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Hybrid center development plan v5


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Newegg Hybrid Center Development Plan

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Hybrid center development plan v5

  1. 1. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. “Hybrid Center: More Than a Store” Project By: Tomas Lee, Product Management Director 02 Feb 2015
  2. 2. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Hybrid Center | Mission Statement “More Than a Store.” Its mission is to bridging the consumers and vendors in Online-to-Offline (O2O) business model. To the local community, strive for the “Eggcellent” value, deliver the best digital shopping experience and introduce the latest innovation. Moreover, function as a media platform to vendors interacting with Newegg customers directly.
  3. 3. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Hybrid Center | O2O sales model Retail Customers Hybrid Center Digital Shopping Experience Online Order Instant Pick- up 100% Customer Satisfaction 1. Natural visit 2. Web site referral 3. Will-call/ Drop-off 4. Promotion/ Event 5. Advertisement 1. Product Demo 2. Digital Kiosk 3. POP Signage 4. Customer Service Agent 1. Online-to-Offline Promotion 2. Showrooming 3. Face-to-face communication 4. Comfort & Security 1. In-store POS (Mobile Devices) 2. Newegg Mobile App 3. Newegg Website 4. Newegg Premier 5. Newegg Express 1. 8 minutes from Order to Pick-up (All small and bulk items) 2. Webrooming 3. Easy checkout (SOP & payment methods) 1. Customer data mining 2. Precise Marketing 3. Offline-to-Online promotion 4. Newegg EggPoint Lean & Efficient
  4. 4. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Hybrid Center | Revenue Growth Catalysts  Adding new customers & retaining old customers  Increasing consumer spending  Changed pricing strategies  Expansion in core/new markets  Innovative merchandising strategies  Merger and acquisition (M&A) activity  Retail display shelving/ Reverse Showrooming  In-store events hosting
  5. 5. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Newegg Hybrid Center™ Cost Saving for OPC Staff Management & Training Grow Sales/ Make Profit Customer Experience Consistency Remote Management Social/ GeoFencing Small, Bulk & Open Box Inventory Management Instant Pick- Up Service Cross Dept. Communication Vendor Support Digital Technology Integration Store Design/ Permanent Web Real Estate Online  Offline Promotion RMA Service Sales Tracking Mechanics Hybrid Center | Mind Map
  6. 6. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Hybrid Center | S.W.O.T. Analysis Strengths • Newegg Branding • Low Operation Cost • Existing Will-Call Customers • Large Product Assortment • Omni-Channel Marketing Weakness • Lack of Retail Experience • Retail Customer Behaviors Analysis • Limited Retail Space • Limited Customer Agents • Lack of Digital/Mobile Technology • Inventory Logistic Infrastructure • Operation Hours Threats • Lack of Vendors Support • Heavy Cost of Doing Retail Business • Warehouse Relocation • POP Expansion of Retail Competitors • Retail Sales License • Newegg Online vs Offline • Natural Disasters Opportunities • Vendors’ Retail Program • New Sales Channel • 3rd Party Advertising & Resources • User Experience Lab • Brand Recognition – O2O
  7. 7. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Winter 2016 All Hybrid Centers Custom System Build Service Fall 2016 5th & 6th Hybrid Centers Hybrid Center | Development Roadmap Late April 2015 Indianapolis, IN 2nd Hybrid Center Sep 2015 City of Industry, CA RMA System Late June 2015 Edison, NJ 3rd Hybrid Center May 2015 City of Industry, CA Online Order, 8mins Pick-up Nov 2013 City of Industry, CA First Hybrid Center Mid May 2015 City of Industry, CA Digital POP & Signage Summer 2016 All Hybrid Centers In-store Services (Installation & Repair) Late Dec 2015 2016 Hybrid Center Budget Approval Aug 2015 All Hybrid Centers Newegg Mobile App Upgrade June 2015 City of Industry, CA Payment Methods Late May 2015 Hybrid Center Web Site April 2015 City of Industry, CA POS System Feb 2015 Hybrid Center Budget Approval Late Sep 2015 Ontario, Canada 4th Hybrid Center 2015 2016 2017 2018
