Archive for October, 2009

Week 6

October 30, 2009

In this weeks blog I will discuss how I anaylsed the upstream and downstream of Supply Chain and discuss the different concepts that could be included including

  • Push-Pull supply models
  • Vertical Integration vs Disintegration vs Virtual Integration
  • Efficiencies in Supply Chain
  • Value Networks

Wine.com get their wine from all over the world, they have different warehouses but are based in California. The wine they have is made over various numbers of years and they don’t make the wine on the spot as they don’t make the wine they import it from different vineyards all over the world as well as some vineyards that they control. They do not make their products but store the wine.

Supply chain management is all the supply activities of an organisation from its suppliers to its customer. Downstream supply chain is transactions between an organisation and its customers and intermediaries, equivalent to sell side e-commerce. Upstream supply chain is transactions between an organisation and its suppliers and intermediaries, equivalent to buy side e-commerce. Wine.com uses both downstream and upstream, the company uses upstream to make transactions from their suppliers they contact the suppliers to get the products for their customers. They also use downstream to make transactions between their company and their customers.

The diagram below shows the supply chain management system. Taking from google images.

supplychain

Push-Pull strategy in business describes the movement of a product or information between two subjects. Pull is when the consumer ‘pulls’ the goods they demand or need, while the suppliers ‘pushes’ the goods towards the costumer. Wine.com is a ‘push’ company as they market their products to their customers and aim to make the customers want to buy their product. Through marketing they use the ‘Push-Pull’ strategy to entice the customers, if wine.com used a ‘pull’ strategy they would have to wait until the customer placed an order to make the wine. This is not viable for the company as most off the wine takes years to mature and develop their correct taste and flavours. By using ‘push’ the products are pushed through the channel, from the production side to the retailer.

800px-Technology-Push_Market-Pull

The diagram below of www.wikipedia.org is of a Push-Pull Model.

Vertical Integration is concerned with how much control a company has over its upstream supplier and downstream buyers. There are three different varieties of Vertical Integration, backward vertical integration which is upstream, forward vertical integration which is downstream and balanced vertical integration which is a combination of both. A company uses Backward Vertical Integration when it controls subsidiaries that produce some of the inputs used to in the production of its products. A company uses Forward Vertical Integration when it controls distribution centres and retailers where its products are sold. Balanced Vertical Integration means a firm controls all of the components, from raw materials to final delivery. Wine.com I believe to be balanced as they control everything within the business and how it is run.

Vertical Disintegration as opposed to integration, in which production occurs within a singular organisation, vertical disintegration means that various dis-economies of scale have broken a production process into separate companies. A major reason for Disintegration is to share risk, it is more likely to happen in volatile markets and I believe that wine.com does not use Disintegration but that it may be brought in, if new companies begin to compete in the market.

Virtual Integration is a new form of Value Chain Management. Virtual Integration plans to allow manufacturers to become virtual companies, owning only the brand and the customer. Vertical Integration is history as the future will be about virtual organisations operating within virtual supply chains. Virtual Integration as opposed to vertical integration represents the decomposition of a traditional company. The main difference is that Vertical Integration performs and Virtual Integration innovates. Wine.com could possibly be called a Virtual store having operated on the internet for years, they also may be able to include third parties when selling goods to try and reach a wider target audience.. Wine.com may not be considered virtual at the minute although they may be able to start to look to change their direction and improve relations with other third parties and new forms of advertising and marketing to get new customers.

The main difference between Vertical Integration and Virtual Integration is that Vertical is the extent to which supply chain activities are undertaken and controlled within the organisation and Virtual is the extent to which all activities are undertaken outside the organisation by third parties.

The diagram below is taken from the power-point notes that were displayed in Maurice Mulvenna’s lectures this week showing the different forms of integration.

integration

Value Network is a complex set of social and technical resources. They work together via relationships to create economic value. They account for the overall worth of products and services. External Value networks and Internal Value networks differ in that external includes customers or recipients and internal focus on key activities, processes and relationships although a company will use both.

