How could Canadian Tire use e-business metrics to monitor its B2C website’s performance?
The most important e-business metric that Canadian tire could use to monitor its B2C (business to consumer) website would be the profit margin from the website generated sales. By monitoring the websites profitability on a regular basis it would have been much easier to see the folly in using the site for sales instead as a consumer research tool like Wal-Mart Canada did.
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Average prices could have been strategically reduced to induce more sales or improved significantly depending on the response to the site. Canada Tire could also have reduced their overheads to raise their profit margins by enabling the company to reduce the average price and therefore attracting more consumers (Jackson, 2009).
Another e-business metric to use would be the finance and administration of the B2C website, specifically the cost of running the site against its profitability. By monitoring the number of late payments, the time it took to respond to consumer requests, the number of accounting, payroll, billing and order errors and the cash flow of the business it would be much simpler to see how the website is affecting the business and whether to continue running the B2C website or abandon the project altogether (Industry Canada, 2010).
Establishing and maintaining a consumer database history is also a clever B2C website performance monitor. A strong consumer database history will in the long run prove invaluable to Canadian Tire.
By monitoring what their consumers purchase a lot or like best, when they shop, how they shop, classifying the consumers into categories like high spending, regulars etcetera, the company can tailor products, advertisements, sales promotions and even shopping experiences to suit the customers who bring in more and more money (Industry Canada, 2010).
Monitoring the number of website visits that translate to a sale will also go a long way in assisting the company management in monitoring the B2C’s website performance. This could be done with the help of a questionnaire handed out to customers who shop at the stores and even on the website (Industry Canada, 2010).
Canadian Tire management could also look at the consumer account activity to monitor the B2C website performance. Monitoring customer activity will prove very beneficial to the Canadian Tire management. Consumer activity could improve due some new product or sales drive or it could go with the season (e.g. Christmas). Such information will help to monitor just how much business the B2C website is bringing in and this is a very important statistic when making future decisions about the website.
Introducing a consumer loyalty program will also help to monitor the B2C website performance. By having a loyalty program run through the website the company can track the website’s performance through the number of reward points earned by its consumers. Higher points will indicate higher website traffic and sales while lower points will indicate the converse.
Whenever a sale is made at an outlet, the management should strive to find out where the customer got the product information from. This will help in determining how much business the website and ultimately other marketing avenues bring to the company. This can easily be done with the help of a questionnaire handed out to customers at the retail outlets.
What was Canadian Tire’s original strategy for its B2C Web site?
The original B2C website launched in November 2000 was designed to gain a competitive edge over other companies in the retail business. The strategy was to offer the consumer, especially those in far flung areas, the convenience of shopping at Canada Tire without having to physically visit an outlet and to provide the consumer with enough information to make the right choice on a product.
Shoppers could purchase online, thousands of products, view numerous photographs of the products, get detailed descriptions of the products and even warranty information. Canadian Tire even introduced fringe benefits like gift wrapping to pull and maintain customers.
With features like real time inventory management (allowed customers to keep track of their online purchases) and an option to customize the web page, Canadian Tire pulled all the stops in making sure that their new strategy would be a success in the Canadian market.
Why did this strategy fail?
This business strategy failed despite the obvious hard work that went into the preparation and maintenance of the website. What Canadian Tire failed to ultimately take into account was the uniqueness of the Canadian retail market. For one, consumers used the site only as a research tool on the items they wanted to purchase then they would drive to the retail outlets and buy them there rather than directly from the site and this was especially true for large and bulky products like lawnmowers.
The company’s strong retail network proved to be its undoing in this respect. With 450 countrywide outlets, 15 minutes drive from 85% of the population, the option of research then visit an outlet was much better. So while the site may have been getting a lot of hits, very few of these translated into actual online sales.
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Another reason the strategy failed was the high and prohibitive cost of shipping and delivery. Consumers living far away from an outlet store were the most affected. This was ironical as the website had originally hoped to target such consumers.
Increased overhead costs like third party help in fulfilling orders e.g. transport and delivery of purchased items and dedicated warehouse space which serviced only the online business proved to be too high. Running the website purchases and delivery service was costing the company more money than it was bringing in and that is where it all went wrong.
What is Canadian Tire’s current strategy? Why is this strategy more conducive to the Canadian marketplace?
The company halted selling of products online and its current improved strategy is to market the B2C website only as a consumer research and inquiry instrument. This is a much more prudent scheme because the company has a very large 450 strong outlet network and thus a store is within reach of a large percentage of the population which limits the need for online purchasing. “Also, according to Richard Talbot (president of Talbot Consultants International), it is very expensive to sustain an online business in Canada given the country’s small population relative to its geographical size” (Industry Canada, 2010, p.1).
Explain the e-business benefits and challenges facing Canadian Tire
One of the main benefits of Canadian Tire doing e-business has been an increase in sales which translates to profit. By offering product information online to just about anyone with an internet connection the company has been increasing its sales because customers can find just what they are looking for from the product descriptions and photographs available on its B2C website. By enabling the customer to make conveniently make the right choice the company is witnessing more sales.
The website also allows constant access to the company’s product information thereby making it very convenient for the consumer who can then research at his/her convenience and also purchase it at his/her pleasure. This effectively eliminates the barriers of time for the consumer.
E-business could also be beneficial to the company when dealing with products targeting a very specific market. While such products may be in little demand at the local level, exposure through the website will bring on a little demand from several places which when combined will result in significant sales for the company.
Doing E-business has enabled the consumers reduce their buying time, make better buying decisions and increased his/her chances of buying alternative products and thus the consumers experience is improved. This results in a happy and satisfied customer and results in more buys thus more profit.
The e-business market is not all rosy; there are thorns that management has to contend with. Top on the list is competition. Just about every other mega retailer in the world has a B2C website that is more or less the same as the Canadian Tire’s site. This presents the challenge of creating a feature or features that will distinguish its website from the hundreds of others out there and thus making itself the retailer of choice.
Improving or maintaining quality services offered on the site is also a challenge. Constantly updating, adding, removing or changing product information on the website is a massive job that requires lots of research, diligence and time.
Industry Canada. (2010). The Business in the Indian Virtual Market. Web.
Jackson, T. (2000). Electronic Commerce – Strategies & Models for Business-To- Business Trading. NY: John Wiley & Sons Ltd.