On the other hand, Tesco has been running its own customer relationship well by keeping customer interaction through various channels like phone, e-mail, clubcards and mobile devices. To sum up, Tesco is integrating information technology with customer service with innovation to keep its leading position 1. Weaknesses However, the cost of research and development is very high which will, as a result, decrease the company’s profit. Sometimes, the input on technology may not match the preference of the market and customers, which means there may be no use and even a waste.
1. Opportunities It not only provides customers an enjoyable shopping experience, but also gives Tesco another breakthrough point to improve its e-commerce service to retain old customers as well as attractive new customers. For instance, online shopping is becoming increasing popular since more customers prefer to shop without stepping foot inside a grocery store (Hartman Group, 2012). Online shopping module can create a convenient and enjoyable experience for customer.
On the other hand, it can expand the customer base to remote area and break the restriction on storage space. Furthermore, companies can collect data easily for analysis so that they can find out customers’ shopping habits and preferences to set new strategy. Overall, high-tech use is a win-win tool for both companies and customers which gives Tesco potential growth opportunity.
1. Threats With competitors developing innovative IT, not only at an incredibly fast speed, but also at various range of service, Tesco is having the risk of lagging behind at some point. For instance, to compete with Tesco, Sainsbury has launched a new technology called brand match since 2011(J Sainsbury plc, 2012). Brand match helps customer to check prices of their products with those of Tesco and Asda immediately.
Customer will get a receipt which shows the differences of prices and will be given voucher if the goods are more expensive than the same one in Tesco or Asda. For Marks and Spencer, the entity has installed an initiative called browse and order point across 40 stores in UK in the first half of 2012 (M&S, 2012). With the help of it, customers could browse more of the product category and buy the products, which are even not in store (Ryan, 2012).
Both of them are increasing their competitiveness by new technology. As far as Sainsbury concerned, brand match has constructed a database of prices to ensure that customer buy the same quality good in lower prices. Also the outputs of information from the database are telling them the service they are enjoying, which could be promotional. For Marks and Spencer, browse and order points are using application software, which not only helps customer to scan through products but also enables the entity to distribute their goods on time. The application of software creates a different shopping experience to customer and breaks the area limitation of shopping.
As can be seen from the SWOT analysis above, even facing various threats and internal weaknesses, it is still not so difficult for Tesco to find opportunities and make good use of its unique competitiveness, strong customer loyalty base and advanced technology development. Overall, Tesco is on an advantageous position in the competitive environment.
Web collaboration tools can expand organisation in new position of market and enhance customer satisfaction. It can be described as a backend software or service that allows company to share information with customers. (Warren., 2011)
The challenge of Tesco is the effectiveness to work across its geographically dispersed organization. International growth depends on a large extent upon rapid and successful adoption of the Tesco operating model. However, manage its process in a timely and cost efficient way will become harder by continued expansion. Therefore, Web Collaboration Tools is used to support rapid international growth that can allow Tesco to lower their costs of operation and to pass on saving to their customers with lower retail prices. This assessment will describe internal and external collaboration.
Internal collaboration External collaboration 1. Unified Communications: Communications services to employee workspaces.1. Collaboration applications: Connect people anywhere by voice and messaging. 1. Telepresence: Cut administrative costs, save time. 1. Customer collaboration: Increase profit while reduce inventory costs. External collaboration: Tesco, in 2011, has performed 10% and 40% growth in UK online sales and international online sales respectively (2012 annual report). Hence in order to maintain and develop the online services, Tesco invested £65m on cloud-based IT service to drive online expansion with probable future benefit expected. (Goodwin, 2012).
Conversion rate plays a crucial role in information system which can be defined as the ratio of visitor who converts casual content view or website visits into desired actions based on subtle or direct requests from marketers, advertisers, and content creators. (Wiki, 2012). There are two ways that can be utilized to achieve better financial performance by applying this conversion rate, which are increasing sales with converse rate optimization and cost minimization with future sales expectation.
Conversion rate optimisation is essential to Tesco’s online shopping service, because it enables the company to achieve much higher sales volume without allocating more investment expense on attracting more potential customers or on developing new business area. According to Fireclick’s benchmark index (2012), only 2.9% visitors actually place the purchase online, therefore most companies mainly focus on how to increase the number of visitors to their website.
2.9% of 1000 visits anyhow brings more profit than 2.9% of 100 visits. While trying to increase the website traffic may be worth the effort, the more effective way can be focusing on improving the conversion rate. According to Newsle, the CEO of LiveChat, Mariusz Cieply, offers nine ways to improve the conversion rate of e-commerce website: make life easy for your shoppers; show what’s popular; engage shoppers while they are hesitating; be as personal as possible; always be available; remember that internet never sleeps; experiment to evolve; listen and learn from customers (Ray, 2011).
On the other hand, future sales volume of different goods can be predicted by applying conversion rates on commodities, which enable Tesco to further cut the inventory cost. As knowing the probable future sales volume, Tesco may keep the inventory at a minimum level, hence high inventory turnover ratio can be expected. For Tesco, a retailer whose major commodities consist of daily food, high inventory turnover ratio directly implies that more healthy and fresh food will be supplied to customer and positive faster operating cash flow will be generated for company. Moreover, since the future sales volume can be proximately forecasted, goods then can be distributed from supplier to local store far before placing the order by customers.
Besides, data analysis on the IP addresses of clicking on different goods may identify the distinct needs of customers from place to place, as a result, distribution system will be improved to be more efficient. Therefore after calculating the future sales volume, better quality goods will be more quickly and precisely distributed to customers while the inventory cost has been greatly minimized.