The Coronavirus disease of 2019 (COVID-2019) has affected businesses adversely with most people choosing to work from home. With the widespread lockdown of economic activities, most companies, especially small and medium enterprises (SMEs), are struggling to stay afloat. E-commerce businesses have not been spared, and they are contending with reduced revenues. However, online-based firms could leverage information management systems (MIS) to remain competitive and address the increasingly competitive business environment, which has been compounded by the outbreak of COVID-19.
Online businesses have to retain core competence by creating and maintaining a unique system of collecting customers’ information to understand their purchase behavior and other factors as a way of improving performance. This paper seeks to discuss how Souq an e-commerce business based in the United Arab Emirates (UAE) that was acquired by Amazon in 2017 (Sims, 2018), used MIS as a useful tool to gain competitiveness and increase its market share by customer information acquisition. Before Souq was acquired by Amazon, it lacked elaborate systems and processes to obtain customer data and leverage it for improved performance, as discussed in this paper.
MIS helps companies and their systems to create an effective way of establishing synergy between how people, both workers, and customers, interact with information systems (Wu et al., 2015; Samer & Rawan, 2018). Additionally, MIS generates robust data that could be used in decision-making at various organizational levels, such as operational and strategic levels. After Souq was acquired, it was benefitted immensely through the alignment of its information systems with the strategic goals of its parent company, Amazon. One of the major changes that occurred at Souq was the separation of its website systems from its order systems. The process of collecting and integrating data with the various functions in a firm plays a central role in
streamlining operations. According to Demir (2017), increasing the “number of the software used by e-commerce organization has been subjected to up gradations and changes…Software configuration management has been considered as an essential tool to control the entire evolution and life cycle of the software projects” (p. 11). This aspect allows for the utilization of customer relationship management (CRM) in e-commerce, which aligns information towards marketing and service provision to customers.
Souq Case Study
Even though by the time Souq was acquired by Amazon it was successful in the UAE market, it lacked the resources and expertise to streamline its customer data acquisition to increase its competitiveness in the global market. However, by operating under Amazon, the company enjoyed an established and elaborate MIS to solve its underlying challenges, to become one of the leading e-commerce platforms in the region.
The two major technologies that have been promoting the growth of Amazon include the integration of CRM and MIS into the overall business strategy. Demir (2017) notes that Amazon uses the “customer relationship management module under enterprise resources management to store personalized information and purchasing trends of its customers, which is integrated with the marketing and advertising campaigns of the organization” (p. 12). The following section discusses how Souq used Amazon’s MIS to streamline its data acquisition and customer management.
Amazon/Souq Data Warehouse
Amazon has an elaborate warehouse that is interconnected with all its operations, including sales, marketing, finance, supply chain, customer care, transaction control, enterprise resource planning, e-mail server, and web server. Bhat et al. (2018) posit that this warehouse is a “focal wellspring for information that need to be cleaned, transformed, and more catalogued, thus that they get a chance to be used to analyses those information which makes the organization for furthermore data of the choice-making” (p. 24). Therefore, information is collected from all areas of operation in the company and delivered to the data warehouse where it is processed and analyzed for informed decision-making. Souq did not have such an elaborate system, but by coming on board Amazon’s MIS, the management can now make data-based decisions to optimize performance.
Souq has MIS that connects its development and information system goals with the overall organizational goals through the application of logical analysis. The MIS is made up of interconnected machines arranged hierarchically to cover all the company aspects from top to bottom. Customer shopping trend, inquires, likes, dislikes, suggestions, and all other aspects that can be captured as they interact with the company’s online platform are collected at the first level of the MIS. The data are then forwarded to the second level for analysis and optimization. As such, the MIS is designed in a way that it continuously promotes synergy between the different organizational aspects through the collection, storage, processing, and transmission of data, which is analyzed using complex mathematical formulas and statistical models to forecast demand and shopping trends.
The MIS has a section for customer reviews as a way of creating an interactive environment for customer engagement. From the information provided by the clients, it becomes easy to identify areas for improvement. Under brick and motor set-ups, customers can write suggestions or share their experiences verbally with business owners. However, in e-commerce, customer reviews are the most authentic way of knowing what clients want and meet those needs hence improved sales. Therefore, Souq has a customer review system that allows the MIS to capture such data, analyze it, and make it useful to inform decision making.
For instance, most online stores do not have warehouses where they can store goods. In other words, the majority of e-commerce companies, such as Souq provide a trading platform where suppliers can list their products for access by consumers. Therefore, when an order is made, the suppliers fulfill it, and the payment is made through the platform. As such, platform owners, such as Souq may not be in a position to verify the quality of the products being sold. Consequently, customer reviews become the benchmark for assessing the quality offered by suppliers (Elwalda et al., 2016). Suppliers’ ratings are aggregated, and buyers could decide to buy from the reliable ones based on the available data, thus leading to increased revenue.
