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Ecommerce has changed the way brick and mortar stores operate. The transition from traditional supply chains to suppliers selling directly to the end user is called disintermediation.
This happens when suppliers eliminate the need for the middleman, retailer, or wholesalers. “Within the context of the new economy, this most often refers to “cutting out the middleman” by purchasing directly from a manufacturer’s or reseller’s website (Finch,2012).” The benefit of ecommerce seems to only benefit the end user. The producer must change to be able to satisfy the end user. Producers must learn to ship out products in smaller quantities and be able to handle much more volume. Producer often ship in large quantities and can mass ship to many retailers. The need for better inventory control is necessary and the ability to process payment through a web base site is key. “Both the presale and postsale tasks associated with online sales differ substantially from traditional business models. Developing effective websites, maintaining current product information, automating order processing, and performing search engine optimization are all specialties that a company may opt to acquire from established providers rather than developing on an in-house basis (Finch,2012).” The biggest draw back from eliminating the middleman is customer service. Producers make the product ship it out and then they are done.
This leaves little room for issues that customers may have. “Other negative outcomes associated with moving away from traditional channel relationships to e-commerce can result from failing to fully understand the supporting infrastructure required to compete online and serve customers directly (Finch,2012).” It is sometimes hard for traditional brick and mortars to transition into online sales. Pier 1 for example has not had a strong presence online. The store has stayed connected to the traditional sales experiences. Pier 1 believes that the place for their products is in store. In a phone interview with Tonya Garcia, CEO Alexander Smith said, “As strong as growth in e-Com continues to be, it will never displace stores and the experience they give our shopper” (Garcia,2015). The connection between online sales and in store sales is not there. I believe that Pier 1 is having a hard time transitioning in to online sales because they are having a hard time accepting change within the market. An analysts form Credit Suisse “For online, it may need sharper pricing, better shipping options, and an enhanced web experience to compete versus players offering lower prices and a wider variety(Garcia,2015).” Evaluate their target audience. This would be a great time for the managers to implement a SWOT analysis. This would help to see the opportunities and threats that are hurting the company.