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DIGITAL
MERCHANTS
Business Model Analysis
Fenia Megremi
Christina Loukissa
Burag Peksezer
Lara Zaccaria
Siqi Yang
Sandeep ...
WHAT IS DIGITAL
MERCHANDISING?
• Digital Merchandising defines all the activities involved in
selling goods and services t...
BRICKS & CLICKS (or Clicks & Mortar)
A business model by which a company integrates both offline
(bricks) and online (clic...
CATALOGUE MERCHANTS
(or Clicks & flips)
A variation of "bricks and clicks" that includes catalogue
shopping
Features
• Sma...
PURE PLAYERS
(Virtual Merchants or E-tailers)
Companies that handle their business appearance, the sales
process and the c...
BIT VENDORS
A merchant that deals strictly in digital products and services
and, in its purest form, conducts both sales a...
CHARACTERISTICS OF
E-MERCHANTS
Websites as a tool that converges their business goals with
the customers’ needs.
3 Key con...
Ubiquity
Serving
anytime/anywhere. No
waiting, no queus, larger
storage
Global Reach
Across boundaries,
across continents
...
Attract
• Seo
• Keywords
• Social Media
Presence
• Forums & Blogs
Convert
• Appearance
• Website Design
• Easy navigation
...
KEY FACTS
£ 70.9bn
Group Sales
£ 2.3bn
Group profıt
before tax
6,784
Stores
Worldwide
12
Markets
Source: http://files.the-...
TESCO ONLINE BUSINESS MODEL
Key Partners
• Suppliers and
businesses at a
regional and local level
• Local joint ventures
•...
TESCO’s 5C
Coordination
Facebook, Twitter, G+,
Pinterest, blogs, Youtube
review videos and customer
segmentation
Commerce
...
TRENDS OVERVIEW
- Mobile Commerce - Increasing number of apps, sites
becoming mobile apps
- Changing demographic – Y gener...
MOBILE TRENDS
• '‘Real-time technologies and location-based services are
expected to drive mobile retail'‘ Mashable,2010
S...
ENVIRONMENT & STRATEGY
Tesco’s strategy
Pursuing disciplined international growth and establish
a multi-channel leadership...
PERFORMANCE
Is TESCO really loved by customers?
• 70% retained loyal customers
• 29% of new loyal customers
• 59,7% custom...
ISSUES
• Pest Analysis
• Political
• Economic
• Social
• Technological
• Competitors
Bricks &Clicks Pure Players Potential
ISSUES
• Go for products with discounts.
• Verify rates with other supermarkets.
Customer Mentality
• Few issues of being ...
WAYS TO TACKLE AND
FUTURE PROPOSITION
• Competitiveness
• Focusing more on price competitiveness.
• Decreasing the deliver...
Sources - Definitions
1. http://www.investopedia.com/terms/e/electronic-retailing-e-tailing.asp
2. http://en.wikipedia.org...
Sources - Characteristics
1. Ryan, Damien. 2014, Understanding Digital Marketing, London. Kogan Book
2. http://www.webolog...
Sources – Business Model
1. http://research-methodology.net/tesco-segmentation-targeting-and-positioning-2/
2. http://www....
Sources - Trends
1. http://www.tescoplc.com/index.asp?pageid=548#ref_index.asp?pageid=540
2. http://www.coriolisresearch.c...
Sources - Issues
1. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10769680/The-five-
numbers-that-high...
UCD Smurfit: Digital Merchants Business Model Analysis
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UCD Smurfit: Digital Merchants Business Model Analysis

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Six international MSc Digital Marketing students and one challenge: analyzing the business model of the Digital Merchants to find the main issues and suggest a way to address them.
Part of the course: "Digital Business Models & E-Commerce".