  8. 8. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Indianapolis, Indiana | Demographic 2012 Land area: 361.5 square miles Population in 2012: 834,852 (99% urban, 1% rural). Population change since 2000: +6.8%. Population density: 2,310 people per square mile Males vs Females Ratio = 48.2/51.8 Indianapolis Median resident age: 33.8yrs (State median age: 37yrs) Est. median household income: $40,854 (IN: $46,974) For population 25 years and over in Indianapolis: •High school or higher: 84.5% •Bachelor's degree or higher: 28.3% •Graduate or professional degree: 9.6% •Unemployed: 8.6% •Mean travel time to work (commute): 22.2 minutes Most Common industries (Males) •Construction (9%) •Accommodation and food services (9%) •Administrative and support and waste management services (7%) •Professional, scientific, and technical services (6%) •Health care (5%) •Other transportation, and support activities, and couriers (4%) •Educational services (4%) Most Common industries (Females) •Health care (19%) •Educational services (10%) •Accommodation and food services (9%) •Professional, scientific, and technical services (6%) •Finance and insurance (5%) •Administrative and support and waste management services (5%) •Public administration (4%) More Reference: Newegg OPC 10 – Indianapolis, IN 6161 Decatur Blvd Indianapolis, IN 46241-9610
  9. 9. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Edison, New Jersey | Demographic 2012 Land area: 30.1 square miles Population in 2012: 101,435 (100% urban). Population change since 2000: +2.89% Population density: 3,397 people per square mile Males vs Females Ratio = 50.6/49.4 Edison Median resident age: 36.3yrs (State median age: 36.7yrs) Est. median household income: $87,944 (NJ: $69,667) For population 25 years and over in Indianapolis: •High school or higher: 90.8% •Bachelor's degree or higher: 47.2% •Graduate or professional degree: 20.5% •Unemployed: 4.1% •Mean travel time to work (commute): 35 minutes Most Common industries (Males) •Professional, scientific, and technical services (15%) •Finance and insurance (9%) •Construction (5%) •Chemicals (5%) •Health care (4%) •Accommodation and food services (4%) •Educational services (4%) Most Common industries (Females) •Health care (14%) •Educational services (13%) •Professional, scientific, and technical services (10%) •Finance and insurance (9%) •Chemicals (5%) •Accommodation and food services (4%) •Broadcasting and telecommunications (3%) More Reference: Newegg OPC 12 – Edison, NJ 45 Patrick Ave Edison , NJ 08837
  10. 10. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Edison, New Jersey | New York City, New York Bridges & Tunnels Toll All rates apply to the Lincoln & Holland tunnels, the George Washington, Bayonne & Goethals bridges, and the Outerbridge Crossing. Tolls are collected entering New York. No tolls are collected entering New Jersey. PEAK HOURS Weekdays: 6-10 a.m., 4-8 p.m. Sat. & Sun.: 11 a.m.-9 p.m. OFF-PEAK HOURS All Other Times OVERNIGHT HOURS FOR TRUCKS Sundays-Thursdays, 10 p.m. until 6 a.m. the following morning Number Cash Toll of Axles Off-Peak Peak Trucks Weekday All Hours Hours Hours Overnight Hours Vehicles with Two Axles and Single Rear Wheels (Includes Tw o Axle Recreational Vehicles w ith Single Rear Wheels and No Additional Axles In Tow ) Two Axle Buses and Mini Buses (Seating Capacity = 10 or More Business Account Only) Three Axle Buses and Mini Buses 3 (Seating Capacity = 10 or More Business Account Only) & Up 11 Motorcycle 2 $8.75 $10.75 N/A $14.00 $23.00 9 $12.25 $12.25 N/A $23.00 $9.75 $11.75 N/A $14.00 8 2 $12.25 $12.25 N/A Class Vehicle Type 1 2 More Reference:
  11. 11. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Hybrid Center | Revenue Goal The 2015 key initiative is to acquire sufficient MDF covering the cost in fabrication and modeling in the first year of new Hybrid Center built. Q1 2015 Hybrid Center – City of Industry, CA Vendor MDF $300K Q2 2015 Hybrid Center – Indianapolis, IN Vendor MDF $200K (Innovation/Modeling Cost: est. $100K) Q3 2015 Hybrid Center – Edison, NJ Vendor MDF $380K (Innovation/Modeling Cost: est. $220K) Q4 2015 Hybrid Center – Markham, ONT, Canada Vendor MDF $220K (Innovation/Modeling Cost: TBD) *Hybrid Center’s Merchandising Program will generate high proportion of the revenue contribution. Performance Matrix  Sales per Sq.ft  Sales per Store  No. of Stores  1-Yr Sales Growth
  12. 12. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Hybrid Center | Incomes and Expenses Marketing Development Fund (Income Contribution Weight: 80%) 1. Retail Show-rooming 2. Events 3. Trainings Gross Revenue (Income Contribution Weight: 15%) 1. In-store Sales & Promotion Operation Cost Reduction (Income Contribution Weight: 5%) 1. Newegg Express 2. Shipping Expense 3. RMA Service 4. Customer Service Cost of Doing Business/ Expenses 1. Personnel (compensation and training) 2. Inventory Management 3. Utilities (e.g. Electricity & Water, Insurance, Internet, General Administration) 4. Equipment & Office Supplies (e.g. POS system, Stools, Beacon) 5. Customer comfort (e.g. Complimentary coffee and snack) 6. Advertising and Marketing (if applicable) 7. Depreciation
