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Retail Management: A Strategic
Approach
Thirteenth Edition
Chapter 6
Web, Nonstore-
based, And Other
Forms Of
Nontraditional
Retailing
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Learning Objectives (1 of 2)
6.1 To contrast single-channel and multi-channel retailing
6.2 To look at the characteristics of the three major retail
institutions involved with non store-based strategy
mixes: direct marketing, direct selling, and vending
machines – with an emphasis on direct marketing
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Learning Objectives (2 of 2)
6.3 To explore the emergence of electronic retailing through
the World Wide Web
6.4 To discuss two other nontraditional forms of retailing:
video kiosks and airport retailing
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Figure 6.1 Approaches to Retailing
Channels
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Non-store Retailing
• Retailing strategy that is not store-based
• direct marketing
• Web-based retailing is the fastest- growing area
– M/SMS-commerce
– Social commerce
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Direct Marketing
• Customer is initially exposed to a good or service through
a non-personal medium and then orders by mail, phone,
fax, smart phone, or computer
• Annual U.S. sales exceed $475 billion (including the Web)
• Other leading countries include
– Japan
– Germany
– Great Britain
– France
– Italy
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Characteristics of Direct Marketing
Customers
• Married
• Upper middle class
• 35-50 years old
• Have access to wifi and broadband Internet
• Are multi-screen shoppers
• Desire convenience, unique items, good prices
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Strategic Business Advantages of
Direct Marketing
• Reduced costs
• Lower prices
• Large geographic coverage
• Convenient to customers
• Ability to pinpoint customer segments
• Ability to eliminate sales tax for some
• Ability to supplement regular business without additional
outlets
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Strategic Business Limitations of
Direct Marketing
• Products often cannot be examined prior to purchase
• Costs may be underestimated
• Response rates to catalogs under 10%
• Clutter exists
• Long lead time required
• Industry reputation sometimes negative
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Clickstream Retailing
• Collection, storage, and usage of relevant customer
information
– name
– address
– background
– shopping interests
– purchase behavior
• Observation of 80-20 rule
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Emerging Trends
• Evolving activities
• Changing customer lifestyles
• Increasing competition
• Increasing usage of dual distribution channels
• Changing media roles, technological advances, and global
penetration
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Selection Factors by Customers
• Company reputation and image
• Ability to shop whenever consumer wants
• Types of goods and services
• Availability of toll-free phone number, Web site or mobile
app for ordering
• Credit card acceptance
• Speed of promised delivery time
• Competitive prices
• Satisfaction with past purchases and good return policy
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Figure 6.4 Executing a Direct
Marketing Strategy
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Media Selection
• Printed catalogs
• Direct-mail ads and
brochures
• Inserts with monthly credit
card and other bills
(statement stuffers)
• Freestanding displays
• Ads or programs in mass
media
• Banner ads or hot links on
the Web
• Video kiosks
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Outcome Measures (RFM)
• Overall response rate (R)
• Frequency of purchases (F)
• Average purchase amount (M)
• Sales volume by product category
• Value of list brokers
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Direct Selling
• Direct selling includes personal contact with consumers in
their homes (and other nonstore locations such as offices)
and phone solicitations initiated by retailer.
• Annual sales of $35 billion in the U.S., where 18.2 million
people are employed (more than 90 percent part-time).
• Annual foreign revenues of $185 billion, generated by 100
million salespeople.
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Table 6.2 A Snapshot of the U.S.
Direct Selling Industry
Major Product Groups (as a percent of
sales)
2012 2015
Home and family care products/home
durables
24.4 16.3
Wellness (weight loss products, vitamins, etc.) 23.0 33.6
Personal care 19.4 17.1
Services 19.2 21.9
Clothing 11.0 8.8
Leisure/educational (books, encyclopedias,
toys/games, etc.
3.0 2.3
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Web Strengths: Consumer Appeal
Using the Web
• Information
• Entertainment
• Interactive
communications
• Personalization
• Peer-reviews
Shopping Online
• Low search costs
• Endless selection
• Prices
• Convenience
• Fun
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Figure 6.7 Global Consumers’ Online Retail
Purchases, 2016 (Selected Product Categories)
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
How has the World Wide Web
Changed Shopping Behavior?
