Retail E-Business Application: Strategy Analysis of Costco and Rivers

This report explores e-business applications in the Australian retail sector, focusing on Costco and Rivers. It highlights the transformation of the retail industry due to globalization and technological advancements, particularly the shift towards online shopping. The report examines Costco's strategy of providing quality products at lower costs by reducing overhead, and Rivers' approach of incorporating online purchasing to meet changing consumer expectations. A literature review analyzes supplier-retailer power dynamics, supply chain structures, customer channel-switching behavior, the role of technology in enhancing customer experience, and the impact of social media on customer satisfaction. The study emphasizes the importance of adapting to technological advancements and consumer demands to secure the future of the retail industry in Australia. Desklib provides students access to similar solved assignments and study tools.

E-BUSINESS APPLICATION

Table of Contents
Introduction......................................................................................................................................2
Background of Retail in Australia...................................................................................................2
Operation of COSTCO and RIVERS..............................................................................................3
Literature Review............................................................................................................................4
Conclusion and Recommendations..................................................................................................7
References........................................................................................................................................8
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Introduction
The future of the retail industry has been under a phase of transformation since the beginning of
globalization and technological revolution. With changing consumer orientations, strategies and
business models have evolved to adapt themselves with the various progresses in social and
technological arenas, in order to keep up with the dynamic business world (Kahn, Inman and
Verhoef 2018). With the advent of ‘online shopping’, the retail stores have been facing stiff
crisis as it fails to provide the easy-accessibility of products that the online shops have to offer.
Online shopping has reduced the extra labor of physically going to the market and selecting from
a variety of products—rather, it offers a spectrum of information and knowledge regarding the
available products, their contemporary alternatives, average price of the product, customer
reviews and much more. The accessibility of products at a mouse click away, with safe monetary
transactions, have proved to be a revolutionary advancement that sets the online retailing apart
from physical retail sector.
The project aims to explore the various aspects of retailing in order to understand in detail its
benefits and shortcomings (Huang and Gamble 2015). The research chooses two large-scale
companies from Australia, Costco and Rivers, to understand and analyze how the various
technological advancements can be applied in the organizational processes to improve its
efficiency as well as branding.
Background of Retail in Australia
The retail sector in Australia has been facing a backlash like every other country, with the
changing consumer trends, shifting from retail to online shopping. With the advent of overseas
businesses, the Australian market has experienced new changes in service delivery in retailing.
With changing social, economical and technological environments, Australian consumers are
now more tech-savvy, wealthy and busy. As the business approaches are becoming more
customer-oriented, it is becoming clearer how the consumer demands and expectations change
with the changing environmental factors like technology, economy and society.
In order to improve the retail sector in Australia, it is necessary to bring in appropriate changes
and developments in their particular approaches to retailing. Appropriate measures have to be
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implemented in order to secure the future of the retail sector (Grewal, Roggeveen and Nordfält
2017). Determination of relevant measures to develop the retail sector must include the voice of
the customer, technological updates and newer approaches to consumer-oriented service
providing. Emphasizing on the various factors that affect the retail industry in Australia would
expose the various ways by which the industry can be developed to adapt to the changing needs
of the globalized consumer base.
Operation of COSTCO and RIVERS
Costco: The Costco Wholesale Corporation is a large scale company of Australia that runs a
chain of warehouses that provide a variety of products and services at a cheaper rate than most
other conventional alternatives. The main objective of the Company is to provide good quality
products and services to small-scale or developing businesses at a significantly lower rate than
other available retail or wholesale outlets. The company provides branded merchandise—varying
from groceries, technological appliances, automotive supplies, hardware goods, furniture and
many others, all accumulated and available from a single shopping mart. The vast range of
product category selection allows Costco a plethora of customers, who are exposed to private
level Kirkland Signature products that are designed to be of equal or even better quality at
consistently low prices.
However, with the rapid global and technological advancements, the Costco Company needs to
adapt with the changing consumer preferences with the help of new retailing approaches and
benefits of the internet (Loftsdóttir and Mixa 2017). Costco’s strategies essentially involved
reducing the cost of production and sale by cutting out all the frills and extra expenditures that
are related to the retail sector, like having a fancy building or involving salespeople on the
ground, which enables them to provide better quality products at a much lower cost. With advent
of online shopping, the Company needs to reorganize its retail approach, so as to successfully
utilize new technological progresses and meet respective consumer demands (Woodside,
Augustine Jr and Giberson 2017).
