Eessõna

 

Antud äriplaani eesmärgiks on saada ülevaade elektroonilise kaubanduse trendidest Eesti autonduses ja vastavalt saadud tulemustele uudse elektroonilise lahenduse genereerimine koos sinna juurde kuuluva äriplaaniga.

 

Uuring on jaotatud neljaks põhimõtteliseks osaks.

Esimeses osas annab autor ülevaate elektroonilise kaubanduse trendidest, elektroonilistest mudelitest, interneti ostjate käitumisest ja elektronilise kaubanduse tulevikust.

Teine osa antud uurimusest sisaldab turuuuringut, milles olulise tähtsusega on nii majanduslikud kui ka tehnoloogilised faktorid. Antakse ülevaade nii autonduse turust kui tehnoloogia arengust.

Kolmas osa keskendud valitud tehnoloogilise lahenduse, interneti kaupluse, kirjeldamisele.

Neljandas osas koostab autor äriplaani interneti kaupluse käivitamiseks.

 

Antud uurimistöö põhitulemused on järgmised:

-         Eesti autokaubanduses ei ole antud äriplaanis pakutavat lahendust veel keegi teostanud.

-         Elektrooniline kaubandus on tõusuteel vaatamata ajutistele tagasilöökidele.

-         Autotarvikute elektrooniline müük on Eestis veel vähe populaarne.

-         Potentsiaalne turusegment on tehnoloogiliselt valmis pakutavat teenust tarbima

-         Elektroniline kaubandus on olulisel määral efektiivsem kui traditsiooniline kaubandus.

-         Eesti pindala, rahvaarv ja oma keel on unikaalsed eelised efektiivse interneti kaupluse töös hoidmiseks.

 

Tänaseks hetkeks ei ole Eestis autonduses veel elektroonilisi lahendusi mis pakuks lõpptarbijale soodsaid hindu ning mugavat lahendust, kuid mõne aja möödudes sunnib konkurents ettevõtteid selliseid lahendusi otsima.

 

Uurimistöö on koostatud inglis keelsena, kuna ka enamus erialast kirjandust on inglise keeles.

 

 

TABLE OF CONTENTS

 

1. INTRODUCTION.. 5

2. OBJECTIVES. 7

3. DEFINITION OF ELECTRONIC COMMERCE. 8

3.1. Electronic commerce segments. 10

3.1.1. B2B: Business-to-business. 10

3.1.2. B2C: Business-to-consumer 10

3.2. Market 11

3.2.1. Advantages and benefits of shopping. 13

3.2.2. Disadvantages and risks of online shopping. 14

3.3. Technologies of e-commerce. 15

3.3.1. Electronic Data Interchange (EDI) 15

3.3.2. Electronic Mail 15

3.3.3. Internet 15

3.3.4. World Wide Web. 16

3.3.5. Electronic Data Exchange. 16

3.3.6. Electronic Forms. 17

3.4. The future of electronic commerce. 17

3.5. Conclusion. 17

4. THE DEVELOPMENT OF ELECTRONIC COMMERCE IN ESTONIAN AUTOMOTIVE BUSINESS. 19

4.1. Sector overview.. 19

4.1.1. Sector size. 19

4.1.2. Sector Structure Overview.. 19

4.1.3. Estonian Distribution Sector in International Context 20

4.1.4. New Car Distribution Infrastructure. 20

4.1.5. After-sale. 21

4.1.6. Smaller Dealers and Dealers Groups. 21

4.1.7. Service and Spare-parts Companies. 22

4.2. The evaluation of Car Web Sites in Estonia. 22

4.2.1. Analyze of e-shoppers. 27

4.3. The evaluation of B2B Sites in Estonian automotive business. 28

4.4. The analyze of web-stores in Estonia. 30

4.5. Conclusions. 31

5. VIRTUAL STORE. 33

5.1. Architecture of e-store infosystem.. 33

5.1. Database structure. 34

5.1.1. Product database. 35

5.1.2. Order processing database. 37

5.2. Web site design requirements. 38

5.3. Functionality model 39

5.3.1 Customer technology. 39

5.4. Tests. 41

6. www.autoosad.ee BUSINESS PLAN.. 42

6.1. Concept 42

6.2. Mission. 43

6.3. Philosophy. 43

6.4. Benefits. 44

6.5. Uniqueness. 44

6.6. Company overview.. 44

6.6.1. Services Provided. 44

6.6.2. Osaühing. 45

6.6.3. Location. 45

6.7. Market Analysis. 45

6.7.1. Target Market 45

6.7.2. Competition. 45

6.7.3. Competitive Advantage. 46

6.8. Promotion. 46

6.9. Brand protection. 47

6.10. Suppliers. 47

6.11. Staffing Analysis. 48

6.11.1 First year 48

6.11.2. Second Year 48

6.11.3. Third Year 48

6.12. Customer Service. 49

6.13. Website. 49

6.14. Products. 49

6.15. Delivery. 50

6.16. Guarantee. 50

6.17. Finance Prognosis. 50

6.17.1. Revenue. 50

6.17.1.1. First Year Revenue. 50

6.17.1.2. Second Year Revenue. 51

6.17.1.3. Third Year Revenue. 51

6.17.1.4. Fourth Year Revenue. 51

6.17.2. Sales prognosis. 52

6.17.3. Projected First-Year Budget for www.autoosad.ee. 53

6.18. Conclusion. 56

SUMMARY.. 57

BIBLIOGRAPHY.. 58

 


 

1. INTRODUCTION

 

Today, a great number of companies are using the Internet as an outlet to promote their products and services. To increase business competitiveness, electronic commerce, or e-commerce, is used as a new strategy within many business sectors. Many companies believe that electronic commerce can improve efficiency in finding and interacting with customers, in communicating with trading partners, and in developing new products and markets. The Internet, as the prototype of the global information infrastructure today, is an ideal environment for E-commerce. It can be primarily used to reduce communication and publishing costs, as well as offering an inexpensive, flexible, and efficient way for businesses to trade and communicate with each other. Electronic commerce on the Internet can also improve company’s innovation, production, sales, and service. Although electronic commerce has already been implemented in many countries and the Internet has been used to improve efficiency and effectiveness in today’s business environment, many businesses in Estonia are still reluctant to go on-line with E-commerce on the Internet.

The last decade has seen tremendous growth in the World Wide Web (WWW) and electronic commerce, which now offers organizations and consumers a unique channel to deliver and purchase goods and services. E-commerce is popularly classified as B2B (business to business), B2C (business to consumer) and C2C (consumer to consumer). Business model of B2B is currently the fastest growing segment of e-commerce it makes more efficient the flow of goods and services across organizations. This efficiency is typically increased using standards for electronic data exchange, automating certain processes across organizations and providing direct database access to external organizations, usually via the WWW. B2C e-commerce consists broadly of providing consumers uninterrupted access to an organization’s goods and services, with minimal geographical boundaries. Creating a virtual shop www.autoosad.ee, consisting of components such as shopping carts, catalogues, and electronic payment mechanisms, usually does this. C2C e-commerce consists of providing distribution channels for consumers to sell goods and services to each other. Typical examples of this include auction sites, where users can auction items to each other, and consumer rating services, where consumers can share information about goods and services with each other. The ubiquity of the WWW has also enabled changes in several aspects of traditional commerce. First, the barriers to entry for setting up a virtual business are considerably lower than for setting up a typical “brick-and-mortar” establishment. Second, geographical barriers are considerably reduced, providing sellers access to a larger customer base. Third, unique pricing mechanisms such as “name your own price,” (e.g., www.osta.ee) and asynchronous auctions are now possible. Fourth, aggregation of demand by several individual buyers is now possible, leading to better negotiation of prices on behalf of these buyers. Fifth, search engines and rating sites provided aggregated information to the buyer about the different sellers of a particular good or service. It is widely accepted that all of these changes have enabled efficiencies and the creation of value. The purposes of this study are to determine the significant roles and current status of e-commerce on the Internet in Estonian automotive business and to identify the important factors and existing problems for developing e-commerce over the Internet.