• Decoupled ordering, payment, and delivery
• Website design/interaction – drives retailer image
• Fulfillment/reliability: 24/7/365. Buy, pay, pick-up anywhere,
anytime
• Customer service – info from retailer, must also provide
peer-reviews
• Security/privacy – personalize for “me only when I need it”
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
How Payment has Decoupled From
Ordering and Pick-Up
Need
Recognition
Information
Search
Purchase
Ordering + Payment + Pick-up
Post
Purchase
Evaluation
Store
Remote channels
(pre-credit card)
Remote
channels
(post-credit card)
Cross-channel
Need
Recognition
Information
Search
Ordering
Delivery+
Payment
Post
Purchase
Evaluation
Need
Recognition
Information
Search
Ordering +
Payment Delivery
Post
Purchase
Evaluation
Need
Recognition
Information
Search
Ordering
Pick-up/
Delivery
Post
Purchase
Evaluation
Paymen
t
Consumers select channels based on when and where they want to pay
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Cross-Channel Shopping Behavior
(Payment and Pickup Decoupled)
Need
Recognition
Information
Search
Ordering Payment Pick-up/
Delivery
Post
Purchase
Service
Store
Website
Social
Mobile
Channels
used by
Firms
(O+P)online – (Pickup)store:
Order and pay online, pick-up in-
store
Purchase transaction stages
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Reasons NOT to Shop Online
• Online shopping accounts for only 8% overall retail spend!
• Lack of trust in retailer
• Fear of fraud
• Lack of security (credit card access)
• Lack of personal communication
• High shipping costs
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Figure 6.9 Checklist of Retailer
Decisions for the Web
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Recommendations for Web
Retailers (1 of 2)
• Develop or exploit a well-known, trustworthy retailer name
• Tailor the product assortment for Web shoppers
• Enable the shopper to “click” as little as possible-
Amazon.com one-click option
• Provide an effective search engine
• Permission-based use of customer information
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Recommendations for Web
Retailers (2 of 2)
• Include unedited ratings and reviews for customers to
increase consumer information and to reduce risk
• Personalize the shopping experience for each shopper
based on past purchases and previous Web searches
• Include free shipping or one time shipping fee for unlimited
shipping
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Optimizing Customers’ Web-Based
Service Experience (1 of 3)
• Service experience based on delivery speed, speed with
which questions are answered, customer’s ability to find
suitable product and accurate portrayal of good (features,
color, style and fit)
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Optimizing Customers’ Web-Based
Service Experience (2 of 3)
• Access to call center personnel through instant messaging
and Email—L.L.Bean’s “click and call” features
• Personalization--Use of computer algorithms to show
suggested products
• Customer reviews
• One-click checkout
• Demonstration videos
• Amazon Remembers-matches photos to actual products
available on amazon.com
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Optimizing Customers’ Web-Based
Service Experience (3 of 3)
• Zappos– full service online shoe retailer
– Free returns, free online shipping
– 365 day return policy
– Eliminated drop shipping due to inability to control on-
time delivery
– Manage 1,417 brands, 152,000 styles, 824,000 UPC
codes
– 4 week new hire training program + 2 weeks in the call
center
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Creating Shopping Experience for
Amazon Customers
Please click URL to view:
https://youtu.be/PeWzMmmDlQM
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Omni channel Retailing
• Seeks synergies among formats (get product information
on Web, order through catalog, pick-up in store, use kiosks
for out-of-stock merchandise)
• Retailer views each channel as creating value (immediacy
of store, 24/7 of Web, long lasting impression of catalog)
• Channels are viewed as complementary, not competitive
(Costco Web site vs. store)
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Principles of Omni Channel Retailing
• Use same product identification in all channels
• Price goods the same in all channels
• Assess infrastructure economies. Direct marketer data
base and delivery system.
• Cross promote goods across channels.
