EWC661 PROPOSAL :

BUSINESS CHALLENGES ENCOUNTER BY ONLINE

ENTREPRENEUR IN SHAH ALAM, SELANGOR

LECTURER NAME: ASSOC. PROF. SITI AKMAR BINTI ABU SAMAH

CLASS: EMD4M5A

GROUP MEMBER: 1)MUHAMMAD IZZAT IHSAN BIN PUZER

2)MUHAMMAD AQMAL BIN MOHD NOR

3)AHMAD SYAFIQ BIN SEMSUDIN

4)ZHAFRI BIN SYAZWI

TABLE OF CONTENTS

ABSTRACT 1
ACKNOWLEDGEMENT 1
INTRODUCTION 2
PROBLEM STATEMENT 2-3
PURPOSE OF STUDY 3
SIGNIFICANCE OF STUDY 3
SCOPE OF STUDY 4
METHODOLOGY 4
PREVIOUS STUDIES 4-5
REFERENCES 6-7
ABSTRACT

Nowadays, online businesses are conducted all over Malaysia from day to day involving
people from all ages. There are several problems that have been found from online business
namely maintaining customer’s loyalty, struggling with competition on prices, shipping issue
as well as competing against retailers and manufacturers. To earn the customer’s loyalty,
sellers must provide excellent customer service. Sellers must ensure the online process of
business starts from ordering to shipping. In this way, customers will be satisfied with the
services. The report aims to investigate these problems faced by online business entrepreneur.
To survive in the competitive market, online business entrepreneurs need to distribute their
own inventory to fulfill warehouse requirements, become extremely resourceful shippers, or
find some unique products to minimise problems. For this report, the information and data
collected is from the internet. Besides that, interview session with selected online business
entrepreneurs will be conducted. Every online shopper expects fast and free shipping at the
lowest price. Therefore, this report will present some recommendations in order to provide
added benefit to increase online sales.

ACKNOWLEDGEMENT

We would like to express our appreciation to all those who contributed to the completion of
this report. A special gratitude goes to our lecturer, Assoc. Prof. Siti Akmar Binti Abu Samah
who contributed in stimulating suggestions and encouragement, guiding us to coordinate this
task well.

We would also like to convey our deep appreciation to all respondents for their cooperation
in answering the questionnaire. Lastly, a special thanks to our family for their moral and
financial supports during preparation of this report. These commitments enabled us to
succeed in completing this report on time. Thank you.

1
INTRODUCTION

Around the world, consumers are turning to the Internet for shopping needs and concerns.
This has opened a window and business opportunity for all businesses. Online business is an
act of trade using internet as a medium to connect buyer and seller. According to Dr. Syed
Shah Alam (2010), online business has several benefits over physical business. One of the
obvious benefits is the global reach of the internet permitting consumers to buy goods and
services from wide range of categories anywhere. Besides that, online sellers deliver the
goods to the customer home allowing customers to order mutiple items. Moreover, online
store is open 24 hours a day, 7 days a week and 365 days a year, so customers does not have
to worry about parking spaces.

Due to this benefit of online business, it has become a trend for young people to start their
own online business. However, this market is more competitive than most people think due to
increasing amount of people venture into online business. As a result, most of the new online
entrepreneur fails to survive in the market of online business. This can be track to several
factors that lead to the failure of their online business. In view of this, the report aimed to
tackle this issues and provide suggestions for new online entrepreneur.

Problem Statement

Nowadays, new online entrepreneurs start their business because they always look up at its
success. In order to have a successful business, it is important to earn the customer’s loyalty
and sellers must provide excellent customer service. In addition, sellers must ensure effective
online process of business which starts from ordering to shipping. In this way, customers will
be satisfied with the services provided by the online entrepreneurs.

In reality, those that have achieved success struggle to keep their business running. Most of
the new online entrepreneurs are not prepared with the proper knowledge about online
business. The implications can be seen when they fail to comply with the demand of their 2
customers. Furthermore, new online entrepreneurs do not realise the reality of competition.
To summarise, they often overlook storage problem and other issues which are essential for a
business to grow larger.
The reason behind this investigation is that new online entrepreneurs are young people within
the age range between 18 and 35. Besides that, curiosity grows with the increasing amount of
advertisement in social media. Finally, new online entrepreneurs must realise what the
advantages and disadvantages are, when they are involved in online business.

PURPOSE OF STUDY

The purpose of this study is to investigate ways to succeed in online business from online
entrepreneur that had been achieved success. This study contains several objectives to be
focus such as follows:

a) To investigate why young people are attracted to online business,

b) To find out whether new online entrepreneur realise the advantages of online business,

c) To determine whether new online entrepreneur know the disadvantages of online business.

