Digital Business and Sustainability Challenges

The assignment highlights the importance of addressing digital business challenges to ensure successful operations and sustainability. It provides insights into the economic essentials of digital strategy and the connection between service design and brand personality.

Digital Business

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview of Business.............................................................................................................1
Traditional Business versus Digital Business.........................................................................1
Digital business model...........................................................................................................2
Main Body.......................................................................................................................................3
Mode of operation..................................................................................................................3
Market segmentation..............................................................................................................4
Key growth factors of digital business...................................................................................5
External forces impact on business operation........................................................................5
CONCLUSION................................................................................................................................6
Reflection on digital business sustainability and profitability...............................................7
Challenges to digital business................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
With the passage of time, new and advanced technologies have emerged which ha e
changed the face of modern businesses and their conduct. In the modern era, these technologies
have facilitated the companies to easily operate their business in a number of international
markets. In this regard, digital technology provides assistance to organisations to combine the
efforts of human resources with data as well as processes to create high value for customers
(Kasemsap, 2016). By embracing the process of digital transformation, companies can easily
enhance their stake in market, ensure customer satisfaction, gain entry into new markets, attain a
competitive and strategic advantage and enhance the existing profitability levels of enterprise.
The following report is based on the ASOS which is an online British retail corporation
which offers cosmetics and fashion products across 200 countries of the globe This report
explores the concept of digital business as well as its advantages over traditional businesses.
Further, this report includes digital business activities and various modes of operation. At the
end, reflection is given upon digital business sustainability along with challenges associated with
the same.
Overview of Business
ASOS is one of the leading e-commerce companies prevailing within Europe that offers
its products to customers situated within over 200 countries. This company was found in 2000
and has its headquarters situated in London, UK (Hjort and Lantz, 2016). Within 2017, this
organisation launched a campaign with the aim to take advantage of “Instagram Stories” feature
which encouraged users to upload videos which showcased the purchased ASOS articles. Here, 3
million persons took part in this campaign in UK. By March 2018, a mobile app of company
which has been downloaded by users over 10 million times give access to users to upload
pictures of clothes they like and the application would then give recommendations of similar
products which the entity deals in. The claim of ASOS is that 58% purchase of this company
within UK takes place by way of mobile devices.
Traditional Business versus Digital Business
Traditional business can be referred to as the physical stores which strive to mainly target
only the local customers. Here, entrepreneurs’ set-up a new venture either by buying or lending a
space on rent where people come to visit the physical stores for purchase of products (Kim and
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Peterson, 2017). Such processes require huge investment in terms of money, resources as well as
efforts. In the modern era, digital operations have taken the place of traditional businesses. This
tends to offer a number of offers and ways to build a connection so as to carry out activities that
assists in providing products over its online platform. Thus, it has generally been seen that the
associated cost of infrastructure for carrying out buying or renting in the field of traditional
business is very high when contrasted with digital businesses.
Similarities of traditional and digital business:
In both the types of businesses, it is significantly important for every organisation to
maintain the inventory of its products at all the times in an adequate and suitable manner. This
would require an immense investment which will remain blocked in the small business. Selection
of a lucrative location as well as adoption of adequate and relevant strategies is required for
traditional as well as digital businesses so that the organisational goals and objectives can be met
in a timely manner (Kim and Peterson, 2017).
Differences between traditional and digital business:
Stores which are setup in the format of traditional businesses operate and function for
usually a limited set of hours whereas in e-commerce market, an organisation can offer its
products and services any time in the 24 hours day cycle of time (Detzel, Mahle and Pätzmann,
2016). Owing to the limited space within physical store, companies are confined to offer only a
limited variety of products. On the contrary, it is possible to offer a wide range of products in
digital businesses and this assists such companies to gain high profitability in global
marketplace. Thus, building healthy relationship with a large number of potential buyers,
ascertaining their needs, effectiveness and efficiency of operations prove to be some of the major
advantages which are associated with digital businesses.
Digital business model
It can be referred to as the plan of a company to generate huge revenues and gain high
profits post the identification of goods and services to be sold in market, target market along with
the expenses required for anticipation of these procedures (Hakansson, 2014). In context with the
selected company i.e. ASOS, its business model can be better analysed by way of internal
analysis with the use of SWOT as follows:-
Strength: Owing to high growth rates of the European market and the exceptional digital
business model of this company, ASOS enjoys market leadership within Europe owing to which
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this organisation has a strong customer base which remain loyal and committed to the products
offered by entity via e-commerce (Gorla, Chiravuri and Chinta, 2017). In this regard, some of its
strengths are mentioned below:-
 The range of brands that are offered by this brand is large.
 The shipping and return policies of company are found to be generous.
 This company also has its own mobile application which eases the experience of
shopping for customers.
 The website of this company offers the option of payment after delivery of products.
Weaknesses: The major shortcomings of the digital business model of this e-commerce
retailer are as follows:-
 High investment has to be made by this entity in research and development which leads
to utilisation of a large quantum of funds in the non-productive segment of business.
