E-commerce is an useful tool for various forms of businesses. It is defined as the use of electronic communications and digital information processing technologies in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals. In simple terms, it is the buying and selling of products or services over electronic systems such as the Internet and other computer networks.
In Singapore, more than 28% of Internet users visited e-banking sites in May 2001. Research by NetValue (an Internet measurement company), shows that the number of people engaging in online banking in Singapore has increased. According to the survey, two out of three visitors who visit the e-banking site will make an online transaction. All major banks in Singapore have ventured into online transaction. Hence, many businesses have followed and start to use B2C e-commerce due to the influence of the banks.
The purpose of this research project is to analyze an e-commerce website. Thus, we have chosen McDonald’s Singapore and McDelivery as our research subject.
2. COMPANY PROFILE
In addition to just providing fast food, McDonald’s main philosophy is to be able to satisfy customer’s needs and wants. They aim to ensure that customer is satisfied through their encounter at McDonald’s.“As you change and grow, we will be right there every step of the way, in touch with you, today and tomorrow.” – Extracted from McDonald’s Philosophy.
From humble beginnings in 1955, the first McDonald's franchise restaurant in Des Plaines, Illinois, USA took in US$366.12 on its first day of business. Hard work coupled with positive work ethics have finally paid of. In 2003, the company recorded over US $40 billion in worldwide sales, and looks set to achieve greater success in the cyber-years to come.
Currently, McDonald's Corporation is the world's largest chain of fast food restaurants. McDonald's restaurants are found in 119 countries and territories around the world and serve nearly 47 million customers each day. McDonald's operates over 31,000 restaurants worldwide, employing more than 1.5 million people.
Today, there are over 100 McDonald's restaurants across the island serve 1.2 million customers every week, since its opening of its first restaurant in 1979 McDonald’s is still working towards providing delicious and healthy meals for their customers and striking a balance diet towards selling fast food and health of their consumers.
3. WEBSITE PURPOSES
Due to the development of Information and Computer Technology (ICT) and the ever-increasing importance of e-commerce, like many other businesses, McDonald has set up ‘McDelivery’ that brings convenience to its consumer group. McDelivery acts as an intermediary between consumer and the main business. This would cut down manpower and resources needed for ‘Hotlines’ since ordering online through the system is more convenient. The website serves as McDonald’s advertising and information’s media of new events or products. This will lead to a significant cut in cost as the maintenance cost of the website and server is lower as compared to the conventional ways (i.e. TV ads, newspaper, etc) of advertising.
In January 2003, after a lawsuit claiming McDonald’s responsibility in children health problems and obesity, McDonald has since tried to increase its consumer’s diet awareness by revealing the nutrition value of the ingredients used on their websites, allowing them to have a better control of their diets. According to a news article from CBS news, U.S. District Judge Robert Sweet however dismissed the case, as he ruled that McDonald's fast food is not to be responsible if the consumers reasonably knew the potential ill health effects yet continuing in consumption of McDonald's products.
However in 2005, the fast-food industry was under pressure from consumer groups and the government to provide more nutritional information on its food products. McDonald's took action by printing the information on the packaging of their food. Hence, these actions have assured that the same incident will not be happening in the future.
4. KEY FEATURES
4.1. Business Model
During the Industrial Revolution Age (IR), McDonald is labeled as a brick and mortar organization as a physical shop is required to operate the business. To meet new business opportunity and environment in the Information Age (IA), McDonald advances into e-Business/ e-Commerce to offer 24/7 services and to meet the changing needs of their customers. In order to stay competitive, McDonald came up with a Strategic Information System (SIS) by introducing the McDelivery Ordering system 24/7 which gave them a strategic competitive advantage and enable them to differentiate the business among other fast-food competitors. Consumers are now able to order online anytime and the food will be delivered to their doorstep within an hour. This attracts a vast number of “late-night” customers for supper.
From the consumer’s point of view, McDonald in Singapore operates using a B2C virtual storefront business model since they are selling their products directly to consumers.
From the business point of view, McDelivery acts as an intermediary between the consumers and the main business using Business-to-Business (B2B) model by coordinating the orders made by consumers to nearest McDonald outlets. In addition, McDonald coordinated with various credit cards banks to facilitate the payment system of McDelivery.