Instructor: Sébastien Ronteau
Students:
• Christina Loukissa
• Fenia Megremi
• Burag Peksezer
• Siqi Yang
• Lara Zaccaria
• Sandeep Ravindran

Published in: Business
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UCD Smurfit: Digital Merchants Business Model Analysis

  1. 1. DIGITAL MERCHANTS Business Model Analysis Fenia Megremi Christina Loukissa Burag Peksezer Lara Zaccaria Siqi Yang Sandeep Ravindran
  2. 2. WHAT IS DIGITAL MERCHANDISING? • Digital Merchandising defines all the activities involved in selling goods and services through the Internet and can include business-to-consumer as well as business-to- business sales.
  3. 3. BRICKS & CLICKS (or Clicks & Mortar) A business model by which a company integrates both offline (bricks) and online (clicks) presences Features • Traditional retailers with strong brand equity • Extensive logistics and supply chains • Traditional face-to-face service and existing customer base Challenges • Integration with bricks & mortar operations • High costs of physical stores • Different value proposition for on line shoppers (e.g. big sizes)
  4. 4. CATALOGUE MERCHANTS (or Clicks & flips) A variation of "bricks and clicks" that includes catalogue shopping Features • Small investment on physical stores • Utilizing an existing print asset to extend the online reach Challenges • Adapting in the digital context • The changing customer behavior • Growing competition from both store and non-store retailing
  5. 5. PURE PLAYERS (Virtual Merchants or E-tailers) Companies that handle their business appearance, the sales process and the customer service completely online. They don't appear physically to the customer at any time. Features • No investment for physical presence • Information • Convenience Challenges • High costs for logistics • Higher investments for customer relationship management and marketing • Security concerns
  6. 6. BIT VENDORS A merchant that deals strictly in digital products and services and, in its purest form, conducts both sales and distribution over the web. Features • Infinite storage space • Much smaller overhead costs • More efficient use of digital channels Challenges • Interdependent on hardware sales • Emerging competition – Spotify, Android, Pirate, Deezer
  7. 7. CHARACTERISTICS OF E-MERCHANTS Websites as a tool that converges their business goals with the customers’ needs. 3 Key contexts • Efficient in attracting customers • Functional site architecture and content • Realiable in payments, delivery and customer relations.
  8. 8. Ubiquity Serving anytime/anywhere. No waiting, no queus, larger storage Global Reach Across boundaries, across continents Universal Standards Same or similar standards for site founding, membership, navigation Information Density Accurate inexpensive and plentiful information,. Easy to compare, easier to decide Interactive Responsive buying process. Accessible and self-reachable Information Richness Different forms of content: Video, audio, and text contents, Personalization & Customization Customized search, profiles, relevant content, personalized messages User Generated Content Shares, reviews, recommendations on site, WOM effect MAIN CHARACTERISTICS OF CUSTOMER JOURNEY
  9. 9. Attract • Seo • Keywords • Social Media Presence • Forums & Blogs Convert • Appearance • Website Design • Easy navigation tools • Easy architecture Close –Security • Distinct categories • Good navigation, search bar • Delivery Options • Partners • Policies SALE & AFTER SALE • Customer Relations • Social media- CRM, UGC • Building Communities, • Newsletters • Loyalty Programs Ubiquity Global Reach Info Richness Universal Standards Interacti vity Info Density Personali zation User Generated Content ENVIRONMENTAL EFFECTS • Higher operating uncertainty • Rapidly changing environment • High investment in Mobile Commerce and other trends • Large Storage – Long Tail (Earn from less) FINANCIAL RESULTS • Large expenditures on site development • Large expenditures on customer acquisition or traffic analysis • Low levels of revenues • Fast growth in revenues
