E-Commerce at Aldi Australia

Introduction

E-commerce appears to be a very attractive trend in the business world today. However, it deals not only with having a social media account and interacting with consumers on a regular basis. For a company to claim involvement in e-commerce, it must be in position to carry out some of its business transactions online. To accomplish it, the presence of social media account is not enough. Social media networking plays an important role in the company’s marketing concept. Still, for e-commerce an interactive website and online payment technology are more mandatory. Customers need to view products, ask for help from the store’s employees and even make orders for pick up later or delivery depending on their preferences. It means that alongside with just communicating with the customers, e-commerce also focuses on delivering the products to the customers as conveniently as possible. With more than 80% of population in the modern world using the Internet for various purposes, it can be assumed that everyone may be online at some point of his/her life (Bosomworth 2015). It means that the Internet is an effective platform for business transactions for the small business enterprises, as well as for the large ones. As a result, while the large corporations like e-Bay have been very successful with their online business model, smaller companies have also been employing the trend. In any case, regardless of the strong competition and numerous challenges the companies may face, most of small businesses are working very effectively online. In Australia, Aldi Stores is one of the retail chains that are making a great effort with their e-commerce aspect. With a little more emphasis on the right factors of their business, they should dominate just as much as Wal-Mart and Tesco within their respective markets and beyond. The major concern with respect to e-commerce is what Aldi is doing at the moment and what potential it can have if it focuses on the right things. Current report provides an e-commerce strategy, which Aldi Stores Australia should adopt to succeed in the industry.

Background

Aldi Stores is an international discount retail chain that currently operates more than 9000 outlets across the world (Berman 2011). Generally, the stores are known for their discount sales structure, which offers products at prices that are much lower than in most of other retailers in the market. The high volume and the low profit margin policy that the company has adopted, enables it to make high sales volumes on low profit margins. It is caused by the fact that the customers are generally price conscious and are attracted to a company that cares about their financial security to the point of offering consistent discounts on staple items. In Australia, it can be observed that the stores have positioned themselves as the cheapest alternative in the industry when looking for a shop to buy basic items like food and beverages, household items, clothing items, as well as gifts among other things. Aldi opened its doors in Australia in 2001 and has since grown to over 200 stores within the region (Mitchell 2014). It means that the company is relatively well-developed, catering for over 20% of the Australian retail industry (Mitchell 2014). With regards to e-commerce, Aldi Stores has an interactive website where the shoppers have a possibility to access all the interesting information that they need, including product offers and price reductions, as well as the weekly sales. It proves that the company is already active online. The challenge is, thus, in getting them to embrace online sales like the rest of the retail industry in the world. Online retailing is a great opportunity for the company to capture customers who have not enough time to visit stores and yet need to shop sometime.

Business Concept

Aldi Stores Australia is a discount retail chain that specializes in consumer products among other things (Lutz 2015). The company is especially investing in availing cheap basic commodities, including food, toiletries, clothing, and household items among other things. The main idea of the company is to avail all the basic products that a consumer would want, under one roof. It implies allowing for convenient shopping which, in turn, saves time and allows the customers to buy necessary things. Based on such operation, it can be concluded that Aldi’s business concept is based on selling consumer products at a cheap price (Huang, Wang & Day 2008). Other than having a wide range of products, the company also has convenient locations aimed at enabling the customers to avoid congestions and heavy traffic of the cities. The company has more than 200 store locations within Australia, meaning that they have invested generously in ensuring accessibility for all their customers (Mitchell 2014).

Recently, the company has ventured into e-commerce, although, with a limited indulgence. They have an active and highly interactive website operated specifically for the Australian market. The website incorporates all of the services offered by the company, including the mobile network named Aldi Mobile. The idea is to have a platform where the customers can find all the relevant information they need, as well as interact with a few members of staff when they need to. It implies that their Internet presence has not yet been monetized to include business transactions (Sánchez-Pérez, Estrella-Ramón, Segovia-López & Marín-Carrillo 2014). They mainly use it for communication with the customers. However, it can be stated that the company has already started operating an online liquor store. Here, the customers can look for various products that are available and even make purchases. Such part of the business has been receiving some positive feedbacks but it is not yet as popular as anticipated. It is probably caused by the fact that most of the shoppers at Aldi Stores Australia prefer to shop once, meaning that they buy all they need when they visit the stores (Mitchell 2014). It presents a challenge for a service that provides only one product category, considering that there are thousands of other products that the customers would still have to go to the store for.

