University of Hull The Internet and ecommerce November ecommerce analysis for Happy Food

Transcription

1 University of Hull The Internet and ecommerce November 2004 ecommerce analysis for Happy Food 1

2 Executive summary Target market Competitors Supply and value chain Recommendations Vegetarians, families and middle-aged people, and health concerned people and professions are Happy Food main target 2,950,000 vegetarians and 250,000 vegans in UK High level of income ICT literate people Want to be able to buy many products on a unique website and want the whole ordering and payment process to be online. Treats from competitors: - Competitors may have a greater product range; - Traditional physical competitors can launch a new online vegan shop; - Competitors have better websites. Weaknesses of Happy Food: - Basic website; - No online payment system; - Manual treatment of each order; - Cessation of online marketing actions after poor results. ecommerce can bring useful changes in the chain: Suppliers and intermediaries: ecommerce can put all the ordering and payments processes on the web, in an extranet included in the suppliers websites; Happy Food: an intranet will help all the departments: o The stock management; o The production follow-up; o The administrative relations between all departments; o The internal communication. For the website: A website with a large product range; An online ordering and payment process; A simple and appropriate navigation system; Value-added content like health articles and recipes. A partnership with a health-orientated website should be envisaged; Cross-selling features, in order to adapt the offer to each target segment and therefore increase sales. For the supply and value chain: Create an intranet; Encourage suppliers to create their website with online ordering facilities. 1

3 Introduction Happy Food enjoys big changes in its market and in the ecommerce. Its market increased regularly since Happy Food was created, and is expected to continue to grow in the next years. The ecommerce began to grow but the major evolutions are expected to come in the forthcoming years. Thus it is important for Happy Food to take advantage of all these changes and not to let the competitors (who have already a good internet presence) get all the benefits of this evolution. ecommerce can also change the way that Happy Food work with its suppliers and also internally. In fact, some changes in the supply and value chain will help the company increase its sales and reach its objectives. This report tends to analyse firstly Happy Food target market, secondly its e-competitors, and thirdly the supply and value chain. For each of these three issues, recommendations are made on how to implement the ecommerce. 1. Target market ecommerce analysis 2. Competition analysis 3. Supply and value chain analysis Recommendations and conclusion 2

4 1 - Target market ecommerce analysis General behaviour of British online buyers According to a 2004 YouGov research, internet is a rapidly growing channel for purchasing. Within the United Kingdom, the number of individuals who shop online has threefold in the last five years. Now, 94% of respondents say they have bought something on the web, compared with 37% in Directline.com, one of the UK s most popular financial websites, predicts that this growth will continue for the next five years and that the ecommerce will expand significantly. Other interesting figures show the % 37% 94% expansion of the ecommerce: 85% of people buy online more frequently now than five years ago; 96% believe the Internet has made it easier to access goods and services that previously they would not have been able to. Geographic behaviours Londoners buy more of almost everything online than the national average. 100% 80% 60% Web browsing behaviours A recent Pennsylvania State University research studied the manners of acting of web searchers while using a web search engine: 54% of the users view only one page of results; 53% enter only one query; Over 55% of web users view only one result per query. Therefore it is very important for a website to be part of the first search engine results for specific keywords. Online buying trends The fore mentioned YouGov research also shows trends of the ecommerce future with regard to the customers behaviours: Half of the users think that 40% or more of their purchases will be online in 2009 compared to 25% of purchases now; 57% of people believe that their internet usage will continue to rise in a steady manner over the coming five years; 23% of the users believe their internet usage will dramatically increase in the next five years. 40% 20% 0% UK individuals shopping online