 

2. OBJECTIVES

 

The aim of the research is to develop a greater understanding of the Estonian automotive business supply chain, business process and markets, and to identify suitable electronic commerce applications for the industry.

And the primary purpose of this work is to highlight areas of research in the construction of e-commerce application. Work does not look at lower level issues such as communication protocols or security mechanisms, though these are certainly large areas of research. Instead we focus on e-commerce application construction. While study does not claim to be exhaustive, our goal is to be as comprehensive as possible in covering different aspects of e-commerce application construction starting from market research to our business plan.


3. DEFINITION OF ELECTRONIC COMMERCE

 

There is no generally agreed definition of "electronic commerce". The term is generally used to refer to trade (which may encompass publicity, information, ordering, delivery and even consumption) via electronic networks, and in particular, via the Internet. The lack of a uniform definition of electronic commerce makes it a phenomenon that is particularly difficult to assess statistically in global terms. Two indicators that are often used for this purpose are the number of Internet hosts and the number of secure servers in a given country. A surveys made in Estonia based upon the level of these two elements reveals that Internet activity - and therefore one can assume commercial Internet activity - is expanding rapidly. An even more difficult task is the measurement of the value of e-commerce transactions. Estimates vary widely depending upon the definitions used and the way statistics for transactions are compiled.

Electronic commerce is more than a new way of selling and buying products or services on the Internet. It's about putting together the right infrastructure to meet customers' needs.

The simplest definition of electronic commerce is when something of value has been electronically exchanged for a good or service. Electronic data interchange is a simplest form of electronic commerce, as is a Web catalog or an electronic auction. Most importantly, electronic commerce offers elegant, effective ways to manage supply chains and manufacturing and distribution processes while linking partners, making it easier for customers to do business.

Other simple definition of electronic commerce is a virtual marketplace for buying and selling online. The full definition of Electronic commerce is defined as an emerging concept that describes the process of buying and selling or exchanging of products, services, and information via computer networks including the Internet.

Electronic commerce is also defined as the use of information and telecommunication technology to automate business transactions and workflow; the facilitation of the purchase and sale of goods or services; the delivery of data, goods or services, computer network payment through telephone lines and other communication modes; and providing quality services and products to satisfy customers, both business and consumer, while reducing service cost and expediting delivery. The electronic marketing structure has been classified as business-oriented (B2B) and consumer-oriented (B2C). The most significant share of e-commerce takes place between businesses ("B2B") and involves typically large online transactions of industrial parts and components; these transactions account for between 70 and 80 per cent of all electronic sales. Business-to-consumer e-commerce (B2C) has the second-largest share, and covers retail activity conducted over the Internet. Less significant (in terms of volume) types of e-commerce are "C2C" - where consumers trade directly between themselves -e.g. via auction sites, and "C2B", where consumers drive the commercial process (e.g. airlines competing to give travelers the most competitive prices for tickets).

Electronic commerce is also the application of communication and information sharing technologies among trading partners to the pursuit of business objectives. E-Commerce can be defined as a modern way of business that addresses the needs of organizations, merchants, and consumers to cut costs while improving the quality of goods and services and increasing the speed of service delivery. E-commerce is associated with the buying and selling of information, products and services via computer networks. Key element of e-commerce is information processing. The effects of e-commerce are already appearing in all areas of business, from customer service to new product design. It facilitates new types of information based business processes for reaching and interacting with customers – online advertising and marketing, online-order taking and on-line customer service etc. It can also reduce costs in managing orders and interacting with a wide range of suppliers and trading partners, areas that typically add significant overhead to the cost of products and services. Also E-commerce enables the formation of new types of information-based products such as interactive games, electronic books, and information-on demand that can be very profitable for content providers and useful for consumers. Virtual enterprises are business arrangements in which trading partners separated by geography and expertise are able to engage in complex joint business activities, as if they were a single enterprise. One example would be true supply chain integration, where planning and forecast data are transmitted quickly and accurately throughout a multi-tier supply chain. Another example would be non-competing suppliers with a common customer using electronic commerce to allow that customer to do "one stop shopping" with the assurance that a single phone call will bring the right materials to the right location at the right time.

3.1. Electronic commerce segments

 

There are at least six different models of e-business:

- Business-to-business (B2B)

- Business-to-customer (B2C)

- Business-to-employee (B2E)

- Business-to-government (B2G)

- Customer-to-customer (C2C) (i.e. consumers’ auctions)

- Consumer-to-business (C2B) (i.e. reverse auction sites)

 

Very often, the terms e-business and e-commerce are used interchangeably. E-business focuses on the overall business-to-business and business-to-consumer activities as well as a company’s internal Intranets. E-commerce, however, applies to the business-to-business (B2B) and business-to-consumer (B2C) selling of products and services via the Internet. Some companies conduct business in only one of these areas, while others will be active in all three.

 

3.1.1. B2B: Business-to-business

Business-to-business, or B2B, refers to the interactions between companies, their suppliers, business partners, and customers. B2B web sites must be able to handle a variety of activities, including but not limited to customer service, wholesale and retail inquiries, and overall real-time links between supply chain partners.

 

3.1.2. B2C: Business-to-consumer

The e-business segment known as business-to-consumer, or B2C, applies to activities surrounding the providing of information, products, and support to the general public, current, and potential customers. Like B2B sites, they too must deal with many customer-oriented activities, but typically handle larger numbers of users, often in the hundreds of thousands, and in some instances, millions.

Difference between B2C and B2B e-commerce are that the customers are different — B2B (business-to-business) customers are other companies while B2C customers are individuals. Overall, B2C transactions are more complex and have higher security needs (Figure 1).

Figure 1. Typology of Electronic Commerce Definitions

Figure 1: Classification of Electronic Commerce models

 

3.2. Market

There is no question that reports on the growth and future potential value of Electronic Commerce activities vary widely. Much of the confusion is shown by the popular press, which, in most cases, reaches for a bottom line number with little regard for the methodology behind the number. Predicted estimates of the value of Electronic Commerce transactions in world between 2000-2002 vary from a low of 23 billion to a high of 150 billion USD. The numbers all come from respected research firms. How can they be so far apart? The firms argue that simply publishing a bottom line number while failing to explain the methodology of the study results in both confusion and a misreading of the trends of the paradigm.

My point is that the numbers can be very misleading; the simple fact is that the market is huge and growing (Figure 2) at an ever-accelerating rate.

