What makes the Quality improvement program in Customer Fulfilment team launched in HKTV mall since 2017 ineffective?

What makes the Quality improvement program in Customer Fulfilment team launched in HKTV mall since 2017 ineffective?

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Executive Summary

Hong Kong Television Network Limited is a company listed in  the Hong Kong stock exchange market that was established in 1992. Currently the company is engaged in developing one of the largest online shopping malls in in Hong Kong known as HKTV mall. The company’s strategic direction encompasses application of technology in the business while expanding the range of products and making significant changes in its operation model.

Table of Contents

1       Introduction. 5

1.1       The Vision of the company. 5

1.2       The Major problem in HKTVmall. 5

1.3       Research question of the project 7

1.4       Rationale of doing the project 7

1.4.1       Key Performance Indicators. 8

1.5       History of HKTV mall 9

1.6       The Aims/Objectives of the project study. 11

2       Discussion. 11

2.1       Analysis of the current situation. 11

2.1.1       External Analysis  11

2.1.2       Internal Analysis  14

2.2            Development of e-Commerce in Hong Kong. 18

2.3       HKTVmall Strategy. 18

2.3.1       The launch  18

2.3.2            Consumers are increasingly ordering online. 19

2.4       HKTVmall in The Retail Market 19

2.4.1            HKTVmall fully understand consumer preferences. 20

2.4.2       Paying attention to customer experience. 20

2.4.3            HKTVmall is equipped with automation system   21

3       Facts and Finding. 21

3.1       New strategy. 21

3.2       Quality improvement program in Customers. 23

3.2.1          Productivity. 23

3.2.2       Cost reduction  23

3.2.3       Market Conquest 23

4       Conclusions. 27

5       Recommendations. 28

5.1       Frontline Aspect 29

5.1.1               Rescaling the pricing. 29

5.1.2       Extend the product variety  30

5.2       Backoffice Aspect 31

5.3       Communication of customer service. 32

5.4       Deliver Arrangement 33

6       References. 35

1         Introduction

1.1            The Vision of the company

The company’s core purpose include experiencing the competition, wining and having a competitive advantage. The company enjoys the use of technology to bring great benefit to the members of the society. In their mission statement the company highlights that they dream to fulfill the desire of self-realization. Besides, the key core values for the company include continuously looking to innovate changes in lives of people and the company, the changes include product changes, services and general business operations even when the changes are painful to the company.

1.2            The Major problem in HKTVmall.

In comparison with other developed countries, Hong Kong has not been able to properly embrace ecommerce. Despite this fact HKTVmall has been able to make significantly milestones in creating a successful online shopping mall in Hong Kong. The number of customers served by the mall has increased greatly. The main reason for the success of this online shopping mall is their wide portfolio of products which fulfils the needs of the customers. Its product ranges from toys, food staffs, cloths and all other household items that one may want to buy from a physical shopping mall. However, with the wide range of products the company has been experiences logistical challenges of making delivers and warehousing their products.

Admittedly, HKTVmall has been experiencing a wide range of problems in its operation in the ecommerce sector. To begin with, HKTV Mall is eventually suffering in understaffed issue. The average of number of orders is 3000 per day, although it is relatively small business comparing with TaoBao, it has already troubled HKTV Mall which leading their business process overloaded. The result of this issue drives a helpless conveyance administration to their clients, one of the issues is client can’t get their request on schedule, even the conveyance date has been affirmed, driving great many terrible remarks leaving in the Facebook page.

The second issue that HKTV Mall has met is their products are not centralized storage, leading difficulties to delivery an order one-off.  It is caused by the variance products approach which leads the products are distributed located in different locations; some of the products may store in their own warehouse, while most of the products are stored in their distributors’ warehouse. As such, for the company to fulfil a one-off delivery, the delivery has to go through several warehouses and this is economically inefficient for the business. The one available option for the company is to make separate deliveries which renders customers idle while they wait for different deliveries and this significantly affects customer satisfaction.

To handle customer unsatisfactory issue, customer service plays an important role in a company, however, seems it failed to comply to HKTV Mall situation. Based on above mentioned, the poor performance of delivery service brings a huge pain to the customer service department. However, the communications between the company and the customers seems has a miss, leading bad-mouth spread out among them. Some of them complained they have not received the orders and no one follows up and many of them even complained the order they received is far from their expectations that these complaints can be processed in a better way.

The company also faces problems with delivery of fresh food staff. HKTV mall also sell fruit and fresh food, although their policy is within 24 hours delivery, the poor delivery capacity might lead to serious delay on delivery and affect the food quality. Even HKTV mall O2O shop (physical shop) need to order at least 9 hours in advanced to arrange pickup. It affects customer intention to buy fresh food online. Instead of existing delivery method (e.g. van), motorcycling delivery can be a prefect option to response urgent and fresh food order. Additional cost will be charged to customer for this speedy delivery solution. Since their existing delivery service is not applicable to locations that cannot be directly accessed by courier trucks, motorcycling delivery service has higher flexibly, helping HKTV mall business expand to remote areas, which have high market demand of fresh food. In order to implement this the company has been developing strategic partner with logistic giants help improving delivery service and operation cost. Imagine if HKTV mall delivery service can be supported by Uber, each Uber drivers can act as special logistic team for fresh food ordering: Uber drivers collect parcels from central HKTV mall central warehouse or O2O shops, at the same time they can carry their ridesharing business to perform double logistic benefit. Uber also support motorcycling delivery service in their UberEATS business, which already established a strong driver force to perform faster and on-demand service.

