multichannel retailing lynda gamans poloian. copyright ©2009 fairchild books all rights reserved....

Multichannel Retailing

Lynda Gamans Poloian

Copyright ©2009Fairchild Books

• All rights reserved. No part of this presentation covered by the copyright hereon may be reproduced or used in any form or by any means–graphic, electronic, or mechanical, including photocopying, recording, taping, or information storage and retrieval systems–without written permission of the publisher.

ISBN: 978-1-56367-6332-1

GST R 133004424

Unit I

The Road to Multichannel Retailing

Chapter 1 Evolution and Impact

L. PoloianChapter 1 ©2009 Fairchild Books, A Division of Condé Nast Publications.

5

Multichannel Retailing Defined:Electronic and Mobile Methods

• E-retailing—Online and other electronic transactions involving goods and services for personal, nonbusiness use

• E-commerce—Includes consumer and business sectors, encompassing all goods and services sold on the Internet

• M-commerce—Selling through cell phones and personal digital assistants that are Internet equipped

• S-commerce—Selling through social media• I-commerce---Selling through interactive kiosks


6

Multichannel Retailing Defined:Bricks, Slicks, and Clicks

• Multichannel Retailing Integrates:– Brick-and-mortar stores (bricks)– Direct marketing methods: catalogs and direct mail

pieces (slicks)– Online (clicks)– And much more!


7

Discerning Channels from Vehicles

• Channels—Conduits through which sales are transacted: ordering online, making a catalog or store purchase

• Vehicles—Promotions or other techniques used to reach and inform customers


8

Organizational Structures

• Pure-play—One channel

• Dual-channel—Two distinct channels

• Multichannel—Two or more channels (triple play)

• Electronic spin-offs—Companies that traded through other electronic means before opening online stores

• Nontransactional sites—Web sites used for information, not commerce


9

Why Adopt Multichannel Retailing?

• Reach more customers

• Provide customer convenience

• Compete more effectively

• Grow the business

• Balance risk

• Achieve profitability

• Expand globally


10

Justification for Multichannel Retailing

• MCR is a strategic imperative for growth

• Expands customer convenience

• Adds retail format options

• Increases customer expenditures


11

Roots of Multichannel RetailingEarly History and Origins of the Internet:

• 1960s—U.S. Department of Defense developed ARPAnet

• 1989—World Wide Web developed in Switzerland

• Early 1990s—Mosaic (first Web browser) became Netscape Navigator

• 1994—Amazon.com first major pure-play


12

Roots of Multichannel Retailing:Obstacles to Development

• Economic downturn in 2000-2001and 2010• Bursting of dot-com bubble• Scarcity of money for development• Battles within companies for control and resources


13

Roots of Multichannel Retailing:Current Status

• Multichannel retailing accepted as the norm

• Online sales grow more slowly in economic downturns and as the industry matures

• Business practices become more efficient

• Customers reached worldwide

• Cyber Monday?


14

Impact of Multichannel Retailing:Worldwide Internet Usage

• 2000—350 million users• 2005—765 million users• 2009—1.17 billion users

In 2008 the number of Internet users in China (253 million) surpassed the U.S. (220 million) for the first time.*

* Sources: China Internet Network Information Center and Neilson Research


15

Impact of Multichannel Retailing:Online Performance Measures

• Revenue growth • Gross Margin or Profitability• Annual sales• Impact of holiday sales periods• Other performance measurements:

– Click-through rates– Shopping cart abandonment rates– Customer service metrics– Web site design evaluation


16

Top Multichannel Retailers:Online Trends

• In 1999 only 27 of the top 50 online retailers were multichannel

• In 2009, 41 of the top 50 were multichannel retailers

• Of the top 10 online retailers only Amazon.com and Newegg.com were pure-play retailers


17

Worldwide Internet Usage: Penetration Rate

• Penetration rate:• measures the percentage of the population

that purchases a product or service—not simply Internet usage– The highest penetration rates are held by:

• United States• Japan• South Korea*

*Source: InternetWorldStats.com


18

Top 5 E-retailers for 2009

Rank Company Comments

1 Amazon.com Well diversified product mix; withstanding economic slump

2 Staples Expects one-third of sales to come from Web

3 Office Depot Using m-commerce features and customer services

4 Dell Upgrading customer service in very competitive market

5 HP Analyzing customer metrics carefully

Source: Internet Retailer. “Top 500 Guide.” 2008 Edition: p86-94


19

Lessons Learned from Top Retailers

• Some perform better than expected

• Sales may not keep pace with technological advances-Technology is driving retail

• High costs of doing business change selling channels


20

Deployment Strategies

• Some started as brick-and-mortar retailers and later added online stores (Macy’s)

• Some began as online retailers then added catalogs and/or stores (Red Envelope)

• Many catalog companies added brick-and-mortar and online stores (Sears)

• Depends on the company and its resources


21

Factors Shaping the Retail Industry

• Technological Advances– Hardware, software, gadgets– Social networking– Virtual worlds– Advanced search– Web analytics

• Customer Dynamics– Aging but active baby boomers– Technology savvy young

people– Value consciousness – Empowered Consumer


22


• Industry Consolidation– Mergers

– Acquisitions

– Larger companies but fewer of them

• Merchandising Polarity– From luxury to low-

budget goods

– Assortments seem fragmented

– Wide variety of consumers


23


• Supply Chain Initiatives– Shorter merchandise

production cycles-QR

– Faster time to market

– EDI

– Greater use of Web for design and production-CAD

– Growth of RFID technology

• Global Retail Expansion– Globalization continues

– Business and non-business sectors affected

– Many global challenges including the economy


24


• Emergence of China– Major power shift

– Chief exporter to the U.S. and the world

– Human rights and intellectual property issues

– Retail activity and growth

– Inflation

– Huge disparity between real China and new consumer


25


• Multichannel Emphasis– Significant influence on retailing today– Emphasis on integration across channels– Huge potential if done correctly


26


• Organized Retail Crime– Major negative movement

– Involves groups of people engaging in theft and scams

– Copyright infringement

– Counterfeit

– Significant losses to retailers

• Customer Privacy and Security– Capture and use of personal

data concerns customers

– Data breaches causing ID theft

– Phishing online

– Spam


27


• Sustainability– Growing interest in

environment by retailers and consumers

– Retailers involved in eco-friendly building products and utilities

– Concerns about carbon-neutral emissions

– Renewable fibers and materials

– Sustainable Practices– Index


28

Summary

• Multichannel retailing:• creates more value and options for

customers • fuels growth for proactive retailers• Adds management challenges• Requires consistency and message

integration• Platform Integration

multichannel retailing lynda gamans poloian. copyright ©2009 fairchild books all rights reserved....

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