Customer Relationship Management as Part of MIS
The success or failure of any organization depends largely on the way customers are managed because they are the lifeline of a business. This assertion is particularly important for online businesses due to various reasons. First, the space is highly competitive, and the cost of switching from one platform to another is almost negligible. Additionally, a brand name is built through satisfied clients who can vouch for the company. With e-business, the fact that business owners do not interact with clients face-to-face compounds the problems that could arise if the right management strategies are not adopted.
Souq uses Amazon’s eCRM platform, which “provides the ability to capture, integrate and distribute data gained at the organization’s website throughout the enterprise” (Al Imran, 2015, p. 10). The eCRM is specifically designed to integrate different channels, including the Internet, various web browsers, e-mail, smartphones, and other related devices to support sales, marketing, and service delivery. The aim of eCRM is to provide sufficient and meaningful data to ensure that customers’ needs are identified and met proactively. This approach increases customer satisfaction leading to repeat orders.
According to Al Imran (2015), “A recent study revealed that a 10% gain in repeat customer arises 10% to the revenue of the company” (p. 10). The objective of managing customer relationships is to ensure that companies understand their clients in the best way possible. As such, Souq applies Amazon’s approach to CRM, which has several aspects, as discussed below.
Customer Selection
Based on the data availed through the MIS, Souq targets specific customers that align with its product offering. After identifying the potential individuals who can become clients, an elaborate marketing strategy is rolled out to ensure that such people know about the company and its offerings. Various tools could be used for marketing over the Internet, including social media platforms, Google landing pages, and other related online marketing approaches. After creating the necessary publicity, traffic starts flowing to the platform, which gives way to the second step – customer acquisition.
Customer Acquisition
Every person buying through Souq is required to create a profile account on the website. Backed by Amazon’s robust MIS, all customer details are stored in a database together with other associated information, including debit or credit card information. This information is important because the company knows its customer’s location, preferences, likes and dislikes, and even personality. With this wealth of information, the company knows how to tailor its products and services in a bid to satisfy its clients.
Additionally, customers shopping through Souq are encouraged to create a wish list where they can add their favorite products. This approach is a subtle way of knowing customers’ preferences. The product review option is also another strategy for direct marketing and customer acquisition. For instance, if a certain product has good ratings, there is a high probability that customers will make purchase decisions based on that information. As such, if a client visits the site and sees a product with a 5-star rating, he or she is likely to be convinced to purchase it, which translates into direct marketing for the company.
According to Al Imran (2015), Amazon allows making a connection in “between the customer, communicating and viewing their interest help to amazon to gain customer trust and initiate world of mouth. In the first three months of 2000, Amazon acquired 3 million new customers without any investment” (p. 10). Therefore, Souq uses this strategy to expand its customer base.
Customer Retention
After acquiring clients, retaining them becomes the next important step. Repeat customers are highly valuable to businesses because they are not associated with acquisition costs, and they could easily become brand ambassadors for the company by referring other people to use the firm’s products and services. Marketing through the word of mouth and referrals are some of the cheapest ways of acquiring new customers. The only way to retain customers is by satisfying their needs and offering the best services available to discourage them from switching to alternatives. Amazon’s founder, Jeff Bezos, once said, “The optimal to do is to spend 70% of your time, energy, focus and dollars building great customer analysis and 30% shouting about it” (Al Imran, 2015, p. 11). This way, Souq has learned invaluable lessons about customer retention skills from Amazon to improve its market share in the market.
Customer Extension
Extension is part of retaining the existing customers. One of the approaches that Souq uses is the creation of a platform to allow customers to speak with one another. At the bottom of the product review section, clients can add their comments or reply to other people’s queries. This way, the platform offers a peer-to-peer form of customer interaction. Information shared by customers could be seen as more reliable from what is given by the company (Felbermayr & Nanopoulos, 2016). Therefore, positive comments improve the credibility of the company’s ability to deliver to its clients.
Conclusion
Souq is an online-based business operating mainly in the UAE, and it was acquired by Amazon in 2017. Before the acquisition, Souq had various challenges in collecting and analyzing customer data for improved performance. While the firm was successful, it did not have the resources to implement robust MIS. However, with the introduction of Amazon’s elaborate data warehousing capabilities, the company has now solved most of its problems. Information about customer reviews, shopping trends, likes, dislikes, and wishes is collected and analyzed using complex mathematical formulas to make the data meaningful and useful for management during the decision-making process. Therefore, MIS is a vibrant tool that could be used to save companies from problems associated with decreasing revenues.
References
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