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Chap003

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  • First, there are major changes in customer buying behavior. I may want to buy a product at 10pm, through my Web browser, or you may want to buy through a call center, or you may want to buy by visiting with a field sales professional or local reseller. I also may want to work across multiple channels, to start my purchase over the Web, then later contact the call center, and finally close the deal with a field sales representatives in my office.
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    • 1. Chapter 3 Multichannel Retailing McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
    • 2. The Multi-Channel Retailer
      • A retailer that sells merchandise or service through more than one channel. By using a combination of channels, retailers can exploit the unique benefits provided by each channel.
      3- Retailer Digital Vision / Getty Images Steve Cole/Getty Images The McGraw-Hill Companies, Inc./Andrew Resek, photographer
    • 3. 3- More Reasons for Becoming a Multi-Channel Retailer
      • - Increase Share of Wallet
      • Example : Eddie Bauer, single-channel customers spend $100-$200
      • per year, dual-channel customers spend $300-$500 per year,
      • tri-channel customers spend $800-$1000 per year
      • - Overcome Limitations of Existing Format
      • - Expand Market
      • - Provide services more cost-efficiently
      • - Leverage Existing Assets
        • - Brand Name, Inventory, Customer Database
        • - Develop Insights in Customer Shopping Behavior
    • 4. Dollars spent at different channels: Average annual dollars spent by J.C. Penny ’ s customers 3-
    • 5. Benefits Provided by Different Channels 3-
    • 6. Unique Benefits Provided by Store Channel
      • Browsing
      • Touching and feeling
      • Personal service
      • Cash and credit payment
      • Entertainment and social interaction
      • Immediate gratification
      • Risk Reduction
      3- Royalty-Free/CORBIS (c) Brand X Pictures/PunchStock
    • 7. Benefits Provided by Catalog Channel
      • Convenience
      • Information
      • Safety
      3- Hoby Finn/Getty Images
    • 8.
      • $2.5 Trillion US Retail Sales
      • $200 Billion Catalog and Direct Sales
      • $4 Billion TV Home Shopping
      • $100 to 150 Billion Internet Retail Sales
      • Just a drop in the bucket, but growing fast!
      3- What ’s the Big Deal About Shopping on the Internet ?
    • 9.
      • Source: Forrester, State of Consumers and Technology, 2006
      3- What ’s the Big Deal About Shopping on the Internet ?
    • 10. Virtual Communities 3- People who seek information, products and services communicate with each other regarding specific issues Social shoppers : seek not just information but also an enhanced emotional connection to others participants in the shopping experience Royalty-Free/CORBIS
    • 11. Virtual Communities
      • Virtual community is a network of members sharing common interests that interact with each other electronically.
      • Examples:
        • IVillage – Women
        • Pricegrabbers.com ; Epinion.com –product comparisons and reviews
        • Flypaper.com – talks about fashion
        • ThisNext.com , Kaboodle.com , Wists.com , StyleHive.com – social shopping that combines shopping and social networking
      3-
    • 12. What People Buy Over the Internet
      • Travel
      • PC/Electronics/Toys
      • Books/Software
      • Apparel
      • Home & Garden
      • Jewelry & Watches
      3-
    • 13.
      • “ Look and See ” attributes vs. “ Touch and Feel ” attributes (?)
      • Degree to which information can be used to predict satisfaction prior to purchase
        • Gifts
        • Services
      • Might not need to “ Touch and Feel ”
        • “ Touch and Feel ” not useful - Gifts
        • Superior presentation of “ Touch and Feel ”
        • Branding
      3- What Merchandise Will Be Sold Successfully Through Electronic Channel?
    • 14.
      • Branding :
      • National brands provide a consistent experience for customers to overcome not being able to touch and feel.
      3- The McGraw-Hill Companies, Inc./Jill Braaten, photographer How Can the Electronic Channel Overcome Limitations?
    • 15. How Can the Electronic Channel Overcome Limitations?
      • Use technology to convert “ touch and feel ” information into “ look and see ” information
      • 3-D Imaging
      • Zoom Technology
      • Live Chat
      • 360 Degree Viewing
      • Virtual Models
      • conversion rates : % of consumers who buy the product after viewing it
      3- Technology increases conversion rates
    • 16. My Virtual Model: Try It On
      • Link to My Virtual Model H & M
      3-
    • 17. How Can the Electronic Channel Overcome Limitations?
      • GIFTS
      • Saves time
      • Saves effort in packing
      • Saves effort in delivery
      • SERVICES
      • No Shipping Problems
      • Examples
        • Travel websites
        • Banking
        • Newspapers
      3- Janis Christie/Getty Images The Electronic Channel Provides Superior Benefits for
    • 18. How Can the Electronic Channel Overcome Limitations?