Opportunities: The major opportunities associated with the digital business model of
this e-commerce retailer are as follows:-
 This entity has a scope to enhance sales and profitability of company by tapping a large
quantum of potential buyers.
 This organisation stands a chance to make use of its social media presence to influence
customers to make a purchase of their products
Threats: The major threats of the digital business model of this e-commerce retailer are
as follows:-
 The fashion and lifestyle trends of the people belonging to age group of 16 to 20 years
change at a rapid pace, thus the organisation may face threats in case such changes in
trends are identified by the rivals of ASOS before the company itself.
MAIN BODY
Mode of operation
The e-commerce store of ASOS is not just seen as a place where people search and buy
products but is often viewed by personnel as a fun shopping experience. In the year 2013, the
stores of this organisation were remade on the basis of the theme of fashion world which
included a number of tools, techniques and features to strengthen the convenient online shopping
experience for customers (Jones, 2013). It includes updated and extensive information related to
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new trends in fashion world, such as a fashion blog, trendy lifestyles and products, with seasonal
varieties. In the fashion glossary, where targeted customers can access important information
about its range of products like shoes, fashionable clothes, accessories and more, are updated as
per current fashion trends in regular manner. Here, intensive information is usually combined
with links and authenticate websites to branded products. This would foster the emotional and
amazing shopping environment to get highly engagement of customers who concern more on
purchasing trendy clothes. They get inspired and are able to buy presented styles and garments
simultaneously via the online shopping platform.
Market segmentation
ASOS is a successful e-commerce retailer owing to the tactics and strategies adopted by
this company to gain a high share in marketplace. Through their easy and intuitive site
navigation, this organisation is able to present much more accessories, clothes and shoes in a
structural and clear manner within an online store which is not possible within traditional retail
stores where the area for sales is confined. This largely assists this company to cater to the needs,
demands and preferences of various customer segments. With the execution of platform
approach of ASOS, this brand has been able to present a wider range of assortment as well as
brands available than previous times. In this regard, to further enhance the sales and profits of
company, this organisation carries out market segmentation which assists the organisation in
getting knowledge about the target segments that they are catering to so that they can specifically
provide products which are adequate, relevant and sufficient to meet the needs of such customer
segment.
Market segmentation can be done on four bases, geographical, psychographic,
demographical and behavioural. Out of these four, ASOS strive to carry out market segmentation
on the basis of demographics of customers. In this regards, it has been identified that this online
retail enterprise has a mass market business model which does not offer much differentiation
between the customer segments (Kalinic and Marinkovic, 2016). The company carries out
marketing of its products for children, men and women. However, it has been identified that
three-fourth (75%) of company’s customer base is female gender and the age group which is the
dominant segment for this entity is 25 to 45 years.
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Key growth factors of digital business
Over years, the success of ASOS owes to a number of factors which have together
contributed towards ensuring the sustainability of this digital business for a long duration of
time. Such growth factors of the company are specified below:-
Focus on first time buyers: They aim at building the trust and loyalty of customers by
providing first in class customer experience to first time purchasers so as to keep them engaged
with the business and not letting them go. This has been done by way of provision of free
shipping and no additional costs in case of returns for those who made their first purchase with
the company.
Demonstrate inspirational ideas: ASOS has made use of a strategic tactic over years
which involve the use of upselling and smart cross selling to gain the trust and attention of
customers. This is being done by the business by provision of options such as ‘gift suggester’,
‘shop the look’, and free consultations with the stylists of fashion industry (Epstein, 2018). This
attracts the customers towards the website or mobile application of organisation and persuades
them to make use of these unique services.
Incorporation of personalisation: ASOS has a Windows, Android and iOS mobile
application which has a number of amazing features such as ‘Photo Search’ wherein if a
customer clicks picture of their favourite and most liked clothes, the app helps to find similar
clothes from over 1500 global brands that are prevailing in ASOS System. Also, this application
is capable of sending personalised recommendations in relation to products, price comparisons as
well as fashion tips (Frishammar and et. al., 2018).
Sweepstakes: Within holiday period, this enterprise launched a campaign wherein people
stood a chance to win one of their favourite items which they had put on “Wishlist” by gaining
entry into the contest. This was indeed a clever move adopted by company to encourage
shoppers to browse various products within ASOS and then select the articles that they would
intend to get for free.
External forces impact on business operation
PESTLE analysis has been used to assess the digital business environment of Europe for
ASOS:-
Political factors: These factors tend to examine the extent of government intervention
within the operations of business. In this regard, ASOS is an e-commerce company having
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Europe as its dominant market, is largely required to abide by certain laws and legislation such
as Data Protection Act which protects the rights of customers as their personal as well as plastic
money information ca be misused.
Economic factors: These are the factors associated with the economy of a geographical
location. In this regard, ASOS is positively affected by the strong and stable economy of Europe
which fosters the growth of e-commerce businesses.