  10. 10. KEY FACTS £ 70.9bn Group Sales £ 2.3bn Group profıt before tax 6,784 Stores Worldwide 12 Markets Source: http://files.the-group.net/library/tesco/annualreport2014/pdfs/tescoar14_ataglance.pdf
  11. 11. TESCO ONLINE BUSINESS MODEL Key Partners • Suppliers and businesses at a regional and local level • Local joint ventures • Associations Key Activities • Buying and selling consumer goods. • Effective distribution system • Collect feedback suggestion and information • Analyzing consumers demand and traffic • Warehousing and Logistics Key Resources • Web site and accounts on various digital platforms • Access to Clubcard holders data • Warehousing and logistics • IT infrastructure Value Proposition • Wide selection variety combined • By 7/24 shopping experience • Safe online buying • Personalized shopping experience for cardholders • Home delivery or collecting from preferable Tesco store • Convenient shopping – no lines Customer Relationships • Long-term relationship • Identify and Retain loyal customers Clubcard • Attract more consumers • Listen to consumers in a number of ways Channels • Stores • Tesco’s website • Social Media (Twitter, Facebook, ) • Mobıle application • Dedicated websites e.g.tescoplc.com tescomedia.com, etc Customer Segments Mass Market segmentatıon:  Low – middle Income  Easy going, traditional lıfestyle  Student  Housewife  Older people  Tesco.com Subscribers Cost Structure • Staff • IT Infrastructure • Warehousing and logistics • Capital Expenditure Revenue Streams • Sale of goods • Home Product Delivery
  12. 12. TESCO’s 5C Coordination Facebook, Twitter, G+, Pinterest, blogs, Youtube review videos and customer segmentation Commerce Delivery systems, Security systems , trade partners and large inventory Community Tesco baby, ladies and charity contests-more directed to the house wives. Old people care, local household communities Content Personalized content, preferances driven, well architectured website Communication NetPromoter Community, Mobile applications, E mail marketing
  13. 13. TRENDS OVERVIEW - Mobile Commerce - Increasing number of apps, sites becoming mobile apps - Changing demographic – Y generation, Millenials - New technologies - NFC, Augmented reality - Security & privacy - Biometric recognition
  14. 14. MOBILE TRENDS • '‘Real-time technologies and location-based services are expected to drive mobile retail'‘ Mashable,2010 Source: https://www.linkedin.com/pulse/article/20140801235123-11284593-m-commerce-numbers-you-shouldn-t- miss
  15. 15. ENVIRONMENT & STRATEGY Tesco’s strategy Pursuing disciplined international growth and establish a multi-channel leadership in all 12 markets using the UK Model. Priorities • Becoming leading multi-channel retailer • Improving TESCO brand equity • Expanding globally • Transparency • Multi-channel customer centric market strategy
  16. 16. PERFORMANCE Is TESCO really loved by customers? • 70% retained loyal customers • 29% of new loyal customers • 59,7% customers shopping across channels • 64.3% shop the brand family
  17. 17. ISSUES • Pest Analysis • Political • Economic • Social • Technological • Competitors Bricks &Clicks Pure Players Potential
  18. 18. ISSUES • Go for products with discounts. • Verify rates with other supermarkets. Customer Mentality • Few issues of being non-responsive. • Being rude, call waiting Customer Care • Improper logistics • Out of stock. • Delivery as a competitive advantage Logistics • Quality ControlSupply Chain
  19. 19. WAYS TO TACKLE AND FUTURE PROPOSITION • Competitiveness • Focusing more on price competitiveness. • Decreasing the delivery expenses • Improving the Customer Value • Bringing more Dark Stores • Personalized suggestions and special offers • Creating a higher quality customer service. • Making deeper analysis of Clubcard holders to anticipate trends and use it to gain market share • Improving the online user experience with new features like live chats • Constant Innovation • Redesigning the offline store and integrating with online • In online shopping having new innovations like 3D experience, Microsoft photosynth
