E-Business: Ocado's Success and Challenges

This assignment delves into the e-business model of Ocado, a prominent online grocery retailer. It examines Ocado's successful strategies, such as its advanced technology infrastructure and efficient logistics network, while also addressing the challenges it faces, including high operational costs and intense competition. The assignment analyzes the impact of Ocado's e-business operations on the consumer landscape and the broader retail industry.

UNIT 29. INTERNET AND E-
BUSINESS

INTRODUCTION
Electronic business refers to operating the business on digital platform and administering
the entire process through internet. It is often referred to in conjunction with e-commerce,
however it is inclusive of both sale of goods as well as services. It is important to note that e-
business also provides for technical assistance and customer support services through the
medium of internet. All the payments to suppliers, recruitment, management of production and
so on are undertaken online and in a speedy manner.
In today's world majority of corporations develop their strategies and operations while
considering the option of internet. The primary rationale behind the same is wide reach of
internet as well as its availability, frequently changing capabilities and such other processes
which have made various processes simpler and convenient. Hence, in the present report focuses
on the scope of e-business in respect to Ocado.com and the available e-business models to the
management.
TASK 1
1.1 Environment in which e-business is conducted and types of business
transaction
E-business is the result of advancement in modern technologies and must a large extent
replaced the traditional forms of businesses. It has also enabled the companies to expand globally
without physically moving out of own country. In addition, it has also made the internal
operations of the company simpler and convenient. For instance, with the use of Intranet,
organisations can establish an effective communication system for transmission and safeguarding
the data as well as information.
Another advantage which accompanies this process is that all the operations and functions
could be undertaken in a faster and precise manner (Oliveira and Martins, 2010). It is interesting
to note that the UK retail sector has reflected a progression of 70% and has attained the position
of one of the largest and effective methods of revenue generation. Also, it has a direct impact on
the society in the form of patterns of customer behaviour, which can be witnessed from online
sales demand. Different business transaction types which can be pursued by online businesses
are:
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• Business-to-consumer (B2C): Under this model of business the organisations directly
sell their respective products or services to the consumer. There is no role of intermediary
in such business models. In respect to e-business if a company is engaged in selling its
own products through its own website directly to the end users, then this model could be
said to have followed. Ocado has adopted a unique business model in pursuance to which
it is selling its own products through the official website along with the products of other
brands (Ocado at a glance, 2017).
• Business to Business (B2B): This process refers to interaction of two businesses for sale
or purchase of goods/services, and the medium of this interaction is internet (Veit and et.
al., 2014). In such business models a supply chain may witness multiple transactions. An
effective commercial channel is developed through this model of business.
• Consumer to Consumer (C2C): The transactions under this model of business are
undertaken directly between consumers. Thus, through the medium of internet a
consumer is enabled to sell its products directly to another consumer, with no interference
from the side of middleman.
• Consumer to Business (C2B): This is the newest forms of business which has found
great significance with e-businesses. In pursuance to this model, consumers or end users
create value or demand of a product through the means of e-business.
1.2 Advantages and Barriers for e-businesses
Like any other business type, e-businesses are also prone to both benefits and barriers,
which the organisations are required to consider while pursuing the decision to go online. Some
of the significant benefits which Ocado.com has realised are:
• Reduced cost of transaction: Selling the products online or procuring them through an
online platform reduces the cost which is incurred is respect to transactions by the
businesses as well as the consumers.
• Increasing market share: A business organization can reach to a wider set of consumers
as it can reach to people at distant places through internet. With the assistance of this
platform increasing number of potential consumers can be reached (Andam, 2014).
Moreover, the consumers can also make a purchase as per their convenience.
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• Increase the effectiveness of promotional offers: Different form of promotional
activities shall produce enhanced effect and have a potential to reach an increased
number of potential consumers.
