Introduction
Online Hospitality business relates to the sale and purchase of legal hospitality products that can be purchased online by customers through Internet shopping. Customers can view details of the products they want to buy and then place an order. They would have to make payment through credit or debit card and once the payment is realised, the seller would despatch the products to the customer through courier. This model has been very effectively used by Amazon, eBay and other online companies and goods worth millions are sold every day. This paper provides a discussion of the business plan for setting up an online hospitality centre.
Business Relationships
Business relationships refer to the relationships that are built with the business partners to conduct and promote the business and in online shopping as well as conventional brick and mortar companies, this is very important. Business relationships help the company to sustain itself and grow. It helps to develop new opportunities, new collaborations, new strategies, new ideas and to sell new products. In the context of the online hospitality, the following trading partners are important (Leading Insight. 2005).
Manufacturer of the products
This is the one of the most important entity with whom a relationship of trust has to be developed. The online business cannot take up manufacture of all the items on their own and would need to source the products from the product manufacturers. This would begin with first deciding what hospitality products would be sold. Hospitality products can include glass fittings, furniture fittings, door controls, wall hangings, decorative items, personal hygiene products, wardrobe fittings, access control systems, architectural hardware fittings, wood connectors, sliding fittings, kitchen fittings used by hotels, hotel industries and even homes (Tylock, 2007).
The first step is to identify the manufacturers of such products. Yellow pages from any industrial area and even the Internet would give possible names and contact details of the manufacturers. These parties can be contacted through email, through telephone and through personal visits. It is very important that suitable agreements be reached with these manufacturers as to the quality, product type, delivery time, credit terms and a firm commitment on the price. This relationship can be developed by mutual trust since the manufacturer would be asked to deliver the products directly to the customer or to the online shopping site owner who would then repack the products after inspection and then despatch the products to the buyer. The relationship with the manufacturer can be made transparent by placing regular orders and making the payment promptly (Leading Insight. 2005).
Buyers
The buyer is the next important entity and the one who gives business. Relationship can be maintained by understanding the exact needs, making prompt deliveries of the right quality and quantity of products and taking back the products in case of any defects or other issues (Leading Insight. 2005).
Making the Business Successful
A variety of marketing tools would be used to make the marketing successful. Some of the methods that would be used are Blogs, Podcasting, Viral Marketing and Online Media. Blogs can be maintained that would give valuable insight into the current trends in the hospitality, features versus utility, prices, new products that add value, discussion of what other people are using and why and so son. The blog would be the best way for a marketing person to display the skill and expertise and the knowledge that one has. A list of potential bulk buyers can be obtained from the website of hospitality associations and these can be filtered as per the amount of business, the class of business, the reach, geographic location and so on. While mass mailers would help to reach a wider customer base, it would not be very effective since many of the recipients would label the mail as Spam and a tailored mail could not be effective. So there would be three or four different types of mailers, each directed for a different customer type. The owner of the online shopping should visit online conferences, physical tradeshows and network to get noticed so that the website gets noticed. In addition, the company should use the services of online marketing companies so that the company name would appear in the search engine list (Teten, 2005).
It is important that search engine optimisation – SEO should be used so that content and information about the site and the products would appear in the search engine when buyers would enter the keyword for searching products. This is a very important innovation and would help in bringing customers to the site. In addition, there should also be attempts to place small, unobtrusive advertisements in WebPages and other Internet sites, besides obtaining a listing in Internet sites such as Thomas Global, Ali Baba and others. Where possible, more and more information about the company, its products and the services along with the unique selling point should be highlighted. There are other models such as pay per click, but the efficacy of these methods is not clear and one never knows how much beneficial such methods have proved. Online lead generation method can also be used once the business is a few weeks old and starts appearing in the search engine rankings (Scott, 2007).
Business Report
The business report for the online hospitality is provided in this section (Teten, 2005).
Concept of the Business
The business model is a simple Internet-based online shopping model that has been widely used by a large number of Internet shopping sites. In this concept, we would have a B2B – Business to Business or a B2C – Business to Customer website that would have a number of items for sale. The concept of online shopping gallery would be used and information about the products would be displayed. Products would be arranged in the gallery as per different categories such as fittings, hygiene and beauty products and so on and it will be possible to search for a product using a search functionality. Visitors would be required to register and would be given a user name and password, free of cost. Very high 128-bit encryption would be used to provide maximum security. When visitors see the products they want, they can add it to the shopping cart and then pay for the purchase using credit card or cash on delivery. Once the payment is realised, the order would be processed and the order sent to the manufacturer for despatch as per the deadline. Payment would be done to the manufacturer once the goods are despatched to the customer. We can charge a small amount of commission for the sales from the customer and the manufacturer and this commission will be built into the price that is displayed on the screen. Courier charges would be extra and if it is in a nearby location, courier charges would below. The business would depend on volume and value on creating a good name (Teten, 2005).
