E-Commerce: Marks and Spencer - Case Study Example

E-commerce: The case of Marks and Spencer Executive Summary Marks and Spencer is one of the largest retailers of the United Kingdom that have emergedas one of the top fashion retailers. Additionally the food business and home products business of the company has also blossomed. The use of e-commerce has become very extensive among the U.K. retailers with changing times. Most of the leading players in the industry are extensively using e-commerce to improve their customer and supplier relationships. Marks and Spencer have neglected its e-commerce over the past two decades and relatively lesser investment has been made in e-commerce. It has been found that the aspect of e-commerce in Marks and Spencer requires considerable improvement in three primary areas. Firstly, websites of the company have to be improved to make them more user-friendly and interactive to improve customer online shopping experience. Secondly, the warehouse operations and inventory management of the company can be significantly improved by developing e-commerce. Finally, intra-organizational operations can also be improved by development of business-to-employees applications through electronic exchange of data. These improvements will be mandatory for the business to survive in the long run because competitors of Marks and Spencer like ASOS, Next, Tesco and Zara have already updated their electronic commerce business to obtain competitive edge over their rivals. Contents Organization overview 4 Digital Enterprise in retail business 5 The overview of e-commerce in the U.K. retail industry 6 Improvement in supply chain management 6 Use of e-commerce for international expansion 7 Use of e-business by Marks and Spencer Group Plc 8 Use of websites for online sales 8 Management of supply chain by Marks and Spencer through online 9 Security of customers 10 Improving the prospects of e-business 11 Summary 13 Reference List 15 Organization overview Marks and Spencer Group plc is a United Kingdom based retailer that operates more than 731 stores across the country. The core area of business is fashion retailing and food. The company sells apparels and lingerie for both men and women. The stores also sell food and home products apart from clothing. The company also conducts business in Asia, Europe and Middle East. Marks and Spencer Group operates in the retail industry of the U.K. and it has been considered as the fifth largest retailer in the U.K. after Tesco, ASDA, Sainsbury and Waitrose. The market share of the company in the food business is comparatively lower compared to its major competitors. The following graph shows the share of market share in food business. Figure 1: Market share of retailers in the U.K. (Source: Li, 2008) The share of the company in the clothing business is comparatively higher and it accounts for 11.8% of the market share among the top ten major retailers in the industry like Zara and Next Plc, Arcadia group, Primark and Debenhams to name a few. The mission of the company is to provide best quality products in clothing, food, home and financial performances. It also ensures that the customers can purchase the products at an affordable price. The mission of the company is incorporated in its vision statement which reads “The standard against which all others are measured”. The organization employs more than 60,000 employees across the world (Marks and Spencer, 2012). The purpose of this paper is to apply the aspect of digital commerce to the marketing strategies of Marks and Spencer’s so that the company can improve its future business. Initially the current systems employed by the company will be reviewed so that the weakness present in the system can be pointed out and recommendations can be made to improve them. Digital Enterprise in retail business The use of e-commerce in the retail business has become extremely common. E-business or e-commerce has been defined as the process of conducting a business over a web based platform. E-commerce can be described as a process of purchasing and selling goods and services over the internet both to consumers and to businesses. The term e-commerce can be used to include m-commerce and s-commerce. The former refers to use of mobiles and the later refers to the use of social media to make purchases (Xu, 2014). The U.K. has the largest proportion of consumers who make purchases via online among all the other OECD countries (estimated to be around 64%). Statistics reveal in case of the retail industry majority of the business is conducted with business-to-business clients which accounts for 76% of the total business and only 24% of the e-commerce clients belong to the category of business-to-customers (Department of Business Skills and Innovation, 2013). Researchers have found that adaptation of e-business in the retail industry provides a large number of benefits to the organization. Improvements in productivity have often been equated with the adaptation of e-business in retail sector (Ghayal, R. and Dhingra, 2012). Many large retailers have adopted e-business in their business strategies and improvements in total factor productivity have been gained from it. It has also been observed that adoption of e-business in retail industry provides innovation in products and