Tesco Company: E-Commerce Challenges

Introduction

Definition of Research Problem

ECommerce entails the processes of acquiring and selling of commodities and services via the internet. The term also refers to the deployment of digital information processing technology and electronic communications to establish, rename, and/or renovate valuable relationships between individuals and organisations. This goal can be achieved through electronic messaging, advertising, sharing of information, and the interchange of electronic documentation.

As a case in point involves e-mail, which many organisations use widely as an eCommerce tool for exchanging information between customers and the organisation. With the increasing globalisation and the augmented use of the internet, eCommerce is the future for retail businesses. Therefore, retailers need to integrate this tool into their strategic business model to have a competitive advantage and/or guarantee their survival in the growing retail industry.

Nonetheless, retailers face a number of challenges in their integration of eCommerce into their business model. Some of the challenges include strategy execution, trust building, building customer loyalty, and the integration of mobile transaction platforms into their websites among others (Fourne, Jansen, & Mom 2014). Therefore, the primary purpose of this paper is to investigate the challenges that retailers face regarding the use of eCommerce.

Moreover, the paper will include a justification of the importance of the study to retailers while providing reasons why further studies are needed with reference to the relevance of similar studies to the contemporary business environments. The paper will also present the aims and objectives of the study. To provide a practical perspective of the applicability and relevance of the study, the paper will constitute a case study of Tesco to reveal some of the challenges retailers face in their integration of eCommerce, including the steps that Tesco has taken to tackle the challenges.

Tesco is a British multinational retail company that deals with general merchandise and grocery. According to Hoovers (2016), the corporation is the largest retailer in the UK and among the top worldwide retailers who rally behind Carrefour and Wal-Mart. Thus, due to its massive operations with about 7,800 stores in roughly 14 nations, including North America, Asia, and Europe, and its long-term experience in the retail industry, Tesco offers an excellent case in point for this study.

Research Justification

Retail businesses have come to recognise the enormous potential provided by the internet when it comes to transforming shopping experiences of their customers. Such awareness has provided a competitive advantage to retailers due to the capacity of the internet to provide information to them regarding customer experience. The internet has facilitated retailers’ one-on-one communication with customers, collection of statistical or research data, promotion of their commodities and services, supporting of online ordering of goods directly from the retailers, and the provision of a flexible and rich channel of running business to retailers.

By so doing, eCommerce gives retailers such as Tesco a means for broadening or extending their target markets, improving communication channels with customers, extending retailers’ product lines, reducing the cost of running business since setting up of physical stores is not needed, enhancing relationships between customers and the business, and delivering customised offers to customer. According to Doherty and Ellis-Chadwick (2010), clients’ reaction towards such pioneering mechanisms has been passionately received to the extent of resulting in a significant growth of retail sales for most businesses, most of which are anticipated to witness unmatched growth.

To customers, eCommerce is essential in the aspect that it allows them to buy goods and services faster. It also simplifies the search and buying process. Moreover, due to the only requirement of internet connectivity, buyers can purchase goods and/or services anywhere in the world, despite their geographical location. In addition, they can visualise the product features through the company website without having to move to the retailers’ physical store, hence providing a convenient buying experience for them (Niranjanamurthy et al. 2013).

Therefore, due to the advantages offered by eCommerce, both to the retailers and customers, the study of specific challenges facing retailers in delivering eCommerce services will be vital in improving the mode and level of delivery of such services to clients. Moreover, by analysing the specific challenges faced by retail companies, the study will review and discuss some of the possible solutions that can be used to tackle the challenges.

Justification of why More Studies are Needed

Despite the booming growth in technology, challenges that retailers face regarding the employment of eCommerce services remain unprecedented. This fact is indicative of the need for further studies that address specific challenges faced by the retailers when using eCommerce. According to Park and Regan (2004), the contemporary business environment has shifted from selling goods and services to customers from physical locations to selling the commodities online without having the need to establish a physical location or store.

Moreover, since the retail industry is growing, more businesses are now delivering commodities to their customers’ doorsteps after they (clients) make an order online. Correspondingly, the opportunity of eCommerce has resulted in the creation of new retailers, expansion of trading activities, and the emergence of novel forms of competition in the retail industry (Araste 2013).