5 1.2 - Characteristics of Happy Food target market Target profiles Vegan or vegetarian: many of them are ICT literate people; Health concerned people: o Families and middle-aged people concerned about the quality of meat products; o Doctors, practitioners, nutrition consultants and similar professions. Aspects of ecommerce valued Barriers to adopt ecommerce Cross-selling aspects Value-adding elements Vegans and vegetarians Families and middle-aged people Doctors, nutritionists Use the Internet Can find many Can compare to locate vegan vegan products to eat instantly the products; varied meals; nutrimental Like ecommerce Can order online components of the because they can find without going products; products that are not shopping with all the Can find new sold in physical family. vegan products and outlets. try them. Feeling that transactions are not secured; Shipping costs; Shipping delays; Buying of a virtual product: it is not possible to touch it. Desirable aspect: pushing of new products in accordance with what customer has already purchased (like Amazon model); Inadvisable aspect: pushing too much is not appropriate: a intensive marketing approach can make people flee. Desirable aspect: pushing of bundles to increase online spending. Pushing of products adapted to children; Inadvisable aspect: idem as vegans. Desirable aspect: pushing of brand new products with new nutrimental characteristics; Inadvisable aspect: idem as vegans and families. Value-added information o Recipes; o Description of nutrimental aspects of each ingredient; Pre-sale service: o Frequently asked questions (FAQs) page and help pages; o ed questions and answers; o Access to policies (privacy, security, returns) 4

6 1.2.2 Market size UK meat-free and vegetarian market * 2004* 2005* * 2004* 2005* million Total UK meat-free and vegetarian market is worth 582 million (2002), and has an 8% rise year on year (Taylor Nelson Sofres, February 2003). 5% of the UK population is vegetarian (National Diet and Nutrition Survey 2001). 33% of the UK population only eat meat occasionally (Gallup Poll for Realeat, August 2001). * Provisional figures calculated with an 8% growth each year. United Kingdom counts 59 million inhabitants, including 2,950,000 vegetarians and 250,000 vegans (Food Standards Agency, Consumer Attitudes to Food Standards Report, Aug-Oct 2001). The percentage of vegetarians differs depending on the UK regions: England is the first market with 6% of vegetarians; Scotland: 4% Wales: 4% Northern Ireland: 2% Market trends In addition to the general ecommerce trends previously seen, it is interesting to focus on Happy Food market trends. 79% of UK vegans have purchased vegan products online, and this figure is expected to increase in the future. Moreover, 96% of vegans have used the internet to locate vegan products. The Internet seems indeed to be a well-known support by vegetarian people. 53% use the Internet several times a day. Income level of vegetarians and vegans: The higher social classes contain more vegetarians: AB 9%, C1, C2 and DE 5%. In addition, 55% have a full time occupation in which they spend more than 30 hours a week. Other market trends (from Happy Food website): 72% of the population will enjoy at least one entirely meat-free meal every week; 42% of people in the UK are actively seeking to reduce the amount of meat in their diet; 32% of the population believe that meat-free meals are healthier. 5

7 1.2.4 Happy Food customers 15% of Happy Food customers order via the website; Many negative comments about the website in the last two years; Customers want to both order and pay online; Online customers are more profitable: an online customer spends 176 a year whereas the rest of the customer base spends 88 a year. The current Happy Food website does not seem to satisfy customers needs. Independently of the design issues, its main lacks are: No fully online ordering and payment process; Much manual intervention; No cross-selling streams; No FAQs and real online help. However it is possible to contact the product expect Rachel Harvey but her address is hard to find; Few added-valued content; The interesting links send the visitor to competitors websites; The About our company page contains lots of things, including policies, delivery costs, company information, market trends That makes it hard to find a particular piece of information. Here are some other ideas identified by the Vegan Research Panel: I would like... "...to see either a website or even a shop which stocked only vegan products, and all vegan products that are available. It is frustrating when one shop has one product but not another." "...a true alternative to cheese - tastes like cheese, melts like cheese." "...a label indicating that a product is vegan... it would sure save a lot of time reading the ingredients!" 6

8 2 Competition analysis 2.1 Happy Food industry Happy Food takes part in the UK meat-free vegetarian and vegan alimentary products. Other vegan products exist, like shoes, clothing, or sweets, but the companies which sell these kinds of products are not Happy Food s direct competitors. Therefore we need to concentrate on direct competitors, which have at least these characteristics: Same target market; Internet-based ordering, even if the ordering process is not entirely online; United Kingdom national wide deliveries; Selling of vegetarian and/or vegan food. 2.2 Industry structure The national/ International economy Technology Government & politics The Industry Environment Suppliers (3 rd party vegan food producers) Intermediaries (UPS) Competitors (UK online vegan food resellers) Consumers (vegetarians and vegans, families, health concerned people and professions) The natural environment Demographic structure Social structure Adapted from Grant (2002). Legend: Macro environment Micro environment 7