McDonald’s uses its website for advertising and McDelivery as an ordering instrument due to the fact that it is almost impossible to sell instantly edible food to individuals online, unless it is a specialty product or selling common food ingredients in bulks. Therefore, we are not able to state that McDonald has revolved from a “flow of places” into a “flow of space” as they still required all outlets in Singapore to facilitate McDelivery online system.
In conclusion, McDonald adopts a combination of “brick and click” environment today to facilitate the business.
4.2. Payment SchemePayment comes in five simple steps:
STEP 1 : Verification – Agreeing to terms and conditions
STEP 2 : Confirm Delivery Information
STEP 3 : Pick order items and checkout
STEP 4 : Payment Information
According to the terms and conditions, only Credit card payment (VISA/MasterCard) is available for web ordering.
STEP 5 : Complete Order
4.3. Security
McDelivery chose VeriSign SSL (Secure Sockets Layer) verified by VeriSign Trust Network to secure e-commerce and confidential communications. During online transactions, the SSL Certificate enables encryption of sensitive information as each SSL Certificate contains unique, authenticated information of the certificate owner. A Certificate Authority will then verify the identity of the certificate owner upon issued. In addition, McDelivery has high-grade encryption, making information hacking almost impossible. By protecting customer data and payment details, such as credit card number and expiry date, this security system helps to prevent credit card fraud and builds up consumer trust.
4.4. Main highlights of the website
4.4.1. WHAT’S ON
This column publicizes the latest promotions and updates offered by McDonald's to the public. In this way, viewers gain access to the most updated information easily.
McDonald’s has made efforts in recent years to fend off health concerns associated with fast food consumption, and to stress the positive aspects of the ingredients it uses in its products, stating that:
- Its meat comes from farms that can guarantee the origin of its cattle and poultry.
- It uses only free range eggs.
- It has promised that it will not use ingredients from genetically-modified sources whilst there is consumer alarm over this new food technology.
In addition, the design of the McDonald website provides the following information:
- Nutritional Info: Provide a table on nutrition information of their food products.
- Food Quality: Uphold the strictest food safety and quality standards in their foods products to satisfy consumers’ needs and demand.
- Menu: Consumers are able to choose their diets using the website’s menu.
4.4.3. BE ACTIVE
McDonald was involved in Olympics, Olympics Day Run, TNP Big Walk and FIFA World Cup by helping people in identify fun, realistic ways to incorporate balance into their everyday lives.McDonald's Champion Kids was the recent special highlights representing Singapore in the Beijing 2008 Olympic Games. During the event, 3 girls took the roles of young journalist by blogging and sharing their experience through the McDonald's website. It was one of the important activities that McDonald's have done to show their active participation and support in the Olympic Games.
4.4.4. MCDELIVERY
Customer can now order the food they want online. Just a click and the food will be delivered to their doorstep conveniently. A surcharge of $3 is charged into the payment.
4.4.5. McCAFE
McDonald invested into the café industry by setting up McCafe. This gave consumer more variety of food and drinks. Customers can now enjoy a cup of beautifully-frothed Cappuccino with Big Mac value meal or grab a cheese cake from McCafe with an apple pie from McDonald.
4.4.6. GOOD WORKS
“Many see their local McDonald’s as a place to have a meal or a snack at a reasonable price. But we like to go beyond these dimensions and think of the broader role our restaurants play in the communities we serve. It's important to our customers, to our employees, to the company, and to the memory of our founder that we give back to the communities that give us so much”.
-Extracted from the website-
4.4.7. CAREERS
McDonald created job opportunities to people who are interested in establishing a career in the industry. Interested candidates might find a suitable job through the criteria, job expectations and benefits stated online. In additional, applicants can now apply for a vacant position conveniently by clicking “Apply now”. As stated by Ray Kroc, McDonald’s founder, “Take care of our people and the business will take care of itself”.5.1. Design of the Website
The website uses a simple layout, which makes it user-friendly for non IT savvy consumers. Main colours of McDonald’s logo are used to brighten up the website. And pictures are used to create a better visual effect.
5.2. Design Model of McDelivery Online System
5.2.1. Data Model – Customers’ particulars
When a Customer “A” orders a food product through the ‘McDelivery’, the system will prompt the customer for member registration. When a customer enters his/her particulars, the information will be captured into McDonald’s database and store for future use. When Customer “A” orders a food product again using this system, the information system will retrieve his/her information. This data system is created to remove replication keying of particulars by the customer.