 

Percentage of internet

Usage among population

Between 17-74

 

 

 

 

 

 

 

 

 


Figure 2: Use of Internet in Estonia

Estonian on-line shopping during the past Christmas season exceeded even the most optimistic forecasts substantially (see figure 3). The simple strategy is not to be left behind. Electronic Commerce is a fact of life and companies of all sizes must play or pay. Motivated use of electronic commerce can create companies that would never have been viable 5 years ago. Amazon.com is the poster child of Internet commerce.

 

 

 

 

                        EEK

 

 

 

 

 

 


Figure 3: Estonian e-business turnover 2002/2003

 

3.2.1. Advantages and benefits of shopping

 

The main advantages of shopping on the Internet related to perceived convenience – avoiding the need to travel, speed, the ease of comparing prices and home delivery.

 

Advantages:

No travel involved

Faster

Easier

Goods are delivered

Can compare prices easily

More choice of products

Cheaper

Find out about new products

More choice of shops

Dislike shopping

Interesting

 

 

3.2.2. Disadvantages and risks of online shopping

 

Consumers are alert to the possible risks and disadvantages of e-commerce. Security risks are widely raised by people in the discussion groups, particularly the potential for fraud, disreputable traders, and the existence of hackers. These fears are often based on hearsay.

Other disadvantages include the inconvenience, for example when browsing takes too long, when there are problems with the lines or the Internet service provider (ISP), when things go wrong or when the transaction does not live up to claims or expectations. The impersonal and remote nature of online business is also cited as a disadvantage of e-commerce. The perceived advantages have to be balanced against the downside of using the Internet.

When clients cannot touch and physically assess goods is the main disadvantage. Concerns about releasing bank details and the possibility of fraudulent suppliers are also widespread

 

Main disadvantages are:

 

Cannot touch goods

Releasing banking details

Not trustful supplier

Releasing personal information

No personal contact

Unknown supplier

Not everybody has access to Internet

May be hidden charges

Delivery problems

Limited amount of information available

Difficult to use

 

 

 

3.3. Technologies of e-commerce

While many technologies can fit within the definition of "Electronic commerce," the most important are:

- Electronic data interchange (EDI)

- Electronic mail

- Internet

- World Wide Web

- Product data exchange

- Electronic forms

 

3.3.1. Electronic Data Interchange (EDI)

EDI is the computer-to-computer exchange of structured business information in a standard electronic format. Information stored on one computer is translated by software programs into standard EDI format for transmission to one or more trading partners. The trading partners’ computers, in turn, translate the information using software programs into a form they can understand.

3.3.2. Electronic Mail

Messages composed by an individual and sent in digital form to other recipients via the Internet.

3.3.3. Internet

The Internet is a decentralized global network of millions of diverse computers and computer networks. These networks can all "talk" to each other because they have agreed to use a common communications protocol called TCP/IP. The Internet is a tool for communications between people and businesses. The network is growing very, very fast and as more and more people are gaining access to the Internet, it is becoming more and more useful.

3.3.4. World Wide Web

The World Wide Web is a collection of documents written and encoded with the Hypertext Markup Language (HTML). With the aid of a relatively small piece of software (called a "browser"), a user can ask for these documents and display them on the user’s local computer, although the document can be on a computer on a totally different network elsewhere in the world. HTML documents (or "pages," as they are called) can contain many different kinds of information such as text, pictures, video, sound, and pointers, which take users immediately to other web pages. Because Web pages are continually available through the Internet, these pointers may call up pages from anywhere in the world. It is this ability to jump from site to site that gave rise to the term "World Wide Web." Browsing the Web (or "surfing the Net") can be a fascinating activity, especially to people new to the Internet. The World Wide Web is by far the most heavily used application on the Internet.

3.3.5. Electronic Data Exchange

Product data refers to any data that is needed to describe a product or service. Sometimes that data is in graphical form, as in the case of pictures, drawings and CAD files. In other cases the data may be character based (numbers and letters), as in the case of specifications, bills of material, manufacturing instructions, engineering change notices and test results.

Product data exchange differs from other types of business communications in two important ways. First, because graphics are involved users must contend with large computer files and with problems of compatibility between software applications. (The difficulty of exchanging CAD files from one system to another is legendary.) Second, version control very quickly gets very complicated. Product designs, even late in the development cycle, are subject to a great deal of change, and because manufacturing processes are involved, even small product changes can have major consequences for getting a product into production.

3.3.6. Electronic Forms

 

Electronic forms are a technology that combines the familiarity of paper forms with the power of storing information in digital form. Imagine an ordinary paper form, a piece of paper with lines, boxes, check-off lists, and places for signatures. To the user an electronic form is simply a digital analogue of such a paper form, an image, which looks like a form but which appears on a computer screen and is filled out via mouse, and keyboard. Behind the screen, however, lie numerous functions that paper and pencil cannot provide. Those extra functions come about because the data from electronic forms are captured in digital form, thus allowing storage in data bases, automatic information routing, and integration into other applications.

 

 

3.4. The future of electronic commerce

 

Many people conclude that the impact of electronic commerce on our life will be as much as, and possibly more than, that of the Industrial Revolution. The Internet will get much more integrated into the average consumer’s life. People will spend more time online, and the Internet will gradually just from the PC to wireless devices and television.

Consumers will be more experienced and comfortable using the Internet for transacting commerce. Security, privacy protection, and trust will be much higher, and more support services will simplify the transaction process. Legal issues will be clarified, and more and more products and services will be online at reduced prices. Electronic commerce is still a new frontier and the future of electronic commerce is unlimited expect by the limitations of our imaginations.

 

3.5. Conclusion

 

Electronic Commerce (or Electronic Business) is a phrase that means many things to many people and agreement on a standard definition can be hard to find. It is fair to say that the vast majority of traditional business transactions can be readily adapted to electronic media.

On the other hand Electronic Commerce is open, spontaneous, and relatively inexpensive to implement. It is scalable and flexible. Thus it has become much more than an improved version of EDI. Because of the development of the personal computer, networking technology, the growth of the Internet and the development of HTML and the World Wide Web, a whole new set of capabilities and services have evolved in the still very early days of the Digital Age. Electronic Commerce includes, among other things, e-mail, customer service, on-line research, and interactive consumer participation in business transactions.

Electronic commerce is an innovative force that will liberate industries and people from the limitations placed by physical elements, time and space on traditional economic activities.


 

4. THE DEVELOPMENT OF ELECTRONIC COMMERCE IN ESTONIAN AUTOMOTIVE BUSINESS.

 

4.1. Sector overview

 

4.1.1. Sector size

 

Automotive retailing and services (excluding fuel) in the Estonia generates an annual turnover of around 2 billion EEK. However, the sector is highly fragmented, containing an estimated 500 businesses.

 

4.1.2. Sector Structure Overview

 

The majority of the 13000 new car sales (2002) are sold by car dealers, who operate 70 sales outlets.

 

The motor trade also retails around 15000 used cars each year, to a total value of 2 billion EEK. Around 10% of used car units (but a higher proportion in terms of value) are sold by dealers, the remainder (mostly small) used car traders.

 

The Estonian after-market, covering routine maintenance, mechanical and body repairs, parts and accessory sales, has an estimated annual value of 750 million EEK. This is also spread across a large number of mainly small businesses.