Although eCommerce has improved business efficiency and reliability, retailers who use this business approach have often faced the challenge of managing the complex distribution chains that have resulted in higher costs than expected (Kazmi 2007). One of the key contributory factors to complexity is the need to target and supply customers across a global network. Thus, by researching on the various challenges faced by established retail multinationals such as Tesco, the research will unveil the successful innovative methods adopted by these retailers to tackle the challenges, hence simplifying the management operations of eCommerce (Araste 2013).

Proper management of eCommerce by retailers will in turn guarantee better services to consumers, reduce unnecessary costs because of poor management, enhance efficiency, improve reliability, and/or provide a basis for competitive advantage in the highly competitive internet retail industry.

Aims and Objectives of the Study

The aim of the research will be to investigate and analyse the challenges facing retailers such as Tesco regarding the company’s integration of eCommerce into its business model. The aim is to find out the possible solutions that it has applied in addressing these challenges, both in the short and in long term. Moreover, the research will also investigate other mechanisms that the case study of Tesco should use to tackle the underlying eCommerce-related challenges. The objectives of the study will include:

  1. Reviewing the background information or context of the research problem
  2. Analysing the challenges that Tesco is facing in integrating eCommerce into its retail operations
  3. Discussing the possible solutions that address these challenges
  4. Providing the necessary recommendations that improve the integration of eCommerce by the retail companies

Literature Review

Background Information

E-commerce has been vital in transforming the entire retail industry. It provides a solution for companies to share forecasts, databases, and other financial data. Therefore, the presence of eCommerce has brought with it a significant effect on business practice. However, despite its positive noteworthy impact on both businesses and customers, eCommerce still faces notable challenges regarding its management and performance (Pulaj, Kume, & Cipi 2015).

The challenges may be due to technological, environmental, organisational, or contextual factors. Such issues may hinder the ability of the eBusiness to obtain value from its competitive dynamic strategic capabilities (Boroto, Abudullah, & Wan 2012). However, compared to the traditional commerce, eCommerce provides enormous benefits compared its cons. Hence, the concept is considered an important innovation for the retail industry (Dixit & Sinha 2016).

Challenges that influence eCommerce affect the adoption and implementation of the necessary technological solution (Dixit & Sinha 2016). Moreover, they hamper the overall growth of the online retail industry, the expansion of the retailers, and consequently deny consumers the opportunity for a great shopping experience. Some of the technological challenges that eCommerce is facing include privacy and security issues because of the exposure of vital customer information to fraud and theft (Vaidyanathan & Mautone 2009).

High costs of delivery and picking, product returns, low customer loyalty, and trust are regarded as organisational challenges due to the direct influence of the business in managing these challenges. Regarding the environmental challenges, the organisation has little or indirect influence. At times, it can have zero influence in its management. For example, organisations may not control the challenge of currency fluctuations since they are solely determined by the existing currency exchange rates of the countries they (organisations) operate. Nonetheless, aspects such as competition or organisational and technological challenges can be tackled through enhancing organisational systems.

Challenges that Retailers face when using eCommerce

Management of Delivery and Picking Costs

Cost is an important factor that determines the profitability of any business venture. The higher the cost, the lower the profit, if an organisation does not adjust its prices upwards as the cost changes. Consequently, organisations look for mechanisms for reducing their operational costs or increasing their profit margins. One of such mechanisms entails economies of scale. By increasing the amount of production, cost saving becomes possible to achieve. For example, for eCommerce organisations, delivering a large amount of products to customers within one location reduces the cost per item or product picked and delivered (Bhatia 2008).

To reduce operational costs, a customer may purchase online, but then collect product at a selected store. However, eCommerce requires the delivery of products to customers’ locations. This case demands the companies such as Tesco to employ staff members to do deliveries. The businesses are forced to include charges for home deliveries. However, these charges may sometimes not be enough to cover the total fee of employing delivery staff members.