Details of the plan
Details of the plan include (Teten, 2005):
- Registering the domain name with the domain registering company and finding a hosting service that is prompt, provides sufficient web server space and has reasonable costs.
- Setting up the website with all the functionalities. This can be done by outsourcing to website developers and the website would be hosted in a reliable hack-free web service hosting company.
- Building a network of suppliers who would provide the required products. Product images would have to be taken along with rates, delivery time, etc.
- Launching the site. It would be a good idea to hire some professional PR organisations who would take up the publicity campaign. Mailers, banner ads, content-based advertisements and other media would be used. Advertisement on TV and print media could be considered but this would be expensive.
Set Up Costs
Set up costs would have the following heads. The exact details would have to be worked out later (Teten, 2005):
- Domain name registration and hosting charges.
- Website development with outsourcing and an annual maintenance contract to maintain the website.
- Expenses for PR and advertisement work.
- Expenses for developing the manufacturer network.
- Administration charges.
- Salary and wages for self and staff who would process the orders.
Simple Contract with the Investor
A sample simple contract is listed as below (Teten, 2005):
- Name/ Address of the Business Owner. ABC shopping.
- Name/ Address of Investor: XYZ investor.
Terms of contract: We herby enter into a contract that is mutually agreeable as per the following terms:
- XYZ herein called the investor agrees to invest xxxx USD dollars subject to achieving some mutually agreed milestones. Payment would be made to the business owner through bank account xxxx in DEF bank.
- The investor agrees to invest the amount and for his efforts, he would be given a yyy% stake in the company. The investor would qualify for a seat on the board of directors.
- The investor has a right to defer payment in case the required milestones are not achieved.
- The business owner has a right to pay back the invested amount at the prevailing company valuation and market rates in the future, subject to mutual agreement.
- The investor is not liable for any lawsuits or complaints that may arise in the due course of the company business
Signed Signed
ABC/ Owner XYZ/ Investor
Document Negotiation/ Rate of contracts
A sample document of negotiation is given as below (Teten, 2005).
- Terms of contract: We herby enter into a contract that is mutually agreeable as per the following terms. Manufacturer FGH would undertake to supply following items as per the rates for xx days binding Product Name and Product Number: Quantity and Rate per piece:
- Terms of delivery: Manufacturer would despatch the said products as per the destination given in the work order within the specified days. No extra surcharges are allowed. Based on the geographical location of the destination, ABC would reimburse the payment for courier charges.
- Payment Terms: Within 2 weeks of the final delivery being made and after expiration of the terms of purchase by the buyer who can ask for a refund if the goods are not as per the order or deficient in any other respect.
Maximise Benefits for all parties
Investor would get his benefit he if the company performs well and his investment appreciates. This can be done by selling more products, increasing the value of the company. Manufacturer would get value when more of his products are sold and he gets prompt payment and increases his revenue. Staff and the owner would benefit when more and more products are sold and this would generate more revenue and enhance the brand (Teten, 2005).
Approval of Negotiations
Negotiations would have to be approved by clearly defining policies for purchase and payment terms and a firm commitment from the manufacturers. A benchmark would have to set that clearly outlines the requirements (Teten, 2005).
Feedback from Colleagues
The site would have a feedback page where visitors can give their feedback and suggestions for improvement. Valid suggestions would be evaluated for cost and practical considerations and implemented if found suitable (Teten, 2005).
Specialist Advice
Specialist advice would be required in the areas of PR and branding and in sourcing items from manufacturers (Teten, 2005).
Honouring Agreements
The contract letters have clearly defined terms and if these are met then it could be considered as honouring agreements. In case some items are not met, then the reason for not meeting the agreements would have to be analysed (Teten, 2005).
Adjustments to the process
Adjustments to the process would arise when delivery schedules are missed or when there is a mismatch between orders and deliveries or when one of the party fails to keep the commitment (Teten, 2005).
Nurturing Relationships
Nurturing relationships is very important for the success of the business. The investor would be informed through monthly progress reports about the state of the business, turnover achieved, number of new customers added, increase in value of the company and all other efforts to keep the investor informed. Manufacturers would be contacted through mailers and through telephone complimenting them on their performance and pointing out how they can improve (Teten, 2005).
Conclusions
The paper has examined important aspects of setting up an online hospitality business. Issues such as building business relationships, marketing and an extensive business report has been provided. The paper would hep those who are interested in developing such a business.
References
Leading Insight. 2005. Building Business Relationships. 2008. Web.
Ryan Liz. 2006. Happy About Online Networking: The virtual-ly simple way to build professional relationships. Happy About Publications.
Scott David Meerman. 2007. The New Rules of Marketing and PR: How to Use News Releases, Blogs, Podcasting, Viral Marketing and Online Media to Reach Buyers Directly. Wiley Publications.
Teten David, Allen Scott. 2005. The Virtual Handshake: Opening Doors And Closing Deals Online. AMACOM.
Tylock Steven. 2007. The LinkedIn Personal Trainer. Tylock and Company; Last Paperback Ed edition.