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COMP 1008 E-COMMERCE Assignment - Middle East College, Oman

CASE STUDY - A "Gilt"-Free Shopping Experience

Q1. What advantages the Guilt Group Company will be getting by operating solely online offers. What are the disadvantages?

Q2. What advice can you offer the Gilt Groupe's management team as they continue to develop their ecommerce strategy? What steps can they take to stay connected to their customers and to keep their customers coming back?

Q3. What Social, Legal and Ethical issues they must consider while developing the strategy for ecommerce for Gilt Groupe's so that they must not face procecution.

Answer - Guilt Group Company

Case analysis

The case discussed in this paper is of an online brand named Gilt. The success rate has been so good that it has scaled from as small as 15,000 members and extended to as high s 2 million members. Flash sales are the most popular events of Gilt. Customer loyalty is extremely high to this brand for two reasons - exclusive range of products and affordable pricing for sophisticated products. Recently, the brand has also decided to expand its segments by entering into men's clothing and travel options. The success continued in men's clothing sales. Right now, the need is an e-commerce strategy that is meant to improve inventory management and profits.

The company is in need of a solid e-commerce strategy that can eliminate inventory challenges and allow profit maximization. The confusion of the management is in focusing too much on online retailing. Though there is a high turnover unlike any other brands, it also wants to gain technological advantage in the market. When the present website has just invited a number of shoppers to purchase products of their choice, entering the e-commerce field will widen the opportunities. In this paper, an e-commerce strategy for Gilt is developed and explained along with strategies to deal with social, legal and ethical issues.

Advantages of solely online offers

Solely online offers tend to maximize customer loyalty and this is the advantage of this brand. It is amazing to note that female customers are waiting for the brand to announce flash sales to purchase their favourite products. The same degree of customer loyalty was observed in men's products also. This also implies the brand equity and reputation gained by Gilt.

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There is no need for physical infrastructure such as human resources and servers and shop space to manage sales and perform day to day operations. Those savings can be invested towards product maintenance and logistics. For instance, physical stores might have to pay salaries to staffs and depend on them for daily operations. However, a virtual store cuts down all the human resource costs and makes the whole business scalable and viable on a longer run (Porteous, 2019).

The final advantage of the solely online offers is the personalized shopping experience offered to the users. Firstly, the flash offers are not available to all and completely based on invitation. This automatically offers a degree of personalization. Subsequently, the product display to a user is based on previous searches and the usual purchase behaviour. This can be interesting as the user gets exclusive offers and products of interest and this saves time in searching the desired product. However, the advantages are limited as there are too many disadvantages owing to the size of the firm and the number of customers and volume of sales handled each day. This will be discussed in the next section.

Disadvantages of solely online offers

Solely online offers depend largely on the technological infrastructure of a firm. When the site crashes or a hacker tries to access the data belonging to the firm, it becomes unsafe for the users to rely on the brand. Further, an instance like site crash can be extremely unpredictable and there is no solid solution to avoid such instance. The best way is to standardize the available technological infrastructure. This disadvantage actually is also an overhead.

The second disadvantage is lack of patience of the users. Though the customer loyalty towards Gilt is high, there can be instances of impatience when the customer queries are not answered instantly or when they do not have the patience to look through the complete database of products to choose the one that suits (Ferreira, 2018). In the case of physical store, this does not happen as there is a scope for communication between both the parties.

The biggest disadvantage and also the nightmare about running solely online offers is the packaging and shipping. In the case of a physical store, the customer carries the product upon purchase but this is not the case with online retailing as every time an order is made, Guilt Group might have to take the responsibility to find the product in requested size, pack it and ship it as per the mutually agreed timing. Sometimes, packages can be misplaced or damaged and all these remain as losses to Guilt Group.

E-commerce strategy for Gilt group

It is a good idea for Guilt Group to make use of e-commerce technology to enable sales to the targeted audience. Apparently, the technologies have developed way beyond expectations that a complete store can be set up in less than an hour. Instead of having a Gilt website where one has to manually enter the products and invite customers everytime there is an offer, it is a better option to develop an e-commerce store that can automatically let all of these happen without human intervention (Khan, 2016).