Moreover, the cost of maintaining a delivery network may cut the profitability of the business, hence posing a threat to the survival of the business. In fact, the cost of maintaining home delivery and picking operations at Tesco was estimated at 14% of the total sales in 2001 (Hays, Keskinocak, & De López 2005).

Maintaining a Desirable Appeal and a Relevant Assortment

The US e-tailing market is becoming almost saturated. The growing number of eCommerce organisations that deal with a similar range of goods and services implies that only the businesses that have managed to build a stronger competitive advantage along some defined and relevant assortments will remain in the market in the near future. Although there is increased consumer spending, customers are only likely to purchase from eCommerce entities that offer more value for their money.

Such value may be acquired through low price and superior quality services. Even where an organisation will increase the quality of services, but charge higher for its products and services, high competition in the market will make such an initiative a source of lower comparative advantage in terms of maintaining a desirable appeal and relevant assortment.

Due to the increasing competition and wavering consumer spending, having a desirable assortment is a major challenge for Tesco because of the continuous rapid changes in the market trends that in turn force the company to keep track of the latest developments in the market to beat its competition. However, the greatest challenge that Tesco is facing is how it can effectively translate these new developments or trends into profitable business opportunities by investing in richer assortments ahead of its competition.

For instance, every year, online competitor companies such as Amazon try to grow their assortment to provide customers with more choices. Therefore, lack of updating of Tesco’s assortment in line with the market trends may lead to a substantial loss in customer portfolio to competitors (Bilgin et al. 2015).

Product Returns

Under non-eCommerce business models, customers physically visit an organisation’s stores. They inspect products and services before they can place an order. Unless guarantees and warranties are provided, products are not returnable once purchased. This principle is held since customers have an opportunity to physically examine the products or services against their claimed utility in market promotions. However, this situation may not be the case for eCommerce. Buying decisions are mainly based on product reviews and descriptions in an online environment.

A normal practice in eCommerce involves enabling customers to return the goods unconditionally within a specified number of days dated from the date of receipt of the goods. This decision to return commodities may be because of customers’ disappointment since they are unable to physically check the goods before they buy them or before they are delivered to their location. However, such returns have a considerable negative implication on Tesco’s overall revenue and consequently the company’s profitability.

As expected, an increase in the returns affects the sales volume of the company negatively. As a result, it leads to a reduction in the profit margins of the company. Moreover, returns are considered a loss to the business due to the expenses associated with eCommerce such as delivery costs (Szafrańska-Blank et al. 2011).

Building and Maintaining Customer Loyalty

Customers have the freedom to decide where to buy or spend their time. Sellers deploy various strategies such as digital marketing that are aimed at wooing buyers (Chaffey et al. 2012). Whenever they want to purchase a product or service, they can select an organisation’s store of their preferred choice. Hu, Kandampully, and Juwaheer (2009) identify these strategies as product and service differentiation from those offered by competitors, superior value demonstration, and building and maintenance of customer loyalty. However, Huang and Chiu (2006) reveal that loyalty is not just a behaviour that is induced in customers through some initiatives of the seller.

Therefore, it is fallacious to assume that customer who continues to purchase from an organisation is loyal. The continued buying may be fuelled by contractual arrangements where higher expenses are incurred in altering suppliers and/or when an organisation is the current low-cost seller (Grounaris, Tzempelikos, & Chatzipanagiotou 2007). This situation opens criticism to some customer loyalty models that many organisations deploy, including Tesco. One of such models entails an argument about the causal relationships between product or service quality, satisfaction, loyalty, retention, and profitability.

Customer retention and loyalty are a major challenge that Tesco is facing in the online retail market. This problem has been compounded by the increasing integration of loyalty schemes by online retailers, thus posing a threat to the business. This situation has resulted in the crashing of the retail giant’s profits since customers can easily shop and obtain offers online, regardless of where they opt to shop (Rigby 2014).

