Strategic Analysis of EuroPC
This report is to analyse the EuroPC Company EuroPC House, Cardonald Business Park, Cardonald, Glasgow, Scotland G51 4EB. The report is to analyse the competition, complete a value analysis and a website evaluation. On completion recommendations can be offered to EuroPC on how EuroPC can improve its online business. These sections will layout a brief description of refurbished computer industry, information about the EuroPC products services they provide and markets they serve. EuroPC Company description and some background information on refurbished computers.
1.1. Refurbishment of computers
In 2006 the United Kingdom government set out a policy Waste Electronic and Electrical Equipment Regulations 2006 (WEEE 2006). This policy was to reduce the amount electrical waste and to encourage reuse recycle and recover. This opened a new avenue for computer manufacturers to sell direct to the general public computers that are deemed as refurbished. A refurbished computer can be from a cancelled order that has never been shipped or redistributed it may have also been returned as a small part had been overlooked or even the seal is broken, by law they cannot be sold as new and any company reselling refurbished must declare where and by whom the refurbishment was carried out.
1.2. Company Description
EuroPC.co.uk is a private limited company with share capital registered with companies’ house, it first started trading as Chaplet systems (UK) Ltd in 1997, specialising in supplying computer systems whole sale, a change of direction occurred in 1998 and the company changed its name to VGL (disposals) Ltd, disposing of used electrical components, it changed again in 1998 to EuroPC and is trading in the United kingdom in computer hardware. EuroPC have a work force around 25 directly plus commission sales persons. They are certified partners for Dell, Hewlett Packard, Toshiba, and sell for Ubisoft software and are a Microsoft Authorised refurbished authority. (Companies House, 2003)On searching this company on the internet I discovered that their annual returns to companies’ house are all in the Microsoft name. (Fast Track 2003)EuroPC has been named by FastTrack as one of the fastest growing companies in Scotland and in 2002 named number 5 and in 2003 number 15 in the Sunday Times virgin Atlantic FastTrack 100 league table. In 2007 EuroPC were awarded ISO9001 (ISO 201) which is a trust symbol informing users they have a strongly focused business model.
1.3.Products and services
EuroPC claim to be UK’s largest outlet for clearance stock of personal computers, notebooks, laptops, servers for Home and Business use. Every product comes with a full warranty, lowest price guaranteed, next day delivery as standard and a 30 day money back Guarantee. EuroPC offer a free phone access for technical support. EuroPC also offer Cisco Showcase for business solutions.
EuroPC sell business to business and also business to consumer, They specialise on home or business delivery they also have one outlet shop in Glasgow that sell to the general public. They supply to Universities, colleges, Schools, Government with an estimated turnover is $60 Million
1.5. Position in the supply chain
EuroPC is predominately a clicks business with bricks business at only one location and fits into the supply chain model with responsibility for recovering and reselling electrical equipment either for safe disposal or recycling. (Bremmer et al, 2007) EuroPC are supplied by all the major computer manufactures through traditional media.Figure 1 shows the supply chain for EuroPC.
2. Competitor Investigation
This chapter will contain information about the main competitors of EuroPC and the drivers for e-commerce will be discussed.
2.1. Identify main competitors
The two main competitors to EuroPC that are to be analysed and compared are;
Black Barn Computers
EuroPC were one of the early companies that recycled electrical equipment this gave them backward leads into what happened to electrical equipment at this time. This placed them with an opportunity to expand into selling refurbished computers; with the right backing they have expanded to be the United Kingdom’s largest seller of refurbished Computers. The competitive edge they have over other e-commerce refurbished computer sellers is the ability to sell qualitative products in quantitative amounts. (Stadtler, Kilger 2007)
Computer Clearances is a relatively new company set up in 2008 and is one of EuroPC’s direct competitors, Computer Clearances have a similar brick and click system with one outlet. The amount of computers Computer Clearances sell is limited to mainly older styles, the same computers are advertised many times within the site, delivery time is longer it can take as many as 7 days, carriage cost is 5p cheaper than EuroPC.
Black Barn Computers has been established for 6 years, another of EuroPC’s direct competitors; Black Barn Computers have a similar brick and click system with one outlet. The amount of computers Black Barn Computers sell is limited to older models; the same computers are advertised many times within the site, the carriage costs is ?3.50 more than EuroPC for a single item, ?11.00 for a complete system.
2.2. Competitor analysis
Competition, in order to analyse the competition to EuroPC, Porter’s five forces analysis: The threat of the entry of new competitors, the intensity of competitive rivalry, the threat of substitute products or services, the bargaining power of customers, the bargaining power of suppliers. The S.W.O.T. will be investigated. (Porter 1979) See appendix A.
Domain tool analyses were carried out and findings are in appendix B.