1.3            Research question of the project

  1. What are the major problems facing HKTVmall?
  2. Is the quality improvement program in customer fulfillment launched in HKTV mall since 2017 still effective?

1.4            Rationale of doing the project

The objective of the study is to investigate the major problems that face HKTVmall in the Hong Kong ecommerce market. The findings from this study will also shed light on the major challenges facing the Hong Kong e-com sector and make recommendations that can help remedy the situation.

There are some new major competitors, such as the Ztore, which spearheaded introduction of Easy and convenience shopping, as well as value for money as it’s the business guidelines. On the other, a major broadcast company, say TVB BigBig Channal, the artists help to promote the products in broadcast at reasonable prices, good quality product. This business model was changing the environment. As a result, it makes HKTVmall under a high pressure on demanding customer demand and has been facing the issue of high employee turnover rate since 2017. If nothing will be taken, the company will meet challenges of loss market share as negative consequences.

In response to the situation, HKTVmall continues to introduce new innovative marketing and quality standards in order to maintain the needs of the customer-oriented for achieving Full marks of customer services. HKTVmall strategically choose the most favorable business locations throughout the territory in the new towns, such as commercial and residential-based stores, and expand the Group’s business networks from online to offline that bring sustained profits.

In order to re-position in the market, the company carried out renovation work in a large scale for the delivery team and O2O too.  Under the above conditions, the company set up a study group, and I have been appointed since then as a Principal Investigator of the group to carry out the project, to identify the problems, draw the conclusions and make recommendations.

1.4.1       Key Performance Indicators

The key performance indicators as criteria for success of the “Quality Improvement Program in Customer Fulfillment Team” include the following;

NoItemCriteria
 Delivery Quota increased  The delivery quota needs to be increased by 50% as compared with 2016
 Operating cost decreasedThe operating cost needs to be decreased by 10% as compared with 2016
 Customer SatisfactionThe average score of customer rating for the delivery should be up to score 4.75 or above. (max score is 5)
 Employee Job Satisfaction  The turnover rate of delivery team should be less than 3% yearly

1.5            History of HKTV mall

HKTVmall is one of the major Hong Kong’s e-commerce operator. HKTV changed their business into ecommerce in 2015 after the company was denied a license to broadcast. The company created and end to end e-commerce business model in Hong Kong from scratch where Amazon did not have a presence in. the company plans to offer services to retailers and consumers to consumers.

Figure 1: Customer Demographics

Recently, HKTV President Ricky Wong announced that he will continue to spend more in hiring additional manpower and actively advertising to the online shopping mall HKTV Mall, which celebrates its first year. President Wong said the number of effective visitors to HKTV Mall every month is between 700,000 and 800,000, and over the past two months, the number of customers ordering has doubled to tens of thousands. Orders per person range from $400 to $1,000. About 99,000 items can be ordered at HKTV Mall, Hong Kong’s first large online shopping mall. HKTV Mall said that considering the murderous Hong Kong rent, the prices of products offered at HKTV Mall online shopping will be much cheaper.

According to recent data from world real estate company CBRE Research, the average commercial rent in Hong Kong is US$4,334 per square foot per year, 3.3 times more expensive than Paris and 3.6 times more expensive than London. HKTV Mall believes that online shopping malls are sufficiently competitive because Hong Kong retailers have to pay more than half of their income as rent. Initially, Ricky Wong tried to formally enter the airwave broadcasting market in Hong Kong, but failed because he was unable to obtain broadcasting rights from the Hong Kong government due to unfavorable reasons. 

HKTV MALL is perhaps the largest market-forming website in Hong Kong’s internet complex. The infrastructure is in place so that items ordered from the website can be delivered at home or delivered from stores in the area called HKTV MALL. It is an internet shopping mall that builds their own logistics system and delivers them to customers, rather than using a courier service. It reminds me of Korea’s Coupang. The advantage of HKTV MALL is OO pickup service. Since you can receive products from over 150 OO shops, aliases and e-locker points in Hong Kong, it reduces shipping costs and helps people easily access Internet shopping malls.

However, majority of the people in Hong Kong do not prefer to buy products on the internet. The reason for this is that they want to see and decide when they buy things, and they do not have to use internet services because they can always easily visit big shopping malls. And high-cost logistics services are also hindering the growth of internet shopping malls. This is an OO pickup service prepared as a way to solve such problems. In most cases one does not get their ordered items shipped over the internet, they go to the store to see, touch, and carry their items with them.

1.6            The Aims/Objectives of the project study

After completion of this study a comprehensive report with detailed analysis, findings and facts, conclusions and recommendations on how to help the company maintain a competitive advantage will be submitted to the management of the company. The implementation of the report is aimed to achieve the following objectives for the interests beneficial to the company’s key stakeholders as mentioned in the company’s mission statement.

  1. Increase the delivery team productivity; deliver more orders to customers daily. Increase delivery quota 50% in 2020. Out-source the dry goods delivery service to 3rd party companies.
  2. Decrease the operation cost by improving business process, new technician. System automation in Tuen Mun Centre was launched.
  3. Developing customer retention team to keep good customer relationships, newer customer service for the loyalty customer, such as VIP program in 2018.
  4. Developing learning team to enhance the training for both new hirer staffs and existing staffs. And provide More benefits to the colleagues

2         Discussion

2.1            Analysis of the current situation

The current situation of the HKTVmall will be investigated in this section. The external environment will be assessed using the porter’s five forces model.

