram101 textbook outlines to accompany: Management fundamentals. [S.l.]: Cram101 Inc. Publication.

Paunov, C. & Vickery, G. (2006). ONLINE PAYMENT SYSTEMS FOR E-COMMERCE. [report] Paris: Organisation for Economic Co-operation and Development, pp. 12-44.

Rekha, Y.C. (2007). Impact of E-Commerce in Supply Chain Management. [e-book] Nellore: Narayana Engineering College. pp. 3-5. http://ssrn.com/abstract=2362136 [Accessed: 29 Mar 2014].

Soliman, F. & Youssef, M.A. (2003). Internet-based e-commerce and its impact on manufacturing and business operations. Industrial Management & Data Systems, 103 (8), pp. 546 — 552.

Steel, W., Daglish, T., Marriot, L., Gemmel, N. & Howell, B. (2014). E-Commerce and its effect upon the Retail Industry and Government Revenue. [e-book] Wellington: New Zealand Institute for the Study of Competition and Regulation. pp. 4-9. http://www.iscr.org.nz/f859,22591/E-Commerce_and_its_effect_upon_the_Retail_Industry_and_Government_Revenue_ISCR_Will_Steel_2013.pdf [Accessed: 29 Mar 2014].

Sun, Z. & Finnie, G.R. (2004). Intelligent techniques in E-Commerce. Berlin: Springer-Verlag.

Yang, M. (2012). Supply Chain Management under E-Commerce Environment. International Journal Of Innovation, Management And Technology, 3 (3), pp. 210-212. Retrieved from: http://www.ijimt.org/papers/223-G0015.pdf [Accessed: 29 Mar 2014].

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