2.3. Drivers for E-commerce
The internet has evolved to allow the purchase of products at the best possible price from anywhere in the world. The internet gave a forward thinking business such as EuroPC a platform to reach as many people as possible from single premises therefore allowing the users to research the purchase expediently. EuroPC have the ability to buy refurbished computers in bulk quantity and of good quality and can deliver a single unit or bulk orders, with shipping to suit purchaser and produce trust following the 10 drivers identified by Porters (Porter) see appendix C.
3. Value Analyses
3.1. Business Model
EuroPC’s’ business model is as a provider to both business and individual customers for refurbished computers. EuroPC has the buying power to purchase refurbished computers at a good price, saving the manufacturers the loss of goods that otherwise would be destroyed; the refurbished computers are then graded from brand new to computers refurbished by the manufacturer through to older computers that have had their hard drive changed and a new operating system installed, then priced and pass the savings onto their consumers. EuroPC is graded as a green company that prides itself in the proper disposal of used computer components and WEEE certification. They have outlets both on Amazon and EBay. EuroPC also offer commission sales for self employed sales persons.
3.2.Value Adding Activities
EuroPC creates value through a value Chain model configuration and can be analysed using Porter’s value Chain model (Porter). Appendix C, (Value chain Analysis). This value configuration can be utilised when analysing the value adding performance and where their value is in the brand. The value of companies in the value chain model is to offer a service that is required to the consumer to a value that is greater than the cost of the activities, therefore producing a profit margin. (Porter) The value chain model is a useful analysis tool for defining a firm’s core competencies and the activities. EuroPC profit margins depends on how well they perform in (Porter) Porter’s chain activities and also there drivers, Appendix C
Porter states, Value chain activities are not isolated from one another. One value chain activity often affects the cost or performance of other ones. Linkages may exist between primary activities and also between primary and support activities. Interrelationships among business units form the basis for a horizontal strategy. Such business unit interrelationships can be identified by a value chain analysis.
3.2.1. Customer Promotions
(Bremmer et al, 2007)EuroPC have regular promotions such as win a laptop, this gathers people’s e-mail address so that viral marketing can be applied and so build up a relationship with potential new clients using traditional media. This promotion will drive the value chain model by increasing their selling power. EuroPC use Content hyper-syndication and have an active facebook wall where users are encouraged to leave messages, Twitter for users to receive tweets, and also RSS to have feeds of promotion direct to users browser.
EuroPC also have outlets at Amazon.co.uk and are also a sponsored link at EBay with their own store also on EBay, There are many stores on line that give away promotional codes for discount for purchase of refurbished computers.
At a computers end of life and providing users are buying an upgrade, EuroPC will purchase users old computer, 1 per individual and 25 per business, and dispose of it safely with certification employing Government approved data wiping ISO 27001 (ICO 2010). This could be something big business would look for when upgrading computers as average costs per unit for data wipe is approximately ?15.00.
EuroPC have a free telephone number for enquiries and for information about breakdowns, warranty and returns or technical support use a local area landline.
EuroPC also use (Google 2011) Google checkout to drive customers to their web site.
3.2.2. Service Provisioning
Service provisioning activities is the support to the customer from the supplier.
EuroPC have a proactive customer support that start with a web page of FAQ’s (Frequently asked questions), if your answer is not found there is a technical support helpline, this will help bolster relations between EuroPC and their customers. EuroPC offer a 30 day no quibble money back guarantee and all refurbished computers come with a 1 year free return to base warranty.
EuroPC also allow consumers to submit testimonials for inclusion on the EuroPC website
EuroPC act as re-intermediary for large computer manufacturers who under the Distance Selling Regulations (OFT 2005) allow customers 7 days to return goods, this then leaves the manufacturer with stock that cannot be sold as new. As long as this law stays enforced, a steady stream of goods will always be returned. Manufacturing companies having a duty under WEEE regulations will always look for the cheapest option and that is to sell them to refurbished distributers and reduce their loss.
The consumer is offered the goods at discounted prices; they are also given all the relevant information and technical specifications.
4. Website Evaluations
The interaction between the user and the web site can be significant and influential for the success of a website. To further analyse the EuroPC graphical user interface it can be assessed with Computer Clearances utilising the framework described by Constantinides. (Constantinides, 2004) Appendix D
4.1. Functional Factors
Functional factors involve how well the web site functions and it ease of use. The main categories of the functional factor are the interoperability and the Usability.
The usability is stable on all browsers with little differences, EuroPC it is a little slow to load; Computer Clearances is not much faster to load. EuroPC navigation is clear and easy to read with one exception when choosing a category the navigation expands over both text and images already on the screen, Computer Clearances navigation text is too small for accessibility apart from that it is easy to follow.
EuroPC allows for some web site customisation once membership is provided; Computer Clearances does not have any. Both EuroPC and Computer Clearances suffer buffering speeds; this should be alleviated once all demographical areas of their intended audiences are provided with faster broadband speeds. EuroPC presents a quick link to the user with previous views of products to a maximum of 6 items. EuroPC can show the cost with or without VAT. EuroPC has a filter mode at top of items for sale that allows the user to see only items in that category.
