Establishing Trust in E-commerce: A Cost-Benefit Analysis for Clicktowear.com

The assignment is about Clicktowear.com, an e-commerce company that needs to establish its business model. The report discusses the fundamental features of an e-commerce business, including mobile apps, email marketing, social media, and transaction logs. It also highlights the importance of trust between customers and the company, as well as the need for cost-benefit analysis (CBA) to make informed decisions. The CBA process involves model design, data collection, preparation, review, and conclusion. The report concludes that e-commerce is a rapidly developing business area with huge potential profits if structured precisely.

Running head: ELECTRONIC COMMERCE
Electronic Commerce
Student’s Name
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Executive Summary
This report is based on business plan of online apparel store and e-commerce is important in
recent scenario for the growth of a business. Here, we have discussed the business goals and e-
commerce strategies set by the organization. Also different kind of business models has been
discussed. For every new business analyzing the strength, weakness, opportunity and threats of
the business is needed with the analysis of internal and external environment. Porter’s five force
model has been also discussed to measure the affects of external criteria on business through e-
commerce activities. Discussion of cost benefit analysis is also discussed in the report.
Keywords: E-commerce, Business models, Target market, Cost benefit analysis, SWOT
Analysis, Porter’s five force model

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Table of Contents
Introduction......................................................................................................................................3
Business Goals.................................................................................................................................3
E-commerce Strategy.......................................................................................................................5
Revenue Models..............................................................................................................................5
Target Markets.................................................................................................................................7
Business Models..............................................................................................................................7
Capital Realization...........................................................................................................................7
SWOT Analysis...............................................................................................................................8
Porters Five Forces Model...............................................................................................................9
Behavior Model.............................................................................................................................10
Consumer Profiles.........................................................................................................................10
Trust and Validity..........................................................................................................................10
Mobile, apps, email, social media and transaction logs................................................................10
Cost Benefit Analysis....................................................................................................................11
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................13

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Introduction
Clicktowear.com is the website or the e-business which provides an all-around solution if
any person wants to buy clothes and apparels. To make the company and run an e-business an
entrepreneur needs to thoroughly know each and every aspect of the business. E-commerce or e-
business is a tricky game in the field of business which can prove to be profitable or not run at
all. An entrepreneur needs to focus on some points before planning to start such a business.
Name of the website is a very important part for an e-commerce business to run and make profits
(Awais and Samin 2012). It should be catchy and trendy and should even be relevant to the kind
of business it denotes. Some of the business strategies which are to be implemented can be
pricing strategy, advanced marketing strategy, brilliant customer service and support. The site
needs to be online all the time and should not crash. Some of these features and business
strategies are discussed in the following report for the apparel e-business site called
Clicktowear.com. There is a wide range of apparel products available on the site which appeals
to every age group and kind of people who shop online.Clicktowear.com aspires to become the
leader in online apparel stores by being a part of the lifestyle of its customers. For this the
company has to develop a state of the art business model.
Business Goals
To create a market and a customer base the company will give offers and gift vouchers to
the customers who visit the site and purchase a product for the first time. This will enhance the
shopping experience a great deal. Every business has some targets and goals which the company
wants to achieve to continue their business and even expand their territory in one way or the

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other (Balaraman and Kosalram 2012). Some of the business goals which are to be achieved by
Clicktowear.com are:
Provide best online shopping experience: Owners and management of Clicktowear.com are
determined to provide a brilliant shopping experience to its customers. E-commerce business is
all about the making available the products to the customers with much ease and satisfaction. To
achieve this goal Clicktowear.com has to design its website in such a way that visitors tend to
find out every detail of the product they are interested in. The showcase of the product should be
descriptive and lucrative for the visitors to get an idea of the real product just by seeing its
pictures (Gökmen 2012). Moreover, the website should be light weighted so that it can run on
slow internet speed as well and should load each page quickly and without much delay.
Customers should be awarded with loyalty points and other such perks so that they feel
privileged by shopping on the website.
To reach a customer base of million people in a year: Every e-business is run by its customers
who constantly visit the site and keep the traffic of the site high. It is due to those customers that
the products of the site get popularity. Without a staunch customer base an e-commerce business
like Clicktowear.com will not flourish (Laudon and Guercio Traver 2012). More the number of
customers more will be the sale from Clicktowear.com which will generate more profits for the
company. When this will happen the company will be motivated to expand its product range and
bring in new trendy and fashionable products for its customers. To reach the first million number
of sales and customer can take up to one year but is not an overambitious target.
Increase profits by 30% in 6 months: Profit is the consequence of sale and is the difference
between the procurement and delivery (Laudon and Guercio Traver 2012). Products sold on
Clicktowear.com should be procured from the sources which are much cheaper from the sale

