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The potential of private labels in the development of electronic trade
Section 14. Economics and management
DOI: http://dx.doi.org/10.20534/ESR-16-9.10-259-261
Boykova Anastasiya Vladimirovna, Plekhanov Russian University of Economics master's student, Department of Trade policy Nikishin Alexander Fedorovich, Plekhanov Russian University of Economics associate professor, Department of Trade policy E-mail: [email protected]
The potential of private labels in the development of electronic trade
Abstract: The modern trade is directly connected with the use of the opportunities of the Internet. In its turn the competition in the e-commerce is higher than in the traditional trade. In the result the trade organizations have to search for new ways to improve their competitive position. The problem is that a number of intangible resources, which can be used for this purpose, belong to the commodity manufacturers. The article deals with the private labels and their role in enhancing the efficiency of the economic activity of the e-commerce organizations.
Keywords: trade, retail trade, electronic commerce, electronic trading, private label.
The growing role of intangible resources is one of the current trends of the trading industry development. The problem of assessing the impact of the intangible resources on the business of traders is generally considered in the works of Ivanov G. G. [1], Mayorova E. A. [2] and others. As shown in these works, the no-
tion of intangible resources is broader than the concept of intangible assets. In the current economic conditions, in which information is one of the key commodities, the role of intangible resources in all industries is multiplied.
The works of many authors are dedicated to the analysis of the composite aspects of intangible resources in trade. In particular, the work of Mukhina M. M. [3] analyzes the impact of brands onto the efficiency of trade organizations.
The work of Leonova Yu. G. [4] is dedicated to the influence of market research results onto the economic trade organizations efficiency.
The development of the system of market relations in the world economy has gradually led to the increasing role of intangible resources in trade. The market research results play an important role in enhancing the trade organization performance. In the planned economy system the volume and assortment of goods being on sale was determined by the plan tasks received from the parent organizations, but in the current conditions of market trade and tough competition the trade organizations independently form their own assortment policy.
At the end of the twentieth century there was a rapid development of the Internet-forms in the modern trade [5]. E-commerce is characterized by a high degree of competition [6]. It is caused by both the wider consumer choice among a large number of online stores and by the fact that the e-commerce subjects have enough broad possibilities for the analysis of economic activities of competitors. In these circumstances the price of goods being on sale is an important factor in the competition for the buyer. However, the lower entry barriers are the distinctive feature of electronic commerce, which has led to the emergence of a large number of un-
scrupulous traders, which, in its turn, has led to an increase in the role of intangible resources, in particular, the image in the electronic commerce. Often the buyer fears to purchase goods in an unknown online store, which makes the role of the business reputation of a trade organization very important.
When deciding where to purchase a buyer is mainly guided by the reviews in the social networks, Internet forums, and conferences. Thus, the competitive position of a trade organization operating in the Internet is mainly determined by its image and established business reputation. Many buyers prefer to purchase goods using exservices. However, the upkeep of a pick-up point, especially in conditions of a small flow of orders, considerably increases the costs of an Internet-shop. The legislation of distance selling gives the buyer the right to return a purchased item. However, the e-commerce business scheme often presupposes the absence of any points with the convenient transport accessibility.
The Internet forms of commerce allow the manufacturers selling the goods directly to end consumers without forming their own trade network. In this situation the manufacturer initially possess such intangible resource as the guarantee of the high quality products declared company and the absence of counterfeit goods. This resource allows setting the slightly higher prices, arranging a minimum number of pick-up points, offering relatively long delivery terms, but the existence of such a resource, as the quality guarantee, allows such shops gaining a large enough flow of customers.
The development of network forms of trade has led to the widespread dissemination of private labels. This allows the networks managing the intangible resources associated with the existing goods leaving to the manufacturer the production function alone. A trading network on its own conducts a campaign forming the competitive advantages and preserves them in the event of a change of manufacturer. Thus, in modern trade the organizations form not only the resources that are specific to the trade sector, but also use a part of the resources directly related to the product. The own trademarks are such resource. An own trademark, un-
Section 14. Economics and management
like the manufacturers' brands, is a resource totally owned by the trading network. A trading chain initiates the creation of a unique product, which will make it stand out among many others. It is worth noting that own trademarks are the intangible asset and the intellectual property of a trading network, which is protected by law, so other stores have no right to sell the products under someone else's own brand.
The goods subsequently sold under its own brand can be manufactured by the sales network and by the independent manufacturers. In view of the limited resources of a trade network the costs onto the non-profile activity are often inexpedient. In this regard, the mechanism of private labels is designed for outsourcing, i. e. a network orders a product under its own brand from an independent manufacturer in the volumes and on the criteria, which it considers fit. Usually the small private enterprises are such manufacturers.