Fjeldstad and Stabells say that a value network consists of theses components;

  • A set of customers
  • Some service the customers all use, enables interaction between customers
  • An organisation that provides the service
  • A set of contracts that enables access to the service

The purpose of a value network is to create the most benefit for the people involved in the network. When considering wine.com when discussing Value Networks you realise that they must have a value network that allows the customers to access their products and services and that they are vital in the overall process of the company. Value Networks are essential for a company to be successful and rely on their products and services being successful. As Fjeldstad and Stabells say there are a few key points that are needed when thinking about how successful a company can be and that the value network allows the company to provide a service.

When dealing with efficiencies within supply chain I could not find how it was linked to wine.com and do not know how they are related.

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Week 5

October 22, 2009

This weeks blog by me will consist of me discussing Porters Five Forces. I will discuss and analyse each of the Five Forces in regards to wine.com and discuss how each Force impacts their website and company. Below is a diagram of how the Five Forces are all related and an explanation on the impacts of wine.com.

The diagram was taking from google images after writing in the search bar Porters Five Forces.

Porters Five Forces

The threat of substitute products and services

When a customer is buying wine there is not really a substitute product available and that they can only buy wine if they want it. There are different services available but it is unlikely that having such a good following and a wide range of publicity that new services would erode the profits of wine.com. Wine.com will monitor the market and will establish if a new competitor will come into the market and begin competing. Although there is a chance of a substitute of services wine.com do not need to worry about the substitute of their products.

The threat of the entry of new competitors (barriers to entry)

Wine.com needs to worry about new entrants into the market; they do not want to start sharing the market with a new competitor and have a fight on their hands for customers. The new competitors if able to compete on the same front as wine.com will possible hold a threat although it may prove beneficial to the market as it could allow customers to search for more wine and end up at wine.com’s website. Wine.com have a big enough grip on the website that they do not need to worry about new competitors and should also be aware that it may be a positive thing if they have a new competitor to compete with in the market.

The intensity of competitive rivalry

Wine.com has over the years adapted to different companies opening new sites to sell and compete in the wine industry. Wine.com offer services like none of their competitors, they offer deals and have many different employees that are experts in their fields and enable the customer buying products to see what they are getting is off good quality. Wine.com have also opened retail shops to cope with the new competitors that they may face, they are in a good position though because they once again were voted the number one internet retailer of the year, for the fifth straight year. So they have do not have to worry about new competitors at the current minute in time.

The bargaining power of customers/buyers

When determining who has the power between the company in this case wine.com and the buyers you have to determine who needs who the most. In the case of wine.com the customers have less commercial power as there are not as many companies that offer the same deals and service that wine.com offer. Wine.com has a set price that is not open to negotiation although they do offer deals that keep customers happy. If wine.com had more competitors than the customer would have more negotiating power.

The bargaining power of suppliers

When studying the bargaining power of the suppliers is like the bargaining power of customers only in reverse where before wine.com was the supplier. Wine.com has a timetable that it has to meet when a customer orders a product they need to get to goods to them as soon as possible. Wine.com orders the goods from suppliers who in turn get their goods from a vineyard. The suppliers are essential to wine.com as they need someone who sells them the wine. Although wine.com do not necessarily get the products of one supplier, different suppliers have different products that wine.com need and therefore not every supplier is essential to the company. Suppliers may find it difficult to raise prices to wine.com as they could move to another one of their suppliers for the business.

Week 4

October 15, 2009

7.

When purchasing from wine.com the customer must ensure that they agree to everything that the company has outlined in the Terms and Conditions. There is nothing in wine.com’s Terms that I would find unreasonable, and it is clearly outlined at the top that if any customer finds any of the Terms not to their personal liken then they are asked not to use the site.

User’s are asked to either intentionally or unintentionally violate any applicable law or regulation. They are also asked not to tamper with non public areas of the site and that unauthorised access may result in prosecution.

