Introduction to retailing
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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

IR – Class 4

26December 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

  • E-tailing in India

  • The future of E-tailing


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)


E-tail- Categories

Electronic Retail

Non-store e-tailing

Internet e-tailing

Websites, Mobile commerce platforms etc.

Television, E-kiosks


Types of e-tailing


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)


Objectives of E-tailing

  • Alternate channel of Product selling

  • Information Dissemination

  • Customer contact.

  • Value Engineering

  • Extend positive brand equity to online and electronic medium.


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)


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.


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.


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


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.


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.


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


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


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)


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


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


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


The B2C Supply Chain


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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