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In this section, e-commerce strategy for Guilt Group is prepared.

The first step to creating an efficient strategy is to develop a roadmap. The vision of this e-commerce strategy is to eliminate physical challenges in managing the stores and automating the daily operations (Brianna, 2018). Once it is applied to the women's apparel store, the same strategy can be replicated to other segments of the business.

Here is the roadmap:

• Create merchandising features online.
• Make use of marketing features like Facebook ads, SEO and PR.
• Improve existing UX with options like live chats, quick transfers and receipts and automated accounts management, email marketing.
• Build e-commerce infrastructure with better database technologies and security improvements (Nanehkaran, 2013).

The second step is to define the sales cycle of Guilt Group. At the present stage, sales happen only in the company's website. With e-commerce in place, sales can happen even through mobile apps and it is mandatory to define this sales cycle to understand how much time user spends before purchase. This sales cycle essentially involves optimization of the checkout process. While attractive products influence the mindsets of buyers, trust motivates the buyers to make purchase. It is essential for Guilt group to analyse the cart abandonment rate and trustworthiness displayed during this process (Laudon and Laudon, 2013). The best idea to enhance the checkout process is to have a status bar at the bottom of each page that shows the percentage of purchase completion.

For a safe transaction, the site currently is available only to limited users. To gain their support and grow further, security certificate to the website is mandatory. This will safeguard the site from unauthorized access, malware attack and viruses. This is the third step of the e-commerce strategy proposed for Guilt Group Company.

The next step is to develop the database system for the firm. Going along with the trend, it is better to switch to a cloud-based infrastructure like AWS that will store customer database; offer products based on search scheme and ensure security to the data stored. As there are millions of customers acquired by Guilt Group, the best idea is to integrate the existing database to cloud infrastructure and the firm can pay based on the space used. There is no need for an internal server to handle the data storage and retrieval operations on a daily basis. Instead, business intelligence server can be used (Brianna, 2018).

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The next step is to focus on analytics. The conversion rate for Guilt Group is so high that products get sold at a rapid pace. However, during the expansion, it is appropriate to study analytics and conduct a website audit to maximize productivity and available features for better usability. An important aspect of analytics is retargeting. Since the shift to e-commerce technology is new, some users might find it difficult to place order and then abandon the cart. In such cases, retargeting is the best option. Retargeting can happen through email campaigns using data from customer database (Brianna, 2018). Important factors to consider are conversion rate, open rate, click through rate and retention rate.

Subsequent e-commerce strategy is to humanize the whole process. When millions of people believe the present brand, it is a good idea to further enhance by humanizing the process (DelVecchio et al, 2006). Here are a few steps to implement:

• Communicate with users by responding to reviews, tweets and comments.
• Add faces behind the brand and let users know the people behind this brand who take care of inventory and delivery operations.
• Invest more on mobile application. Guilt Group should not just stop with a site but make it compatible to other platforms and give options for people to download application and make their purchase. This is a great step to expand the business and get creative by maximizing all the platforms.

Humanizing e-commerce experience and studying the analytics can offer customized interface and also offer lifetime value to the customers.

The subsequent strategy is to perform cross promotion on varied platforms. With a vast scope and demand for products of Guilt Group, this is the right time to take advantage of other social media platforms and promote small ticket items wherever possible to promote a user experience on the main page (Luo and Lee, 2018). For all of its new segments, it is essential to spend more towards marketing. This can create brand value and credibility that will automatically create the necessary hype and bring in more sales than expected.

The final suggestion to kickstart immediately is to use state of the art technologies. For instance, using a CRM (customer relationship management) system can improve the experience and also collate the data at an ease. Right from cataloguing to product launches to information provision, action boxes using CRM can do the needful (Savage, 2019). This CRM system has to be integrated to the present warehouse/ inventory management system, billing system, supply chain and customer support departments. Additionally, the results from these systems will have to be taken into consideration by marketing and financing departments as metrics and plan the subsequent strategies accordingly (Filson, 2004).