 

Also relevant to the car distribution sector – but not always counted as directly part of it – are the several businesses providing finance, insurance and other services.

 

 

 

4.1.3. Estonian Distribution Sector in International Context

 

The car distribution sector in the Estonia is broadly similar in structure to those in other advanced economies. Compared to other European markets, the Estonia is distinctive in having:

 

- A very large leasing sector – nearly 50% of new cars are sold as leased cars.

 

- A large used car market – 9 out of 10 Estonia drivers have a car bought second hand.

 

- In Estonia also there has a very advanced after-market wholesale structure.

 

- A higher population of new car dealers, for the size of the market, compared with countries such as Finland or Sweden. The Estonia has a large number of dealer groups controlling over 60% of new car outlets and a higher proportion of total sales.

 

 

4.1.4. New Car Distribution Infrastructure

 

 

There are over 40 major brands of new cars on sale in Estonia. Each car manufacturer operates a national distributor for its brand(s), responsible for wholesaling new cars and parts, plus a wide range of marketing and other brand support functions. The majority of these distributors are owned by the car manufacturers, although some independents and joint ventures remain. New cars are sold, on consignment, to dealers within the network for the car brand. 60% of all dealers’ outlets are exclusive to one brand. Estonian dealer networks are almost entirely single tier, contrasting with Finland market which still have large population of independent (mainly rural) sub dealers who obtain supply through the main dealer.

 

Nominal dealer gross margins (the difference between wholesale and recommended retail prices) have been steadily reduced in recent years and are now typically 5-10%. Actual gross margins retained by dealers are more like 5% after discounts but including manufacturers’ bonuses. Most Estonian dealer new car sales departments (including finance commissions) make a small loss after all relevant overheads are taken into account. Most Estonian dealers therefore rely on used cars and after-sales to generate profits.

 

4.1.5. After-sale

 

The independent after-sales sector in Estonia is well developed. In addition to the many independent service and repair workshops, it is also well covered by nationally branded fast-fit, tire and service chains.

 

Retention of service business by new car dealers declines rapidly after the expiry of the standard warranty, which has extended to 3 years for many makes.

 

Critical to the functioning of the after-market is the supply chain for replacement parts. The complexity of part numbers, even for a single car brand, means that repairers should aim to hold minimal stocks of all except the most fast moving parts. New car dealers ordering parts on the manufacturer are increasingly using daily (or more frequent) deliveries. Independent parts wholesalers also hold a significant share of the market.

 

The accident and repair sector (body shops) is heavily influenced by their dominant customers, the insurance companies. Here, speed of repair approval is an additional factor in addition to parts supply and cost control in a sector where margins are very tight.

 

Across Estonia after-sales sector, IT has become increasingly important, especially in the parts supply chain and dissemination of technical information. It is also playing a larger role in the management of customer databases and customer relationship management (CRM).

 

4.1.6. Smaller Dealers and Dealers Groups

 

The level of e-commerce readiness among the smaller groups and smaller dealers is very low, even when it comes to B2C activity. Only 70% of dealers have web sites. Dealers, considering their traditional key role to be to sell within their territory (in which view they have been encouraged by their manufacturers), have often seen the development of e-commerce as an additional cost rather than a benefit.

 

4.1.7. Service and Spare-parts Companies

 

Due to its size spare parts sector in Estonian automotive business is most significant. Electronic commerce readiness is at a reasonable stage, with both wholesalers and independents looking at the implications for both service and parts facilities, on B2B level.

No one dealer, including the larger groups, is able to offer on-line service booking as yet: the back-office processes are not in place to facilitate such an offering. Parts companies, however, are successfully making the on-line transition. Parts on-line ordering, payment and return procedures are commonplace to improve customer visibility and response times.

 

4.2. The evaluation of Car Web Sites in Estonia

 

The increasing use of Internet, the media channel with 300 000 users in Estonia has become very important and significant marketing tool also among Estonian car-selling companies.

From technological point the possibilities of marketing in Internet may be divided into 2 main channels: mailbox & web pages.

The advertisements arriving into the mailboxes (e-mails and news) are relatively modest compared to web marketing – which may be the one that Estonian car-sellers consider Internet marketing. All main Estonian car-sellers and car brands are presented in Internet.


 

Studied websites:

http://www.amservauto.ee/

Toyota

http://www.ascar.ee/

Opel

http://www.auto.ee/itaaliaauto/

Alfa Romeo, Fiat, Lancia

http://www.bmw.ee/

BMW

http://www.chrysler.ee/

Chrysler

http://www.daewoo.pleione.ee/

Daewoo

http://www.esmaauto.ee/

Mazda

http://www.ford.ee/

Ford

http://www.helkama-auto.ee/mitsubishi/

Mitsubishi

http://www.helkama-auto.ee/skoda/

Skoda

http://www.honda.ee/

Honda

http://www.hyundai.ee/

Hyundai

http://www.japauto.ee/

Seat, Suzuki

http://www.kia.ee/

KIA

http://www.kommest.ee/

Peugeot

http://www.lada.ee/

Lada

http://www.mercedes-benz.ee/

Mercedes Benz

http://www.nissan.ee/

Nissan

http://www.renault.ee/

Renault

http://www.revalauto.ee/

Audi

http://www.saksa-auto.ee/

Volkswagen

http://www.subaru.ee/

Subaru

http://www.veho.ee/citroen/

Citroen

http://www.vikingmotors.ee/jaguar/

Jaguar

http://www.vikingmotors.ee/saab/

Saab

http://www.volvo.ee/

Volvo

 

As evaluating the Estonian car retailers we used following criteria in 10-point scale (see table 1.)

 

 

 

XXX

 

 

 

Table 1: Evaluation conclusions.

 

Design – what kind of artistic design is used?

Speed – the speed of connection and how fast is web site for user.

Simplicity to use – how easy it is to find the useful information, how logically the site is built (understandable).

Information – can the user find answer to every question, that can arise during searching for information and car-buying process (news, leasing opportunities, technical data etc.)

Dynamical solutions – if the web master has used every possible mean of programming to make using the web page more comfortable and interesting (for example price-calculator and views from different angle).

Prices – are all useful prices brought out.

Promotion – how different means of marketing are used (for example special offerings, bargains, campaigns, and best selling arguments.

 

As our analysis show the biggest amount of car retailers have built their web-pages whit quite cheap resources trying to fit in too much information about company and prices of products.

Although most of the web pages are with quite stylish design and with logical construction, are most of them difficult for the ordinary users. One of the reasons may be that sometimes they are to slow, the users has to wait too long for the useful information and pictures and they may quit searching.

Sometimes Estonian web-masters do not know how to most efficiently use the possibilities of making the site more dynamical and more creative.

During the research we found more dynamical and interesting solutions as:

Completing (putting together) the cars according to the self-chosen engine, additional equipment, color etc.

By just one click optional color changes

 

Some web pages as retailers of xxx, xxx, xxx and xxxx have used the possibilities of Internet better than other. We liked the amount of dynamical solutions, informativeness, using of marketing opportunities. They have brought out best offerings at the moment, additional values of new models, best selling arguments. These web pages are also updated frequently.

But sometimes the speed of displaying is too slow. In general the pictures are too small and do not bring out the best features and differences of different brands. It would be nice to see besides outlook also photo from inside, different parts, from several viewpoints etc. It will make the page more interesting attractive and gives the better picture of the whole car. Now the costumer has to go to the shop to get right picture.