Analysis

In order to have an effective e-commerce strategy, the company needs to have an interactive website. It is the first and, considerably, the most important step. Aldi Stores already operates a great website with impressive features (Lutz 2015). The website is not only engaging and interesting in terms of the content, but is also appealing in its layout. It is easy for a used to navigate the website, since the tabs are clear and organized. The second aspect regarding e-commerce would be the clientele. It is a relatively common assumption that only the young people spend time online. However, the statistics show that at least 80% of the people living, working or schooling in urban areas have consistent access to the Internet. In Australia, this number was estimated to reach 83% in 2015 (Lutz 2015). Consequently, it can be stated that any business should consider employing e-commerce, since almost every customer spends online much more time than expected. Another impressive fact is that more than 70% of Internet users admit doing shopping online. It means that the Internet is not just used for looking for information and socializing but also for business transactions (Turban, King & Lang 2009). Since Aldi Company operates within Australia, it has the potential clientele for e-commerce. As a result, Aldi can operate an online store without having to worry about relevance and viability in their Australian market. The company also needs to possess the human capital to run its online business. While an online store would mean limiting the number of physical store locations and thus receiving an opportunity to operate fully with fewer personnel, it must be noted that online business transactions are much more engaging (Huang, Wang & Day 2008). The customers will require more interaction with the company, since they need to ask many questions before they can commit to buying a product. Moreover, they will need to receive reassurance about the delivery system for the purchased goods. In addition, they may also need to develop a mobile application for shoppers who like convenience and would like to use their phones or tablets for shopping. Shopping applications are especially popular for companies that are seeking to gain customer loyalty basing on convenience and accessibility.

Strategy

Objectives

Aldi stores are already performing relatively well in the Australian retail chain industry. However, with an introduction of a complete e-commerce strategy, the company should be able to improve its sales volumes and customer loyalty numbers (Lee 2009). It is caused by the fact that the company is aimed at reaching out to over 80% of the Australian population who spend time online (Bosomworth 2015). The objectives for embracing e-commerce at Aldi Stores would include increasing the company’s market share in order to boost its sales volumes and customer loyalty. In addition, they can use the platform to introduce new products into their assortment, since they will not have to worry about shelf space. With a successful online platform for its sales, the company will have an opportunity to avoid problems with its shelf space in the physical store locations.

Business Model

In order to be successful with its e-commerce venture, there is a number of clear considerations that the company should consider. The main aspects discussed in current section include target customer segments, cost structure, revenue streams, customer relationships, and value proposition. All of them are significant for employing the desired business mode, once the company decides to implement e-commerce. 

Target Customer Segments

Currently, Aldi Stores has a very large customer base and target market (Lutz 2015). Initially, the company mainly targeted baby boomers, a population segment that has to shop for its relatively large households. It means focusing on the adult population comprising mostly of mothers and fathers. As a result, the stores make an emphasis on bulk buying and weekly discounts. The aim of it is to cover a market segment of people who appreciates the value of discounts in terms of enabling them to meet their obligations at home. With a demographical shift in shopping tendencies, the company started seeing more young people shopping in bulk for their small households as well. It results in growing of the narrow older target market to embrace the younger customers. With the introduction of e-commerce, the company can expect to embrace a wider segment of customers. Currently, the elderly may be removed from the target market due to the limitations in terms of mobility (Lutz 2015). With the online retailing component and the mobile commerce, it can be expected that the elderly will be shopping at Aldi as well. It calls for a restructuring of the company’s target customer segments. The stores will now be working to attract anyone from the age of 6 to 100. However, each of the age groups will have to be approached differently in terms of marketing communications. 

Cost Structure

The cost structure in this case refers to what the e-commerce aspect will cost to the company. Considering that a website is already developed and running, the company will only have to make a few changes in order to make the online store more interactive and capable of hosting business transactions. It is expected not be very expensive. The company will also have to market the online store, hire personnel to handle the expected customer traffic, look for a software company to create its mobile commerce platform, and possibly find an affordable solution for a new delivering mechanism. Aldi will need a cheap alternative for delivering the products to the online customers. The only expensive venture would be connected to maintaining the e-commerce. The company may need to hire some new members of staff to handle the online transactions, as well as make additional investments into e-commerce security systems for the website.   