This global accessibility of goods has forced retailers to come up with innovative customer loyalty programmes that guarantee retention and even attract clients from their competitors. However, managing customer programmes effectively poses an enormous challenge to Tesco, thus resulting in poor implementation and losses. For instance, Clubcard, Tesco’s customer loyalty programme, faces the challenge of customer data management such as monitoring the shopping habits of its customers. This challenge indicates the retailer’s urgent need to come up with new, effective, and long-term data management solutions (Benady 2012).

Competition

Competition is a force that immensely shapes the market dynamics for any organisation. Only an organisation that has a better competitive advantage withstands the storms of other businesses that attempt to erode its market share. Despite Tesco’s advantage in the UK’s online marketplace, Kornum and Bjerre (2005) assert that the rapid growth in competition may negatively affect the company’s market share and consequently lead to revenue reduction.

According to a report by McDonald (2015), Tesco reported a large loss of 6.37 billion Euros, partly due to competition from German discount stores that entered the retail market. The increased competition caused deterioration in Tesco’s market share, which was reflected in its reduced overall profitability. A similar report by Creasey (2014) indicated that the increasing pressure from online discounters has intensified the competition due to the rush by customers who opt for cheaper goods and services. Consequently, the retail giant has been forced to reduce its price to a competitive level to regain dominance of the online retail market.

Unpredictability in Customer Confidence and Behaviour

Consumer confidence in the Tesco’s eCommerce platform has been a challenge for the retailer. Consumers have different preferences when it comes to making online purchases, especially groceries. Various consumers lack confidence in the online market. As a result, they prefer shopping at physical stores. Additionally, some customers are selective in their use of eCommerce. They often make infrequent purchases online while majority of their shopping is done physically.

Such trends limit the company’s ability to expand its eCommerce platform due to the lack of growth in the total sales obtained from online retailing (Ghandour 2015). Such unpredictability in consumer confidence and behaviour also hampers the company’s ability to make long-term plans for its eCommerce strategy, hence limiting its growth (Clarke, Thompson, & Birkin 2015).

Any growth strategy for Tesco should translate into higher sales. Hence, additional stocking to meet the anticipated increased clientele is necessary. However, it is practically impossible to increase stock levels without the assurance that the goods will move without the accumulation of dead stock (Alwi 2009).

Such an assurance is only possible in case Tesco is sure that it will grow its customer confidence. Such self-assurance is necessary for the company to develop reliance on the products and services offered by Tesco. However, despite placing itself as supplying fresh and frozen produce, especially groceries, Tesco faces the challenge of convincing its consumers that it exactly delivers products through e-tailing method that meets this promise.

Channel Conflict

Tesco is an online retailer that faces the challenge of channel conflict because of its use of multiple channels. Channel conflict occurs when brand manufacturers discount their existing channel partners such as wholesalers and retailers through selling products directly to customers. The commonly used method of direct sales is eCommerce. In most cases, channel members may antagonise each other because of the perceived or real differences with reference to incentives, policies, rewards, and support. Additionally, Fallgren and Sundborg (2013) assert that it may be difficult for retailers such as Tesco to fully integrate online retailing as a profitable venture, unless they eliminate or mitigate channel conflict that hinders effective and efficient implementation of the company’s eCommerce strategy.

Even though Tesco mitigates channel conflicts, problems persist since cheaper channels are available for customers to deploy when purchasing products sold through eCommerce platforms for Tesco. For example, some of the products sold by Tesco such as electronics are sourced from the primary manufacturers in the UK and across the globe (Gillespie & Hennessey 2011). Other retailers and wholesalers who are located close to the clients also sell such products. Consequently, instead of incurring extra costs that are charged for delivery, customers may opt to visit directly the retailers within their localities where such costs are not incurred.

Currency Challenges

In 2015, currency fluctuations contributed to a drop of the company’s quarterly profit by seven percent (Butler 2015). For the consumers, cross-border online retail purchases forced them to pay using a foreign currency under unclear rates of foreign exchange. This situation may prove more expensive compared to purchasing from the local markets.

Moreover, cross-currency purchases may be associated with unclear or unspecified costs on the side of the consumers such as taxes, customs, duties, and shipping, all of which increase the cost of buying goods through eCommerce. On the side of the company, eCommerce may translate into management challenges, including regulatory and compliance issues, processing fees, overheads in currency conversions, and an increased risk of consumer fraud. According to a recent EU study, cross-currency costs account for a significant challenge in eCommerce across the EU nations (Levy 2014).