2.1.1       Analyze and assess whether there is necessary for HKTVmall having launched the “Quality Improvement Program in Customer Fulfillment Team” since 2017

In 2017, HKTV launched a program that was aimed to improve customer satisfaction and quality of service deliver in an attempt to increase the company’s competitive advantage. Being the biggest online shopping platform in Hong Kong, HKTV is  the handiest organization that is inclined to commit awesome resources in growing online buying enterprise in Hong Kong market and therefore, we embrace an awful lot those who are eager to study and enjoy demanding situations. We placed a variety of notion and attempt into nurturing our people; no longer simplest via creating an environment that makes work more pleasurable, however also via stimulating person potential to grow personal power. In HKTV, we put in force conscientious operating mind-set to experience the fulfillment of manufacturing top and tremendous works, we also are satisfied that having fun can absolutely relieve stress, so that you can in flip spark off the spirit so that it will accomplish success both in personal profession and agency performance. It was necessary for the company to launch the Quality Improvement Program in Customer Fulfillment Team in 2017. However, the implementation of the program has not been effective as the management had desired.

2.1.2       External Analysis

2.1.2.1      Porter’s five forces model

The threat of new entrants is at a medium level since the access limitations are rather low to enter the enterprise, a prospective new entrant needs only a B2C internet site. The capital necessities rely on the scale. indeed, groups can start with a smaller scale B2C internet site which requires decrease funding.

The power of suppliers is at a low level because the switching value is low maximum of the products are not offered in a physical keep, converting the suppliers could in maximum case equals the changes of pictures and description inside the web sites (Isabelle et al. 2020). Furthermore, the ability of suppliers to charge an excessive rate inside the deliver-demand relationships low because most of the people who pass B2C internet site are seeking out merchandise with similar capabilities and they in all likelihood might now not call a particular brand.

The Power of buyers is at a low level. There is a large number of users of the B2C website, and they are unconcentrated. Most users are individual customers that tend to have little communications with each other. Moreover, the units purchased by them each time tend to be small in volume.

The chance of substitutes is at a high level since the client’s price of switching to the options is low. A huge amount of on-line shopping websites lets in buyers to make rate evaluation without problems. also, they might straightly visit the bodily shops and different diverse retailers to purchase the products in preference to shopping for on-line.

The rivalry among existing competition is at a medium level. We think that HKTVmall is in the industry structure of oligopoly which there are a few large firms. Also, there will be a 10% annual growth rate of e-commerce industry which is quite stable and the retail e-commerce sales as a percentage of total retail sales are increasing.

The rule of thumb of the model indicates that the weaker the five forces, the higher the industry’s profit potential. Therefore, we can conclude that the firms involved in the online retail industry should be quite profitable. However, it is surprising that HKTVmall struggles to make a profit despite having a high power against the consumers and suppliers while facing a general level of competition.

HKTVmall Porter’s  Five Table

 ForcesAnalysis
CompetitionHigh number of other online shops The entry of TaoBao into the Hong Kong market Other physical mall that are still attracting high number of customers The rivalry is however in the medium level for online commerce in Hong Kong
Barriers to entryThe rivalry among existing competition is at a medium level
Suppliers PowerThe power of suppliers is at a low level because the switching value is low maximum.
Buyer PowerBuyers have considerable higher power since they choose where to buy either on the internet or at physical mall based on the service they get.
Threat of substitutesThe chance of substitutes is at a high level since the client’s price of switching to the options is low.

2.1.2.2      PESTEL analysis

By using the framework, we can scan, monitor, and evaluate changes and trends in the firm’s microenvironment. However, the business world in these days is characterized by high volatility, uncertainty, complexity, and ambiguity, numerous factors existed and may affect HKTVmall. Therefore, we are trying to identify the significant factors which would turn into threats or opportunities of the company.

With the recognition of smartphones and different digital gadgets, there may be a growing fashion of the online client in not simplest Hong Kong but also everywhere in the international. A facts showed that 85.9% of the mobile populace in Hong Kong suggested owning a telephone and 80.2% of the entire populace stated the use of the net at the least sometimes in 2017. Furthermore, There are presently 4.15 million E-trade customers in Hong Kong, with an extra 1.2 million customers anticipated to be shopping on line by using 2021. Consequently, as a participant of online retail business, HKTVmall need to have a massive quantity of capability customers.

The second external aspect is technology. huge facts is a term that describes information containing more variety, arriving in increasing volumes and with ever-better speed. additionally, conventional statistics-processing software cannot address these types of records. big statistics is constantly creating new challenges and possibilities for groups. on the subject of retail and e-trade, an increasing number of groups invested heavily in large facts analytics hardware, software program, and services. If businesses can efficaciously enforce powerful massive records technology, then they are able to create higher buying reviews enhance the consumer’s pride and generate more sales. 