The pages of xxx, xxx and xxx were the worst, these showed only the car prices, different engines and additional equipment. These pages looked like the price-lists with pictures. And these pages were done several years ago and not updated much since then. It seems that these retailers do not think Internet as significant marketing tool.

As we compare the result of our subjective study with the top-10 list of Estonian car selling companies (see attachment 2) we can see that there are not great differences. Only two brands were different and did not fit in the two top 10-s.

Different strategies of retailers were seen also from their web pages. These who are focusing on campaigns and promotion find to use the same style in their homepages also. These, who want to stress their image, put more attention to the design and attractiveness of their web pages.

 

List of Estonian most sold cars in 2002.

Peugeot

Toyota

Volkswagen

Nissan

Mazda

Citroën

Honda

Lada

Opel

Ford

Suzuki

Hyundai

Renault

Mercedes-Benz

Kia

Volvo

Seat

BMW

Chrysler

Audi

Fiat

Skoda

Mitsubishi

Subaru

Daewoo

 

4.2.1. Analyze of e-shoppers

A survey of US e-shoppers intending to buy a car was made in 2000 (Source: Friedman Swift Associates 2000). Its focus was to find out what car buyers wanted on a dealer web site:

 

%

Price                                                               92

Pictures of cars                                               75

Options available                                             79

On-line trade-in value calculation                     60

On-line deposit                                               42

On-line credit application                                 44

MRSP/dealer invoice comparison                    76

List of used cars in stock by model                  64

List of new cars in stock by model                   73

Inventory                                                        79

Financing pre-qualification                               46

Extended warranty                                          59

 

 

Another major finding from the study concerned dealer response times to customer enquiries:

 

Acceptable Response (%)       Experienced Response (%)

Less than 1 hour                      13                                           9

Less than 6 hours                     17                                           16

Less than 1 day                       52                                           31

Less than 2 days                      12                                           12

Over 2 days                            6                                             14

Never                                      0                                             19

 

 

 

4.3. The evaluation of B2B Sites in Estonian automotive business

 

The development of B2B sites in Estonian automotive business can be explained by three main targets; cut transaction costs, improve efficiency, and expand trading horizons. Examples of automotive business in the B2B e-commerce are described in the following table. The features describe what has been observed by browsing through the websites.


 

Table: 1 Automotive Companies using B2B web sites

 

Automotive Companies using B2B e-commerce

Company and web site

Features

Online stock situation

Resellers net price

Information about other stocks

Transport options

Login password

Optional products offering

Online ordering

Ordering history

XXX

X

X

X

X

X

X

X

X

XXX

X

 

X

 

X

 

X

 

XXX

X

X

X

X

X

X

X

X

XXXX

X

 

 

 

X

 

X

X

XXX

X

 

 

X

X

X

X

X

XXX

X

 

 

 

X

 

X

 

XXX

X

 

 

X

 

 

X

 

 

X

 

 

 

XXX

 

X

 

X

 

 

X

 

X

 

 

 

X

 

X

XXX

X

 

 

 

X

 

XXX

Opening his new site

XXX

Site closed due the change of owner

 

 

 

These web sites are having significant impact on business-to-business operations because they provide a more-efficient and cost-effective means of conducting trade. These sites automate and streamline multiple steps of the buying process. For example, buyers can save significant time and money on simplified product searches through content-rich online catalogues. Automated transactions save on communication and people costs, and result in fewer ordering errors not surprisingly, however, these and other benefits are fast becoming mere prerequisites for competition.

Another factor underlies the escalating importance of B2B sites - the economy-wide shift toward competition among commerce chains. Commerce chains (integrated networks of companies that collectively bring products and services to market) are replacing individual companies as the optimal unit of competition.

The most successful B2B sites are expanding their capabilities from the ability to make transactions and support to encompass a myriad of value-added services.

 

Companies also must assemble and integrate the optimal mix of value-added services. This mix should be defined by what is most compelling to buyers and sellers, based on industry-specific or product-specific factors: content, community, logistics support, and credit all assume different levels of criticality in different verticals. The value and valuation of B2B sites will be set by the breadth, relevance, and seamless integration of their services.

Whether participating in, building, or buying a B2B web site, companies must remember that technology is actually the easy part. Disciplined yet creative business planning will be required to select and leverage internet market opportunities, and as B2B sites continue to evolve, they will change the nature of competition, challenge the boundaries of individual companies, and redefine the rules of business-to-business commerce.

 

4.4. The analyze of web-stores in Estonia

 

Web-stores allow people to seek and purchase cars or car spare parts through specific web sites.

B2C electronic commerce is more about retail activity on the web where activities such as online shopping are common. In order to be more competitive against the increasingly popular B2B sites, B2C sites must take big step to become also so popular.

 

There are only two companies in Estonia who are promoting themselves as online traders:

www.xxx.ee

www.xxx.ee

But even they do not have proper online catalogue or any price visible in their page.

They do not offer also other features such as online ordering or payment transactions.

These types of sites do not sell directly to the consumer; they are just additional promotion for their outlet.

Also some regular shops are having query form in their web sites

http://www.XXX.ee

http://www.XXX.ee

http://www.XXX.ee

but turnover via these sites are not worth to mention.

 

4.5. Conclusions

 

Electronic commerce on the Internet offers tremendous market potential for today’s businesses in business-to-customer transactions. It is mostly customer-oriented because companies want to satisfy customer needs. Although most of the attention and activity in e-commerce on the Internet has been in business-to-business transactions, but in the future an increasingly large part of the market will involve business-to-customer transactions.

Business-to-consumer electronic commerce may bring significant benefits to consumers and industry. Risks for conducting transactions on the network remain. Technologies are being developed and tested to improve the environment for transactions over the Internet. Technological development is not sufficient, however.

Some companies observed that there are very few success stories which can be used to demonstrate the benefits of this new medium.

This view is affected the acceptance of electronic business.

The actual rate of e-commerce adoption across the sector can be described as slow to progressive. Most companies have not made the giant leap into e-commerce, believing that the uncertainty in the current market makes it difficult to make investments in technology and systems which are outdated practically as soon as they are installed and rolled out.

Those companies which have decided to take a lead have taken an evolutionary approach towards e-commerce adoption.

Instead, most parties have opted for incremental change – building e-business systems which connect to existing legacy systems such as Fast Text Protocol (FTP) and EDI. This has worked well to date with much of e-commerce activity focusing on B2C initiatives.

Many companies are purposely opting to be laggards as opposed to pioneers but, as the sector moves slowly towards focusing on B2B closed for public systems and processes, the need to implement the latest technology will become ever greater.


 

5. VIRTUAL STORE

 

This chapter is intended to give a general technical and functional overview of the online web store implemented as part of this work. Next chapter deals with the architectural overview of the product.

 

5.1. Architecture of e-store infosystem

 

The www.autoosad.ee e-commerce system is designed to provide affordable, flexible and extensible e-commerce solutions for selling car spare parts via internet. System uses Microsoft’s Active Server Pages (ASP) written using the VBScript scripting language. The ASP scripts are hosted on Microsoft’ s Internet Information Server (IIS) and the ASP scripting engine included with the Windows NT/Windows 2000 Server platform. A Data Source Name (DSN) that can be configured on the IIS web application server provides database connectivity via Open Database Connectivity standards (ODBC).

