Etailing introduction

BRICK AND MORTAR BUSINESS:
The term brick and mortar business is used to refer to a company that
possesses a building or store for operations. The name is a derived from the
traditional building materials associated with physical buildings — bricks and
mortar. Its first use was in 1992.
More specifically, in the jargon of ecommerce businesses, brick and mortar
businesses are companies that have a physical presence and offer face-to-face
customer experiences.

 “E-tailing is the selling of retail goods on the Internet.
 research predicted that e-tailing would grow to $37 billion by
2002.
 E-tailing has resulted in the development of e-tailware --
software tools for creating online catalogs and managing the
business connected with doing e-tailing.

 The word E-tail has its roots in the word „retail‟.
 E stands for „electronic‟ since the shopping process happens
through the electronic media (internet).
 With the use of a web-space a virtual shop is created and the
products are displayed through images in this space with the
features and price tags. By accessing this shopping site a customer
can choose his/her products into a cart.
 The payment to this product can be done in various modes as
mentioned by the shopping site.
 The product would be delivered to the address specified by the
customer.

Steps involved in E-tailing:-

The shopping process through internet media happens in 5 steps
generally.

1. Customer visit: The customer accesses the website of the e-tailer
through his/her mobile or PC or laptop.

2. Choice of product: customer visits the site he/she would choose a
product based on the image and valid information available on the web
page.

3. Payment online: Payments to the product can be made online through
credit or debit card or even cash on delivery basis where the customer
pays the e-tailer when the product is delivered to him/her.

4. Product delivery: The delivery of the product would be based on the
availability of the product in the inventory closest to the customer‟s
delivery address. This process may also involve shipment of the
product.

Benefits of e-tailing:

 Less Space: It reduces the space occupied by retail outlets in
the real world.

 Easy Access: It gives quick and easy access to a shopping
space at any time and from any place where there is access to
internet.

 Saves time: It saves time of the customer that is spent on
travelling to a shopping place in real world.

 Platform for various goods: It creates a new platform for goods
from different parts of the world which could be imported by
placing an order.

E-tailers in India:
 Yebhi.com
 Flipkart.com
 Infibeam.com
 Myntra.com
 E-bay.com
 Indiatimeshopping.com

There are certain essential ingredients for an electronic retailing
business to be successful:
 Attractive business-to-consumer (B2C) e-commerce portal
 Right revenue model
 Penetration of the Internet

E-Catalog: It is a database of products with prices and available stock.

Shopping Cart: The customers select their goodies and fill shopping
cart. Finally, as in a real store, at the time of checkout, the system
calculates the price to be paid for the products.

A payment gateway: Customer makes payments through his/her credit
card or e-cash. The payment mechanism must be fully secure.

Support Services in E-Retailing:

The electronic retail business requires support services, as a
prerequisite for successful operations.

These services are required to support the business, online or offline,
throughout the complete transaction-processing phases.

The following are the essential support services:

 Communication backbone
 Payment mechanism
 Order fulfillment
 Logistics

MULTI-CHANNEL RETAILING

 Multi-channel retailing is a marketing strategy that offers your
customers a choice of ways to buy products.
 A true multi-channel strategy covers purchases from a store,
purchases from a website, telephone ordering, mail orders,
interactive television, catalog ordering and comparison shopping
sites.

Objective of Multi-Channel Retailing:
The aim of a multi-channel retailing strategy is to maximize revenue
and loyalty by offering your customers choice and convenience.

Multichannel retailing is the merging of retail operations in such a
manner that enables the transacting of a customer via many connected
channels.

Channels include: retail stores, online stores, mobile stores, mobile app
stores, telephone sales and any other method of transacting with a
customer.

Experience:
A successful multi-channel strategy offers your customers a consistent
quality of experience, whichever channel they use. The customer's
experience in buying a product influences her perception of your
brand. You must ensure that all customer-facing staff in your contact
centers, retail outlets, order processing departments and website
development understand and comply with your company's customer
service standards. Policies such as returns and delivery charges should
also be consistent across each channel.