Wine.com also outlines how it will not be held liable for any loss of goods. The company clearly outlines that no matter what happens they are not held liable and the customers uses the site at their own risk. They say “IF YOU ARE DISSATISFIED WITH ANY PORTION OF THE WINE.COM SITE, OR WITH ANY OF THESE TERMS OF SERVICE, YOUR SOLE AND EXCLUSIVE REMEDY IS TO DISCONTINUE USING THE WINE.COM SITE.” This statement perhaps unreasonable as if the customers goods do not arrive in a reasonable condition then it can should not be deemed to be the customer’s fault.

8.

The use of encryption restricts unintended recipients from viewing the data, which are deemed confidential. Encryption is the procedure of transforming plain text to cipher text. This is turning text that can be read by anyone to text that can be read with someone with a secret decryption key. When ordering from wine.com the customer should not have to worry about entering sensitive information into the website, when wine.com asks for things like credit card number or social security number the data is encrypted with the best encryption software in the industry as they say – Secure Socket Layers (SSL). On a secure page like the ordering page on the wine.com website the lock icon at the bottom of the page will switch the lock from being open to being locked to show that the information is secure. The business uses data encryption to ensure online transactions, it plays four important roles.

  1. Digital authentication – allows both customers and the merchant to be sure they are dealing with who the other party claims to be.
  2. Integrity – ensures that the messages received are not changed during transmission by a third party.
  3. Non-repudiation – prevents customers or merchants denying they ever received or sent a particular message.
  4. Interception – if data is every intercepted encryption ensures privacy that prevents third parties.

9.

As Wikipedia describes it a ‘cookie in computing terms is a small piece of text stored on a user’s computer by a web browser. A cookie consists of one or more name value pairs containing bits of information such as user preferences, shopping cart contents, or other data used by websites.’

A cookie is data is data stored on the end users hard drive with information related directly to the end-users visit to wine.com. Any information placed in the cookie is accessible only to wine.com and they say in their statement that it will not be shared with anyone else. The use of cookies on wine.com is a unique session identifier which maintains shopping carts and state selections from different page requests, and allows wine.com to maintain information between visits. However wine.com do not find it necessary to have the cookie setting on their website and have made it clear that if the user rejects the cookie they can still browse the website, but unable to make a purchase. The cookies however make it easier for a user to log on and saves the user time when visiting the site again. Cookies also enable wine.com to track and target the interests of the users to enhance their experience and display products relating to a certain user’s preferences.

Week 3

October 9, 2009

4.

Wine.com has had a lot of new customers and new people accessing the site which means that the company will be able to use the information to target new people. The amount of unique visitors that come to the site shows that as a website it is successful. It is one of the most popular search results when entering the word WINE into a search engine. This shows that against competitors it should rank at the top as being first n the list most new customers will click to access it. Wine.com is the top of the list and that is what attracts a lot of new customers to the site.

unique visits

Over the past few months wine.com has been successful in having a lot of people visiting the website. The amount of visits as you can see from the graph means that over a period of December the visits to the site increased. From the reviews that people left this may be because they do good offers that will allow customers to buy gifts for friends and family and to use wine over the festive period. From the list of ratings and reviews out of 12 ratings 8 gave wine.com a five star. This is very high rating and shows that wine.com has the capability to attract new competitors.

visits

5 stars (8) 4 stars (0) 3 stars (1) 2 stars (0) 1 stars (3)

Below shows how popular wine.com is to the general public and how it attracts to the different target audiences. It shows that most people who use the website do so from work and that less people use the website at home and school. It also shows that from the ages of 25-54 wine.com proves most popular. It also shows that the age group of 18-24 is least popular. Some over 65’s do use it as well allow not as many as the 35-44 age group which is the most popular. Most people who use the website are females and therefore wine.com should try to aim their website at females in the age between 25 and 54. Also if they want to improve their sales they should probably aim their website at the younger people who are in college.

ta

5.

When you enter the website name and the page appears the first thing that is asked of you is what state you want your goods shipped to. The page below shows what it looks like when it’s first opened. It gives you a list of the states that the company can deliver the wine too.

state

After choosing which state you would like the wine delivered to it’s solely up to you as the customer to choose what you would like. The user interface on the website is friendly and easy to use and so navigating a way round the website should not be a problem. When you decide what wine you want and click the ADD TO CART button it will automatically add.  You can add as many items as you would like. Once you have finished and are satisfied with your purchases you click the checkout button. Once there you will be asked if that is everything and you proceed.

checkout

You then must access your personal information including your name Zip code and password. Once you create an account wine.com will be able to target you with a list of all the previous items you have bought. Once you have entered all your personal information you are asked for your bank details.

