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Introduction to retailing

Introduction to retailing. IR – Class 4 26 December 2009. Scope of Discussion. Defining E-tailing Objectives of E-tailing . When to E-tail Service aspects of E-tailing Conventional Retail Vs E-tailing Organizational Perspective of E-tailing Advantages to E-tailing Barriers to E-tailing

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Introduction to retailing

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  1. Introduction to retailing IR – Class 4 26December 2009

  2. Scope of Discussion • Defining E-tailing • Objectives of E-tailing. • When to E-tail • Service aspects of E-tailing • Conventional Retail Vs E-tailing • Organizational Perspective of E-tailing • Advantages to E-tailing • Barriers to E-tailing • E-tailing in India • The future of E-tailing

  3. Defining E-tailing • E-tailing is nothing but ELECTRONIC RETAILING. • It is a retail format in which the retailer and customer communicate with each other through an interactive electronic network (internet, mobile telephony, interactive TV etc) (Levy & Weitz, 2001)

  4. E-tail- Categories Electronic Retail Non-store e-tailing Internet e-tailing Websites, Mobile commerce platforms etc. Television, E-kiosks

  5. Types of e-tailing

  6. Stages of e-tailing • BROCHURE WEBSITE • Provide information about the company, its products and its contact details. • COMMERCE WEBSITE • Integrate the monetary transaction ability to their websites. • WEBIFIED STORE: • Brings the Internet into the brick-and-mortar location with browser-based kiosks, POS, or terminals • Provides additional information from manufacturers' sites, and allow for online orders of items not carried at that brick-and-mortar location. • WEBSITE INTEGRATED EXISTING PROCESS • The process of focusing on customer orders and engineering delivery process from “Order to Delivery”. • SITE INTEGRATED MANUFACTURING SYSTEMS • The highest form of achieving Customization through digitization. (eg: McLaren Mercedes)

  7. Objectives of E-tailing • Alternate channel of Product selling • Information Dissemination • Customer contact. • Value Engineering • Extend positive brand equity to online and electronic medium.

  8. When to E-tail?? The point of entry for organizations into the e-tailing format has to be discovered using the following pointers. • Addressing Geographic diversity • Extendable offline equity to the online channel • Changing Customer preferences • Organizational Growth strategies (Product Vs Market strategies)

  9. Objective of e-retailing • To complete product purchase transactions… • e-retailing exhibits more of the characteristics of a service transaction than a goods transaction. • Unique benefits to the consumer • Time saved • Increased convenience • Reduced risk of dissatisfaction • The product search and evaluation facility is provided and the product delivery service is contracted before the tangible good is received • The heterogeneity in delivery quality is less severe in e-retailing - because of the uniformity of computer-based transactions.

  10. Retailing vs. E-tailing • A retailer is restricted to a particular location • A brick-and-mortar retailer has to identify a good location for his operations and wait for customers. • A retailer has to spend considerable time, effort and money in setting up his shop, stocking inventory and creating display patterns. • Customer retention is achieved through better offers, loyalty programs etc. An e-tailer can go global An e-tailer has to virtually attract a customer to his site and offer him exemplary services Thanks to web-driven retailing, an e-tailer has no such hassles The primary aim of every e-tailer is to attract a prospective customer to his e-tail site. That calls for a large adspend. Retaining an e-tail customer is certainly a costly affair. For, in the world of the web there is nothing such as loyalty.

  11. Barriers to E-tailing • Lack of trust • Payment gateways not clear • Security concerns • Transaction fulfillment is questioned • No integration between online and offline stores • Physical large shopping malls themselves are a new concept in India

  12. E-tailing in India • According to leading consultants KSA Technopak, the Organized Retail market in India is estimated to be around 5000 crores by 2007. Currently it is around 1000 crores. • The E-tail market in India is estimated to be around 100 crores.

  13. The Future of E-tailing • The future of E-tailing is connected with global PC, Internet and Mobile Telephone penetration. • Spread of Mobile platforms and maturity of financial markets • Comfort levels of Customers increasing when it comes to procuring through electronic channels.

  14. Characteristics of Successful E-Tailing • High brand recognition • A guarantee provided by highly reliable or well-known vendors • Digitized format • Relatively inexpensive items • Frequently purchased items • Commodities with standard specifications • Well-known packaged items that cannot be opened even in a traditional store

  15. E-Retailing Business Models • Classification by Distribution Channel • Mail-order retailers that go online • Direct marketing from manufacturers • Pure-play e-tailers • Click-and-mortar retailers • Internet (online) malls

  16. Online Purchase-Decision Aids • Shopping portals • Gateways to e-storefronts and e-malls; may be comprehensive or niche oriented • Shopping robots (shopping agents or shopbots) • Tools that scout the Web on behalf of consumers who specify search criteria • Business Ratings Sites • Bizrate.com, gomez.com • Trust Verification Sites • TRUSTe (truste.org), Verisign.com • Other Shopper Tools • Escrow services • Communities of consumers who offer advice and opinions • E-wallet (or e-purse)

  17. Online Purchase-Decision Aids • Other Shopper Tools • Amazon.com’s A9 Search Engine • Remembers information • A user can make notes about any Web page and search them • Offers a new way to store and organize bookmarks • Recommends new sites and favorite old sites specifically for the user to visit

  18. Amazon.com & Toys“R”Us • Alliance between amazon.com and Toys“R”Us • Amazon.com expertises in e-tailing business, but could not get best deal from toy manufacturers • Toys“R”Usis the best in toy industry but failed in e-tailing • Seemed to be a promising agreement • However, they sued each other after 4 years out of 10-year agreement. • Toy“R”Us wanted amazon to sell only its products • Amazon interpreted the agreement to allow it to sell other companies’ products

  19. Issues in E-Tailing Disintermediation The removal of organizations or business process layers responsible for certain intermediary steps in a given supply chain Reintermediation The process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles

  20. The B2C Supply Chain

  21. Issues in E-Tailing • Channel conflict Situation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition • Determining the right price • Personalization • Mass customization • Fraud and illegal activities • How to make customers happy • Need market research

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