ITS 380: Global E-commerce Systems

John Bergstrom

CH9 HW

1.      Why did OpenTable competitors have a difficult time competing against OpenTable?

Competition against OpenTable had a difficult time competing against OpenTable because of many reasons. First, OpenTable is the number one, leading provider of reservation and table management, as well as, guest management software for restaurants. Second, OpenTable already has an established customer base in existing restaurants already using OpenTable. Moreover, OpenTable collects their revenue from two revenue streams; monthly subscription fees and a one-time transaction fee which provides the restaurant with an on-site installation and training on how to use the software. OpenTable also offer additional services that gives them a competitive advantage over other restaurant software. OpenTable has the ability to track costumers and help restaurants collecting valuable data and customer patterns that helps them develop strategies and grow.

2.      What characteristics of the restaurant market make it difficult for a reservation system to work?

One of the most challenging aspects of making a reservation system to work as it is supposed to is among others that the restaurant industry has been slow to leverage the power of technology, internet, and information. A couple of years back and to some extent today, most of the restaurant websites were not technologically advanced enough to be able to handle reservations for a particular date and time. This resulted in the reservation systems being constrained by the times that restaurants were open to call in and make a reservation. The disadvantages with making a phone-reservation is that this system is prone to human errors, and dependent solely on the oral conversation between customer and the restaurant employee. Moreover, since the restaurant industry in itself is quite fragmented with different needs depending on what niche the restaurant is in. This has resulted in restaurants using different systems from each other and those systems are not always compatible with their websites.

3.      How did OpenTable change its marketing strategy to succeed?

One of the shifts in Open Table’s strategy was to pay online restaurant reviewers for providing a link to the OpenTable website and have the reviewers target big national chains for fast expansion. They also redesigned their software and hardware to create a more user friendly ERB system. OpenTable also deployed a door-to-door sales force to attract subscription from high-end restaurants visitors, this in combination with their highly aggressive E-commerce presence proved to be useful. As OpenTable grew and their technology became more established their customer base started growing rapidly. Additionally, OpenTable also developed useful programs to help market their service, through e-invites, good reviews, and social media. This provided OpenTable with a continuous customer curiosity and attraction that has proven to be a success for OpenTable.

4.      Why would restaurants find the SaaS model very attractive?

The SaaS model works because most of today’s customers don’t just simply buy software and install it on their computers, instead, they go online and get the software through an online platform by subscribing to the right to use the software. Another aspect of this, is that the SaaS model doesn’t necessarily have to sell physical goods, instead it enables restaurants to make restaurants, much like a social media site enables its users to share and communicate content. Lastly, the SaaS model can increase the efficiency of operations and provide cost savings for both the restaurant and its customers.

 

Project Questions

 

1.      Find an example not mentioned in the text of each of the four types of online retailing business models. Prepare a short report describing each firm and why it is an example of the particular business model.

A.    One business model that I identified as not existing in the four types of retailing business models was an open-source portal for games like Steam. This could be considered a manufacture direct business model, but with the difference that an open-source portal for games lets anyone put up their content for sale on the website.

Open-source portal

Website: steam.com

Company: Steam

B.     When looking at the manufacture-direct business model I immediately though of Bauer, which is hockey brand that manufactures skates, sticks, protective gear, and accessories. They have a pretty tight product focus on only hockey products and knows their target market very well. Since Bauer does their own design, development, and manufacturing of their products I thought that this was a good example of a manufacturer-direct website.

Manufacture-direct

Website: Bauer.com

Company: Bauer

C.    When it comes to catalog merchant I figured that JCPenney would be a good example. I and many of the people I know gets so many catalogues from JCPenney sent to us by post. They must spend a lot of money on printing. Purchases can be made directly from the Web page or their web catalog, either with a mail-in form or a toll-free telephone number, or directly ordering to your door, which I assume is the way of ordering that is most frequently used.

Catalog merchant

Website: jcpenney.com

 Company: JCPenney

 

D.    A good example of a multi-channel merchant or brick and click store is BestBuy. BestBuy does a good job of leveraging their strengths and assets as they advertise their line of electronics and entertainment offerings in technical media, social media, and printed media. They provide their customers with good recommendations based on user’s web behavior and also offers discounts on various products.
Multi-channel merchant/Brick and click

Company: BestBuy
website: BestBuy.com

E.     A great example of a virtual merchant is Joss & Main with their only presence being online. They have developed a quite well known and respected brand in the furniture industry. The main focus of Joss & Main is provide good looking and well-functioning furniture at a low cost along with good customer service.

Virtual merchant
Company: Joss & Main
Website: jossandmain.com

2.      Drawing on material in the chapter and your own research, prepare a short paper describing your views on the major social and legal issues facing online retailers.

As the world is moving towards more globalization by every second, and a with technology being a big part of why globalization is possible I think that some of the main trends we will see in the upcoming years are developments in the software of tracking and trading goods on global shipping routes, as well as, developments in healthcare. Blockchain is the new buzzword in the IT and supply chain industry. With Maersk’s new project on Blockchain together with IBM will show many unused opportunities in global trading that will affect e-commerce greatly. With the development of new forms of e-commerce and business models, I think that healthcare will be affected. In Sweden, there are already companies who offers a virtual visit to the doctor through their website. This is something that I think we will see expand to other countries, and especially capitalistic countries such as the U.S. and the rest of Europe. This will revolutionize the healthcare industry and help drive e-commerce to new levels of profitability.