• Use suitable partners (Amazon to sell, Fedex to deliver)
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Nontraditional Retailing
• Nontraditional retailing includes hybrid formats that do not
fit into store and nonstore-based categories to extend
retailers’ footprint :
– Vending machines
– Video kiosks
– Airport retailing
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Vending Machines
• Vending machines are a cash- or card-operated retailing
format that sells goods and services.
• Eliminates the use of sales personnel and allows 24-hour
sales. Lowers costs and risks.
• Machines placed wherever convenient for consumers, but
not for store.
• 95 percent of the $50 billion in annual U.S. vending
machine sales involve hot/cold beverages and food items.
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Advanced Shopping Technology at
Amazon Go
Please click URL to view:
https://youtu.be/NrmMk1Myrxc
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Video Kiosks
• A video kiosk is a freestanding, interactive, electronic
computer terminal that displays products and related
information.
• Some kiosks are located in stores to enhance customer
service; others let consumers place orders.
• There are 2.2 million video kiosks in use throughout the
world, nearly 1 million of which are Internet-connected.
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Airport Retailing
• Large group of prospective shoppers
• Captive audience
• Strong sales-per-square-foot of retail space
• Strong sales of gift and travel items
• Difficulty in replenishment
• Longer operating hours
• Duty-free shopping possible
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Airport Omnichannel E-Commerce
Please click URL to view:
https://youtu.be/x1u6v0_9IQE
Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
Copyright

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berman_retailmgmt13e_ppt_06.pptx

  • 1. Retail Management: A Strategic Approach Thirteenth Edition Chapter 6 Web, Nonstore- based, And Other Forms Of Nontraditional Retailing Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved.
  • 2. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Learning Objectives (1 of 2) 6.1 To contrast single-channel and multi-channel retailing 6.2 To look at the characteristics of the three major retail institutions involved with non store-based strategy mixes: direct marketing, direct selling, and vending machines – with an emphasis on direct marketing
  • 3. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Learning Objectives (2 of 2) 6.3 To explore the emergence of electronic retailing through the World Wide Web 6.4 To discuss two other nontraditional forms of retailing: video kiosks and airport retailing
  • 4. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Figure 6.1 Approaches to Retailing Channels
  • 5. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Non-store Retailing • Retailing strategy that is not store-based • direct marketing • Web-based retailing is the fastest- growing area – M/SMS-commerce – Social commerce
  • 6. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Direct Marketing • Customer is initially exposed to a good or service through a non-personal medium and then orders by mail, phone, fax, smart phone, or computer • Annual U.S. sales exceed $475 billion (including the Web) • Other leading countries include – Japan – Germany – Great Britain – France – Italy
  • 7. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Characteristics of Direct Marketing Customers • Married • Upper middle class • 35-50 years old • Have access to wifi and broadband Internet • Are multi-screen shoppers • Desire convenience, unique items, good prices
  • 8. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Strategic Business Advantages of Direct Marketing • Reduced costs • Lower prices • Large geographic coverage • Convenient to customers • Ability to pinpoint customer segments • Ability to eliminate sales tax for some • Ability to supplement regular business without additional outlets
  • 9. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Strategic Business Limitations of Direct Marketing • Products often cannot be examined prior to purchase • Costs may be underestimated • Response rates to catalogs under 10% • Clutter exists • Long lead time required • Industry reputation sometimes negative
  • 10. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Clickstream Retailing • Collection, storage, and usage of relevant customer information – name – address – background – shopping interests – purchase behavior • Observation of 80-20 rule
  • 11. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Emerging Trends • Evolving activities • Changing customer lifestyles • Increasing competition • Increasing usage of dual distribution channels • Changing media roles, technological advances, and global penetration
  • 12. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Selection Factors by Customers • Company reputation and image • Ability to shop whenever consumer wants • Types of goods and services • Availability of toll-free phone number, Web site or mobile app for ordering • Credit card acceptance • Speed of promised delivery time • Competitive prices • Satisfaction with past purchases and good return policy
  • 13. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Figure 6.4 Executing a Direct Marketing Strategy
  • 14. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Media Selection • Printed catalogs • Direct-mail ads and brochures • Inserts with monthly credit card and other bills (statement stuffers) • Freestanding displays • Ads or programs in mass media • Banner ads or hot links on the Web • Video kiosks
  • 15. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Outcome Measures (RFM) • Overall response rate (R) • Frequency of purchases (F) • Average purchase amount (M) • Sales volume by product category • Value of list brokers
  • 16. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Direct Selling • Direct selling includes personal contact with consumers in their homes (and other nonstore locations such as offices) and phone solicitations initiated by retailer. • Annual sales of $35 billion in the U.S., where 18.2 million people are employed (more than 90 percent part-time). • Annual foreign revenues of $185 billion, generated by 100 million salespeople.