Users have access to EuroPC by use of a free telephone number and direct access through a computer instant talk for 6 days a week as well as email and landline telephone calls direct to relevant sections. Computer Clearances has a telephone answering machine and email corresponded information only. Computer Clearances offer a 7 day money back offer and a 6 month guarantee on items sold; EuroPC offer 30 days money back offer and a 1 year guarantee on items sold. Computer Clearances uses Royal Bank of Scotland world pay to accept payments and no other secure collection of data; EuroPC uses Go Daddy security when collecting data and also when accepting Visa/MasterCard. Both use symbols from well known businesses.
4.3. Content factors
The content factors are broken into two sections, aesthetics: how the web site looks and feels and marketing mix: the contents and how they are displayed.
EuroPC website gives the appearance of a professional designed website with lots of ways in which the user can interact and find the product the user is looking for also reminds the user what they have visited; the website uses colours that are associated with large businesses (Aladwani, Prashant 2001), the web site is separated into different sectors and by doing so install confidence in the user. Computer Clearances website does not give the appearance of a professional design and gives only a few ways the user can interact with the website, the colours the website uses are cheap and cheerful this making the screen look cluttered when in fact there is little information. The website is separated into different sectors but is difficult to find.
4.3.2. Marketing Mix
The products sold by EuroPC show the cost of buying from a bricks and mortar store along with the discount offered, there is also promotional codes that offer a further discount that can be found on the internet, the product stock is always changing indicating a good turnover. Delivery can be set up to suit user’s requirements and a delivery window can be agreed. Anyone can become an affiliate or a reseller and earn money through traffic driven to EuroPC that end in a sale. EuroPC also have a testimonial page with reviews from educational, government, well known businesses and individuals. EuroPC has a shop on Amazon and also on EBay. The products sold by Computer Clearances are older models and are at the lower end of the refurbishment value chain; the delivery is through a 3rd party and is subject to the 3rd parties’ delivery, terms and conditions. Computer Clearances stock would not be found on high street shops, there are also promotional codes that offer a further discount when the user spends over ?500 with Computer Clearances, the average cost of a product being approximately ?150.
Both website suffer with load bandwidth capabilities the average speed of a page loading is 1.5 seconds, this may deter some customers with lower slower bandwidth, slower websites are also punished by search engines giving them a lower ranking. Appendix (E), EuroPC has a higher page rank(4) than Computer Clearances(1), EuroPC has more back links(8) than Computer Clearances(0), Alexa statistics show EuroPC has significant higher site traffic than Computer Clearances, The estimated value of EuroPC’s website is from Alexa is $1.535 and Computer Clearances$5.
When using Google search engine using “refurbished computers” Computer Clearances came 2nd and EuroPC came 5th it is only EuroPC that uses Google Checkout.
5. Conclusions and Recommendations
Both Computer Clearances and Black Barn Computers sell older models of refurbished computers, there are a few other competitors, EuroPC at present are the number 1 seller of refurbished computer, this is mainly achieved by a superior brand image and the ability to deliver in both quality and quantity on time. The refurbished computer market is already changing with large companies’ such as PCWorld starting to sell refurbished computers, although this service is not yet advertised a user might visit other websites to enquire. EuroPC need to be aware of these types of threats especially if it threatens their acquisition chain.
5.2. Value Analysis
The value of value Chain Company is the interrelationships between the suppliers and procurement of products and the ability to market and sell, provide additional services and support, distribute to the end user and maintain a profit margin and to perform better than the competitors.
5.3. Web Experience
The experience a user gets when they visit websites is very important to maintain and install trust especially when much larger companies are trying to expand into the same market and supply similar products at a cheaper or similar price. The website experience of EuroPC whilst very positive could achieve more mainly in the information of products. EuroPC cater for users with some technical knowledge but none for people without any knowledge without contacting EuroPC direct, the design of a computer aptitude questionnaire to help people decide what computers are recommended and further narrow the choice would further enhance user’s interaction this would further add trust as it could only recommend computers that match a user’s skill. The terms and Conditions on EuroPC do not meet the office of Fair trading regulations for distance selling. (Distance selling regulations 2000).
5.4. Future expectations
EuroPC could use the internet to better advantage by advertising on such places as you tube to compliment advertising on other social media sites. Getting advertising on university and further education campus could greatly increase awareness of EuroPC, EuroPC could engage with universities and further educational institutes for the design of an advert, EuroPC also need re-evaluate their S.W.O.T analysis and find other methods of identifying and producing value such as offering to upgrade existing products. EuroPC need to run a positive campaign to tell users about a green recycling and promote their computer exchange scheme. The EuroPC name is not widely known or recognised; until they run brand awareness they are reliant on existing custom, without getting brand awareness established EuroPC run the risk of slipping into obscurity. (Equalities Act 2010) EuroPC should also make adjustments to their website to comply with the Equalities Act 2010.
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