Situational Analysis

External Environment

Political, Ethical, and Legal Trends. One of the most prominent issues facing online retail businesses would be the current Political & Economic policies that lead to unfavorable economic outcomes i$.$e$.,$ higher taxes, stagnant incomes. Less expandable consumer spending due to inflation and higher taxes; when consumers are constrained their margins for spending on apparel for work or leisure is minimized. However, a recent FRED report from the Federal Reserve shows that inflation is down, and consumer spending is stabilizing while still well below the previous high; leveling to $2012$ levels $($University of Michigan: Consumer Sentiment, $2023).$ The legal trend facing online small business is the advent of $$The American Families Plan Tax compliance IRS bill$$ that asses reports of withdraws and deposits of $$600$ including those made from online sales threshold for tax purposes, this can destroy and erode profitability for many small businesses.

Sociocultural Trends. The change of shopping habits post COVID$-19$ economic impacts such as remote$-$work has led to consumers spending less money on office clothes, as more relaxed dress codes are prevalent as well as working from home $($C$.$ Tymkiw How Shopping Habits Changed Due to COVID$-19,2022).$ Consumers have authenticity and quality concerns related to online shopping $($Factors that affect consumer trust in product quality: a focus on online reviews and shopping platforms, $2023).$

Eunsuk Sung, Won Young Chung Nature.com $($November $2023)$ elucidated that the key drivers for consumer decisions pertaining to online spending were number of reviews, authenticity, and the online shopping platform. However, consumers face difficulties making purchase decisions involving non$-$famous brands due to uncertainty.

The sharing economy is an acute effect on consumer spending, buying more thrift second$-$hand or used items, or simply renting clothes via online platforms.

Technological Trends. Artificial Intelligence and e$-$commerce, AI can have a significant impact for online retail business through AI Copywriting, Chabot$$s and Virtual Assistants, Personalization, and Inventory Management $($Four Ways Artificial Intelligence Is Transforming E$-$Commerce, Forbes, $2021).$ This can have positive effect for many small business as this can help leverage resources for organization with $1-5$ employees.

Economic Trends. The median household income in the United States in $2022$ was $$74,580$ This is a decrease from the $2021$ estimate $($unadjusted for inflation$)($Census$.$gov$).$ While consumer sentiment improved in $2023,$ it is significantly below pre$-$pandemic levels; the online e$-$commerce business is extremely sensitive to these indicators and is cyclical in nature $($Ten Charts That Explain the U$.$S$.$ Economy in $2023).$

Competitive Environment

The threat of new entrants is high. The entry barriers to start an online retail arbitrage business are low. Stores of similar nature open consistently on Amazon and eBay respectively.

The rivalry among existing firms is high. Similar online e$-$commerce stores open regularly and an Example of some of these small online retailers include Highendfindsforall. Large, national chain retailers such as Nordstorm, Banana Republic, and Theory would be considered indirect competitors. Many of these competitors have been in business a long time and have more sales volume$/$reviews$.$ Large national chain retailers have more marketing capabilities and have been in business longer; however, often do not have better pricing or intimate customer service.

The threat of substitute products is high. The products sold at new age luxury INC are not necessities and are considered luxury products.