However, this process is also prone to barriers which may pose certain difficulties for the
businesses to mark their presence online:
• Skilled Recruitment: All the employees shall be appraised with the concept of e-
business and shall be capable to conduct operations on this platform. Hence, it may pose
to be a difficulty to find employees with such specific skills and capabilities.
• Constant Maintenance: There is a high cost which is required to be incurred towards
constant maintenance of the online platform. The website requires constant monitoring
and modifications with change in different aspects.
• Trust for e-business transactions: There are still consumers which do not trust the
online payment modes and find it difficult to make payments using such medium
(Oliveira and Martins, 2010). Thus, there shall be a loss of customers in light of this fact.
1.3 Safety and Legislative issues faced by Ocado.com
Ocado.com has undertaken various measures for protection of its data and confidential
information with assistance of varied methods. This implies that both the business and the
consumers are impacted by the security issues which are prevalent in this sector. Lack of privacy
or trust issues could affect both customers and businesses as it may be difficult for them to verify
each other. Exchange of data may be impacted by viruses or malware programs and so on. To
deal with these issues Ocado has undertaken the following measures:
• Firewalls: Installation of firewall shall restrict the accessibility of untrusted networks,
• Digital Signature: This is an encryption technique which enables the business to verify
the authenticity of consumers and provide evidence for establishing contractual relations.
• Digital Certificates: This authorizes e-businesses to secure e-commerce and undertake
communication with the use of internet platform. Hence, both the company and their
consumers are enabled to make use of security applications in respect to Public Key
Infrastructure (PKI).
Some of the legislative initiatives for securing this process of e-business can also be
found in the statutes of Electronic Communications Act, 2000 (Ifinedo, 2011). The primary
objective of this act is ensuring the authenticity of digital signatures and other related
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communications. Further, Data Protection Act 1998 imposed an obligation on the businesses to
secure all the data and manage the same in an effective manner.
Disadvantages of security and legislation
 Security enhances the burden of the company and it also directs the entity to adopt new
procedure.
 Security aspects needs to have constant vigilance; hence it becomes difficult to manage.
 Legislation needs to be managed in such a manner so that it can reduce the legal aspects;
however lack of such thing can impose other burden of the company.
1.4 Modes of Communication
While undertaking an e-business the business enterprise is required to communicate with
the consumers at various instances, which can be formal or informal in nature. Some of the
specific methods which has been adopted by Ocado are:
• Terms and conditions: This is one of the formal communications which is made by the
company to its consumers in the form of a document. Through this mode, the consumer is
informed about all the terms and conditions on the basis of which products shall be sold
and the services shall be provided to the consumers.
• Shopping Cart: This option of the website acts as an actual cart in a shopping mall
wherein the consumers can drop all the selected items to be purchase and review the
same before finally buying them (Combe, 2012).
• Customer follow up: This communication is either through an option of the website or
personal emails, wherein the consumers are required to give their feedback on the way
services have been provided.
• FAQs: This is one of the most common method of communication wherein the users are
free to post their query which shall be responded by the representatives of Ocado. This is
the means of communicating with other customers as well who may have a similar query
and hence, is reflects all the questions and their answers.
Further, online chat, social media and emails are the most prominent sources that can be
used in the domain of communication. Hence, Ocado can use such sources so that to
communicate information from one source to another. The sources are also essential in terms
of adopting new things in company’s practices and operations. Such sources can also be used
for formal and informal communication aspects.
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TASK 2
2.1 Importance of Internet technologies
There are various internet technologies which are being used by Ocado for providing
efficient services and maintaining confidentiality of the data. Moreover, these internet
technologies act as an interface between different users and allow accessibility as well as
exchange of relevant information between two sources (Gloor, 2012). Internet refers to a
network, which recognizes each computer system with a different IP address. A domain name
server (DNS) represents the IP Address.
• Transmission Control Protocol and Internet Protocol (TCP/IP): This enables the
company to consistently transmit reliable data over a network between client and the
server. Hence, when any information is received by the system then it is saved in the
name of IP address. Moreover, it becomes convenient for the recipient user to categorize
the all the data received and manage all the data.