For the financial factors, inflation is looming. in step with the annual file from the census and statistics department, the patron rate Index has mechanically expanded because 2004 in Hong Kong. This trend can also shift consumers’ behavior which human beings can be turned away with the aid of better fees, buy fewer gadgets, be greater focused on getting matters they want. aside from the inflation, personnel are becoming extra high priced. these days, the authorities is making an attempt to increase the statutory minimum wage to HK$37.50 an hour which the upward thrust will add an extra HK$700 million a year to the fees of the Hong Kong businesses. This elements can position a whole lot of pressure on HKTVmall.

2.1.3       Internal Analysis 

HKTVmall positions itself in a convenience(in one single order), (high) credibility, competitive price, and product variety characteristics and aims to provide a delightful shopping experience.

2.1.3.1       Resources

HKTVmall owns several system which facilitate in managing the whole online market platform: a robust website, that categorise more than 174,000 products and show all products’ photo; ordering system, which helps in handling and combining the order, picking, return, exchange and payment (different payment method provided to convenience customer such as Payme which enhances the payment process for some customer) ; automated warehouse system, which helps in picking and packing the ordered product; logistic and delivery system, which helps in delivering the ordering.

HKTVmall aims to provide a joyful shopping experience to customers. Therefore, it offers a delivery service. To guarantee the service, HKTVmall has its logistics and warehouse professionals, a car fleet with 160 cars and 3 temperature cool trucks and 3 warehouses which one of them is a food factory.

The resources above can advance HKTVmall in provide an excellent online shopping platform for the customer. However, the services provided are not satisfied.

For the powerful website, the loading time of the web is appreciated but there are some things should be improved.

First, although there are more than 174,000 products provided on the website and they are from different categories, almost all of them are the brand that can find in the local market. HKTVmall has more than 2,700 partners, and most of them are the brand in the local market that means HKTVmall cannot distinguish itself with the physical store in the Hong Kong Market. Second, although HKTVmall claims it that it provides competitive pricing at lower running cost, the price showing on the web is similar to the physical shop.

Third, since there are too many products sell in the HKTVmall, how to categorize product become a big problem. Although people can use the search function to find goods they want, people are difficult to find the good they want in the category. For example, in appendix 1, when we want to see woman perfume from the types, we can only find 2 related product in the first page first two row. The web interface is not user-friendly, especially for the customer who wants to buy good without a specific brand. 

 For the logistic and delivery system, the service provided is not satisfied. HKTVmall claims it is a convenient online platform for every single order so it will provide the delivery and customers can choose the delivery time. However, the distribution does not cover the remote area such as some village in New Territories. Moreover, some customers reflect that the delivery time always not as the promised time and there are missing good problem which causes their inconvenience.

2.1.3.2      Activities

Marketing and sale activities

HKTVmall provide many marketing or sale event in their web such as some festival sales (e.g. mother’s day); one-day event created by itself (e.g. Japan Food Festival); VIP shopping day every month; Thankful Sale; Credit card Promotion; Combination sales(e.g. buy A product get b product free or buy A product get a discount of B product). 

The promotion event can attract the customers the consume more. The website promotion can attract the original customers since HKTVmall will send the promotion email to their customer before. Moreover, the Credit card promotion can attract the new customers. HKTVmall cooperates with different credit card company so that if people apply for the credit card, its coupons(usually HKD100) will be provided. With the free delivery for over HKD400 purchase, credit card promotion with the coupon can rouse the interest of now customer to buy more. Besides, on the assigned day some assigned credit will have a discount on buying goods in HKTVmall. It also promotes with Citi Pay so that customers can use the Citi Pay with Point to pay in the purchase in HKTVmall. HKTVmall is the first and only online shop that can use Citi Pay with point and that enhance the Citi card users’ purchase experience.

However, the combination sale seems not attractive since the combination is with no relationship. Customer may not spend extra money on the combination sale even there is a discount since the separate product is useless.

After-sales Services

HKTVmall provides FAQ and a real-time customer service chat box to answer the customer. The FAQ provided in HKTVmall contains various questions and answers and are categories systematically. Customers can know everything such as how to use the web, the payment method, delivery problem. Besides, the real-time customer service chat box (mall cha) can answer customers’ question from 10 am to 8:30 pm by the staff. After the working hour, “mall mall cha” will show some robotic answer which shown in FAQ, but it will sort the related question for the customers first.

The FAQ in HKTVmall is systematic, and customers can easily find the answer they want. It is good enough for a new customer to know the purchasing process. For the after-sale service, the website will direct the customer to the page of “report product problem” and the refund, exchange, and related problem will process automatically and will solve between 2-3days, which it claims is faster than the regular customer service officer handling. 

However, the service of “”mall mall cha”” is not satisfied. First, the service time is too short for the OL who can only purchase after work. Many customers complained that the service time of “mall mall cha” is nearly the same with their working time so that they cannot live chat with staff since they cannot use the function after work. Second, even when they can contact the team, the staff change from time to time within a chat, so they need to explain to the new staff again for the same issue. Third, the conversation can only show robotic answers that can found in FAQ after the working hours of “mall mall cha”. The chat will not record the problem customer is facing, so the customer needs to ask again in the working hour. 

Besides, HKTVmall did not provide customer service hotline which causes some customer feel inconvenience since they cannot know who is handling the problem and cannot find the person who is treating the issue afterward.