Social factors: These are the factors which are associated with consumer demographics,
latest changes and trends prevailing in marketplace etc. In this regard, ASOS deals in fashion and
lifestyle products where the trends and tastes of customers change on a rapid pace. Thus,
company needs to constantly research upon the consumer trends so as to anticipate the latest
consumer needs as well as inculcate within the products offered by entity so as to ensure long
term sustainability in marketplace (Čuček, Klemeš and Kravanja, 2012).
Technological factors: With efflux of time, changes take place within the techniques and
old and obsolete technologies are replaced by advancement technology. In this regard, digital
operations in itself is a technological advancement. ASOS is tapping the advantage of opting for
digital operations for enhancing the sales and profits of company and successfully ensuring its
sustainability within Europe and other revenue generating countries for a long duration of time.
Legal factors: These factors define the laws and legislations that are stipulated by
professional bodies or statute (Dawson, Hirt and Scanlan, 2016). In this regard, ASOS has to
take into various regulations passed by law such as in relation to shipping, delivery, data
protection, refund policies etc. ASOS ensures to abide by all these regulations so as to avoid
legal intervention or public prosecution.
Environment factors: These define the extent to which a business operates in the
interest of community and environment (Camisón and Villar-López, 2014). Any business
organisation that operates as a part of economy is required to adopt sustainable practices,
recycling etc. so as to ensure least harm to environment. In this regard, ASOS runs in a business
line where the company can significantly reduce the paper work as majority of the work is done
over internet within e-commerce.
CONCLUSION
From the above report, it has been concluded that digital business operations are the key
to success of business in modern and dynamic corporate world. Further, it has been examined
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that digital businesses have a number of advantages over traditional businesses and this is the
reason behind majority of company opting to embrace digital operations. Besides this, it has been
acknowledged that it is necessary for a company to assess the digital business environment of a
geographical location before embracing digitalisation within the organisational premises. Also, it
has been ascertained that market segmentation is necessary for companies operating in e-
commerce sector.
Reflection on digital business sustainability and profitability
I think that digitalisation and digital operations are both the key to success of a business.
In this regard, I feel digitalisation tends to provide a lucrative opportunity to business firms to tap
the advantage of building healthy relations with customers so as to enhance the sales and
profitability of company. Further, e-commerce tends to provide ease and convenience to
customers by providing them a faster and one stop shopping experience. This enhances the
chances of sustainability of digital business in today’s hyper competitive world.
Challenges to digital business
In today’s modern era, where competition is cut throat, to run or establish a digital
business is a risky task owing to a number of constraints that act as challenges for the process of
digital transformation. In this regard, the biggest constraint is the lack of adequate funds to
launch digitalisation within the organisational premises. Another biggest challenges to digital
businesses is the proportion of people within the population who look more at the security
concerns associated with this business type rather than looking at the ease and convenience that
digital operations bring for people.
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REFERENCES
Books and Journals
Camisón, C. and Villar-López, A., 2014. Organizational innovation as an enabler of
technological innovation capabilities and firm performance. Journal of business research.
67(1). pp.2891-2902.
Čuček, L., Klemeš, J. J. and Kravanja, Z., 2012. A review of footprint analysis tools for
monitoring impacts on sustainability. Journal of Cleaner Production. 34. pp.9-20.
Dawson, A., Hirt, M. and Scanlan, J., 2016. The economic essentials of digital
strategy. McKinsey Quarterly. 3. p.45.
Epstein, M. J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Frishammar, J. and et. al., 2018. Digital strategies for two-sided markets: A case study of
shopping malls. Decision Support Systems. 108. pp.34-44.
Hakansson, H., 2014. Corporate Technological Behaviour (Routledge Revivals): Co-opertation
and Networks. Routledge.
Jones, G. R., 2013. Organizational theory, design, and change. Upper Saddle River, NJ:
Pearson.
Kim, Y. and Peterson, R. A., 2017. A Meta-analysis of Online Trust Relationships in E-
commerce. Journal of Interactive Marketing. 38. pp.44-54.
Detzel, R., Mahle, I. and Pätzmann, J. U., 2016. The Connection Between Service Design and
Brand Personality: An Explorative Study Analyzing the Curated-Shopping-Platform"
Zalon by ASOS". Markenbrand. 5(5/2016), pp.57-65.
Kasemsap, K., 2016. Advocating electronic business and electronic commerce in the global
marketplace. In E-retailing challenges and opportunities in the global marketplace (pp.
1-24). IGI Global.
Hjort, K. and Lantz, B., 2016. The impact of returns policies on profitability: A fashion e-
commerce case. Journal of Business Research. 69(11). pp.4980-4985.
Kalinic, Z. and Marinkovic, V., 2016. Determinants of users’ intention to adopt m-commerce: an
empirical analysis. Information Systems and e-Business Management. 14(2). pp.367-
387.
Gorla, N., Chiravuri, A. and Chinta, R., 2017. Business-to-business e-commerce adoption: An
empirical investigation of business factors. Information Systems Frontiers. 19(3).
pp.645-667.
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