Privacy and Security Challenges

Privacy and security are a serious ethical issue that Tesco faces in its use of eCommerce. Moreover, tackling these two issues is not easy. For example, in September 2012, an online security and privacy expert revealed that the company had failed to protect personal information and customer details. Particularly, the expert revealed that Tesco’s inappropriately responded to sensitive enquiries such as password retrieval through displaying it as normal or plain text in the recovery email’s body. This case demonstrated that the company failed to install cryptographic protections for such sensitive data.

The expert also noted that the presence of inconsistent HTTPS encryption across the company’s website, which may have potentially compromised users’ personal information. This issue posed dubious queries regarding Tesco’s guard for users’ personal data. Consequently, it compromised customer trust and relationship. In fact, a study carried out by TRUSTe found out that 54 percent of customers were concerned more about their online privacy compared to a year ago– 2011, indicating the enormous implication that privacy and security concerns associated with eCommerce can have on a retail company such as Tesco (Foster 2012).

Information security problem is not unique to the operation of Tesco. The problem is common to organisations that engage in eCommerce. Even though eBusiness helps to resolve the challenge of effectiveness and efficiency associated with the traditional systems, Timmers (2000, p. 31) maintains, ‘eBusiness systems naturally have greater security risks than traditional business systems’. Hence, proactive strategies need to be deployed to ensure that such eBusiness systems are secured against various highly probable risks.

EBusiness systems enhance repeated contact with business models when compared to traditional systems (Timmers 2000). Employees, customers, and even suppliers among other people use organisations’ business systems on a daily basis to give their confidential information to facilitate the completion of transactions, including money transfer through credit cards. In the process, they always anticipate that the confidentiality of their information will be maintained (Westfall 2010).

The interaction process between customers and Tesco eCommerce systems introduces security concerns among the stakeholders. For example, customers anticipate high security of their confidential information in an environment of increasing risks when it comes to companies’ information systems. Although Tesco has been criticised for exposing its information systems to more risks, such a situation should not be treated as an act of negligence, but due to lack of adequate surveillance and understanding of risks. Hackers are keen on tracking the transactions made by people with the intention of conducting malicious attacks (Fickes 2006; Meier & Stormer 2008).

Consequently, despite the efforts by the organisations to put in place mechanisms for ensuring that the security concerns of the customers are addressed, another group of people is seeking to capitalise on the probable loopholes on its information systems. This situation leaves the company to appear as though it has not put any measures in place to guarantee the security and privacy of information.

Finding Solutions to the Challenges

Parcel Carriers

To reduce the cost of delivery, Vanelslander, Deketele, and Van Hove (2013) advocate a substitution of employment of a dedicated fleet of company vans or trucks. Tesco and its retailers can replace their current delivery modes with parcel carrier companies such as DHL and UPS, which already have an existing network of distribution. They can be used to deliver commodities to customer safely. Moreover, Tesco can take advantage of the large distribution coverage by the distribution networks, thus allowing it to expand its eCommerce services and/or reduce the cost of delivering the items.

Seeking partnership with experienced logistics companies can help Tesco to reduce the cost of delivery significantly (Hitt, Ireland, & Hoskisson 2008; Hitt, Ireland, & Hoskisson 2009). Such organisations may afford to transport ordered goods at optimal capacity.

Even in the case where Tesco may not afford to fill the capacity of any one vehicle, it becomes possible to deliver at much lower costs since such organisations may have the option of delivering items for several organisations at ago. To deal with the problem of high competition in the e-retailing market, Tesco can form strategic partnerships with other reputable organisations in other markets. For example, on the global platform, the company can deploy Amazon’s strong supply chain and logistics capability. This move will enable Tesco to achieve retail internationalisation.