  • 17. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Table 6.2 A Snapshot of the U.S. Direct Selling Industry Major Product Groups (as a percent of sales) 2012 2015 Home and family care products/home durables 24.4 16.3 Wellness (weight loss products, vitamins, etc.) 23.0 33.6 Personal care 19.4 17.1 Services 19.2 21.9 Clothing 11.0 8.8 Leisure/educational (books, encyclopedias, toys/games, etc. 3.0 2.3
  • 18. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Web Strengths: Consumer Appeal Using the Web • Information • Entertainment • Interactive communications • Personalization • Peer-reviews Shopping Online • Low search costs • Endless selection • Prices • Convenience • Fun
  • 19. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Figure 6.7 Global Consumers’ Online Retail Purchases, 2016 (Selected Product Categories)
  • 20. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. How has the World Wide Web Changed Shopping Behavior? • Decoupled ordering, payment, and delivery • Website design/interaction – drives retailer image • Fulfillment/reliability: 24/7/365. Buy, pay, pick-up anywhere, anytime • Customer service – info from retailer, must also provide peer-reviews • Security/privacy – personalize for “me only when I need it”
  • 21. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. How Payment has Decoupled From Ordering and Pick-Up Need Recognition Information Search Purchase Ordering + Payment + Pick-up Post Purchase Evaluation Store Remote channels (pre-credit card) Remote channels (post-credit card) Cross-channel Need Recognition Information Search Ordering Delivery+ Payment Post Purchase Evaluation Need Recognition Information Search Ordering + Payment Delivery Post Purchase Evaluation Need Recognition Information Search Ordering Pick-up/ Delivery Post Purchase Evaluation Paymen t Consumers select channels based on when and where they want to pay
  • 22. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Cross-Channel Shopping Behavior (Payment and Pickup Decoupled) Need Recognition Information Search Ordering Payment Pick-up/ Delivery Post Purchase Service Store Website Social Mobile Channels used by Firms (O+P)online – (Pickup)store: Order and pay online, pick-up in- store Purchase transaction stages
  • 23. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Reasons NOT to Shop Online • Online shopping accounts for only 8% overall retail spend! • Lack of trust in retailer • Fear of fraud • Lack of security (credit card access) • Lack of personal communication • High shipping costs
  • 24. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Figure 6.9 Checklist of Retailer Decisions for the Web
  • 25. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Recommendations for Web Retailers (1 of 2) • Develop or exploit a well-known, trustworthy retailer name • Tailor the product assortment for Web shoppers • Enable the shopper to “click” as little as possible- Amazon.com one-click option • Provide an effective search engine • Permission-based use of customer information
  • 26. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Recommendations for Web Retailers (2 of 2) • Include unedited ratings and reviews for customers to increase consumer information and to reduce risk • Personalize the shopping experience for each shopper based on past purchases and previous Web searches • Include free shipping or one time shipping fee for unlimited shipping
  • 27. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Optimizing Customers’ Web-Based Service Experience (1 of 3) • Service experience based on delivery speed, speed with which questions are answered, customer’s ability to find suitable product and accurate portrayal of good (features, color, style and fit)
  • 28. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Optimizing Customers’ Web-Based Service Experience (2 of 3) • Access to call center personnel through instant messaging and Email—L.L.Bean’s “click and call” features • Personalization--Use of computer algorithms to show suggested products • Customer reviews • One-click checkout • Demonstration videos • Amazon Remembers-matches photos to actual products available on amazon.com
  • 29. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Optimizing Customers’ Web-Based Service Experience (3 of 3) • Zappos– full service online shoe retailer – Free returns, free online shipping – 365 day return policy – Eliminated drop shipping due to inability to control on- time delivery – Manage 1,417 brands, 152,000 styles, 824,000 UPC codes – 4 week new hire training program + 2 weeks in the call center
  • 30. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Creating Shopping Experience for Amazon Customers Please click URL to view: https://youtu.be/PeWzMmmDlQM