5.2.2. Transaction cost Model
Contract: Customers have to agree to the Terms and Conditions before proceeding to the next step. This is an implicit agreement with McDonald's. Thereafter, consumers will have to register as a new member or login as an existing member.
Searching: Customer will proceed to ordering. Prices of food are indicated clearly in the system. In additional, customers may also request for their favorite sauces through the system. Customers will then checkout from the order screen.
Regulation: Customers will have to make payment using MasterCard or Visa. Once payment is done, an Order ID will be auto-generated by the information system for customers to track their order status.
Maintainance: McDonald will not do any refund if there is any cancellation of order.
5.2.3. Decision making Model
Assuming that McDonald has complete (perfect) information on the industry, they have to make rational decisions on some of the following:
Delivery surcharge and price of food: McDonald's pricing varies at different locations. For example, the same set of meal would cost cheaper in an outlet in polytechnics as compared to Orchard Road. Thus, McDonald's would have to consider factors such as rental to determine the prices at different outlets. But they have to ensure that ordering through McDelivery is reasonably priced to attract more potential customers.
Launching of McDelivery system and McCafe: Marketing researches are conducted before a new venture such as McCafe is launch. Factors such as competitors (starbucks, etc), concentrations (condense or fragmented), consumer’s need for coffee house and pricing are considered. These factors play a vital role in the feasibility and the success of the new venture.
Opening or closing an outlet: If an outlet is making a loss due to factors such as competition and demand in the area (e.g. Due to health conscious, higher concentrated elderly areas has less demand for fast-food), McDonald's should consider closing down the current outlet. Similarly, if the demand for fast food is high, they might consider opening another outlet nearby.
6. STRENGTH
Improve communication: Customers can check the website for the latest promotion, event, job opportunities and even ordering of fast-food. Every interaction with McDonald's could be replaced with just a click.
Reduce transaction cost: As mentioned above, with an online ordering system, manpower cost for McDelivery hotline is reduced. This would in turn reduce the cost of hiring customer service officers.
Increase dis-intermediation: With the launch of McDelivery system which is also known as a GroupWare, auto routing is facilitated. The order made will be processed by the system and sent to the nearest outlets. Hence, manual data entry will not be needed by the call operators.
Increase Reach: The access speed of the website is relatively fast. This shows that they have enough bandwidth and does regular maintenance on their server. It could also be due to the fact that they have little animations on the website.
With advance technology where speed is essential and broadband is common, most users are not able to tolerate slow servers. In addition, venturing into E-commerce allowed McDonald to keep in touch with their customers 24/7.
Reduced Information Asymmetry: Errors are greatly reduced when customers enter their orders into the system as compared to order taking by the call operator.
7. WEAKNESS AND RECOMMENDATION
Freshness of Food: Freshness of the food products are not ensured due to delivery time, as compared to being served at the outlet. McDonald’s might consider ways to shorten the delivery time.
Payment System: The system limited the number of consumers in the market. As currently, only credit card payment via VISA or MasterCard is accepted ordering through the system. Thus, in order to increase the number of consumers, McDonald might consider enabling payments to be made via a more widely used financial cyber-mediaries such as NETS or Debit Cards or even I-banking.
Weak usage of technology: McDonald’s Singapore did not fully utilize the use of its website. In the case of McDonald’s Canada, a nutrition calculator on the food products was created using on their Adobe Flash Player. In addition, information on ingredients used and nutrition value for the food products are also listed, these provides convenience for consumer who are health conscious.
In terms of Singapore’s website design, they might want to consider to use a more multimedia and interactive theme. The site is too verbose although they use many graphics to make it more attractive. Since e-commerce is opened to many forms of multimedia, it is recommended for them to include more substance to the site by introducing flash or animations to enrich the contents.
8. CRITICAL ANALYSIS OF THE SITE
McDonald Singapore has fulfilled the basic requirements of an e-commerce website such as providing adequate information and strong transaction security. In addition to that, McDonald has differentiated them by venturing into 24/7, and also creating a Strategic Information System (SIS), McDelivery which is also known as a GroupWare.
However, there is no “Wow” factor that attract consumer to use the online service continuously due to the limitation as discussed above. McDonald's might consider adopting a more interactive and attractive design and systems in order to better differentiate their products and increase market share in the fast food industry.