  20. 20. Sources - Definitions 1. http://www.investopedia.com/terms/e/electronic-retailing-e-tailing.asp 2. http://en.wikipedia.org/wiki/Catalog_merchant 3. http://en.wikipedia.org/wiki/Brick_and_mortar 4. http://en.wikipedia.org/wiki/Bricks_and_clicks 5. http://en.ecommercewiki.info/fundamentals/business_models/virtual_merchants 6. http://ie.com.au/the-survival-of-the-catalogue-in-the-digital-age/ 7. http://digitalenterprise.org/models/models.html#Merchant 8. businessmodelgallery.com 9. http://www.scribd.com/doc/13892099/E-Retailing
  21. 21. Sources - Characteristics 1. Ryan, Damien. 2014, Understanding Digital Marketing, London. Kogan Book 2. http://www.webology.org/2010/v7n1/a77.html 3. http://classes.soe.ucsc.edu/ism050/Fall00/obriench8/sld039.htm 4. http://www.ehow.com/info_12021311_eight-features-ecommerce-technology.html 5. http://www.tokyowebdesigns.com/advice/1192/35-key-e-commerce-platform- features#.VBv2Vfl_tqU 6. http://www.hubspot.com/products/calls-to-action 7. http://www.searchenginejournal.com/15-must-have-features-ecommerce-site/27233/ 8. http://www.reportlinker.com/ci02106/E-commerce.html 9. http://www.qfinance.com/sector-profiles/e-commerce 10. http://www.businessnewsdaily.com/5097-virtual-merchant.html 11. http://www.slideshare.net/mauriciogq/introduction-to-ecommerce-12876912
  22. 22. Sources – Business Model 1. http://research-methodology.net/tesco-segmentation-targeting-and-positioning-2/ 2. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9356088/Tesco.com-to- split-customers-according-to-wealth-and-age.html 3. http://www.essay.uk.com/business-resources/case-study-database/tesco-case-study.php 4. http://en.wikipedia.org/wiki/Tesco#Internet_retailin 5. http://www.tescoplc.com/index.asp?pageid=160#ref_partnerships 6. http://www.tescoplc.com/files/pdf/reports/ar14/download_strategic_report.pdf 7. http://www.tescoplc.com/files/reports/ar2012/index.asp?pageid=19Insight: 8. https://www.youtube.com/watch?v=bf9Xe_xYMkc.
  23. 23. Sources - Trends 1. http://www.tescoplc.com/index.asp?pageid=548#ref_index.asp?pageid=540 2. http://www.coriolisresearch.com/pdfs/coriolis_tesco_study_in_excellence.pdf 3. http://www.gurufocus.com/news/128547/tesco-plc-tscdy-business-and-value-analysis 4. http://businesscasestudies.co.uk/tesco/#axzz3DgsiC9WX 5. https://www.pwc.com/es_CL/cl/publicaciones/assets/retailing2015.pdf 6. http://mobilenext.net/mcommerce-numbers-you-shouldnt-miss-infographic/ 7. https://www.linkedin.com/pulse/article/20140801235123-11284593-m-commerce-numbers- you-shouldn-t-miss 8. http://mashable.com/2010/04/13/mobile-web-stats/ 9. http://www.internetretailer.com/2014/03/10/mobile-commerce-will-be-nearly-half-e-commerce- 2018
  24. 24. Sources - Issues 1. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10769680/The-five- numbers-that-highlight-Tescos-problems.html 2. http://www.dailymail.co.uk/news/article-2113233/Tesco-forced-apologise-customers-plagued- problems-30m-dotcom-store.html 3. https://ie.trustpilot.com/review/www.tesco.com 4. http://www.independent.ie/business/irish/dan-white-clarke-faces-tough-task-as-new-tesco- ireland-boss-29313757.html 5. https://dataprotection.ie/Viewtxt.asp?DocID=1195#4 6. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10769680/The-five- numbers-that-highlight-Tescos-problems.html 7. http://www.theguardian.com/uk-news/2013/oct/22/horsemeat-scandal-guardian-investigation- public-secrecy 8. http://www.bestdaily.co.uk/food/news/a560353/supermarket-spy-tests-online-shopping.html 9. https://uk.finance.yahoo.com/news/the-best-value-supermarket-for-your-online-shop.html 10. http://www.dailymail.co.uk/news/article-2561697/Aldi-edges-Waitrose-favourite-supermarket- Chain-voted-best-provides-value-money.html 11. http://www.ft.com/intl/cms/s/0/fb345f5e-0650-11e2-bd29-00144feabdc0.html#axzz3DxMkoI8i

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