  • 31. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Omni channel Retailing • Seeks synergies among formats (get product information on Web, order through catalog, pick-up in store, use kiosks for out-of-stock merchandise) • Retailer views each channel as creating value (immediacy of store, 24/7 of Web, long lasting impression of catalog) • Channels are viewed as complementary, not competitive (Costco Web site vs. store)
  • 32. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Principles of Omni Channel Retailing • Use same product identification in all channels • Price goods the same in all channels • Assess infrastructure economies. Direct marketer data base and delivery system. • Cross promote goods across channels. • Use suitable partners (Amazon to sell, Fedex to deliver)
  • 33. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Nontraditional Retailing • Nontraditional retailing includes hybrid formats that do not fit into store and nonstore-based categories to extend retailers’ footprint : – Vending machines – Video kiosks – Airport retailing
  • 34. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Vending Machines • Vending machines are a cash- or card-operated retailing format that sells goods and services. • Eliminates the use of sales personnel and allows 24-hour sales. Lowers costs and risks. • Machines placed wherever convenient for consumers, but not for store. • 95 percent of the $50 billion in annual U.S. vending machine sales involve hot/cold beverages and food items.
  • 35. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Advanced Shopping Technology at Amazon Go Please click URL to view: https://youtu.be/NrmMk1Myrxc
  • 36. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Video Kiosks • A video kiosk is a freestanding, interactive, electronic computer terminal that displays products and related information. • Some kiosks are located in stores to enhance customer service; others let consumers place orders. • There are 2.2 million video kiosks in use throughout the world, nearly 1 million of which are Internet-connected.
  • 37. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Airport Retailing • Large group of prospective shoppers • Captive audience • Strong sales-per-square-foot of retail space • Strong sales of gift and travel items • Difficulty in replenishment • Longer operating hours • Duty-free shopping possible
  • 38. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Airport Omnichannel E-Commerce Please click URL to view: https://youtu.be/x1u6v0_9IQE
  • 39. Copyright © 2017, 2015, 2013 Pearson Education, Inc. All Rights Reserved. Copyright

Editor's Notes

  1. If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed: 1) MathType Plugin 2) Math Player (free versions available) 3) NVDA Reader (free versions available)
  2. At the beginning, a retailer often relies on single-channel retailing, whereby it sells to consumers through one retail format. That one format may be store-based (a corner shoe store) or nonstore-based (catalog retailing, direct selling, or Web retailing). As the firm grows, it may turn to multichannel retailing, whereby a retailer sells to consumers through multiple retail formats. To optimize efficiency and enhance customer experiences, the best retailers turn to omnichannel retailing, and deliver a consistent, uninterrupted, and seamless experience regardless of channel or device.
  3. Some types of non-store retailing will continue to grow, while others will not. Direct marketing will show the most growth as a result of its diversity, rising consumer confidence in it, overcrowding at stores, increases in working women, technological breakthroughs, etc. Vending machines and direct selling will show little growth as a result of rising costs, limited applications, and consumer distrust.
  4. Direct marketing is a type of retailing where a customer is made aware of a good/service through a nonpersonal medium and then proceeds to place an order by the mail, phone, fax, or via computer, smart phone or tablet. Strengths of direct marketing include the appeal it has to those who need a flexible shopping alternative to store-based retailing, increased sales, reduced costs, lower prices, and easier targeting of customers.
  5. In the United States, direct-marketing customers are more apt to be middle class. Mail shoppers are more likely to live in areas away from malls. And, because they want to avoid traffic and save time, phone shoppers are more likely to live in upscale metropolitan areas. The share of direct-marketing purchases made by men has grown: The average consumer who buys direct spends several hundred dollars per year, and he or she wants convenience, unique products, and good prices.