process. Empirical research work has revealed that adaptation of information technology in retailing plays an important role in product and service innovation and improves performance of firms. Furthermore econometric analysis has also revealed that improvements in value chains have also been associated with the application of information technology and e-business activities in retail industry (Ghayal, R. and Dhingra, 2012). The overview of e-commerce in the U.K. retail industry The U.K. retail sector is one of the most competitive sectors of the economy and it has dynamically adapted itself to the changing market forces. The initial picture of the high-street and the local parade retail stores have changed in the recent times and a transformation of the retail industry had occurred since the 70’s and 80’s (Department of Business Skills and Innovation, 2013). New marketing channels like e-commerce and m-commerce have been introduced by the retailers to match up with the growing popularity of internet based business. Major retailers like Tesco, Sainsbury and ASDA provides e-business facilities to their customers which have reduced footfall in the stores but increased the proportion of home delivery (Laudon and Traver, 2007). In the overall retail industry more than three quarters of businesses has their own website. The rate of online transaction has been estimated to be around 17%-33% (Department of Business Skills and Innovation, 2013). Retail shopping has been able to provide consumers with the benefits of convenience shopping by saving their time. E-business has been able to enhance customer relationship management by improving communication with customers. Improvement in supply chain management E-business has also been found to impact the value chain of retail business. Major impacts have been felt in the shelf life of the product and time rotation of inventory. Most of the retailers like Tesco, ASDA, Waitrose and others have implemented e-business because supply chain management costs are greatly reduced through e-business (Laudon and Traver, 2007). For instance Tesco has used the system of electronic data interchange and internet technology to order products from the suppliers. Engaging with the suppliers has helped Tesco in creating a better understanding of the former about the demand forecasts. Similar process had later been adopted by other retailers like ASDA and Sainsbury as well so that management of the products could be shifted to the suppliers. Major retailers in the U.K. have realized that continuous improvement in the supply chain can be accomplished by keeping their systems updated (Dave, 2008). Sainsbury for instance have been able to monitor the needs of the suppliers and consumers by implementing e-business and this in turn have helped Sainsbury in effective inventory management. Use of e-commerce for international expansion It has been reported that majority of the British retailers are using e-commerce as a cheap method to expand business abroad. Majority of the players in the fashion industry are using multiple channels to make their global presence. Marks and Spencer plc is also one of the retailers that is formulating plans of international expansion based on e-commerce. In this regard it can be argued that fashion retailers are using the business model of entirely online based business like ASOS for expanding their market. It has been found that consumers depend on the online channels for ordering products and use of internet for online ordering is largest among the U.K. consumers. About 11% of the orders in 2013 from retailers were place online which is even greater than that of the U.S. e-commerce market where consumers had placed 7.8% of the orders online (Thomasson and Davey, 2014). The government of the U.K. is also keen on exporting products other than financial services and developing the retail sector which is one of the primary concerns. The market for U.K. based retailers is quite large and the number of international customers seeking for U.K. based clothing has increased by 13% (Thomasson and Davey, 2014). ASOS and Next have significantly used their e-commerce strategies to expand in the international market. The presence of online stores is a common factor among the U.K. retailers and it has been found that Tesco, Amazon and e-nay have the largest online store in the U.K. Other major players in the market includes Argos, Play.com, Next and John Lewis. The total value of online sales in the U.K. has been estimated to be around 110.5 billion Euros (Department of Business Skills and Innovation, 2013). In this regard it can be mentioned that Marks and Spencer has been unable to make a formidable presence in the U.K. retail sector. Use of e-business by Marks and Spencer Group Plc The entire business of Marks and Spencer can be divided into seven major sub-divisions areas namely women’s wear, menswear, children’s’ wear, foods, beauty, lingerie and home products. The company presently maintains its own website www.marksandspencer.com. The website that is maintained by the company is mainly transactional. The company had multiple store locations but maintains transactional websites in only France and the U.K. In the past twenty years the Marks and Spencer had underinvested in the information technology that has resulted in business loss of companies. Presently it has been estimated that majority of customers of Marks and Spencer who deals with online trading lies in the age group of 55 and above. 