 

 

 


User Interface and navigation

 


http response                                                  http request

 

 


                                           Application Logic                        Administrative Interface

 

 

 


                                   Database                                             Payment Module

 

 

Architecture of infosysteme

5.1. Database structure

 

Database is a collection of information organized so that computer program can quickly select desired pieces of data. Database can be named as an electronic filing system.

 

Application maintains persistent data in database tables, organized according to the functional areas of the application. Next figures illustrate the database schemas. The application uses this database schema to maintain user information and track orders for products. Thus, there are three areas for which data must be maintained: product, order information and user information.

The car information, product information, product category information and transport fees represent the business’s product catalog. Also each product has an associated entry in the inventory table that represents availability for that product.

 

In administrative database the account table maintains customer information, one record per customer, with information such as customer name, e-mail, phone number, and customer address. Finally, there is an order and shopping chart tables for information such as bill-to address, total price of the order and transportation. The orders table is linked to counter and payers tables. Each item in an order is stored in a separate record on order table, which contains the quantity ordered and price and also there is indicated total transport cost. Also there is separate database for storing queries information.


5.2. Web site design requirements

 

Site design is an important element for consumer satisfaction. Design and simplicity of use can enhance or ruin the experience of buying or browsing online.

 

Other issue concerning design is download time: An appropriate image is able to communicate a great deal of information to viewers in a few seconds. Some companies have even incorporated sound, video, and animation into their web sites to attract the attention of viewers. However, these elements are also the primary obstacle to rapid Internet access. To achieve greater download speed, some users turn off the graphic capability of their browser. This unique option gives new challenges to marketers. First, consumers have an unprecedented level of control over the style and content of marketing messages presented on the page. Second, if consumers chose to view a Web page in its entirety, they may encounter a seemingly endless wait. These two challenges cannot be ignored while developing web sites for marketing purposes. What web designers are striving to find out is the equilibrium of the number of graphic and other peripheral information elements and the degree of annoyance of waiting, which is highly qualitative rather than quantitative and influenced by a large number of factors.

 

Chosen screen design

 

5.3. Functionality model

 

The www.autoosad.ee e-commerce system provides the base functionality needed for a successful e-commerce model as well as additional features

 

This model represents every element that is needed to allow a customer to search and view detailed information about a automotive products, add items to a virtual shopping cart, make decisions about and payment type, have their order processed and then receive confirmation, both visually and through email, that their order was completed successfully.

 

5.3.1 Customer technology

 

Search for products

Costumer can use the included search functionality of www.autoosad.ee to allow searching for catalog items by category or simply browsing full list of products for his/her car. A customer can also click on a link to get details about a particular product (picture/manufacturers home page).

 

Add products to the Shopping Cart

As a customer is shopping on a www.autoosad.ee web store, they can add products to their virtual shopping cart along with a quantity they need. This data is persisted in the www.autoosad.ee database so that when the customer is ready to check out, the contents of their cart can be retrieved, totaled and presented to them for payment options.

 

For identification of costumer system is using cookies. Netscape 3.0 or Microsoft’s Net Explorer 3.0 has what is called a “cookie function”. This function registers user. When user is shopping the cookie function stores information about purchases.

 

Clear purchase process

 

Unlike many other online shops, www.autoosad.ee purchasing process is very straightforward. It consists of free steps, each clearly outlined and begins once all the items have been placed in the shopping cart. The first step is for the customer to select product from dynamic catalogue. During the second step the customer have to add selected item to the shopping cart. In the third step the customers identify themselves and chooses the payment method. Different options are proposed, so that everybody can find a suitable. At any point it is possible to change any information already entered what products are in the shopping cart, and even cancel the order.

 

E-marketing

 

To the system is included also option for sending promotional mail to all customers contained within the web store’s customer database.

 

Eesti Post real time shipping rates

www.autoosad.ee provides a server side calculation of shipping rates. All products have their personal weight and total weight is also identified in shopping chart for calculating actual transport cost directly to costumers home or place he/she can choose from any part of Estonia.

 

Inventory updating

www.autoosad.ee automatically updates the inventory to reflect the available stock availability from the suppliers.

5.4. Tests

 

The system was tested for both functionality and performance. The functional testing focused naturally on verifying the correctness of the system and that it is constructed according to specification. The goal of the performance testing was to verify the adequate throughput of the system and to identify the possible bottlenecks and inefficiencies of the system.


 

 

6. www.autoosad.ee BUSINESS PLAN

 

6.1. Concept

 

As individual providing an innovative idea to enter the electronic business industry, I propose to open a car spare parts business called www.autoosad.ee. The purpose of this business plan is to work out proper e-commerce solution and offer customers possibility to buy wide range of car spare parts from Estonian internet environment and get in 3 years 0,5% market share.

 

To gain a better understanding of business idea, there have included a brief overview in the following segments: services provided, company, and products.

 

The market analysis conducted here is based primarily on secondary resources found through research. To better show the results of this analysis, the information has been divided into the following segments: Target Market, Competition, Competitive Advantage, and Promotion.

 

www.autoosad.ee will have high quality suppliers that will supply the different types of car spare parts. Each supplier will be responsible for supplying the requested amount needed, which will be arranged through the logistic chain of www.autoosad.ee.

www.autoosad.ee will have specific products available from each of the supplier.

 

The staff at www.autoosad.ee will mainly consist of, IT technician and customer service person.

 

Being an e-business, the www.autoosad.ee website is the main contact this business will have with its customers. The www.autoosad.ee site will be visually attractive and present its products in an organized and easy to navigate manner that makes it simple for customers to use.

 

www.autoosad.ee will offer its customers a variety of high quality car spare parts at a low cost. The company will specialize in:

Body parts

Car electric equipment

Brake parts, exhaust systems

Shock absorbers

Steering parts

Transmission parts

Engine parts

Fuel and air supply systems,

Batteries

Heating systems

Car accessories

 

6.2. Mission

 

Our mission is to offer an exceptional service to both wholesalers and consumers. This will allow wholesalers to obtain more revenue than by selling to a traditional retailer. This will also allow consumers to purchase high quality car spare parts at a lower cost with quicker delivery time.

 

6.3. Philosophy

 

www.autoosad.ee aims at providing a superior service by offering a large attractive variety of high quality car spare parts at a lower than retail cost. We intend to attract and keep new customers by promising a prompt delivery of car spare parts, which will be made possible through agreements made with wholesalers.

 

 

6.4. Benefits

 

www.autoosad.ee will provide benefits for both its customers and contracted wholesalers. Customers will be able to purchase quality car spare parts from reputable manufacturers, at a lower cost than at retail stores. The wholesalers will benefit because they will gain a new group of targeted customers, which will increase their sales and revenues. They will also receive more revenue per product than they would through retailers.

 

6.5. Uniqueness

 

www.autoosad.ee is an e-business that offers its customers a unique service. It is the first online car spare parts website that provides a service of quick delivery to its prospective customers. www.autoosad.ee is also unique in the aspect that customers can check current inventory totals in a safe and protected manner. Our company is distinctive from others because of the short, one to two day delivery time, which is unmatched by other car spare parts stores.