2.2            Development of e-Commerce in Hong Kong

The development of Hong Kong’s e-commerce market has been relatively slow compared with other developed markets in Asia such as Mainland China, South Korea and Taiwan. However, because the outbreak of the new crown pneumonia, increasingly more customers have switched from bodily stores to on line structures to keep, and society’s notion of e-commerce has additionally modified rapidly. With the growth of the client base and the corresponding growth inside the varieties of products offered, e-commerce has attracted attention, and shopping modes which includes on line shopping transport and online shopping self-collection have speedy become the new purchasing regular.

2.3            HKTVmall Strategy

E-commerce, on the other hand, received an enormous tailwind from the corona crisis and can be described as a big winner of the crisis. Before the outbreak of the novel virus, online business had not really caught on in the former British colony (Ding, Huo and Campos 2017). Many Hong Kong residents preferred the traditional shopping experience. But in times of social distancing , many locals prefer to stay at home and order their goods online.

Data from the state-run underground operator Mass Transit Railway (MTR) indicate, among other things, that the population avoided the city’s central shopping streets. The number of passengers between January and September 2020 was a third below the previous year’s level (Raval and Pawlik 2018). The sharpest declines occurred between February and April and in July and August. During these months, the Special Administrative Region (SAR) – at least by Hong Kong standards – recorded particularly high levels of infection.

2.4            HKTVmall in The Retail Market

The company’s sales increased 114 percent in the first half of 2020 compared to the same period of the previous year. In July 2020, the company registered more than 1.1 million orders, an increase of 150 percent compared to the same month last year. As a result , HKTV mall was able to report a decent profit to its investors for the first half of 2020. The figures were still in the red last year. The development is likely to represent the entire e-commerce industry.

2.4.1       HKTVmall fully understand consumer preferences

The most important thing in business is to learn how to catch consumers’ psychology. As long as you fully grasp consumer preferences, you will not be far from success. HKTV mall has a strong customer database, which records customers’ daily consumption behaviors and habits, or the types of goods purchased, and analyses their consumption preferences one by one, so as to recommend related products that they will be interested in to improve their purchases Intend. For example, according to data from HKTV mall, cereals, oils, groceries, beauty and health products, and electronic and electrical products are the most popular product categories for Hong Kong people. When these products appear more frequently, the more they can stimulate their consumption.

2.4.2       Paying attention to customer experience

Today’s service attitude is not enough. This classic advertising line means that the quality of customer experience will directly affect their desire to buy. HKTV mall understands this principle, so it has been continuously reviewing and improving user experience in recent years, in order to create a simple and convenient shopping platform for customers. In order to prevent customers from abandoning orders due to payment barriers when buying hot products, or not patronizing due to long waiting time for self-pickup, it strives to improve the shopping process, such as customer diversion and classification, and Expanding the order collection network and home delivery logistics resources, etc., enable customers to receive goods more easily and quickly, greatly shortening the waiting time to meet their requirements for convenience and fastness.

In addition, they have also introduced different customer-friendly functions for different customer groups, such as no-account opening, no online payment, support for voice search products and enlarged product icons, to attract users. Continuous praise can drive the number of customers to come back to increase.

2.4.3       HKTVmall is equipped with automation system

Another advantage of HKTVmall is that it is equipped with an automated system. When it opened, the order coordination and sorting work mainly relied on human hands. Therefore, it was very busy during peak seasons. It was not only error-prone, but also not efficient. Starting in 2018, HKTVmall has spent a lot of resources to invest in smart infrastructure, mechanizing the labor-intensive delivery, packaging, and transportation procedures in the past. Now HKTVmall can handle a large number of transactions more systematically and flexibly. At the same time, the accuracy is greatly improved to ensure smooth operation, and it is logical to successfully retain customers. This secret of success of HKTVmall is in the heart of merchants, so they have opened stores on the platform.

3         Facts and Finding

3.1            New strategy

Opening Online to Offline store is a new strategy that HKTVmall is doing. There are 35 HKTV O2O shop opened, and 10 of them are in Hong Kong, 8 of them are in Kowloon , and 18 of them are in New Territories. The opening hour of different stores is different. The opening time is about 10:30 am – 12:00 pm and the closing time of all shop is 9 pm. All of them open every day. Customers can order from online and pick up the purchased goods in the O2O shop. They can also buy the products in the O2O shop by the HDTV all app in mobile. The selling points of the O2O shop are that customers can get the purchased product in O2O shop when they have purchase above HKD30 without any delivery fee(free delivery only offer to people who buy above HKD400 online initially) ; an HKD20 HKTVmall coupon will be given if people buy more than HKD400 in O2O shop; the appointed goods can be pick-up in the O2O shop after 7 pm that day if the order is made before 10 am; there are sales associates in the O2O shop to provide 1-to-1 consultation on any queries related to  HKTVmall. 

The promotion offered by HKTVmall can attract new customer base such as housewife since they can go into the O2O shop to buy the products. Also, it provides a new pick-up location for people who live in a remote area so they can get the good from the nearest O2O shop.

Moreover, the sales associates can help the people who formerly do not know what to use the HKTVmall app. Other than that, buying good only by HKTVmall app can increase the hit rate of HKTVmall app.

Figure 2: O2O strategy

However, the payment method of the O2O shop is not user-friendly, since some elderly do not have a smartphone and they cannot buy in O2O shop. Besides, there is no notification when the ordered products have arrived at the designed O2O shop. People can only check the status of the product delivery time by time in the web by themselves to know when to get the products. Also, the O2O shop increases the operating cost of HKTVmall since they need to pay the rental fee.