80% of its online customers belong to the age group of 55 and above (Thomson, 2012). In terms of commodities it has been found that only 12% of its general commodities are sold online and one third of its apparels are sold online (Marks and Spencer, 2012). The use of social media by Marks and Spencer is vivid and different platforms have been used to promote multiple activities. For instance, facebook is primarily used for the purpose of obtaining customer reviews and building an online community to obtain support from the customers. Twitter is used for the purpose of promotional campaigns of the company and obtaining feedback from the customers. Use of websites for online sales A significant portion of the sales of the company comes from its online websites. Marks and Spencer is trying to use online websites to expand operations in Russia, Finland and India. Recently the company has also launched e-boutique in Amsterdam to expand market share. Marks and Spencer have realized that in order to improve its market shares of the company it is important to tap the full potential of e-business. Presently the company is dedicated to enhance quality service to customers by improving communications with them. The company has introduced gift vouchers for its freedom reward customers. Barclaycards have been introduced by Marks and Spencer to acknowledge customer loyalty. This effort undertaken by the company can be interpreted as one of the ways to maintain direct contact with its customers. As a result of its communication strategy, customer retention increased (Marks and Spencer Plc, 2014). Marks and Spencer has been facing the issue of falling profits in the financial year 2012-2013. Underinvestment in the information technology has made the management of supply chain very expensive for Marks and Spencer which is likely to reduce the profits for the company. In 2013 the company had more than 110 distribution sectors which meant that the inventory had to be transferred between them physically and this had entailed a cost (Marks and Spencer, 2012). Presence of multiple distribution centres implies that huge costs have to be incurred in transporting the inventories from the port. Engaging proactively in e-business can reduce both the costs and time for the company. According to analysts costs of doing business after implementing e-business can be reduced by 40% and time savings can be improved by 70% (Thompson, 2013). Presently Marks and Spencer have updated its food business online and instant results were observed in terms of better inventory management. In case of the apparel and the food products poor support is provided by online. Customers of the company are not fully satisfied with the online service delivery as has been evidenced from the customer surveys. Online sales of the company are supported through the online platform of Amazon at present. Recently an attempt was made by Marks and Spencer to relaunch its website. However, instead of improving the sales of the company creation of the new website resulted in a plunge of sales by 8.1% (Chapman, 2014). According to the analysts of the Retail Week, complexity in the use of the website by the customers was one of the biggest reasons that had resulted in its failure. It has also been reported that enough care was not taken about the details regarding the website and needless features were added to it which had maligned the sales (Chapman, 2014). Management of supply chain by Marks and Spencer through online The supply chain management are inadequately supported by online support measures as of now. However, the new warehouse that has been built in Castle Donington is expected to take care of the business to improve relationships with suppliers and help in real time management of the inventory. Presently there are complaints regarding lengthy delivery times of the products purchased. Based on the business practices of the company it has to be commented that most of its business support activities have limited online support. Though the company have tried to maintain good relationships with suppliers yet there has been little effort to implement online streaming into demand forecasting to enhance the efficiency of the system. Competitors of Marks and Spencer in the apparel industry like Zara are also trying to improve their e-commerce to integrate management of supply chain. Therefore, development of e-commerce of Marks and Spencer at this point can be treated as a major step that will provide the organization with a competitive edge over its rivals. Tesco can be considered as one of the best players in the market that have integrated e-business practices much to its advantage. The present structure of online business of Marks and Spencer can be classified into the following groups (Turban, et al., 2008). Business-to-business: The business-to-business e-commerce engagements of Marks and Spencer involve management of relationships with suppliers. Majority of online business is done with suppliers based on e-commerce. Collaborative e-commerce: Marks and Spencer also engages in developing products in collaboration with