CASE STUDY ONLINE STORE Executive summary IntroductionAims and purposeBusiness designE-order fulfilment and logisticsTransaction costs and the buyerCost of evaluation and selectionShipping costs and their impactConclusionReference listEXECUTIVE SUMMARYThis is an online retailing company that formed by a consortium of domestic and overseas investors who want to invest in Australia, the company proposes to build a warehouse in Sydney with a possibility of expansion to other cities like Melbourne and Brisbane. The company proposes to deal the supply of car accessories and tools, leisure products for boating, camping and fishing and electrical household appliances.
Due to the huge number of Australia household access to the internet on both personal computers and mobile, the prospect of online retailing is high. The company plans to use web-only in the first warehousing in Sydney and will expand later to multi-channel services as expansion taking place. The future plan on the company is to operate in three states that is Sydney, Melbourne and Brisbane, the products sourced from Singapore and Hong Kong and the other services outsourced to minimize cost at all stages of the business for manufacturing and distribution here in Australia.
1.0 INTRODUCTIONThe recent trend toward the outsourcing of logistics activities has given prominence to the concept of third-party logistics service providers (3PL). 3PL defined as providers of logistics services that do the logistics functions on behalf of their clients. Because of the need for timely delivery system, perfect information system and low logistics operations cost due to of economic scale, 3PL providers have had to improve the flow of information both internally and externally and integrate their logistics services into the retail delivery provided by convenience stores.
The retailing delivery includes four functions: 1) packing process, 2) delivery system and 3) pick-up point. The RD system has two special features. First, to address concerns on safety of payment methods online, and this is important for people who do not have credit cards. The second special feature is that the RD service provides consumers with a self pick-up approach through convenience stores. The monthly data collected from financial institutions on the value of spending on debit and credit cards, further divided into domestic and overseas merchants spending.
Through estimates made from domestic electronic purchases has grown from around eight per cent in 2005 to eleven per cent in 2010. (RBA 2011) Though these estimations indicates electronic transactions that includes all e-commerce activities, because of these wider coverage of e-commerce activity, the RBA figure does not give a clear picture of online retail share of all retail sales. (Frost and Sullivan 2010) Estimate that around forty one per cent of online expenditure in Australia directed to overseas sites in 2010. A more recent report estimated that forty four per cent of online sales will be overseas in 2011 which equates to $6 billion.
(PriceWaterhouse Coopers 2011) Survey data collected in 2010 indicates a slightly higher proportion of Australians shopping online at 68 per cent. (ACMA 2010) A survey of 1000 Australians aged 21 years and above done by the Swinburne University of Technology estimates that 69 per cent had purchased goods online in 2011, compared with 40 per cent in 2007. (Ewing and Thomas 2010) Through the research by Roy Morgan Research there is an indication that in September 2010 about a half of Australians aged 16 years and above bought goods online in the previous one year compared with only ten per cent a decade earlier.
(Roy Morgan Research 2011)