As has been mentioned earlier, in electronic commerce the price competition has an important role. It defines the important competitive advantages of the Internet units of trade networks.
On the other hand, a high price competition leads to the need to search for the new competitive advantages. Such competitive advantages may be formed with the help of intangible resources. It should be noted that in case of sale of goods under the brands of the manufacturers an Internet company has no rights to them and cannot make full use of this resource in its activity. In this regard, the use of own trade marks is very promising.
In their turn the benefits of own trade marks for the trading network, which carries out its activity using the Internet, include the right to manage this resource. A trading network can differentiate suppliers, including increasing the sales volume, if necessary, by engaging new ones. The private labels are becoming such a popular and efficient method to enhance the customer loyalty that some networks have several kinds of private marks. It should be noted that the private labels are not only the products, which can be seen on the websites of a particular network, but also its own brand and business reputation. In this regard, the quality of the goods sold under own trade marks must be carefully monitored, because it has a strong impact onto the customer loyalty [7].
Currently the private labels are also undergoing a transformation and the brands, which in the premium segment stores several times exceed the actual purchase price, appear, but at present it is rather an exception to the rule. Accordingly, the development of private labels in the high price segment is very promising.
In this situation it is reasonable for the organizations of the Internet commerce to use in their product matrix several private labels, which are positioned in different consumer segments. In particular, other methods of sales promotion, rather than price incentives, shall be applied to such trade marks. It would be reasonable to include the creation of a relative image of such trade mark among the consumers into such methods. To this end, it is important to use the positive reputation of trading network in the promotion of a private label. Such brand must be differentiated from the commodities of the lower price segments. A trade organization shall carefully monitor the quality of such products, including using the mystery shopper
method. A deterioration in the quality of products sold under such brand leads to the loss of business reputation of a trade network.
In most countries, in accordance with the law, the seller must provide the buyer with the basic information about the product and about itself. However, many buyers wish to obtain the additional information, which cannot be attributed to the basic information. This task is particularly important in the premium segment. The distance selling is characterized by the fact that the buyer has no direct contact with the product purchased and has the opportunity to get acquainted with the product only through the description on the site. Although the obligation to provide the consumer with the main properties of the goods is stipulated by the law, the buyer wants to receive some information, which is necessary for him/her personally by virtue of the expected specific features of use of the goods. Such information can be obtained only by the direct contact, but as of ordering the goods are at the seller's place and such contact can be provided only by the seller. The sale of goods under own trade marks provides the assortment stability, which makes it easier to advise the buyer, characterizes the prospects for promoting not only the store, but also the product in social networks.
A customer can't obtain such information in another shops, which solves the problem of the possibility that the buyer seeking the information in another store can buy the product there, if is offered the most advantageous conditions. Thus, the absence of any information on this product reduces the competitiveness of the store, which is a significant problem. On the other hand, the high-quality advice, which can't be obtained from other trade organizations, stimulates the transition from viewing information about the goods to purchasing them. It should be noted that a poor consultation by the members of an online store adversely affects the competitiveness, which makes requirements to the personnel tougher. Different categories of buyers prefer different ways of obtaining such advice, a number of buyers prefers the "live chat" with the consultants and other customers — the communication in writing. To reduce the costs of the buyer a seller may use the special free phone numbers or callback service.
Not only employees of the online store, but also other users on the network may inform the buyers. In this case, there is no need for additional staff costs and training, and the buyers usually have greater trust to the reviews such buyers as themselves. The guest book may have the same function. In this case the online store faces the dilemma how to deal with the negative feedback. On the one hand, their presence negatively affects the reputation of the store, on the other hand, the presence of only positive feedback dramatically reduces the confidence of buyers in such reviews. The correct reaction of the store to the negative feedback may solve this problem. In this regard the description of positive characteristics of the goods, which in the sale of own trade marks form the image online store in general is very promising.
As a conclusion, it can be said that the use of own trade marks is very promising for the development of manufacture and for the enhancement of all areas of business and of trade networks efficiency. The introduction of trade marks of high price segments is the most promising due to their low prevalence at present.
References:
1. Ivanov G., Mayorova E. Intangible assets and competitive advantage in retail: case study from Russia//Asian Social Science. - 2015. -T. 11. - № 12. - C. 38-45.
2. Maiorova E. A., Lipitskaya N. V. Assessment of customers' perception of social responsibility of trade business//International Journal of Economics and Financial Issues. - 2016. - T. 6. - № S2. - C. 158-163.
3. Mukhina M. M., Nikishin A. F., Pankina T. V The role of image in the e-commerce//European science review. - 2015. - № 11-12. - C. 220-221.