other businesses to design products by using screen-sharing and management of inventory online. Business-to-customer: The online sell of merchandise to customers can be considered as business to customer aspect of e-commerce. Partnership with Amazon has allowed Marks and Spencer to sell its products online. Security of customers Ensuring the online security of the customer is an integral part of conducting transactions as customers have to share personal details like credit cards and pin numbers while conducting transaction. The retailers involved in the business have to ensure that their payment system complies with payment card security standards; data encryption system is encrypted so that the financial information remains secure; and finally safe screen log in options that makes it reliable for customers to initiate the purchase process (Tsai, et al., 2011). In this regard it can be said that Marks and Spencer has implemented strict measures to ensure privacy of customers who visits the website online. Collection and maintenance of data is done when the customer browses through the website of the company. Additional care is taken to ensure that privacy of customers is protected regardless of the device that they use in accessing the website. Personal data collected from the customers are kept discrete and are not divulged to any third parties. It can be commented that security system of the online operations are according to the best practices of the industry. Based on the present case study of Marks and Spencer, the following problems can be shortlisted: Firstly, there is not enough engagement with the customers especially in the context of the apparel business. Secondly, presence of multiple channels of distribution has inflated the time of delivery of service. Thirdly, lack of implementation of e-commerce in the intrapersonal organizational communication can be treated as one of the impediments. Marks and Spencer is one of the largest U.K. retail sector chains with impressive market share. However, its less than adequate investment in the electronic commerce have increased the cost of operation of the business and made the service delivery expensive. The organization immediately needs to take necessary steps to improve on its weaknesses. Improving the prospects of e-business Though Marks and Spencer have become one of the largest retail businesses in the U.K., only limited effort has been made by the company to invest in its e-business. The present system of online commerce is dedicated to improvement of inventory management and management of supplier relationships. Drawbacks have also been observed in the case of online sale of products to customers in terms of prolonged delivery time. The following suggestions can be implemented for the improvement in the e-business operations of the company: Better engagement with the customers: Marks and Spencer does not have any youtube channel of their own or any videos about themselves on their websites. Therefore, it can be suggested that the use of videos on youtube and websites can improve the communication with the customers that may provide a boost to the online sales of the company. Use of multiple channels improves the visibility of the brand and improves chances of sales. Improving relationships with suppliers: Formidable improvements have been reported in managing supplier relationships by use of e-commerce. At present only limited support is provided by Marks and Spencer to its suppliers. It can be suggested that improvements in supplier relationship management can be made by creating a centralized operation system entirely dedicated to manage the online purchase of the product from the suppliers. Online management of the supplier relationships can also be helpful in reducing the number of physical distribution channels of the organization (Gunasekaran and Ngai, 2004). The first step to achieve this has already been taken. In order to revamp its business and improve sales the company has opened a 900,000 square feet facility to facilitate its e-commerce. Improving intra-business operations: The present study of Marks and Spencer reveals that the company does not have adequate measures of intra organizational communications. According to studies conducted by researchers it has been found that intra-business e-commerce has been proved to be extremely successful in improving build-to-order capabilities. Improvement in built-to-order capabilities improves the demand planning and factory-execution accuracy of the business. Improving intra-business operations through electronic commerce systems has been found to be helpful in reducing the customer service delivery time improving their satisfaction (Kaefer and Bendoly, 2004). It has been found that delivery time of Marks and Spencer is relatively high which often produces customer dissatisfaction. Developing intra-business operations can provide an effective solution to the problem. Plan for improvement Activity Improvement Impact Improving customer relationships. Improving the online interaction with the customers by creating interactive videos on the company website along with youtube videos. Making the website of the company user-friendly for making shopping easier. Greater interaction with the customers and easy-to-use online shopping