3.2            Quality improvement program in Customers

If the person is not satisfied with any of these points, the quality of the product decreases – this means a bad experience as a consumer. It is called voice of the customer the representation of these requirements through concrete expressions and keywords.

3.2.1       Productivity

The customer’s voice can be compared with the company’s internal data to evaluate the performance of its shares. They are represented by indicators and make up the voice of the process. For example, if the customer’s voice concerns logistics and they may say that they need a faster delivery, one of the indicators that should be prioritized in the voice of the process is the average delivery time. Among the factors that interfere with this indicator are item production and order processing. If HKTVmall is dedicated to improving processes related to the main attributes of quality, they will also increase their productivity and customer satisfaction.

3.2.2       Cost reduction

The model ensures that, focusing on product quality in its broadest sense, productivity increases and costs decrease. This can be seen by the following example, if the product is not what the customer expects or arrives with a defect, what happens in e-commerce is called reverse logistics. This is the process of serving the customer and enabling the return, generating administrative and logistical expenses. If management remains focused on total quality, these events will occur less frequently and costs will fall.

3.2.3       Market Conquest

The conquest of the market will take place naturally. A good shopping experience for the user and a feeling of quality will produce a new purchase and, without a doubt, indications of their brand. The cost reduction, in turn, will give the company the possibility to lower the price of the product, occupying market segments that were previously controlled by their competitors. Quality is found throughout the organization and is considered a cultural issue focused on reducing waste and reaching maximum potential.

Continuous improvement is a dedication to the process and an attitude that involves the entire company, and should be encouraged by the brand owners. It covers teamwork, innovation and constant learning. It is widely used in digital marketing, and there are some steps that are repeated all the time such as planning for increase sales a given percentage.

The process of managing ecommerce encompasses,  talking about people management, financial management, accounting management, inventory management, logistics management, marketing management and sales management. “Logistic and Supply Chain Management” (2011) -Quality is the center of core product, which companies has to ensure that it is in highest consideration, then with other added value items such as good customer service & logistic arrangement, customers can be retained and gain the competitive advantage.

The opposite predominant trouble came about in HKTV mall is terrible stock control. within the ecosystem of eCommerce, inventory act as a vital function, especially it’s storage function for in addition logistic improvement. As an online buying platform, HKTV mall generally is predicated at the providers’ supply chain, if there’s any disconnect or negative ordering management, customers cannot purchase what they want in the course of online purchasing revel in. In HKTV mall case, most of their clients complained approximately the lack of warm sellers, out of stock alert is anywhere, even clients made the purchase, they still ought to wait until provider refilled their stock (Khalid et al. 2018). Lack of capability revenue and awful buying experience result in terrible organization photograph and low level of purchaser self-assurance.

From the above chart, Prof. Christopher. M (2011) pointed out that if a product is out of stock, 31% customers will purchase in elsewhere for that product especially if the product is common and easy to buy from others, 26% customers will substitute different brand, 19% will substitute the same brand, 15% will delay the purchase action and 9% will not purchase the product. Another research found that more that 60% of shopping decision are made at the point of purchase that the purchase is triggered when the product is available on the stock. And the purchase will not be triggered when the product is out of stock. The out of stock impact does not only cause direct loss for HK TV mall, but also push customer away from the brand permanently.

In HKTV mall suppliers’ angle, they could simply fill up merchandise while HKTV mall make change orders. There might be time lapse between the request of product and order of product. HKTV mall depend on manual/human to response to thousands of request must not be and green manner in eCommerce cycle. lack of well improvement auto ordering gadget to connect with suppliers make HKTV mall less aggressive in online purchasing enterprise.

4         Conclusions

Their workers or even management staffs have inadequate experience on handling emergencies, especially for the delivery arrangement under extreme weather condition. In the last summer, there are several typhoons which made HKTV Mall to postpone their leading orders on the day which typhoon signal No.8 or above is hoisted. They decide to put the postponed orders from the head to the tail of the queue and this made their customers angry. The HKTV Mall has received a lot of complaints on that time because of the unfair arrangement.

To avoid this happened again, they should setup clear guidelines for staffs to follow. Besides, they can also use knowledge management system (KMS) to create corporate knowledge and share best practices. HKTV Mall can improve the performance of delivery by automation. HKTV has already spent approximately HK$ 141 million last year for purchasing automation systems from German logistics solution provider Schaefer Systems International (SSI). The automation system includes conveying, automatic picking, automatic storage and retrieval of commodities.

They can also improve the efficiency of customer services and shipping by integrating their back-office system with customer relationship management (CRM) system such as Salesforce. For example, DHL, the famous global market leader in logistics industry has also used Salesforce as their CRM system to centralize global operations. With CRM, Customer service officers can check customers’ information such as order history, online chat records, offline messages and email history. It is important to provide high quality customer services and it helps corporate in keeping loyal customers.

The other problem in HKTV mall is poor inventory management. As an ecommerce platform instead of manufacturer, HKTV mall replies on its merchant to provide products for online shoppers. Supply chain is indirect and hard to be responsive when hot sellers are out of stock, thus clients have to wait for longer time, which discourage further sales from existing customer.