• Client/Server Computing: This represents association which is established between two
distinct computer systems. In this setup, one of the programs act as a client for generating
requests in relation to a service, whereas the other acts as a server. This ensures effective
management of resources (Srivastava and Teo, 2010.)
• Packet Switching in Internet: It has been observed that internet users have been
increasing daily and in order to manage this ever-increasing traffic Ocado has adopted
packet switching in internet.
2.2 Features of HTML
The Hypertext Markup Language (HTML) is the medium through which a document is
created to be read by special software programs. To access HTML documents the first browser
was created in the name of WorldWide Web. The general structure of these documents
comprises of Title head and Body, wherein the former consists of a Title to identify the initial
part of the coded document and the latter in the section where most of the work in the form of
text, images and such elements are undertaken. Some of the features of HTML are:
• Context Menus: It assists in formation of context menus in applications and varied web
pages.
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• Eliminate requirement of href: The need to place anchor on web applications is
eliminated and use of tags is allowed (Kloch, Petersen and Madsen, 2011).
• HTML new form types: The specifications of datetime, month, week, email is present in
the form of standard inputs.
• Canvas: This enables addition of images and graphs, apart from other elements on the
web page.
 <head>: This is useful in terms of defining information about the document
 <meta>: This defines metadata about an HTML document
 <basefont>: This is useful in specifying a default color, size and font for all text in a
document.
Thus, all the tags are useful for different purposes as per the requirement of the information.
https://www.google.co.uk/search?
q=html+codes&espv=2&source=lnms&tbm=isch&sa=X&ved=0ahUKEwi8n4bJmojTAhXDLM
AKHfhrCXoQ_AUIBigB&biw=1366&bih=599#tbm=isch&q=html+tags&*&imgrc=CRLWO1n
_lZMSRM:
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2.3 Utility of client server or web browser and the function of search engine
The web browser or server both together legal act is as a client-server system and create
the connection between server and client. All the designed and database maintained in the central
part of a computer which is known as a server. Further, it can be used by a single person who
designed the websites. While the client is those who use websites, which is designed by the
server. There are many clients of single websites but its server is only one (Bordonaba-Juste,
Lucia-Palacios, and Polo-Redondo, 2012).
The basic function of client-server and browser is to works a client to a website request
and get data and information of any specific websites, then it provides access to over them. On
the other hand, purpose of the browser is to transfer information on WWW (World wide web)
network and respond the present information. Browser converts all the data which was taken
from the server into an understandable information.
Function of search engine: Search Engine function is to allow its internet users to search
particular information from web based keywords which is entered by user. Further its function is
to locate, store, and rank the value of data and show it to users.
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https://www.google.co.uk/search?
q=client+server+network&espv=2&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjf1LqJm4jT
AhWHB8AKHZ_hAJ4Q_AUIBigB&biw=1366&bih=599#imgrc=Hqsa8KJtz11oaM:
sThere is some important role of search engine that it stores information from all the
websites. After storing information, it can be searched by user them it a form of history and
bookmarks.
2.4 Used of intranet and extra-net
Modes of connectivity discussed as Intranet and extranet mode they are the different tools
of connectivity which is different from the internet. Intranet can be being easily connected
anywhere till its limit which set by a firm per its preference. Apart from network internet, it has
separate information technology infrastructure and it is also a restricted type of computer
network (Gloor, 2012).
On the other hand, an extranet is can connect two or more internets at very limited extent
because it is also a restricted computer network. There are high security and internet network not
followed the extranet. It helps different type of organization in making cooperation when then
work together on any project. It also connects different stakeholder with the organization safely
and securely.
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Advantage and disadvantage of intranet
 advantage of intranet is that it offers chance to keep every concerned single informed
about the regardless of the location
disadvantage of intranet
 one of the major disadvantage is that it there is risk of security corporate information
resources. It is quite risky for keeping information on intranet.