experience can improve the sales. Improving supplier relationships. Making the purchase process from the suppliers easier by centralizing operations. Forecasting demand by using advanced statistical methods and coordinating the purchase process. Significant reduction in the number of physical distribution centres which in turn will improve the process of service delivery by saving time. Automating the intra-organizational communication. Use of electronic data interchange can make the data exchange process easier allowing the employees of various departments to interact with one another on a real time basis. Employees can directly interact with the management in case of any difficulty by developing certain business-to-employee applications. Significant impacts can be observed on the service delivery of the employees by streamlining processes. Impact is likely to be observed in dissemination of information between employee and management. Summary Adoption of innovative technology has made the U.K. retail sector highly competitive. Use of e-commerce has been adopted not only to manage relationship with the customers but also with the suppliers. In case of Marks and Spencer it has been found that present infrastructure of electronic commerce is not developed adequately and relatively less investment has been made in developing e-commerce to manage supplier relationships. Limited efforts have been observed in inventory management and facilitating supply chain operations. Therefore, attention is mainly to be given in the apparel and the home merchandise business of the company as these areas are worse off compared to the food business that has already been updated. Existing websites of the company can be improved for helping customers to purchase products online in an effective manner. Reduction in the number of warehouse can be brought about by improving e-commerce operations which will be helpful in managing supplier relationships and inventory. Cost of business operations can be brought down significantly in this manner. Additionally using e-commerce in improving intra-organizational relationships will also reduce the delivery time of service and enhance customer satisfaction. However, it must be mentioned that recently major investments has been made to improve e-commerce of Marks and Spencer. Reference List Chapman, M., 2014. Analysis: Why did M&S’s new website fail to click into place? [online] Available at: [Accessed 8 September 2014]. Dave, C., 2008.(missing in the intext) E-Business and E-Commerce management. New Delhi: Pearson Education India. Department of Business Skills and Innovation, 2013. A strategy for future retail. [pdf] Crown Copyright. Available at: [Accessed 6 September 2014]. Ghayal, R. and Dhingra, M., 2012. Impact of E-Business on the Retail Market: A Short Study. [pdf] Institute of Research Engineers and Doctors. Available at: < http://www.seekdl.org/nm.php?id=489> [Accessed 6 September 2014]. Gunasekaran, A. and Ngai, E. W., 2004. Information systems in supply chain integration and management. European Journal of Operational Research, 159(2), pp. 269-295. Kaefer, F. and Bendoly, E., 2004. Measuring the impact of organizational constraints on the success of business-to-business e-commerce efforts: a transactional focus. Information & Management, 41(5), pp. 529-541. Laudon, K. C. and Traver, C. G., 2007. E-commerce. Boston: Pearson/Addison Wesley. Li, E., 2008. Supermarket chains and grocery market in the UK. [pdf] CIEBS. Available at: [Accessed 8 September 2014]. Marks and Spencer Plc., 2014. M & S for business. [online] Available at: [Accessed 8 September 2014]. Marks and Spencer, 2012. Annual report and financial statements 2012. [pdf] Marks and Spencer. Available at: < http://www.lebensmittelzeitung.net/unternehmen/pages/pdfs/1/1692-gb.pdf> [Accessed 8 September 2014]. Thomasson, E. and Davey, J., 2014. E-commerce edge helps British retailers expand abroad. [online] Available at: [Accessed 8 September 2014]. Thompson, J., 2013. Marks and Spencer: Under pressure to deliver. [online] Available at: [Accessed 8 September 2014]. Thomson, R., 2012. M&S to expand international e-commerce. [online] Available at: [Accessed 8 September 2014]. Tsai, J. Y., Egelman, S., Cranor, L. and Acquisti, A., 2011. The effect of online privacy information on purchasing behavior: An experimental study. Information Systems Research, 22(2), pp. 254-268. Turban, E., King, D., McKay, J., Marshall, P., Lee, J. and Viehland, D., 2008. Electronic commerce: A managerial perspective. New York: Prentice Hall. Xu, J., 2014. Managing digital enterprise. [pdf] Southern Cross University. Available at: < https://snt146.afx.ms/att/GetAttachment.aspx?file=0f915835-b7d9-4351-b81f-2ee016fc2361.pdf&ct=YXBwbGljYXRpb24vcGRm&name=MTEyMjc0N19zdHVkeV9ndWlkZS5wZGY_3d&inline=0&rfc=0&empty=False&cid=62bed23e335a547e&shared=1&entryPt=download&biciPrevious=0f7e77b6-8548-4d07-87de-80ce7bd8d0a9_016c20877b5_5701&blob=M3wxMTIyNzQ3X3N0dWR5X2d1aWRlLnBkZnxhcHBsaWNhdGlvbi9wZGY_3d&hm__login=saptarshi.debnath&hm__domain=eximiusresearch.com&ip=10.148.160.8&d=d1345&mf=0&hm__ts=Mon%2c%2008%20Sep%202014%2005%3a27%3a25%20GMT&st=saptarshi.debnath%25eximiusresearch.com%407&hm__ha=01_7cb19ed83615fcf0f8381cb02c651b8714591a24839f0bb9509ab630539733c5&oneredir=1> [Accessed 8 September 2014]. Read More