Amazon.com deploys information systems to conduct almost every aspect of its business functions. From marketing and sales systems point of view, Amazon.com uses information systems to market and sell its products to many people who are distributed randomly around the globe. Through the systems, the organisation can monitor various trends that influence the sales efforts of its products with the view of planning for new distribution networks and/or monitoring its competitors’ operations (Cosper 2012).

Marketing and sales information systems are also central to the operations of Amazon.com since they support the company’s marketing research by helping to not only analyse strategies such as marketing but also evaluate sales performance and pricings decisions since all information on historic trading trends is contained in a single database. Through interactions with customers on a single platform, the company is able to locate more and prospective customers whom it accords services such as client support. Therefore, by forming strategic partnership with Amazon, Tesco will benefit from these capabilities, which can aid in its long-term expansion via the internationalisation strategy.

Assortment Policy

An organisation that operates in a highly competitive market environment needs to develop an appropriate strategy that can enable it to outperform its competitors. One of such strategies entails specifying and selecting a set of products that it wants its customers to view it as superior in terms of supply. Consequently, even if a customer wishes to consider sourcing from rival organisations that offer the same product at lower prices, the perceived value and quality of Tesco’s products would turn them off.

This observation underlines the need for selecting specific products that the organisation wants to position as flagship commodities and a source of comparative advantage. In this process, an appropriate assortment policy is necessary. Toporowski and Lademann (2014) assert that assortment of products by a retail company determines the ability of a business to compete with its rivals in a competitive market. To utilise this opportunity effectively, Tesco needs to develop a policy that allows it to implement the relevant and competitive assortment decisions. Moreover, the policy should provide more options for customers to choose to guarantee higher profit margins and/or increase customer loyalty and confidence.

Lenient Product Return Policies

Customer returns are a major concern and challenge for Tesco and other retail companies that use eCommerce. Petersen and Kumar (2010) observe that product return disincentives, for instance, the inadequate duration of purchase returns, commodity personalisation, and non-refundable cost guiding principles are only but short-term solutions to tackling product returns. Contrastingly, enabling customers to return products freely through a lenient return policy potentially bestows benefits to the company by encouraging clients to make more purchases due to increased confidence.

In an online environment, customers have no physical experience with the products since they make purchase decisions online (Chaffey & Smith 2013). Indeed, this case constitutes one of the reasons why returns are almost inevitable in eCommerce. However, this challenge may be tackled by ensuring that product reviews offer the actual representation of the physical product (Asare 2011). Such reviews may be accompanied by images of the products. Therefore, customers will have confidence that what they saw in the web page for Tesco is what is actually delivered. Hence, even if Tesco needs to have lenient return policies, it should take steps to ensure that customers do not make return decisions in the first place due to variations of the actual product utility with that is developed in the online product reviews.

Building Trust

Trust building is the foundation of enhancing customer loyalty as opposed to using loyalty programmes to attract and retain clients (Arya & Srivastava 2015). In this regard, trust encompasses high customer contentment through providing high-quality products/services. An empirical study by Kassim and Abdullah (2008) indicated that trust and customer satisfaction had a remarkable positive effect on client loyalty.

Hence, the two elements play an essential role in guaranteeing customer retention. Although using customer trust as a model for ensuring customer satisfaction is important, care should be taken to certify that Tesco does not run under models that are not evidence-based. Indeed, satisfaction is an important antecedent for enhancing customer retention since it influences purchase decisions and continued relationship between clients and an organisation (Ndubisi, Malhotra, & Chan 2009; Lodato 2014).

However, customer fulfilment may not offer reliable forecasts for repurchasing habit. Seiders et al. (2005, p.39) assert, ‘Managers who believe that a higher satisfaction score will undoubtedly lead to stronger re-purchase behaviour may be operating their businesses under a false sense of security’. This finding underlines the need for considering ways of motivating customers to repurchase or ensuring their retention. This process may include focusing on building good customer relationships that are guided by principles of trust (Gil, Hudson, & Quintana 2006).

Trust suggests some form of reliability and dependability. Reliability means that Tesco’s customers are assured that they will receive their orders after some promised time upon completing the payment process. Therefore, they can plan on when to use the product without experiencing any inconveniences. Dependability implies the probability that the customers will use Tesco’s eCommerce services at any time when such a need arises. Such use of the services should also be convenient, efficient, and effective.

