This is much cheaper than a conventional advertising model. Here the prospects are also going to be customers. The customers visit the company’s website and orders for the goods. They pay instantly with a credit card. The company does not have to give any credit and can save on huge working capital interest costs. The products can be mailed all over the country from one single point and a lot of wasteful transportation costs can be saved. A successful sale in just a few days and with such little over-heads! They save about forty percentage of the costs.
An important thing here though is whether the customer is happy with the product experience. That ultimately depends on the quality and value of the product which compels the customer to buy again. Without a good product, the company will soon go out of business. So the company ‘a’ will strive to do their best in terms of quality care and customer relationship management. With such big savings, the company can also help to pass on a percentage of the savings to the end-user or customer.
E-com models have reduced costs of many products by over fifty percentage. In fact it is the cheapest retailing model and it is easy to implement. It also amounts to saving huge amount of money in employee salary because the payrolls can be shorted by excluding your army of expensive sales men. E commerce has come as a boon to the airline industry. No other industry was as interested and enthusiastic about jumping in to implement IT than names in the aviation sector. The no-frills service providers were looking for a better way to deliver their services cheaper and faster to the customers and they logged on to the internet to achieve this.
Apart from e-commerce, IT bags have lent other goodies to the industry. It has helped them integrate end-to-end processes in the industry thereby having superior management decision capability and faster communication. Real-time sales and operational figures have been very important to the sector. Databases that were connected to the internet could gather all the information from all over the world and produce an updated picture on any vertical within the industry.
The cost savings is also immense. Airlines spend almost sixty percent of their revenue in fixed cost such as fuel, operational cost, salaries etc. The other fourty percentage is spent on sales network maintenance, advertising and promotion, reservation
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