Rivers: Rivers Pvt. Ltd. is a large scale company in Australia that owns and runs a chain of
clothing and shoe retail stores. The Company has taken up repeated interventions to
appropriately shape their market strategies in way that is essentially customer-oriented and
relevant with their changing needs and expectations (Fujiok and Stobart 2018). The Company
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also allows the provision for online purchasing, which is a huge step-up in the world of
technological boom. Rivers holds an approximate of 150 retail stores, spread all over the
Australian continent. The Company now operates as a subsidiary to another enterprise, the
Specialty Fashion Group Ltd.
One of the leading strategies of Rivers was to present quality products that are relevant with the
Australian lifestyle and affordable by the target consumers. In order to update their retailing
experience with the changing external factors, the Company has incorporated a provision for
online shopping, where consumers are exposed to a vast variety, prices and other relevant
information regarding a product, before they can buy them with a mouse-click and get them
delivered at door-step for nominal fees.
Therefore, the two chosen companies exhibit characteristics of technology-inclusive retailing
approaches as well as the lack of it and offer a better scope at understanding the future of the
retail industry, in the light of recent technological developments (Lozano 2015).
Literature Review
Analyzing the current conditions of the retail industry in Australia requires in depth knowledge
of the history of retailing and the various factors that play vital role in affecting the future of the
industry. In order to validate the research with authentic studies and literature, a literature review
will be conducted to guide the various steps that would fulfill the research objectives and deliver
substantial results to the specific questions.
A model of supplier-retailer power asymmetry in the Australian Industry
According to (Hingley Angell and Lindgreen 2015), this study emphasizes on the power
asymmetry in supplier-retailer relationships that pose stiff challenges, especially in the retail
industry of Australia. The impacts of the existing power asymmetry play a significant role in
ostracizing the harmonious organizational flow of various retail businesses. The study
incorporated a huge groundwork of documentary analysis by investigating three major grocery
retail enterprises. Along with sufficient insight on the related industry, the documents also
provided vital information pertaining to the specific challenges faced by the supplier-retailer
power asymmetry. With exclusive emphasis on the role of ‘power’ in the various levels of supply
channels, the research exposes how the major chains of supermarkets in Australia enjoys a
substantial amount of power, which they are free to exploit for their own benefits. The increasing
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power imbalances are further discussed with the help of chosen grocery retail sector and
explained how the exploitation of power by strong market forces, can temporarily benefit the
Company and its consumers but, in the long-run, would cause detrimental loss of consumers
through various ways (Van Alstyne, Parker and Choudary 2016).
Supply chain structures shaping portfolio of technologies
According to (Brandenburg et al. 2014), this research focuses on the vertical integration of a
company’s supply structure, so as to ensure optimum utilization of available technologies. An in-
depth understanding of the various supply structures would help in exploring the various ways
how they impact the expansion and development of the organization. In order to conduct a
thorough analysis, the research incorporates information and data derived from three case studies
involving the leading forces in Australian mass-retail industry, consisting of various supply
structures. The study analyzes the role of vertical integration in determining specific supply
chain technologies in respective structures. This research proposes a particular framework that
offers guidance in recognizing a particular organization’s supply chain portfolio, which in turn
helps in determining the appropriate supply technology for the organization. The requirements of
the supply chain of a particular company, determines the most relevant supply chain technology
that would be appropriate for the identified needs. The ‘arcs of integration’ framework further
explores the various ways in which the degree of vertical integration, in a company’s supply
chain structure, affects the supply chain portfolio of technologies (Du Plessis and De Vries
2016).