 

6.6. Company overview

 

To gain a better understanding of company, here is included a brief overview in the following three segments: services provided, ownership, and location.

 

 

6.6.1. Services Provided

 

www.autoosad.ee will be providing a direct service to its customers. The company will not own the car spare parts; instead the car spare parts offered on our site will be contracted with the wholesalers to be featured on our site. The wholesalers will store and retain ownership of the demanded products until the time of purchase by the consumer. www.autoosad.ee will be responsible for delivery.

 

6.6.2. Osaühing (Limited Liability Company).

 

www.autoosad.ee will be an osaühing (OÜ). This was chosen due to www.autoosad.ee’s staffing structure, current funding situation, and limited capital. It is needed also for getting domain name autoosad.ee

 

 

6.6.3. Location

 

www.autoosad.ee will operate from virtual office at sales persons home.

 

6.7. Market Analysis

 

The market analysis we conducted is based primarily on secondary resources found through research. To better show the results of this analysis, the information has been divided into the following segments: Target Market, Competition, Competitive Advantage, and Promotion.

 

6.7.1. Target Market

 

In 2002, there were approximately 300000 cars owners in Estonia, who spend 800 million on car spare parts products. In dealing with a market where the increase in car sales has generated an increase in car spare parts sales, www.autoosad.ee plans to target its market to middle class car owners. People in this market have a higher potential and access to internet to purchase quality car spare parts needed in a shorter period of time.

 

6.7.2. Competition

 

The car spare parts business over the Internet has possibility to grow rapidly. As sales boom, more e-businesses jump at the opportunity to receive a portion of those revenues. These companies could be seen as our competitors even they differ from our website in that our business focuses on providing a service, rather than a product. www.autoosad.ee is a service, which forms a marketplace for car spare parts that customers are interested in buying.

 

6.7.3. Competitive Advantage

 

Our focus on the prompt delivery and low priced car spare parts makes our service extremely valuable and is our main competitive advantage. Other companies that sell spare parts give a five to seven day delivery time. With our real-time updates of availability of our goods, we can guarantee an impressive one to two day delivery for every product found on our website. Because of our unique relationship with our suppliers, we will be able to offer everyday low prices for the consumers as well as increased revenue for the suppliers.

 

6.8. Promotion

 

In the first year of operation, www.autoosad.ee can not allow big investments to advertising. But ww.autoosad.ee must establish its name within the market and to promote the business to its selected target market. As 80% of internet user will find their target pages via search engines it will be also our main cannel.

Next years the advertising expenditures increase accordingly to our turnover.

 

In the next years www.autoosad.ee will prove to the contracted suppliers that the products will sell and that there is a market for them. www.autoosad.ee will accomplish this through extensive advertising in specific magazines and selected television programs. www.autoosad.ee also realizes that there is a large market interested in the car spare parts business. The car spare parts industry has approximate total revenue of about 800 million, which is another reason to believe that these products will sell.

Spending for advertising is one aspect that we cannot afford to minimize. This promotion process is vital for the success of www.autoosad.ee.

www.autoosad.ee has allocated roughly 100000 EEK for Internet advertisement for the next year. This amount will be adjusted in each following year according to the results of the previous year. www.autoosad.ee will be located on all of the major search engines, and can be found by typing in certain key words. www.autoosad.ee would most likely place banners, or have links on related automotive sites. By browsing these sites use will be able to click on the banner or link and visit www.autoosad.ee’s homepage.

 

6.9. Brand protection

 

In the virtual e-economy a powerful brand is essential. Something that a business plan is not likely to acknowledge is the fact that a recognizable domain name (www.autoosad.ee) can set the business apart from the competition. However, an early domain name and trade mark registration is essential to build a solid brand.

From a branding perspective, domain names and trade marks serve a similar purpose: providing a personal identity. A business plan that misses these nuances is a short-sighted one as these issues are as key to the success of the company as its operational activities.

 

6.10. Suppliers

 

www.autoosad.ee will have high quality suppliers that will supply the different types of car spare parts. Each supplier will be responsible for producing the requested amount needed, which will be arranged through the sales person of www.autoosad.ee. The following are the wholesalers www.autoosad.ee will also contract with:

Helvar Merca AS                    http://www.helvarmerca.ee

Arwidson Balti AS                   http://www.arwidson.ee

Balti Autoosade AS                 http://www.autoparts.ee

AS Balti Laager                       http://www.baltilaager.ee

AS Salome                              http://www.automaailm.ee

S.V. Ärigrupi                    http://www.lakiauto.ee/

HTS Auto AS                         http://www.aave.ee

AS Automeister                       http://www.automeister.ee

AS Rekrol                               http://www.rekrol.ee

Atoy Eesti AS                         http://www.atoy.ee

OÜ Remonde                          http://www.automarket.ee

 

 

6.11. Staffing Analysis

 

The staff at www.autoosad.ee will mainly consist of free lanced IT technician, and customer service associate. Listed below is a projected breakdown of www.autoosad.ee's staffing for the first three years.

 

6.11.1 First year

 

In the first year, the founders will be performing many tasks that do not relate to upper management. Founders will be the managing partner and will be responsible for the overall running of the business. Later www.autoosad.ee will hire one salesperson to help in logistics works. One free lanced IT technical analyst will be hired to perform all technical problems and updates. In order to assure that the company is starting to structure the business correctly, a Human resource consulting firm will be hired to help with the business. In addition, a book keeping will be outsourced to deal with all legal issues when starting a new business.

 

6.11.2. Second Year

 

The structure of the second year will rely on the amount of revenue www.autoosad.ee will receive. If the amount is adequate for expansion, the entire staffing structure will be re-constructed. Founders will be appointed as managing director. The new departments may consist of Human Resources, Sales, Technical, Marketing/Advertisement, and Finance. In each of the departments, there will be a minimum of two employees. One of the employees in each department will be as a sales assistant. They must also have a focus in the department they are hired in. A department may have more than two employees depending on the tasks that need to be accomplished.

 

6.11.3. Third Year

 

In the third year www.autoosad.ee will hire a managing director to assist in the running of the business. If there is a substantial amount of expansion, new departments will be added to the business. New experienced personnel will be hired to fulfill these positions. Additional employees will be hired as needed.

 

6.12. Customer Service

 

 

Customer Service will be the only part-time position available at www.autoosad.ee. One customer service person will be hired to answers phone calls and any basic questions a customer might have. He/her will direct any questions they cannot answer to the suppliers.

 

Since there are many different product groups, customer service must be highly trained. www.autoosad.ee does not expect many complaints, due unique database they have. With expansion of the business there will be new customer service personnel as needed.

 

 

6.13. Website

 

 

Being an e-business, the www.autoosad.ee website is the main contact this business will have with its customers. The www.autoosad.ee site will be visually attractive, present its products in an organized, and easy to navigate manner that makes it simple for customers to use.

 

A webdesign firm will be outsourced to design the website. It will be maintained by an IT technician.

 

The site will use a secure ordering system to ensure the privacy of the customers. Payment will be made by use of major banks in Estonia.

 

6.14. Products

 

www.autoosad.ee will offer its customers a variety of high quality car spare parts at a low cost. www.autoosad.ee will specialize in all main car spare parts groups (see list upper).