Quality as a determinant factor of increased competitiveness and export growth (Case study: Kosova)
4. Leonova Ju. G. Peculiarities of performance assessment of a trade organization in a competitive market//European Journal of Economics and Management Sciences. - 2016. - № 1. - C. 72-74.
5. Mayorova E. A., Nikishin A. F., Pankina T. V. Potential of the internet network in formation of the assortment of the trade organiza-tions//European science review. - 2016. - № 1. - C. 208-210.
6. Kuznetsova A. A., Nikishin A. F., Mayorova E. A. Managing price policy of trade organizations in the Internet. The Ninth International Conference on Economic Sciences Proceedings of the Conference. - 2015. - C. 130-132.
7. Nikishin A. F., Ivanov G. G. Stimulation of sales in electronic trading. Humanities and Social Sciences in Europe: Achievements and Perspectives 9th International symposium. - 2016. - C. 306-308.
DOI: http://dx.doi.org/10.20534/ESR-16-9.10-261-264
Lleshi Samir, Phd (c)., Lani Lirim, E-mail: [email protected]
Quality as a determinant factor of increased competitiveness and export growth (Case study: Kosova)
Abstract: The main purpose in drafting of this paper is to empirically analyses and treat the quality and in enhancing of the competitiveness and export companies exporting in Kosovo. The records that are used in the paper are the primary data, namely through the questionnaires in a particular sample of exporting businesses in Kosovo. The quality nowadays is understood as a process that should be developed steadily, whereas the acquired data during this process serves to improve the products and services in the future, so that the current products and services will remain sustainable for customers aiming to return the t customers who have lost the confidence in those products and to obtain new customers. The general conclusion of the paper is that the management of the quality is a determining factor in the growth of exports in the exporting companies in Kosovo.
Keywords: Quality, Export, Performance, Product, Safety, Certification.
1. Introduction
The manufacturing businesses are oriented in the strategic quality of management, where the quality is an integral part of strategic planning and in agreement with the entire management of the organization. This provides benefits, which is a strong competitive weapon, but increasingly being oriented towards the requirements of the clients (users) who should be satisfied. In many sectors, the economy of the countries in the region is not able to be a serious competitor, whereas the sector of the food industry, countries such as Kosovo, Macedonia and Montenegro have potential and can produce a large domestic consumption and to make attempts for entry into the European market. However, the challenges and obligations in this regard are very difficult. The European market is very strict toward the quality and meeting of standards for products and to enter into this market, they should initially fulfill of these conditions, even though many companies from these countries have already witnessed such a demand has been is fulfilled and can penetrate freely in the European market, this is evidenced with achieved engagements for export of these products.
According to the ISO 9000 standards, the quality is comprised of the characteristics of the product or service that meets the appropriate requirements [7]. Compliance with standards and norms management opportunities are preserved and developed and production costs are reduced. Thus the requirements of customers and the market to increase toward the quality and raise of the staff ethics, which also results in a higher quality product or service. Effective quality management can enhance competitive abilities of the organization and provide strategic advantages, whether it will reflect the perception of the management quality [5].
The competitive ability of the company in the market largely determines the level of the quality of the product, regardless of whether it is being produced for the already familiar or unfamiliar
buyer. For this reason, it is very important the link between the sales department (which is best familiar with market opportunities) and services of the preparation for production and which with its solutions should try to resist more the existing competition in the market. The quality control is essential for organizational success and brings in the improving profitability benefits, such as; the satisfying clients and increasing competitive advantage [11]. In this sense, the link of technological systems is important where the constructive ideas of market products are implemented, because on the contrary, it could increase the cost of the quality, and cause a higher price of the product, and a drop the competition. On the other hand, lower quality compared to competitive products offered for specific products, usually causes progressive decline in open market price. Therefore, it is necessary to establish a level of quality that will be balanced with the price offered by the market for the quality [8].
It should be further noted that Kosovo has made significant progress in terms of infrastructure quality in the recent years. The lack of awareness about the importance of certification, and other elements of quality infrastructure and drag in the adoption of international standards that directly leads to the fact that the products in Kosovo are not in line with EU standards, or a very small number of them. By continuously monitoring the process, the manufacturing organisation could prevent defect items to be processed in the next stage and to take immediate corrective action once a process is found to be out of control [9]. On the other hand, the constituting and the development of quality infrastructure is one of the important steps toward EU affiliation. Competition in Kosovo is a major problem for many businesses, for the simple fact that in many sectors and the activities it appears as unfair, which means that the risk of competition is over the normal range. Another element worth mentioning here is great concentration of many businesses in few sectors.