Customers’ online channel switching behavior
According to (Gensler, Neslin and Verhoef 2017), a consumer oriented marketing strategy is
extremely important for securing the future of the retail industry and hence the emphasis on
consumer demands and expectations have risen considerably in the recent years. Understanding
consumer behavior and purchasing patterns have become a vital source of information and data
that affects the organizational objectives and marketing strategies of a company. Taking into
consideration the modern consumers of a globalized market with technological boom, channel-
switching behavior can be noted as one of the vital traits that explain the retail experiences from
a consumer’s point of view. Online retail has proven to be one of the most influential marketing
strategies that effectively utilize the advancements in technological fields to satisfy the varying
needs and demands of the respective consumers. The study discusses and explores the channel
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switching behavior of the consumers and identifies the various factors that are responsible for the
triggered interest or the lack of it. The conceptual model discussed in the paper focuses on the
perceived value of the consumers on using internet as a medium of shopping experience and how
it is related to the channel switching behavior (Wu et al. 2014).
Role of technology in enhancing customer experience
According to (Blázquez 2014), this research emphasizes on the differences between the shopping
experiences of an online retail and in-store retail. Focusing on multi-channel fashion shopping
experiences, this study ventures on the role of Information Technology and analyzes its role in
affecting consumer experiences. The sudden surge in online retailing posed a great risk for the
extinction of physical brick and mortar stores. However, with appropriate integration of
technological advancements and innovative ideas, the digital revolution can be utilized to
transform the consumer experience into a more wholesome affair. Not only does online retailing
provide a larger scope and variety to the potential consumers but also highlights the perceptions
of the consumers, consuming over a range of websites or channels. The brick and mortar retail
stores, on the other hand, offers an experience that is beyond just shopping or purchasing. In
order to make the in-shop consumer experience more appealing, it is necessary to keep up with
the changing technology and consumer demands (Lemon and Verhoef 2016). With an easy
access to a wide array of information regarding the product, its price, available alternatives and
customer reviews, online shopping has proved to be more trustworthy, reasonable and less time-
consuming for most of the consumers.
Role of social media in retail network operations and marketing to enhance customer
satisfaction
According to (Habibi, Laroche and Richard 2014), in the age of internet and digital boom, the
retail industry needs to make major amendments in order to keep with the rising consumer
demands and online presence. The advent of modern technology has made it mandatory for the
retail sector to implement relevant business models that would be unique and relevant for
fighting competition against online channels. Since the initiation of organizational presence in
social media, it has opened up new scopes for both the retailers and the consumers to build a
stronger relationship based on transparency, trust and loyalty. Customer reviews on social media
play as a vital factor in ensuring a product’s success in the market. Therefore, the customer
reviews must be thoroughly taken into account, in order to devise an appropriate strategy and
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structure that serves best for the purpose. The derived knowledge from the study clearly exposes
the role of social media in achieving consumer-satisfaction as well as the dominating positive
role played by service operations that affect the customer satisfaction levels to a great extent.
Conclusion and Recommendations
To conclude, the advent of digital revolution has created a new channel for the retailing products
and services, but also posed a risk of extinction of the in-store retail industry. The rising
popularity of online shopping facilities has deemed the physical shopping experiences as out-
dated and time consuming. This paper has chosen two large-scale companies of Australia to
investigate their supply chain structure and analyze how integration of modern technological
appliances might affect the competitive advantage of each organization. The research explores
various business models and frameworks that help in determining the most relevant
technological upgrades that would make the retail experience more wholesome. The role of
social media in establishing a brand’s image has also been discussed, which highlights the inter-
dependence of consumer satisfaction and customer reviews.
The research recommends an integrated approach to retailing of products and services that is
more inclusive of the recent technological advancements and changing consumer trends and
expectations.
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References
Blázquez, M., 2014. Fashion shopping in multichannel retail: The role of technology in
enhancing the customer experience. International Journal of Electronic Commerce, 18(4), pp.97-
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Du Plessis, L. and De Vries, M., 2016. Towards a holistic customer experience management
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Gensler, S., Neslin, S.A. and Verhoef, P.C., 2017. The showrooming phenomenon: it's more than
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Loftsdóttir, K. and Mixa, M.W., 2017. The opening of Costco in Iceland: Unexpected meanings
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Lozano, R., 2015. A holistic perspective on corporate sustainability drivers. Corporate Social
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Van Alstyne, M.W., Parker, G.G. and Choudary, S.P., 2016. Pipelines, platforms, and the new
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