 Advantage of extranet is that it increase the speed of all transaction for be complete and
their is less chance of mistake.
 disadvantage of extranet is that time is needed for training the employee for using its
tools of network
TASK 3
3.1 Different e-business model
There are various e-business models which can be adopted by a company for generation
of maximum revenue and thereby earning profits. The following are some of the e-business
model:
• Affiliate Model: Under this business model the concerned businesses operate to receive
recommendation fees or a percentage of sales revenue. The primary focus of these
entities is on development of effective relationship. Ocado is operating based on this
model.
• E-distributor model: These businesses are engaged in delivering the goods or services
which have been ordered by the customers online.
• E-Procurement Model: in pursuance to this model an individual consumer is enabled to
make a purchase in bulk and enjoy a group discount (Bordonaba-Juste, Lucia-Palacios
and Polo-Redondo, 2012).
• Auction Model: Sellers and bidders are enabled to come on a single platform to offer
prices which are dynamic in nature.
• Exchange Model: this model offers a broad range of services for undertaking transaction
which ranges from market valuation of products to concessions.
In addition to this, it can be described the development models such as the e-business, e
distributor plays very significance role because it consider a common source for generating
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and collecting revenue for the company. Along with this, it included all the information about
the services customer of the organization.
3.2 Analysis of e-business model
It shall be noted that these e-businesses are based on B2C business model and enable the
respective corporate to reach to an increased number of potential consumers. The Affiliate model
model enables the company to sell goods and services to consumers. These websites have
effective tools and options to cater to the specific needs and requirements of consumers.
The search engines enable them to find products from the range of goods available on the
website. Further the e-procurement model shall be specifically useful for the traditional retail
businesses and using internet, reaches an increasing number of retailers (Reynolds, 2010). The
revenue generation model facilitates the consumers to make a onetime payment for buying the
services or goods online. Lastly, the auction model is one such e-business model which gathers
bidders and sellers from distant places and make the final transaction on the best price.
It has been noticed that by having an application of e-business model the organization can
have better opportunity in regard to sales. With an assistance of sales model the collection of
revenue can be advanced because it allows to have better interaction with customers. It helps in
analyze demand and supply of company.
Affiliate model
Ocado company is using Affiliate model which is known as an online distribution
channel and it also based on principal of communication. It sell their goods and services
through links to partner websites. It is known as the pay for performance model where
commission are paid in order to earn revenue or success. Further, Affiliate link include the code
which help in finding out the Affiliate. It states the way through click leads and sales can be
tracked. The affiliate work as a interface between merchants and customers. Although this model
creates a win win situation because merchant sell their goods and services and for this Affiliate
get their commission. There are some variation which includes pay per click, revenue sharing
program and banner exchange. This model is very effective and well suited for Ocado so it is
very popular. This affiliate model is based on commissions because firm can sell items from
other different retailers site. Along with this company also get reward for bringing new
customers for selling products. With this model there are different number if payment methods
such as pay per impression, pay per lead etc. in pay per lead the affiliate is paid at the time when
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someone clicks on affiliate link and complete action. For instance, completing a form to generate
a new lead.
Affiliate model Capacity to generate revenue
Pay per lead Affiliate is paid when anyone clicks on affiliate
link and takes an action that is completing a
form to generate a new lead.
Pay par impression Affiliate is paid when someone lands on the
merchant site
Pay per sale Affiliate is paid at the time when sale is
generated and affiliate received a cost of the
item
Paid per click Affiliate get paid whenever the affiliate link is
clicked
3.3 Future Developments in e-business model
After understanding the present trends in the market, it can be foreseen that e-business
has the potential to become highly in demand as it has the potential to serve 24*7 to the
consumers. Some of the specific developments which can be seen in these models are in relation
to providing services which are more personalized in nature and implement effective customer
care services which shall develop brand loyalty among the consumers (Li, 2011).