      • Use the Internet to Improve Multichannel shopping experience
        • Instantaneous and easy data collection on how and why customers shop, and how they ’ re dissatisfied or satisfied with their electronic shopping
        • Store and website layout design tailored to customers ’ buying habits
      3-
    • 19. Evolution Toward Multichannel Retailing
      • Traditional store-based and catalog retailers are placing more emphasis on their electronic channels and evolving into multichannel retailers.
        • E-channel gives a way to overcome limitations of existing format
        • With electronic channel, retailers can reach out to new markets
        • Builds share of wallet
        • E-channel enables retailers to give insights into customers ’ shopping behaviors
      3-
    • 20. Recreation Equipment Inc. (REI) – A Leader in Multichannel Retailing 3-
    • 21. Capabilities for Multi-Channel Retailing
      • To effectively operate and realize the benefits of multi-channel retailing, firms need to have skills in:
      • Developing assortments and managing inventory
      • Managing employees in distant locations
      • Distribute merchandise efficiently from DCs to stores
      • Present merchandise in catalogs
      • Present merchandise on websites
      • Process orders electronically
      • Efficient distribution of individual orders to homes
      • Operate information systems for all channels
      3-
    • 22. Capabilities for Multi-Channel Retailing 3-
    • 23. Catalog Retailers can Add Electronic Channel Easily
      • Ready to take orders
      • Able to pack merchandise
      • Able to deliver
      • Able to handle returned merchandise
      • Already have a database
      • Visual merchandise for catalog is the same for electronic
      3- Steve Cole/Getty Images
    • 24. Why are store-based retailers evolving into multi-channel retailers?
      • Sales through an electronic channel are growing at over 20% per year
      • Adding an electronic channel creates immediate possession utility
      • Multi-channel retailers can attract more customers and satisfy existing customers better
      • The growth of sales in stores is declining
      3-
    • 25. Impact of Internet Shopping on Store Sales 3-
    • 26. Ecommerce Myths
      • Low Cost of Entry
      • Overestimate Importance of Technology, Under Estimated Need for Traditional Resources
      • First Mover Wins
      • Gets Rid of the Middleman
      3-
    • 27. Which Channel Is the Most Profitable? Cost Drivers in Stores and Electronic Retailers
      • Bricks and Mortar, Salespeople
      • Attracting Customers to Store
      • Distribution Centers
      • Restocking Returned Merchandise
      • Building,Refreshing Web Site
      • Attracting Customers to Web Site: “ Customer-Acquisition Costs ” are huge but “ Customers ’ switching costs ” are tiny.
      • Picking, Packing, Mailing Small Orders to Home
      • Restocking Returned Merchandise
      3- Stores Electronic Retailers Few e-tailers are profitable
    • 28. Will Manufacturers Bypass Retailers and Sell Directly to Consumers?
      • Advantages of Retailers vs. Manufacturers
      • Distribute Merchandise Directly to Customers
      • Provide Assortments
      • Collect and Use Information about Customers
      3- Widespread Disintermediation Unlikely
    • 29. Issues in Multi-Channel Retailing
      • Integrated Shopping Experience
        • Communicate with customers anytime, anywhere through multiple channels
        • Website, Store, Kiosks, Handheld Devices
        • Integrating legacy systems for seamless customer interface
      • Brand Image
        • Consistent brand image across different channels
      • Merchandise assortment offered in each channel
      • Pricing across channels
      3-
    • 30. 3- Customer Web & Email • 24x7 • Visual Call Center • Convenient • Immediate Kiosks • Visual • Convenient Handheld Devices • Immediate • 24x7 Brick & Mortar • Touch/Feel • Experience driven Consumers buy what they want, when they want, wherever they want
    • 31. Channels Offer Complementary Benefits 3- Stores Internet Catalog
      • Known Entity
      • Entertaining/ Social Experience
      • Easy Checkout and Returns
      • Personal Assistance
      • Product Trial- Complementary Merchandise
      • Immediate Gratification
      • Location Convenience
      • Speed
      • Greater Selection
      • Personalized Presentation
      • Community
      • Portability
      • High Quality Visual Presentation
    • 32. Multichannel Shopping 3-
    • 33. Illustration of Multi-Channel Integration 3- Source: Progressive Grocer , 01 Feb 00; Grocery Headquarters , 01 Feb 00.
      • Consumer does not find desired item in the store.
      • Consumer goes to kiosk to search for product
      • Kiosk links to chain ’s web-site allowing consumers to find and purchase item
      • Consumer places order online for home delivery or store pick-up at a later time
    • 34. Opportunities to Enhance Multi-Channel Experience
      • Order on Internet, Pick-Up in Store
      • Promote Web Site on Receipts, Shopping Bags
      • Product Availability in Stores Available on Website
      • Kiosk in Stores to Order Merchandise Not Available in Stores
      • Plan Purchases (Shopping List) on Website
      • In-Store Events Promoted on Website
      • Ad Curricular on Website
      3-
    • 35. Integration – Key to Multi-Channel Retailing 3-

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