Security as the company will be putting company critical data into someone else’s hand. Security issues (But bestlaptops would not have to worry about this as their choice of implementation is Shop creator, ASP would ensure security) Competition would be intense as customers want quality products…. Bestlaptops would have to establish a customer relationship. Winning a new customer base…. As they are not the first to enter the market they will have to look at their competitors and not make the mistakes they made. There is the risk that you may not be able to capture the market.
By going online, the company hopes to reduce the overall costs of the business, as there will be no shop or physical infrastructure, so the cost of running them will diminish, although there may be a small charge for having a bank account. The company would also benefit from a large customer base. As the website is to be created using a Flat pack ASP solution, a technical infrastructure would not be needed by the company. There is no need to employ any IT personnel as al upgrades and installations will be done by the Application Service Provider (ASP); however there will be a cost involved in adopting a flat pack ASP solution.
These costs will vary from initial license costs to annual hosting charges. Upgrading of the website also has its costs attached. A business model ‘specifies the relationships between different participants in a commercial venture, the benefits and costs to each and the flows of revenue’. [Keen ; Elliot, 2002] Turban (2002) defines business model as ‘a method of doing business by which a company can generate revenue to sustain itself’. All definitions, more or less point to the Portor’s value chain. Turban (2002) states that ‘the model spells out how the company is positioned in the value chain’.
However, a business model is not all a company needs. As Elliott (2002) states that all businesses, irrespective of the business model would fail if they lack sufficient focus on the following equation. He expresses the need for businesses to address this equation. The business model for bestlaptops. com will change from currently a shop to being an e-shop. The company’s plans are to completely get rid of the high street shop, which would in turn reduce costs, as the costs of renting the premises and paying staff would diminish.
Using this business model, the business would have a broader geographic reach and would consecutively have lower costs. Deliveries will be made directly from the suppliers warehouse, and inventory costs and risks would also decrease, as the company would only purchase what it has sold to its customers. An e-shop business model for bestlaptops. com would also ensure an attraction of a huge range of products and longer opening hours, i. e. 24×7, instead of traditional 9-to-5. Bestlaptops. com would operate from home, since customers will only be attracted through the website.
The company believe that customer spending over the Internet has increased over the last few years, especially the sales of laptops and other computer related accessories. This claim can be backed up with some literature published in the recent years. Elliot (2002) states that some of the most popular online purchases in the UK in 2000 were leisure and travel products followed by software/hardware and other computer related products. Fletcher (2000) in his report predicted that online consumer spending would rise from $2. 6 billion in 2000 to nearly $30 billion by 2005.