9 2.2 Competition structure Using Porter s five forces we can structure the competition and identify its threats. Potential Entrants Competitors of the physical world launching their ecommerce website. Threat of new entrants Suppliers Vegetarian and vegan food producers Bargaining power of suppliers Competitors in the vegetarian and vegan food market Bargaining power of buyers Customers Can easily compare products and prices on the web. Intensity of rivalry Threat substitutes products or services Substitutes All other meat-free food. 2.3 Happy Food competitors websites overview Vegetarian and vegan e-shops are not numerous. But many of them offer other products that can interest Happy Food target, like clothes or personal care products. We focus here on three competitors which seem to have a well-settled internet presence. Another competitor which is not analysed here is Goodnessdirect.co.uk. The websites of the competitors are very different, not only in their navigation system, but also in the contents they offer. 8

10 VeganStore This company offers a full product range that can suit vegetarians and other people of Happy Food target (families and health concerned people and professions). TheVegetarianSite This US-based website delivers worldwide; therefore it targets notably Happy Food current and potential customers. It regularly changes its special offers and proposes a lot of added-value content like articles and nutrition information. VeggieStuff This website is quite static, but it contains a full product range of vegetarian food. The navigation is clearer than the two previous websites and it looks more professional. 9

11 2.4 Analysis of Happy Food s competitors Website evaluation Audience & purpose veganstore.co.uk thevegetariansite.com veggiestuff.com 8 The delivery area should be indicated on the front page Management 8 Xmas special offers Ease of use 6 No site map and difficult navigation Content 7 Abundant product information Links 0 No links to other websites Design 1 Very onerous to use: all texts are in image formats (GIF or JPEG). Slow to load with a 56k connexion Interactivity 4 Medium. Newsletter subscription and e- mail address Advertising 7 Self advertising only 8 The delivery area should be indicated on the front page 8 November special offers 3 No site map. Plenty of rubrics so hard to browse 8 Product information + nutrition info 7 Links to other parts of the website and other relevant websites 5 Navigation bar not on all pages. Design unclear 4 Medium. Newsletter subscription and e- mail address 7 Self advertising only 10 Everything at VeggieStuff is suitable for vegetarians, and delivery area is indicated 5 No sign of recent update 9 Site map and easy access to all resources 8 Product information + nutrition info 0 No links to other websites 8 Easy-to-use website with same navigation bars on all pages. Simple and effective design 4 Medium. Search engine and address 7 Few but relevant advertising (vegan books, etc) Uniqueness Recommendation Overall score Comments Not easy-to-use website due to hard navigation and slow loadings Good content-added website with unpleasant navigation Good ebusiness focalised website which knows its main financial objective 10

12 2.4.2 ecommerce characteristics of competitors websites veganstore.co.uk thevegetariansite.com veggiestuff.com UK delivery Yes (UK-based website) Yes (even if USbased website) Yes (UK-based website) Online ordering Yes Yes Yes Online payment Yes Yes Yes Online after-sale service (order follow-up ) No Yes: Access to customer account but no order follow-up Yes: Access to customer account but no order follow-up FAQs and/or help Yes, both FAQs and No Yes, but hard to find help pages Company Yes Yes? (Empty page) information Policies Value-added content Dynamic content (PHP, ASP ) Product display on home page (shop window) Yes (return policy) No (only newsletter, no recipes or other content) No, except ordering and payment processes Yes (return and privacy policies) Yes, a lot. Articles, recipes No, except ordering and payment processes Yes (privacy, security and return policies; terms of use). Very well explained No No, except ordering and payment processes Yes Yes Yes Cross-selling No No No Product range Very large Large Food, shoes, clothes, Many products but books, household food product range products, body not enormous care Competitiveness degree for Happy Food ** Because many products but bad navigation and design * Because few food products Very large Deep and complete food product range, and other products *** Because many food items and good navigation 11