  6. Many costs are reduced—even low startup costs are possible; inventories are reduced; no displays are needed; a prime location is unnecessary; regularly staffed store hours are not important; a sales force may not be needed; and business may be run out of a garage or basement. It is possible for direct marketers to have lower prices (due to reduced costs) than store-based retailers. A huge geographic area can be covered inexpensively and efficiently. Customers shop conveniently—without crowds, parking congestion, or checkout lines. And they do not have safety concerns about shopping late at night. Specific consumer segments are pinpointed through targeted mailings. Consumers may sometimes legally avoid sales tax by buying from direct marketers not having retail facilities in their state (however, some states want to eliminate this loophole). A store-based firm can supplement its regular business and expand its trading area (even becoming national or global) without adding outlets.
  7. Products cannot be examined before purchase. Thus, the range of items purchased is more limited than in stores, and firms need liberal return policies to attract and keep customers. Firms may underestimate costs. Catalogs can be costly. Computer systems must track shipments, purchases, and returns, and keep lists current. A 24-hour phone staff may be needed. Even successful catalogs often draw purchases from less than 10 percent of recipients. Clutter exists. Each year, billions of E-mails and catalogs are mailed in the United States alone. Printed catalogs are prepared well in advance, causing difficulties in price and style planning. Some firms have given the industry a bad name due to delivery delays and shoddy goods.
  8. Evolving Activities Web and mobile technology has moved to the forefront in all aspects of direct marketing—from lead generation to order processing. Multiple points of customer contact are offered by most firms today. Changing Customer Lifestyles Consumer lifestyles in the United States have shifted, mostly due to the numerous women who are now in the labor force and the longer commuting time to and from work for suburban residents. Many consumers no longer have the time or inclination to shop at stores. They are attracted by the ease of purchasing through direct marketing. (Selection Factors by Customers) Increased Competition Intense competition exists because entry into direct marketing is easier and less costly than entry into store retailing. A firm does not need a store; can operate with a small staff; can use low-cost 1-inch magazine ads, send brochures to targeted shoppers, and have an inexpensive Web site. It can also keep a low inventory and place orders with suppliers after people buy items (so long as it meets the “30-day rule”). Dual Distribution Channels Today, many stores add to their revenues by using ads, brochures, catalogs, and Web sites to obtain mail-order, phone, and computer-generated sales. They see that direct marketing is efficient, targets specific segments, appeals to people who might not otherwise shop with those firms, and needs a lower investment to reach other geographic areas than opening branch outlets. Changing Media Roles Many firms now print “specialogs” in addition to or instead of the annual catalogs showing all their products. To help defray costs, some companies accept ads from noncompeting firms that are compatible with their image. To stimulate sales and defray costs, some catalogs are sold in bookstores, supermarkets, and airports, as well as at company Web sites. The percentage of consumers buying a catalog who actually make a purchase is far higher than that for those who get catalogs in the mail.
  9. Consumer lifestyles in the United States have shifted, mostly due to the numerous women who are now in the labor force and the longer commuting time to and from work for suburban residents. Many consumers no longer have the time or inclination to shop at stores. They are attracted by the ease of purchasing through direct marketing.