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An example is here:

Applying intelligent marketing platforms like artificial intelligence tools, semantic search tools and cloud server can actually multiply the sales. Perhaps, these are used by competitors of Guilt Group Company at the moment.

Before taking the final call, these questions need to be asked.

This is the right time to leverage the existing customer data and empower knowledge by offering compelling reasons to believe the brand and provide seamless experience to all the users (Saleh, 2016).

Social, legal and ethical issues

There are also issues concerned with the e-commerce implementation and technological development of Guilt Group. With advanced technologies, there is also a pile of issues that need to be sorted.

Social issues

The primary social issue is security and privacy (Gollman, 2000). Many customers prefer to avoid online purchases due to this reason. Right from the mode of payment to quality of end product, there are several instances that arouse suspicion of the seller (Vishnoi, 2019). On top of these, there are also cases of hacks and spyware that encourage unauthorized access to private data owned by Guilt Group. The next social issue is shipping. Occasions like flash sales boost up the shipping frequency and quantity and make it complex for Guilt Group.

Alternatively, the brand has to focus on regular sales and even setup an internal team that can take care of shipping and logistics. This will eliminate the complexity of the process and also control the overall costs. The process of making a purchase is again impacting the cultural behaviour and knowledge of the buyer. Those who are new to online shopping or have limited knowledge in using technology can find it difficult to register an account, choose products and enter credit card number to make the purchase. Multiple steps can affect the standard of the organization.

On the whole, these issues can be sorted with e-commerce when they are addressed on the first place even before implementation.

Legal issues

The primary legal issue is transaction protection. All the transactions made on an e-commerce site need to abide by the local rules. Right from product description to shipping process, Guilt Group Company has to give a detailed understanding to the customers. Else, penalties might be imposed to the firm.

The second legal issue commonly faced by brands in the e-commerce industry is copyright protection. Using content belonging to a brand randomly to explain the product can be an offense. Since Gilt's product list contains huge number of products, the best solution is to use pictures that are approved by the manufacturer (Babu, 2011). Alternatively, the brand has to implement a legal department that can take care of the legal breaches and problems in advance.

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The final legal issue is taxation and regulation. As Gilt Group deals with solely online offers and retailing it is essential to also abide by the online retailing laws issued by the local jurisdiction. Sudden changes in taxes can be a critical issue and hence, it is mandatory to constantly assess the taxation policies and implement suitable solutions to avoid penalties and breaches.

These legal issues can occur at anytime after the e-commerce business has initiated in the market. This has to be taken into consideration for other brands run by Guilt Group Company.

Ethical issues

There are 2 major ethical issues associated with this online retailing business.

When we look at why people prefer physical purchases over online purchase, the flat answer is every personal datum is tracked as soon as a person enters the site. This web tracking stands as the major ethical issue. Apparently, user anonymity and confidentiality are compromised when sites try to initiate cookies and track the user search patterns (Kim and LaRose, 2004). Sometimes, there are also sites that implement data miner application that shall randomly collect data of the user and store in the server.

The subsequent ethical issue is privacy. Whenever a buyer makes payment, he/she uses a card and the electronic transaction questions about security of the private information and privacy of the user data (Babu, 2011). It is astonishing to see how fraudsters try gaining access to the sites and stealing the confidential data at an ease.

The less known ethical issue is ethical selling. This begins with accurate listing of products without deceptive words, abiding by the online selling laws, maximizing accessibility of website and enhances SEO practices.

Conclusion

Guilt Group Company is doing a wonderful job in selling products online and acquiring a large chunk of users with its unique marketing strategy. It is a good step taken by the company to upgrade the technology and enter into e-commerce industry with automated tools and policies. Meanwhile, we have also developed a strategy and listed the key points to take care of. Eventually, the issues faced by this industry are listed so that Guilt Group Company is aware of them and implements for every brand introduced by this group.

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