13 2.3 SWOT analysis for Happy Food Opportunities - Great ecommerce expansion forthcoming; - Online buyers more profitable; - Number of vegetarians growing each year; - Most vegetarians are ICT literate ; - Vegetarians are mostly in high social classes. Strengths - Happy Food has already a loyal customer base of over 5500 customers; - Online orders increased from 1% of all orders in 1995 to 15% now; - Selling of both 1 st party indoor production and 3 rd party products. Treats - Competitors may have a greater product range; - Traditional physical competitors can launch a new online vegan shop; - Better websites of competitors. Weaknesses - Basic website; - No online payment system; - Manual treatment of each order; - Cessation of online marketing actions after poor results. 12

14 3 Supply and value chain Current supply and value chain S U P P L I E R S 3 rd party producers Supply manufactured vegan products for resell purposes Food suppliers Supply alimentary raw material Other suppliers Supply packing and boxing material, machines, energy, etc. Office material suppliers Supply office furniture and computers Happy Food warehouse Happy Food factory Happy Food offices I N T E R M E D I A R Y UPS Customer Internal links External links 3.2 Current supply chain analysis The current supply chain contains at least four types of suppliers. Each one has links with one of the departments of Happy Food. The traditional paper-based ordering process links the different entities. 13

15 3.3 What ecommerce can change in the supply chain With an internet-enhanced supply chain, relations with suppliers and intermediaries can become much faster and simpler. The ecommerce potential will be on the suppliers side: an extranet on their respective websites will permit Happy Food to order online whenever wanted, to follow its order, look for new products and act online with suppliers staff. In the current model, Happy Food has the power upon the suppliers, because the company can choose what suppliers to deal with. In the ecommerce model, this power will increase because Happy Food will be able to find other suppliers and compare very quickly the offers. 3.4 Current internal value chain analysis No internet interaction exists between the different departments of Happy Food. 3.5 What ecommerce can change in the value chain All the processes can be ameliorated both in terms of quickness and efficiency. For that purpose, an intranet will let all the departments communicate together. This will be particularly useful for: The stock management; The production follow-up; The administrative relations between all departments; The internal communication. Therefore this will help manage the production in real time, relative to the stock conditions. This is a replacement of the current system and this could demand an investment from Happy Food. But this investment should not be too high because the existing computers can be kept. It is just needed to add an internal network and an intranet. 14

16 3.6 Future supply and value chain S U P P L I E R S 3 rd party producers Supply manufactured vegan products for resell purposes Internet & Extranet Food suppliers Supply alimentary raw material Internet & Extranet Other suppliers Supply packing and boxing material, machines, energy, etc. Internet & Extranet Office material suppliers Supply office furniture and computers Internet & Extranet Happy Food warehouse Happy Food factory Happy Food offices I N T E R M E D I A R Y UPS Happy Food intranet Customer Internal links External links 15

17 Recommendations and conclusion Happy Food is a dynamic company that wants to take part in the internet revolution and profit of the ways it can help to develop the company activity. Not only Happy Food s target market is in expansion, but the ecommerce is expected to experience a fabulous growth in the next five years. Some of Happy Food s competitors have already a good internet presence and it is time for the company to adapt its activity to the latest technical evolutions. It is therefore recommended to create a new website which can compete effectively with the other vegetarian e-shops. This goes by several points: A website with a large product range. It could be necessary to find new suppliers and propose other products that can interest the target; An online ordering and payment process; A simple and appropriate navigation system including navigation bars and menus; Value-added content like health articles and recipes. A partnership with a healthorientated website should be envisaged; Cross-selling features, in order to adapt the offer to each target segment and therefore increase sales. A dynamic e-shop created either in PHP or ASP language will be necessary. Marketing is also an important point to deal with. For a free internet promotion of Happy Food website, link exchanges and partnerships with other related websites have to be implemented. Happy Food can also profit from the ecommerce revolution in its supply and value chain. Internet-based transactions will simplify both ordering and payment processes. Thus the company should privilege online suppliers and encourage its current suppliers to propose online ordering facilities. In its internal organisation, Happy Food can use the internet to link all the departments on the same database and let them communicate and share information about the production, the stocks, the contracts, the customer order, and so on. In conclusion, the internet will help Happy Food to conquer new customers and reach its objectives: Move a significant proportion of existing customer base to internet based ordering, from 15% currently, to 60-70% within two years; Grow the average online spend per head from the current 176 per year to more like 350 per year; Grow the customer base from the current 5,500 to 8,000 within the next two years. 16