Competitive Pricing

Competitive pricing of products, including logistics costs such as shipping costs, are key to survival in the online retail market. Shin (2001) asserts that lower costs by competitor companies can pose a threat to eCommerce retailers such as Tesco. To avert this threat, Tesco needs to formulate competitive pricing strategies for selling its products online. However, the best strategy should be formulated based on market studies. The studies will help to reveal what customers value most for any online retail organisation. In case price is an important factor for the market segment served by Tesco, the low-cost strategy will be appropriate, considering that Tesco will achieve economies of scale.

Proper Information Management Systems

Retail companies that use eCommerce to sell goods and services need to incorporate effective information management systems into their eCommerce platforms to address issues of privacy and information safety of their customers (Carpio 2015). As a result, Tesco can regain the lost trust and confidence of its customers for a stronger and more long-term customer-organisation relationship (Boritz & No 2011).

The main issue here is how such security concerns should be addressed. Firstly, the company should take proactive immediate efforts to ensure that any confidential information, for instance, passwords recovery, should not be displayed in open texts. This goal can be achieved by installing cryptographic protection. Consequently, it is inappropriate to assume that only people to whom the texts are destined would receive them. Malicious attacks on people’s email are commonplace in an environment of cyber insecurity.

Cyber insecurity is not a problem of small retail companies, but even large corporations and organisations that have sophisticated information protection systems (Brenner 2009; Rid 2011). For example, in the beginning of 2012, startling allegations of India’s involvement in hacking one of the United States’ commissions systems of e-mail communication hit many local and international media headlines.

The communication system essentially dealt with security and economic relations between China and the US. Many reports contend and confirm that Indian government spy hackers succeeded in placing an Indian cyber spying military intelligence document on the internet. The document discussed mechanisms for targeting China-US communication processes with the help of expertise derived from mobile phone manufacturers of the western world.

Reportedly, email transcripts of the mails changing hands between the commission members were also included in the document. Among many other cases of operating system software hacking, an attack was speculated on 21st November 2011 in the US. It was claimed in the media that a hacker had destroyed a Curran-Gardner’s municipality water siphon in the state of Illinois. However, it was later confirmed that this information was counterfeit (Andress & Winterfeld 2012).

The above two incidents exemplify an ongoing trend of access to organisations and states’ internet computer resources without authenticity. Consequently, it is inappropriate for Tesco to assume that displaying email recovery information in plain texts sent through customers’ emails would reach the target audience. Mechanisms for ensuring that such information is sufficiently protected should be established. Tesco also needs to put in place mechanisms for ensuring detection and response to any threat on its eCommerce system. The intention of people identified in the system without prior authority should be detected and the loopholes in the security of the organisation eCommerce that such people have exploited identified. This strategy can help in consistent improvement of the system to make it more cyber secure.

Conclusion

ECommerce refers to the use of digital information networks, electronic, or internet communications and technology to make purchasing transactions between businesses and individuals. ECommerce has experienced tremendous growth, partly due to the increase in globalisation and wide use of the internet by a large proportion of retailers’ target market. Therefore, to survive the harsh and competitive retail industry, businesses such as Tesco need to integrate this technology into their operations strategy. Nonetheless, retailers also need to circumvent the challenges they generally or uniquely face to have a competitive advantage that can guarantee long-term survival.

ECommerce challenges can be classified as technological, organisational, or environmental. The main technological challenge facing retailers such as Tesco involves guaranteeing privacy and security of customer information. This issue can be tackled through the integration of modern and effective information management systems that protect clients against internet fraud. Such systems have the potential of winning customer confidence.

Other unique and general challenges facing Tesco as an online retailer include updating the relevant assortment, effective management, the mitigation of delivery and picking costs, product returns, and building of customer loyalty, competition, and confidence. To tackle these challenges, the research recommends Tesco and other retail businesses that use eCommerce to adopt parcel carriers, lenient product return policies, trust building, and competitive pricing as part of their eCommerce strategies.

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