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price which is displayed on the website. To achieve this type of rate difference the responsibility
of product procurement should be in the hands on most experienced sales professionals who hold
a tight grip on the apparel business. The difference in rate of procurement and sale will increase
the profit margin of the Clicktowear.com. To make more profits in less time the company has to
give offers and announce sale so that large number of products are sold within a short time span.
E-commerce Strategy
Business strategies are the most vital part of a business to run and flourish. The following
are some of them.
Value propositions
Some of the value propositions for Clicktowear.com are:
 Qualified buyers who are willing to shop regularly from the website and provide them
with feedback and rate its products (Meier and Stormer 2012).
 Exclusive integration of products, services and advertising which makes a holistic
display of apparels on the website.
 Content Syndication adds to the exclusivity to the range of products as no other website
is selling the same product as Clicktowear.com.
Revenue Models
Clicktowear.com has to follow an integrated revenue model in which there are number of
aspects put together to generate revenue for the company other than the sale of the products
(Moertini 2012). These factors are:

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 Sponsorship: The Company will provide selected sponsorship to a group of sponsors.
For paying for the company the sponsors will get a premium slot in the website for
advertising and content integration of their own products (Waghmare 2012).
 Affiliate Commissions: The payment for products will be done through payment
gateways assigned which takes a part of the payment as commission and the website also
earn through per click of advertisements which the payment gateway receives (Chen and
Zhang 2013).
 Advertising: Any e-commerce website is seen to generate its revenue from the
advertisements it does on the interface of the site. Slots are rented on the site for ads to be
displayed and every click or visit to the site has a fixed rate which the company is paid
for (Gökmen 2012). The rates of the ads are determined by the performance of the CPM.
It also generates traffic as well as revenue for Clicktowear.com. Banners and posters are
fixed on the allocated slot and it varies according to the choice of the customers and the
trends which is analyzed during multiple visits to the website.
 Value added services: Every customer wants to get more during their shopping streak
(Gajendran, Brewer and Marimuthu 2013). The value added services which
Clicktowear.com provides is the gift vouchers redeemable within a span of time and that
too on the same website when the customer visits the site again or purchases another
product. These vouchers do not cost much to the company but derive a high possibility of
future sale from the same customer.
Target Markets
Clicktowear.com has to analyses and target different types of customers according to
their choices of products and shopping potential. Business of apparel is an open one and

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everyone intends to but new and fashionable clothes (Gangeshwer 2013). The company has to
find out the demographics of its customers such as number of males and females, age group of
these people, kind of education they have got which says a lot about their choices, kind of
employment which determines their purchasing capacity, total household income, their marital
status, degree of internet access they have got and the time duration for which they are online
(Niranjanamurthy, Kavyashree and Chahar 2013). All these characteristics help in defining the
target market for Clicktowear.com.
Business Models
The most common and relevant business model in the e-commerce business is the
Business to Consumer model (Sobihah, Salleh and Amin 2013). It is justified that one entity of
business is selling its products directly to the customers with no middleman or any entity in
between. This model is followed by the e-commerce giants such as Amazon.com, Ebay.com, and
Alibaba.com all located around the globe.
Capital Realization
It is the most important entity of the business. As capital required for starting an e-commerce
business is huge its realization becomes a tough task (Distante, Camelier-Carvajal and Rossi
2014). If the capital investment is not done in a proper way the business is not going to succeed
and it will incur huge losses. There are some ways which can reduce this risk in capital
realization such as:

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 Saving in logistics: E-commerce business does need a showroom or a market store. It
only needs a huge warehouse and a good logistics system (Guo and Hu 2014). Saving by
reducing the cost of warehousing and logistics is one way to go.
 Accelerator, incubator and mentoring: These are some programs which the owners
and management needs to join to gain some valuable tools, connections, resources and
expertise about the business they are doing which helps them to reduce cost and gain in
profits (Saini 2014).
 Crowd funding: This method will help the owners of Clicktowear.com to raise capital
from different sources and investors in the market. It is done by exchanging equities in
return of the investments made by different parties in the company (Sivapalan, Sadeghian
and Madni 2014).
 Pre-orders: This method is very useful in adding up to the capital as money comes in
and there is a surety of the product to be sold (Chaffey 2015). Pre-orders are actually
arranging capital from the customers itself.
SWOT Analysis
 Strength: E-commerce has the biggest advantage as it is a part of global market
(Mazzarol 2015). There are no boundaries and restrictions to the scope of business as
anyone who uses internet becomes a potential customer. There are no time constraints
in shopping as one can shop from anywhere anytime. It is faster method of
purchasing as one can but many items in very less time.
 Weakness: Security is one of the biggest issues in e-commerce as integrity of the
payment is always in question (Weiwei and Yue 2015). There are many fake websites
with the same name and interface which confuses the customer. Credit card frauds are

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a common thing to happen as details of cards and other private information is on the
website.
 Opportunities: Customers who spend money are brand conscious and don’t intend to
buy local made products (Akter and Wamba 2016). If the quality of product is up to
the mark then they don’t mind buying the stuff from Clicktowear.com.
 Threats: As the market gets huge threats also increase in size. Global markets induce
global competitors with huge customer base and capitals (Deng and Wang 2016).
There are many laws and rules which needs compliance in doing business at such
global level.
Porters Five Forces Model
 Supplier Power: The volume and concentration of supplies is of utmost importance as it
keeps the availability of the product intact (Chaffey 2015).
 Threat of new entrants: Clicktowear.com needs to keep track of the new entities
entering in the same business to keep its supremacy in the market (Mazzarol 2015).
 Threat of substitutes: Costs of products vary in this business. Clicktowear.com needs to
be aware of the substitutes available in the market of its products to maintain its own
sales (Weiwei and Yue 2015).
 Buyer power: Volume of products purchased, bargaining, brand integrity, price
variation, difference in products and incentives for the buyers are some key points to be
kept in mind (Deng and Wang 2016).
 Rivalry: The intensity of rivals in the market which can create barriers determined by the
growth of this industry is to be tackled by Clicktowear.com.

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Behavior Model
Demographic and psychological factors are prevalent in the e-commerce business as
customers follow the local trend of dressing which is determined by their mentality (Guo and Hu
2014). Tech-savvy and young people tend to shop more online than the older ones.
Consumer Profiles
Analysis of the choices of customers is done by Clicktowear.com to know the type of
products they want to purchase in the future. Profile contains gender, age, marital status,
demography, income etc (Saini 2014).
Trust and Validity
In e-commerce trust is the foundation of business which is to be established from both
ends (Sobihah, Salleh and Amin 2013). Customers should trust for the services, products, quality
and delivery of the products and the company should trust on the loyalty of the customer to shop
more and pay more.
Mobile, apps, email, social media and transaction logs
They are the basic features of e-commerce. Every e-commerce company makes its own
mobile app, sends emails to notify about the offers and advertises on social media through online
marketing techniques (Sobihah, Salleh and Amin 2013). They also keep their transaction logs to
calculate their sales and to provide as evidence at the time of audit.

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Cost Benefit Analysis
Clicktowear.com needs to do CBA for it business keeping in mind the aspects such as cost of
the project technology being used by the company, savings done in the operations cash flows in
and out of the company (Sobihah, Salleh and Amin 2013). These are done on the model of CBA
which includes:
 Model Design: Clicktowear.com does designing of the model of cost they will use for
their business.
 Data Collection: A time period is set for collection of relevant data depending upon the
kind of operations done by Clicktowear.com.
 CBA Model preparation: Selected models are used specific to the apparel business of
Clicktowear.com.
 Review: Going through each and every detail of the CBA which includes formation of
charts, graphs and tables of data is done to get a holistic idea of the exact costing and
revenues by Clicktowear.com.
Conclusion
It can be concluded that the business model of Clicktowear.com which is an e-commerce
business has been done in the above report. All the business strategies covering fundamental
features of a business to be established is discussed in details taking all the dimensions into
consideration. Business models have been discussed which are apt for online apparel store
with its implications and requirements. The products and services which are required for
Clicktowear.com to flourish have been stated. Being an entrepreneur the business goals
which the company needs to achieve have been written and explained in details with its

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prerequisites and consequences. All the facets of business plan such as value propositions
target markets are mentioned with analysis on different business proposals. It can be
concluded that e-commerce is the new dimension of business developing at a rapid pace all
over the globe and can fetch huge profits if structured with precision.

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