  10. Business Definition First, a company makes two decisions as to its business definition: (1) Is the firm going to be a pure direct marketer or is it going to engage in multichannel or omnichannel retailing? If the firm chooses one of the latter two strategies, it must clarify the role of direct marketing in its overall retail strategy. (2) Is the firm going to be a general direct marketer and carry a broad product assortment or will it specialize in one product category? Generating Customers Buy a printed mailing list or an E-mail list from a broker. For one mailing, a list usually costs up to $50 to $100 or more per 1,000 names and addresses; if printed, it is supplied in mailing-label format. Lists may be broad or broken down by gender, location, and so on. In purchasing a list, the direct marketer should check its currency. Media Selection Printed and/or online catalogs Direct mail ads and brochures Inserts with monthly credit card and other bills (“statement stuffers”) Presenting The Message The next step in a direct-marketing strategy is the firm prepares and presents its message in a way that engenders interest, creates (or sustains) the proper image, points out compelling reasons to purchase, and provides data about goods or services (such as prices and sizes). Customer Contact For each campaign, a direct marketer decides whether to contact all customers in its data base or to seek specific market segments (with different messages and/or media for each). Customer Response Customers respond to direct marketers in one of three ways: (1) They buy through the mail, phone, fax, computer, or smart phone. (2) They request further information, such as a catalog. (3) They ignore the message. Purchases are generally made by no more than 2 to 3 percent of those contacted. Order Fulfillment A system is needed for order fulfillment. If orders are received by mail or fax, the firm must sort them, determine if payment is enclosed, see whether the item is in stock, mail announcements if items cannot be sent on time, coordinate shipments, and replenish inventory. Measuring Results And Maintaining The Data Base The last step in a direct-marketing strategy is analyzing results and maintaining the database.
  11. In  choosing among media, costs, distribution, lead time, and other factors should be considered.
  12. Overall response rate: The number and percentage of people who make a purchase after receiving or viewing a particular brochure, catalog, or Web site Average purchase amount: By customer location, gender, and so forth Sales volume by product category: Revenues correlated with the space allotted to each product in brochures, catalogs, and so forth Value of list brokers: The revenues generated by various mailing lists
  13. A direct-selling strategy emphasizes convenient shopping and a personal touch, and detailed demonstrations can be made. Consumers often relax more at home than in stores. They are also apt to be attentive and are not exposed to competing brands (as in stores). For some, such as older consumers and those with young children, in-store shopping is difficult due to limited mobility.
  14. From a consumer’s perspective, the Web provides a means to access a wider variety of products at a retail level (at even a global level) without leaving the home. It is especially useful for consumers at remote locations or for those who have difficulty leaving home to do their retail shopping. The Web also provides an opportunity for the consumer to comparison shop (both product and price-based) with relative ease; consumers on the Web have easy access to competitive analysis and product and price comparisons (via shopping bots). Web purchases offer the added bonus of increased privacy and anonymity over traditional storefront transactions, and are currently free of sales taxes in many instances.
  15. U.S. retail e-commerce sales as a percent of total retail sales has been increasing since 2006, and has a far higher growth rate than overall retail sales. Mobile commerce surged ahead of computer in terms of time spent shopping for the first time in early 2015 (59 percent compared to 41 percent for computer); however, it still lags computers in share of online spending (15 percent to 85 percent).
  16. For a retailer, the World Wide Web offers the advantages of the potential access to a larger customer base and operating on a 24/7 basis. The Web shortens the distance between the retail storefront and the customer. Also, a Web site is advantageous to a retailer in that it is inexpensive, builds image, provides data on store locations and products, promotes and explains a company’s offerings, enables consumers to choose what they want to view, and allows firms to gather feedback. In addition, specials can be promoted, employment opportunities are featured, and sales are generated.
  17. The Web may fall short for consumers who prefer to see products in person as they purchase them. The sense of the buying experience is changed when purchases are done over the Web. Consumers may easily adjust to buying items such as contact lens solution from a Web-based outlet, but may resist buying clothing from a Web-based retailer because they consider shopping for clothes an event that requires leaving the home. They may prefer to physically be at the retail outlet for the full experience. It may be for the simple reason that they always try on clothing before they buy, or just because they prefer to be in a mall setting to establish the mood for clothes shopping.
  18. Tailor the product assortment for Web shoppers, and keep freshening the offerings. With download speed in mind, provide pictures and ample product information. Enable shoppers to make as few clicks as possible to get information and place orders. Provide the best possible search engine at the firm’s Web site. Capitalize on information about customers and relationships. Integrate online and offline businesses, and look for partnering opportunities. With permission, save customer data to make future shopping trips easier.
  19. Indicate shipping fees upfront and be clear about delivery options. Do not promote items that are out of stock; and let shoppers know immediately if items will not be shipped for a few days. Offer online order tracking. Use a secure order entry system for shoppers. Prominently state the firm’s return and privacy policies.
