MusicJuice.net

Lecture 6 Case Submission

Ahlben Phillipus: 509802

Question 1
What are the major opportunities and challenges involved in Internet (as opposed to brick and mortar) startups?
Answer
Both Brick-and-Mortar companies and internet startups each face their own unique opportunities and challenges characteristic to their type of business and industry.
Opportunities which internet startups have over brick and mortar are detailed below;
• Immediate access to a global market place, a platform from where internet companies can mass market products, or use a more intelligent marketing approach through search engines, based on specific search results of users on Google, yahoo, AOL, etc.
• Reduced warehousing and distribution costs, if products sold are tangible, through achieving economies of scale by having the portfolio of products on offer available and visible on the website (e-catalogue) and doing all deliveries from one central location. Most companies incorporate a lead time on their products (similar to Apple) and only manufacture once order and payment confirmed, and thereby reducing warehouse costs, almost in totality.
• Simple, streamline and efficient business processes are vastly enabled through web functionality and capability.
• Access to customer data and their shopping preferences through your e-catalogue records, allows for greater customer relation management possibilities, and also generating higher cross sell and upsell ratios if data is “mined” correctly.
• Reduced staff numbers, therefor reduced costs, as interaction is mainly done through the company website, and call center functionality can be outsourced at a fraction of the costs.
• Capable of generating orders and sales 24/7/365 with the same resources as long as lead times are in place and clearly communicated to customers.
Challenges facing internet