  13. 13. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Hybrid Center | Resources Required Personnel Support 1. 1 x Administration Coordinator (Daily Operation/ SOP/ Training) 2. Staff requirement for each Hybrid Center  1 x Will Call Agent (C3 Rank)  1 x Customer Service Agent (C2 Rank) Retail Operation Licenses (CA, IN, NJ & ONT, Canada) Assets and Systems 1. Administrative and Functional Management Structure 2. Dedicated Web Site ( 3. Small, Bulk & Open Box Inventory Management 4. Mobile Payment System (Newegg Mobile App) 5. Return Merchandise Authorization (RMA) System 6. Accounting System for Local Sales Tax Collection (In-store purchase) 7. Retail Insurance
  14. 14. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Will-Call Agent Will-Call Agent Will-Call Agent Will-Call Agent Head of Hybrid Center (TBA) Director of Logistic Dept. Director of Customer Service Dept. CS Agent CS Agent CS Agent CS Agent Chief Operation Officer Hybrid Center | Management & Organization Structure California Indiana New Jersey ONT, Canada Administration Coordinator (TBA) CS Agent
  15. 15. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Appendix
  16. 16. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Study Case | Amazon @ Purdue University (Indiana) Location: Purdue University in West Lafayette, Indiana, staffed by Amazon employees Customers: Students and Facility staffs Products: Textbooks and all other goods Services:  “Order online. Pick up here.” (Free One-Day Shipping)  Drop-off for product return Promotion: “Amazon Student”, the benefits of Prime Membership for $49 a year Future Expansion Plan:  Second Location on the Purdue campus in later this year  University of California, Davis (Spring 2015)  University of Massachusetts Amherst (Spring 2015) Location Info Krach Leadership Center 1198 3rd St. Room 169 West Lafayette, IN 47907-2109 Mon – Fri 9am – 9pm Sat – Su 12pm – 6pm
  17. 17. 2000-2015Newegg,Inc.Allrightsreserved.Confidential. Reverse Showrooming (Webrooming) | Goulston & Storrs PC • Have a good inventory monitoring system in place. Perhaps this one is too obvious to mention, but if a retailer does not have the product, the consumer will buy it from another store that does, or forgo buying at a store altogether. • Create easy-to-use mobile applications and websites and set up in-store terminals that allow consumers to search for inventory, specifications, reviews, offers and coupons. Nielsen’s 2014 Digital Consumer Report estimates that 65% of Americans own a smartphone. And have no doubt that they will use it while in the store (even if they have already done some research beforehand). Great mobile applications/websites and designated terminals enhance the customer’s in-store shopping experience and keep the customer on the retailer’s own sites and content. • Incorporate digital marketing programs in the stores. For example, Target has a website and mobile application called Cartwheel which generates offer codes online for consumers to use in-store only. And last holiday season, Nordstrom arranged its in-store displays based on top items pinned on Pinterest, demonstrating that it was listening to its audience and ensuring that those items were in stock. • Integrate e-commerce conveniences with in-store ones. Online ordering and in-store pickup is a great example and one that more and more retailers are offering each day. • Offer convenient, easy and secure in-store checkout. Eliminate one of the top-cited reasons people avoid stores: long check- out lines. • Properly train sales staff. Many consumers still value having their questions answered by real human beings. In a 2013 Deloitte survey, more than half of respondents said knowledgeable in-store staff would make them more likely to buy in- store. References:  Reverse Showrooming: Best Buy, Amazon And The Internet Sales Tax by  History of Retail 100 Objects by Intel  Shopper Showrooming: Retailer Strategies in a Smartphone World by mobext  Another web-only retailer will open physical stores by Internet Retailer  Study: how reverse showrooming is shifting the opportunity back to the brick and mortar stores by  9 ideas to take advantage of reverse showroom by A.Bach Online
  18. 18. 2000-2015Newegg,Inc.Allrightsreserved.Confidential.
  19. 19. 2000-2015Newegg,Inc.Allrightsreserved.Confidential.