  20. To enhance customer service on the World Wide Web, retailers should ensure consumers that purchases will be private and secure. Once consumers fears about shopping online are acknowledged, addressed, and overcome, there will be more likely to complete online purchases.
  21. Another important point is that Web-based retailers could improve the ease of transactions to prevent potential customers from backing out of online sales. Web sites should have as few forms as possible to fill out, and have ways to make repeat shopping easier (such as retention of credit card numbers and retention of preferred shipping information). Amazon.com’s one click purchase mode illustrates an easy to implement Web-based transaction.
  22. 2;53 mins. Inside Amazon Videos Amazon teams creating a great shopping experience for customers Published on Mar 9, 2016 Shoppers visiting Amazon.com have come to expect that they will find the products and services they are looking for with ease. It takes a lot of hard work from our Search Experience, Browse, Personalization and Catalog Quality teams to make the product discovery experience simple for customers. Our technical and product management teams use advanced techniques and customer data to create an intuitive shopping experience, touching every customer who visits Amazon.com and leading the eCommerce industry in search and discovery. To learn more about our teams, visit Amazon.jobs.
  23. The advantages of a multi-channel retailer include possible synergies among the multiple channels, being able to appeal to multiple types of consumers, diversification, and increased bargaining power due to greater overall sales. There is seldom integration or coordination among the separate channels or devices at a multichannel retailer. A multichannel retailer also seeks to maximize the performance of each separate channel.
  24. Nontraditional retailing also comprises video kiosks and airport retailing—two key formats not fitting neatly into “store-based” or “nonstore-based” retailing. Sometimes they are store-based; other times they are not. What they have in common is their departure from traditional retailing strategies.
  25. A vending machine is a cash- or card-operated retailing format that dispenses goods (such as beverages) and services (such as electronic arcade games). It eliminates use of sales personnel and allows 24-hour sales. Machines can be placed wherever convenient for consumers—inside or outside stores, in motel corridors, at train stations, or on street corners. Although there have been many attempts to “vend” clothing, magazines, and other general merchandise, the vast majority of the $65 billion in annual U.S. vending machine sales involve cold beverages, candy, snacks, and confections.
  26. 2;53 mins. Inside Amazon Videos Amazon teams creating a great shopping experience for customers Published on Mar 9, 2016 Shoppers visiting Amazon.com have come to expect that they will find the products and services they are looking for with ease. It takes a lot of hard work from our Search Experience, Browse, Personalization and Catalog Quality teams to make the product discovery experience simple for customers. Our technical and product management teams use advanced techniques and customer data to create an intuitive shopping experience, touching every customer who visits Amazon.com and leading the eCommerce industry in search and discovery. To learn more about our teams, visit Amazon.jobs.
  27. Kiosks can be used to supplement store-based sales for goods that are out-of-stock or that are only available on the Web or as a means of contacting customer service personnel. An electronics retailer, for example, can use a video kiosk to enable customers to surf the retailer’s Web site. This provides Web-based services in a retailer’s store environment.
  28. In the past, the leading airport retailers were fast-food outlets, tiny gift stores, and newspaper/magazine stands. Today, airports are a major mecca of retailing. At virtually every large airport, as well as at many medium ones, there are full-blown shopping areas. The potential retail market is huge. Worldwide, more than 1,200 commercial airports handle nearly 5 billion passengers each year—with North America accounting for one-third of global passenger traffic.
  29. 3:14 mins. Frankfurt Airport Omnichannel E-Commerce Launch Published on Apr 17, 2016 Watch how AOE & Magento turned Frankfurt Airport, Europe's largest travel hub and one of the largest shopping malls on the planet, into the most comprehensive Omnichannel E-Commerce experience ever conceived.  The Fraport project won "Omnichannel Site of the Year" at Imagine Conference 2016 in Las Vegas More about the project:  Case Study: https://www.aoe.com/en/projects/frank... Blogpost: https://www.aoe.com/en/blog/why-the-d... Project URL: https://shop.frankfurt-airport.com/