Revenue Streams

Customers of the Aldi Stores are currently willing to pay for the good quality products. However, with e-commerce they should also be ready to pay for the convenience offered to them due to the retailing and mobile commerce components. Considering that it is a discount store that has been established on the basis of lowest prices in the market, the company cannot expect to continue making such impressive sales numbers if it increases the prices of the commodities. It means that the company will have to find a new way of making revenue. The delivery cost can be covered by the customers until the company organizes its personal delivery unit. Using an in house delivery system is cheaper, since the company will be expecting to sell goods to customers who are located within the vicinity of a physical store location. As a result, that the distance traveled to deliver the products to the consumers will be short in most cases. Thus, the pricing tactics should remain consistent in order to avoid jeopardizing the company’s unique selling point.  

Customer Relationships

Aldi Stores already has a very large number of customers within Australia. Consequently, the company has a great experience of serving the customers in the retail industry. With e-commerce component, it will have to consider looking for more customers online. It will be connected with using the Internet, as well as its marketing communications. Considering that the mobile commerce is particularly aimed at fostering customer loyalty by creating long term customer relationships based on convenience and familiarity, it can be expected that the company will start by targeting its current consumers. It will require organizing promotions for the new online and mobile outfits of the business within their current physical locations (Jiang, Shang, Liu & May 2015). In addition to focusing on an already wide and existent customer base, the company will have to keep registering profits, while trying to introduce its e-commerce strategy. It can also be stated that the customer service in this case will not be costly. The customers already spend time online, and most of them have smartphones. As a result, the company members will not have to make any special considerations for the online retailing or mobile commerce options. In such way, it translates to a relatively low customer costs for the company. All the company representatives will have to do is to popularize the two platforms and make sure that both the website and the mobile shopping application are easily accessible for the clientele.     

Value Proposition

Considering value proposition, the company needs to understand what it really offers to the customers. In this case, the company has been selling food and beverage, household goods, clothing, and gift items among other things at a cheap price. Due to it, the strategy of the company has always been based on the high quality products at a low price and in the convenient location (Jiang, Shang, Liu & May 2015). With e-commerce aspect, the company will be introducing online retailing, e-CRM and mobile commerce. All of the above-mentioned factors are significantly new and important aspects of the business and each has a potential of creating some value for the customers.

Online retailing deals with letting the customer shop online without the inconvenience of having to go to the actual store. It means that a student can shop for groceries while conducting a research on his/her coursework, a mother who has to stay at home with her child can also fill up her shopping cart, while reading her favorite magazine, just like the programmer can shop for his clothing items, while writing a new program on his laptop. Generally, the convenience here is that anyone can make a shopping list and buy all the necessary goods from anywhere and at any time. In addition, the customers receive an opportunity to choose from a very wide range of products, meaning that their inability to visit the store location personally will not make them refuse from things they like. In fact, since they are shopping online at their own convenience they will be able to browse through a wider variety of products and pick what they really want.

As for e-CRM, customers could have the complaints about the company but were deprived of possibility air them due to time restraints. For example, if the customer had bought a product that turned out to be below his/her expectations in terms of quality, it is likely that he/she will not have enough time to complain about it (Alrawi, Ekbia & Jaber 2008). Most customers shop once in a long time and by the time they go shopping again, they may forget about that complaint. With e-CRM, the customers receive both the opportunity to air their concerns and have them responded to immediately. Managing customer relations online implies having a consistent presence online to interact with the customers. In terms of value, the clients will always have their questions and concerns, as well as complaints, responded to (Doherty & Ellis-Chadwick 2009). As a result, the company will have a chance to fully understand the needs and expectations of its clientele so that to offer better quality products and services.

Mobile commerce implies a possibility to satisfy the shopping needs of everyone who has a smartphone. The people who do not spend much time at computers have a limited access to online stores. On the other hand, the mobile application would be accessible to everyone who has a mobile phone. Moreover, since it is an application it will require the customers to sign up and log in. It means that the customer can keep an open tab by starting a shopping cart and paying for the goods only when they are done shopping and are thus ready to receive the products (Pearson 2014).

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