An integrated supply chain management system is a system provided to product manufacturer, the wholesaler, the distributor and the retailer. It is normally a web-based system seeking to communicate with distributors and wholesalers. It also consists of commercially available software packages that provide an integrated system to purchase, track and order agricultural products. Supply chain management system can also integrate with HKTV mall’s CRMS and POS in order to achieve the competitive advantage.

Supply chain management system can help to improve the inventory management effectively. This system connected supplier and HKTV mall with real time inventory reporting. Transparency of inventory in stock and purchasing trend help both HKTV mall and its suppliers to analyze future sales prediction . Supplier also closely connected to this system, so that they can react quicker when inventory is low. Since HKTV mall can also keep tracking on the inventory level and order hot sellers from suppliers automatically.

5         Recommendations

 For the recommendations for HKTVmall could scale up the business and win the intense competition in the e-commerce industry. By segmenting the issue into two prospects, frontline and back office, this section will focus on improving the currency policy and mechanism of both frontline and back office, in order enhance the customer experience which could attract the customer and enlarge the market share. The final target is to arrange a leading customer experience in the e-commerce sector with a well-controlled costing as well as smoothing the operation of e-commerce business. 

5.1            Frontline Aspect

5.1.1       Rescaling the pricing

As pricing is the primary concern of the customer, especially to that customer with extremely high pricing sensitivity, reform on the current pricing will be the first step to capture the maximum market share as well as the potential customer. The suggested strategy will offer more discount options regarding the purchase quantity of the product. 

A discounted price is one of the most common and practical techniques that raised the purchase intention of a consumer, which is the willingness of a consumer to buy a product or not. As the consumer behavior happened in the grocery store are mostly classified as low-commitment consumer behavior, as the product in the store is mostly fast-moving consumers goods, which implies that the consumer did not have a high involvement. With offering a discounted price on the products, which can redefine as an additional encouragement and motivation, it could alter the decision of the consumer to choose the product with discount instead of the one without a price cut.

According to Mohamed (2016), he pointed out that consumer is more willing to purchase products with price discounts as they believe that they made a rational choice. Also, under the effect of discount price, consumer even buy the brand which they are not a fan of that brand. With such an outcome, it is believed that providing a discounted product could have a high impact on the consumer behavior.

Although HKTVmall has offered discounts on selected items, the consumer needs to purchase a large amount of single product to enjoy the discounted price. For example, the consumer needs to buy 24 bottles of Oolong tea at once to enjoy the 40% off discount. For the individual consumer, the required quantity for having the discount price may be too high for them which exceed their preferences. As a result, they may abandon the decision of purchasing that product.

To trace this issue, by offering more discount options may help to maximize the preferences of the consumer, and their profit. In specific, HKTVmall can set up the different discounting price once every 4 units of a single item are purchased. Also, the same method can be applied when the consumer purchase product but mix with different favor under the same brand. By developing a flexible and tentative discounting scheme, it could max widen the consumer choice and fulfill their utility simultaneously. 

5.1.2       Extend the product variety

Except offering attractive pricing to the customers, providing a broad range of product to the market is another effective mean for enhancing the purchase experience as well as drawing attention to the potential customer. As in the grocery product sector, the customer often has a relatively low switching cost when comparing to another retail market, which implies that the customer could easily choose to purchase their product from HKTVmall or its competitors such as Welcome, Parknshop and other grocery vendor provide e-commerce service. 

 Currently, HKTVmall has more than 174,000 items on a combined bias in general. In specific, there are approximately 40,000 products in the supermarket category which provides from 2,700 partners. Although the data indicated that supermarket category has a sufficient number of products, however, it is still room for improvement for seizing the attraction of the potential customer as well as maintaining the advantages of being a leading vendor in Hong Kong e-commerce industry.

To be specific to implement this suggestion, it is recommended that to replicate the business model of the 759 Store as a goal of the long-term strategy. 759 Store a chain store that sells snacks and groceries that from all over the world, and with its distinguished business model, it bypasses the local distributors and import directly from foreign manufacturers from different countries by introducing a variety of snacks with special favor from Japan and South Korea. As of 30-April 2018, 759 Store has a profit of HKD 456,953,000 , which proofs that 759 remarkable business strategy had gained an enormous business success. By witnessing such a great achievement, it seems that HKTVmall could study to referencing 759 stores that import directly from foreign manufacturers, which could provide diversified products of choice.

 For the short-run strategy, HKTVmall could establish a strategic partnership with 759 Store. By convincing 759 stores to supply their unique product on the HKTVmall e-platform, which could benefit both corporates; HKTVmall could provide more products to the customer while experimenting how the special edition of snack could impact the consumer behavior and estimate the benefit once we adopted 759 store strategy of direct importing from the foreign manufacturer. In contrast, 759 stores can widen their own sales channel from offline to online and evaluating the feasibility of investing their e-commerce platform. Such a partnership could achieve a strategic goal of both companies by serving as a pilot program before transmuting the business model. 

5.2            Backoffice Aspect

For the back office, we have two main issues, unsatisfying response from customer service, and underperformed delivery service, which are the after-sales service that is an important indicator of satisfactory of the entire shopping experience. After purchasing in HKTVmall, many customers expressed their bad shopping experience through social media, stating the company’s unsatisfied customer and delivery service.

5.3            Communication of customer service 

For instance, HKTVmall customer named Lee has published an angry comment on his personal Facebook page after purchase, expressed his dissatisfaction and unpleasant experience he encountered with engaging in the latest “HKTVmall Summer Giveaway” promotion.  