 

6.15. Delivery

 

One aspect that separates www.autoosad.ee from its competitors is its delivery time. The products will be shipped to the customers by Eesti Post within a one to two day period. www.autoosad.ee will be able to provide this prompt delivery because the products are already in one of supplier’s warehouse and ready to be shipped upon ordering.

 

6.16. Guarantee

 

www.autoosad.ee will offer its customers a one year guarantee. If for some reason the customer is unsatisfied with his or her product, they may ship it back to the wholesaler at no cost. A new item will then be sent to the respected customer within a one to two day period after the wholesaler receives the returned goods.

 

6.17. Finance Prognosis

 

6.17.1. Revenue

 

Annual revenue will be gathered only through the sales of car spare parts. This main total for revenue consists of the number of purchases multiplied by the average price (projected at 234244 EEK) multiplied by commission (30 percent).

 

6.17.1.1. First Year Revenue

 

As there is contracts with suppliers where average payment term is 30 days from date of invoice and also there is made pre payment from costumer side there and www.autoosad.ee is not going to keep any stock in his location in first year it is very sure that www.autoosad.ee is not going to have any loss. Based on exceptions www.autoosad.ee will realistically obtain 234244 EEK in revenue the first year alone. Depending upon how quick success comes for the company, our revenues can vary very widely. For further pessimistic and optimistic revenue views for the first four years see budget tables.

 

6.17.1.2. Second Year Revenue

 

The second year revenue will be based on an increase of units is sold. It may be sold approximately two times more than first year. Given these approximations, www.autoosad.ee will acquire about 316230 in revenue, which is an increase in revenue of 26 percent.

 

6.17.1.3. Third Year Revenue

 

By the third year, name www.autoosad.ee will be widely known and it will have more suppliers (also manufacturers) to contract through. In this year www.autoosad.ee will achieve revenue of around 426910. This projects an increase in revenue growth of 26 percent.

 

6.17.1.4. Fourth Year Revenue

 

By the fourth year, name www.autoosad.ee will be widely known and it will have more suppliers (also manufacturers) to contract through. In this year www.autoosad.ee will achieve revenue of around 576329. This projects an increase in revenue growth of 26 percent.

 


 

6.17.2. Sales prognosis

 

Business plan will predict following sales for first year (in EEK)

 

 

and in figures

 

Month

1

2

3

4

5

6

7

8

9

10

11

12

Monthly sales

35000

40250

46288

53231

61215

70398

80957

93101

107066

123126

141595

162834

 

As we can see, sales will rise monthly about 13%
Predicted sales for next 4 years are:

Year

1

2

3

4

Year Sales

1015058

1370329

1849944

2497424

 

In every year sales will rise approximately 26%

 

All sales prognosis are made in basis of following data:

Number of internet connections will rise about 20% annually

GDP will grow about 5% annually

Car spare parts sale will rise about 7% annually

 

 

6.17.3. Projected First-Year Budget for www.autoosad.ee

 

Start-up Costs (in Estonian kroons)

 

Furniture/appliances (desks, tables, misc.)

10000

Installations (for utilities, computers, etc.)

2000

Equipment (printer, copier, scanner/fax, etc.)

10000

Web Site: Designer

15000

Legal: Negotiation, Contract, Misc. Costs

5000

Misc. Start-Up Costs: (search engine, etc.)

10000

 

 

Total Start-Up Costs:

52000

 

 

On-going Costs: (monthly)

 

 

 

 

Year1

Year 2

 

Computer leasing

 

500

 

 

 

Copy machine and printer

 

300

 

 

 

Server rent

 

200

 

 

 

Utilities, Phone

 

2000

 

 

 

Internet connection

 

500

 

 

 

 

total

3500

42000

 

 

Salaries:

 

 

 

 

 

Sales person

 

 

 

172800

 

IT specialist

 

6000

72000

72000

 

 

 

 

 

244800

total

Advertising:

 

 

 

 

 

Web

 

4500

54000

 

 

Magazines

 

2000

24000

 

 

 

 

 

78000

total

 

Transport expenses

 

1500

18000

 

 

Legal expenses:

 

500

6000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total On-going Costs (Monthly):

 

18000

 

 

 

 

(Yearly):

216000

 

 

 

 

First-Year Revenue

 

Sales: Commission (30% of purchases)

234 244

Total Revenue:

234 244

 

Total On-going Costs:

216 000

Total Start-Up Costs:    +  

52 000

Total First-Year Costs:

268 000

First-Year Loss:

-33 756

 

 

Projected Future Budget for www.autoosad.ee

 

 

Year 1

    Year 2

     Year 3

    Year 4

Costs:

 

 

 

 

Utilities:

42000

46200

50820

55902

Salaries:

72000

244800

269280

296208

Advertisement:

78000

93600

112320

134784

Transport expenses

18000

21600

25920

31104

Legal Expenses:

6000

6500

7000

7500

Start-up costs:

52000

0

0

0

Total Costs:

268000

412700

465340

525498

Increase in Costs:

 

35%

11%

11%

 

 

 

Year 1

    Year 2

     Year 3

    Year 4

Revenues:

 

 

 

 

Sales

1015058

1370329

1849944

2497424

Commission (30%)

234244

316230

426910

576329

Increase in Rev:

 

26%

26%

26%

 

 

 

Net Profit/Loss:

Year 1

    Year 2

Year 3

    Year 4

Total Revenue:

234244

316230

426910

576329

Start-up Costs:

52000

0

0

0

On-going Expenses:

216000

412700

465340

525498

Net Loss:

-33756

-96470

-38430

50831

Decrease in Losses:

 

-65%

60%

Making profit

 

 

6.18. Conclusion

 

www.autoosad.ee will provide its customers with high quality car spare parts at a low price, and in a short amount of time. This service provides an exclusive competitive advantage that is needed in this market. This business plan has outlined the goals of www.autoosad.ee, as well as its organization, staffing, growth potential, and financial feasibility. The primary obstacle to starting www.autoosad.ee is the capital needed for the start-up expenses and advertising.


SUMMARY

 

The aim of this study was to investigate the situation and trends of the Estonian automotive Web site market.

And main purpose was to implement proper electronic solution for the industry together with the business plan.

 

This work is divided in four main sections.

First, the Electronic Commerce definitions are analyzed and classified, to arrive to the final definition allowing to see the real value of the Electronic Commerce. Overview of business-to-business, business-to-consumer Electronic Commerce and the traditional value chain is given. Main conclusion was that Electronic commerce is an innovative force that will liberate industries and people from the limitations placed by physical elements, time and space on traditional economic activities.

After that short overview of the situation in Estonian automotive market is given, in order to show how different sectors are developed and how the Estonian situation compares to that of other developed countries. In this chapter there is also examined the future of Electronic Commerce. Main conclusions of this section is that most of the attention and activity in e-commerce on the Internet has been in business-to-business transactions, but in the future an increasingly large part of the market will involve business-to-customer transactions.

 

The third chapter as the main goal of the study is implementation of virtual store solution with use of theory presented in previous sections. Actual electronic store solution is shown in practice. This chapter is intended to give a general technical and functional overview of the online web store implemented as part of this work. This chapter also deals with the architectural overview of the product.

 

The fourth chapter is the www.autoosad.ee Business Plan.


 

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