Entering all the information you will finally be allowed to get your confirmation order. You follow five steps listed below. After all steps are completed you wine will be sent out.

billinginfo

6.

I believe that if wine.com wants to be successful then a good way of going about improving their business idea would be to approach new ways of marketing and improving their business and prospective buyers. There are many possible ways in which they could market their company. As mainly an internet based company they are leaving themselves with too many eggs in the one basket so to speak, and although they do have two retail shops by advertising better and making it more accessible to more people the company could be able to improve sales and all aspects of the business.

The best way I believe is to make their website accessible through digital television if a possible customer was sitting at home during a commercial break and an advert came on telling them that instead of accessing the internet they could do it right there and then through pressing a button on the remote control then it may attract new consumers. The customer would press say the ‘red’ button say and would bring them to wine.com’s selection page where they would be able to make their own choice of wine selection and order it. The payment method would be through credit or debit card. This method of payment would be the only one accepted. Wine.com would also be able to keep a record of the customer name address and what wine they have bought in the past, so that they could send brochures out advertising the type of wine that customer would like. This process seems to be the most viable and easiest applicable as the company can attract a new range of interested consumers.

This method is strategically good as it is not a lot of bother to set up allow it does mean that company will need to pay different channels for methods of advertising during commercial breaks on TV. This may be the only main problem apart from the added advertising costs wine.com should benefit in the long term from expanding their advertising base that would enable them to gain new customers and hopefully make the company more successful in the long run.

Week 2

October 2, 2009

1.

Rombauer Vineyards was founded in 1982 by Koerner and Joan Rombauer and sits on a tree covered knoll overlooking the Napa Valley.

Wine.com is the top online wine retailer over the last five years. In the Internet retailer magazine wine.com was ranked number 15 in food and drug companies and 218th overall in the Top 500 guide of e-retailers 2009 edition. The Vineyard is regarded highly in all wine trade journals and many of the world’s finest restaurants use the wine from the vineyard to please their customers.

Originally founded in 1998 as eVineyard.com, we purchased the Wine.com name in 2001 and have grown into the #1 online wine store. Wine.com help you get the facts about the wine and help you make informed decisions about buying wine, who made it, which grapes it contains and what the critics make of it.

2.

Wine.com main aim as their CEO Rich Bergsund is and always will be focused on our core Internet sales channel,” said, Wine.com. But they do have two retail stores in California and Connecticut they allow the customer to meet face to face with the people behind wine.com and allows the people in the company to better the needs of the customer. By showing that their main aim is through sales on the internet but they are willing to open retail shops shows that they are aiming for a financial gain. The company only has one hundred year round employees.

I was unable to find the exact figures but Wine.com has a long history of financial problems, illustrating the challenges of dealing with state restrictions on shipping wine shaped in the 1930s after the end of Prohibition. The retailer can ship wine to customers in only 26 states and is obliged to operate 10 different warehouses that buy from state-licensed wholesalers, increasing its costs. This has the disadvantage that they cannot reach as a wide variety of people as they would like.

3.

Originally founded in 1998 as eVineyard.com, it became Wine.com name in 2001 and has grown into the number 1 online wine store by annual revenues. The business is based around their internet sales although they do have two retail shops which were opened to attract a new target audience. The main income for the business is the internet. They attract all new customers through new means. They use amazon.com to help in advertising and other measures. Their sales although are restricted to the USA and not every state. They have also moved with the times they use Twitter and Facebook to advertise their wine. The internet channel has more sales than the retail shop based on the fact that the company only has two retail shops and the internet can attract a wide customer base. The company was set up to help people enjoy the best of wines and wine.com strives to give the customer the best experience possible. On their website they are summed up by their first line “Our mission is to become the trusted resource for the wine enthusiast.”