According to the description of the mentioned campaign, customers will be entitled to receive a free-of-charge gift voucher once the purchase value exceeds HKD 400. Unfortunately, Lee claimed on the post that after the purchase is recorded, the free-of-charge coffee machine was replaced by a melon instead .He claimed that he had been snubbed by HKTVmall customer service. This issue has been reported by Hong Kong online media, Marketing Interactive, and criticized by the public.

For the problem of poor online customer service, the main point is service inconsistency. In specific, each customer is tackled by more than one service officers, causing information distortions and inefficiency. Moreover, there is no online enquire hotline, and robotic answers handle all customers inquiries. To settle these current adverse conditions, in the short run, we suggest HKTVmall to organize one service officer per customer. By doing so, we can keep our service with consistency by a direct one to one service, and settling customers’ questions immediately.

Moreover, we recommend that the hotline service hour from 11:00 to 23:00. As most of HKTVmall’s customers shop after works, having nighttime inquiries service would be more convenient for them. For inquiries after 23:00, we can record all customers’ questions and do callbacks to them the next day. We can eliminate systematic robot answers by doing so, and customize service to different customers. In the long run, we suggest the company to provide training on its service officers in handling customers complaints. In concrete, HKTVmall could release and consulted for a standard operation procedure for providing a correspondent solution that related to frequently asked questions and problems. Once the promotion is online, the operation department could release a memo that specific to the latest promotion scheme. Such an arrangement could standardize the reply of the customer service officer, which could avoid the inconsistent message that answered by different staffs. 

5.4            Deliver Arrangement 

For poor delivery service, three main problems are notified. Customers lost track on their own purchased products; products do not deliver on schedule. From the in-app comments, customers reported that the delivery service that owned by HKTVmall ruined their whole shopping experience and causing them unnecessary inconvenience. 

While the current issue is the HKTVmall own delivery fleet does not have the sufficient capacity to handle the numerous orders and deliver on time. For tackling this issue, there are mainly two recommendations to fix this issue. The first option is outsourcing. For example, logistics service providers like DHL and SF EXPRESS own overwhelming delivery

experience with high-efficiency and reliable logistics network that can deliver the products in a satisfactory and expected level. It is suggested to outsource part of the order which exceeds the delivery volume that can be handled by the own fleet. And the optimal solution will be enlarging the current delivery unit. However, it will incur an additional investment cost, which requires further study and consideration.

The second recommendation is about enhancing the delivery operation. For instance, introduce a highly centralized and automatic mechanism, TaoBao uses the barcode to connect track of products and the delivery unit. Customers can check online to notify the status of their product at any time, and the company can have better control of the delivery service. 

 As the company can track their product locations, in the case of late delivery, the company can send messages instantly to customers, for updating them the latest delivery schedule and arrangements. By adding barcodes and sending automatic messages, it provides information to the customer about the status of their product. 

Eventually, HKTVmall can have better delivery control as well as inventory management, that lead to a reduction on the related costing, but an improvement on the aspect of inventory control.

6         References

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Hamidi, H. and Moradi, S., 2017. Analysis of consideration of security parameters by vendors on trust and customer satisfaction in e-commerce. Journal of Global Information Management (JGIM)25(4), pp.32-45.

integrationDistributionConsulting, S., Devices, R., technology, S., assurance, Q., integration, S., AssuranceSoftwareComponents, P., Carriers, D., Facilities, P., Assurance, Q., City, S., IoT, I. and IoT, C., 2021. Business Platform for RFID & Wireless IoT Technologies. [online] RFID & Wireless IoT. Available at: <https://www.rfid-wiot-search.com/> [Accessed 7 February 2021].

Khalid, A., Lee, O.O.K., Choi, M. and Ahn, J., 2018. The effects of customer satisfaction with e-commerce system. Journal of Theoretical and Applied Information Technology96(2), pp.481-491.

Leung, K.H., Cheng, S.W., Choy, K.L., Wong, D.W., Lam, H.Y., Hui, Y.Y., Tsang, Y.P. and Tang, V., 2017. A process-oriented warehouse postponement strategy for e-commerce order fulfillment in warehouses and distribution centers in Asia. In Managerial strategies and solutions for business success in asia (pp. 21-34). IGI Global.

Raval, M.V. and Pawlik, T.M., 2018. Practical guide to surgical data sets: national surgical quality improvement program (NSQIP) and pediatric NSQIP. JAMA surgery153(8), pp.764-765.

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Isabelle, D., Horak, K., McKinnon, S. and Palumbo, C., 2020. Is Porter’s Five Forces Framework Still Relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review10(6).

Yu, Y., Wang, X., Zhong, R.Y. and Huang, G.Q., 2017. E-commerce logistics in supply chain management. Industrial Management & Data Systems.

Smagina, N.N., Magomedov, M.G. and Buklanov, D.A., 2017. Sustainable competitive advantage of the international business tourism on the regional level. In Overcoming Uncertainty of Institutional Environment as a Tool of Global Crisis Management (pp. 541-548). Springer, Cham.

Ding, F., Huo, J. and Campos, J.K., 2017, September. The development of Cross border E-commerce. In International Conference on Transformations and Innovations in Management (ICTIM 2017). Atlantis Press.

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