Development of Shopping applications have already made the entire process extremely
convenient to be used by the society. However, there is still an element which is missing in all
these models and that is of services with a personal touch. Hence, this is a potential area which
shall be tapped upon by the consumers for introducing new features to this model. In addition, it
is also predicted that social media shall become one of the most powerful platform to promote
the products and services.
In addition to this, it can be said that company can also focus on use of mobile to enhance
the level of customer interaction. With an application of methods like diverse e-business the
issues can be overcome. In coming the future different models of electronic businesses includes
several of elements of information of the organization such as products, return of the amount,
customer service, customer feedback, payment or others.
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TASK 4
4.1 Key elements of good web design
Web design plays an instrumental role in determining the success of a e-business. In
pursuance to the same, Ocado shall prefer to adopt the following specific elements:
• Navigation: The current website has been designed in an effective manner, but more
efforts can be made to reduce the number of clicks which the user must make in order to
reach in the desired section. This is an element utilised for producing the structure of the
concerned web design (Camarinha -Matos, Afsarmanesh and Rabelo, 2013). With the
assistance of this element the users shall be able to access the site and make their
purchase at a faster rate.
• Keyword searches: An effective search engine shall be set up so that the consumers can
make a search with the use of keywords and produce desired results. The entire process
shall be made simpler and faster. Moreover, the consumers shall also be made available
with certain filters to refine the search.
Features Feedback based on Ocado
website
Suggestions for improvement
Navigation Is focusing more on the
corporate customers
Two separate web portals for
retail customers and another
portal for wholesale customers
Colours Good and it reflects the brand
positioning of Ocado
Language options Since, Ocado sells grocery
items procured through
Carrfour, it is sure that it has
a customer base who might
not speak as the first
language.
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Therefore, it is important to
provide translation option to
other European languages
4.2 Effect of good-designed websites on E- business
E- business firms totally depend on the different on their website for attracting many the
customer (Andam, 2014). They need to design the websites in an effective manner for starting
their business. There are many positive impacts of E-business such as it grabs the attention of a
large number of customer and encourage them to buy product and services from their websites.
Along with this, if firm effectively presents its content then it encourages customer to look
through it and buy products. The detailed information of product on the website help them in
making decision for buying it. It is one of the best step to attract large number of visitors. If
content of page is attractive then people like to read and share it with others such as their friends
and family. It also help in increasing the search engine practices and for staying on top in search
engine ranking
4.3 Issues concerning websites usability
For starting a new business organisation needs to make online websites which should be
easy for the user to log in and understanding it. There are some issues which relating to websites
usability that is as follows:
Small area to click: Some time firm make a small icon of their websites which are very
small. So, it becomes difficult to be found but customer and clicked to perform other function.
No customer feedback column: a good website must have feedback column in which they
can share their experiences and give suggestion in relation to their product and services. It helps
in increasing high level of customer satisfaction.
If there is larger font size then it impacts to the customer. Customer may not like large
font size as it create problem in reading the content of post. Further language used in present
report not necessar is understand by people. Language of content should be simple otherwise
people not like to read it.
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CONCLUSION
E-business has gained significant importance in the present world and in pursuance to the
same increasing number of companies are making their presence in the digital world. Ocado is
one such entity which is operating online as a digital grocery store and is working on B2C
business model. It has been observed that this new trend has the potential to reach a wide range
of consumers, however at the same time it is attached with various issues such as requirement of
constant maintenance and the need of highly skilled employees.
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REFERENCES
Books and Journals
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Camarinha-Matos, L. M., Afsarmanesh, H. and Rabelo, R. eds., 2013. E-business and Virtual
Enterprises: managing business-to-business cooperation (Vol. 56). Springer.
Combe, C., 2012. Introduction to E-business. Routledge.
Gloor, P., 2012. Making the e-business Transformation. Springer Science & Business Media.
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Online
Ocado at a glance, 2017. Available through: <http://www.ocadogroup.com/who-we-are/ocado-
at-a-glance.aspx>. [Accessed on 14th March 2017].
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