SIGNIFICANCE OF STUDY

The results of the study will assist new online entrepreneurs in starting of their business as
well as cope with any issues that may be faced. Initially, this study will discover the problems
faced by online entrepreneurs during starting of their online business. Besides that, this study
will discuss about the strategy that has been used by online entrepreneur to overcome their
problems. Therefore, new online entrepreneurs could utilise this study as a guide to start their
online business.

SCOPE OF STUDY
3
There are potential limits for this study that has been identified. The studies only focus on
several issues that are considered critical for online business. Therefore, there might be issues
faced by online entrepreneur that is not being discussed. Besides that, the study is limited to
technologies that exist in the duration of the study. Hence, there might be better strategies
that could be taken in the future due to better resources. Lastly, the strategy might not be able
to be used by every online entrepreneur due to different access of resources and different
situation of problems they may encounter.

METHODOLOGY

This study will be conducted at Shah Alam, Selangor. A few young online entrepreneurs will
be the subject of this study. Data for this study was gathered through personal administered
questionnaire which were distributed to the chosen online entrepreneur. The questionnaire
will be divided into several sections according to objectives of the study. The first section is
about the background of the business. Next section will determine whether online
entrepreneur realise on advantages as well as disadvantages of online business. The final
section focused on the issues that had been identified as critical to online business. A report
will be created through analysing on the data gathered. The study is conducted between May
and June.

PREVIOUS STUDIES

There are several studies conducted to explain the issues faced in online business such as
maintaining customer loyalty. The changing role of the content, context, and infrastructure of
the marketplace is one of the reasons for the importance of loyalty in online business(Rayport
& Sviokla, 1994). According to Griffin (1996), one of internet’s role is building customer
loyalty and maximizing sales to your existing customers.Reichheld and Schefter (2000)
surveyed that trust to an online website is more important compared to price of the
goods.Through website, customer could shop frequently with less cost and reducing
operating cost for entrepreneur.Loyal customer often provide help to those in need, reducing
company costs for providing help.Therefore,internet is an essential tool to maintain
customer’s loyalty.

It is also found that new competitors prefer to attack in markets where the established
manufacturers have lived with acceptable margins for years, keeping the price level stable. In 4

such a situation, the market entry of new low‐priced suppliers can rapidly change the market
structure, cutting deep into the profits of the existing suppliers. The new products will not
only attract the low‐price segment that was kept from using the product before because of the
high prices, but also attract many of those that have used the existing products so far. Finally,
price decreases do not always lead to high enough sales gains or market growth to make up
for the lower contribution per unit.

Besides that, retailers and manufacturers exist in a competitive environment of intense

competition for consumers and products (Kotler, 2003). For large retailers, apparel products
typically flow directly from manufacturer, to retailer, to consumer (Jarnow and Dickerson,
1997. In traditional economic theory, price determination establishes the retailer as the “price
taker” rather than the “price maker” with the understanding influence exists within
determining the quantity to produce (Shankar and Bolton, 2004). While in the past,
determining the quantity to produce has been in the power of the manufacturer, the shift in
the supply chain from manufacturing to marketing has given the greatest power to the retailer
(Fratto, 2004).

Finally, a considerable amount of previous research has examined the issue of shipping
charges on customer behaviors. The importance of shipping and handling fees in retaining
online consumers was confirmed in a study by Rao et al. (2011). Various customers view
shipping charges differently. Some customers consider shipping charges negatively such that
they treat it as an unfair source of profit for an online retailer (Schindler et al., 2005). On the
contrary, other customers may consider shipping charges as a fair charge to cover the cost of
product delivery (Schindler et al., 2005). Therefore, they are more sensitive to the shipping
charges and prefer free shipping. Moreover, Lewis (2006) provided evidence that free
shipping, the combined price which includes both shipping charges and product price in total
price, can change customers ordering behaviors such that customers order more frequently,
but they order less each time. Also, improving order‐fulfilment performance by increasing
shipping fees may not improve purchase satisfaction. However, Cao et al. (2003) identified a
negative and significant effect of price satisfaction over pleasure with the order‐fulfilment
process. In short, customers will be satisfied if the items arrived in good condition even
though the price is quiet expensive.

On the contraty, other customers may

On the contrary, other customers may consider shipping charges as a fair charge to cover the
cost of product delivery (Schindler et al., 2005). so they are less sensitive to shipping charges
and are willing to pay for shipping.

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4. Siqi Ma, (1990), Fast or free shipping options in online and Omni-channel retail? The
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6

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