Integrate:
You can use the data available from multi-channel strategies to identify
customer preferences and maximize lifetime revenue. The risk in a
multi-channel strategy is that customers' information and profiles can
become fragmented as they use a number of channels. In an integrated
strategy, purchasing data is consolidated into a single database so you
get a 360-degree view of your customer.

Research:
A high proportion of shoppers conduct their pre-purchase research on
the Internet, although they may use other channels to make the final
purchase. The definition of multi-channel retailing must therefore take
account of each stage of the purchasing process.

Pricing:
When you operate a multi-channel strategy, you have the option of
charging the same price for a product across all channels, or offering
your customers different prices, depending on their channel choice.
Offering customers website prices that are lower than store prices is
common practice and reflects the lower overheads in website
operations. Your customers also have a choice between lower online
prices and personal service in the store.

Reach:
A multi-channel strategy gives you the ability to expand your business
on a national or global scale without investing in further physical
stores. An e-commerce website can be designed to operate in multiple
currencies and with local content to attract customers in many
countries. You can also conduct business across multiple time zones
with no restrictions on opening or closing times.

Successful Organizations with E-tailing:
 Marks & Spencer's
 Fairmont Hotels

There are five key factors that retailers should be addressing now, if
they‟re to stay ahead of the game.
1. With shoppers consolidating their spending on fewer retailers, the
winners will be those who ensure they make it onto the „most
favoured‟ list for their target customers.

2. Operating in a multi-channel world makes it even more important
to understand your most valuable customers, and to be able to serve
them when they want, and how they want.
winning retailers will be those who rapidly develop a „single view of
product‟ - enabling them to instantly locate available stock across all
channels and locations, and so serve more customers, more often,
and with a wider variety of products.

3. The digital space provides a raft of new opportunities to engage
consumers, and to learn from their comments and behaviors - from
Twitter and Facebook, to online campaigns and consumer reviews,
the opportunities to have conversations with customers are growing
every day.

The winners will be those who listen carefully to their customers,
becoming tuned to their needs; and those who find creative
opportunities to encourage consumer contribution, making
shoppers feel like an integral part of the brand.

4. New performance measures that reflect the realities of this new
multi-channel world are the next essential building block to making
profitable decisions and choices.

Developing the KPIs (Key Performance Indicators) to evaluate a
store‟s effectiveness as a showroom, compared to its effectiveness as
a transaction space, and capturing the value of websites as a
research tool and in driving footfall to stores, are examples of areas
that leading retailers are beginning to focus on today.

5. The winners will be those who can deliver a sustainable advantage
by developing new operating models, designed to handle the
realities of multichannel retailing.

The current supply chain was built to get stuff to stores - it‟s not
ideal for a system that‟s 10% online and growing - and as direct
channels continue to gain scale, there will be opportunities to flex
operations to improve margins.

But it‟s not just about the supply chain - rethinking organization
structures, roles, incentives and governance are key to delivering a
seamless customer experience across channels - and to achieving
„most favoured‟ status with your most valuable customers.

Shortcomings of e-retailing
1. It has no theatrical ambience which can be the customer.
2. It lacks an emotional shopping experience that the customer can get
in a personal shopping store.
3. It being container of intangible merchandise (i.e., virtual display of
merchandise) does not provide sensory support to the customer,
these the customer cannot hold, small, feel, or try the product.
4. On line customers are reluctant to part with their credit card details
on net, fearing they may be misused. It arises security issues. The
customers are not yet convinced about the foolproof status of this
method, especially in Indian environment.
5. It provides, to a large extent, impersonal services which the Indian
customers are not exposed to; they are rather used to the tangible
personalized services which's they miss in online retailing services.
6. It is lacking in family shopping experience which the Indian
customers enjoy at the weekends, and particularly during festive
seasons and marriage marketing.

Success factors for e-retailing
 Strong Branding
 Unique Merchandising
 Value Addition
 Competitive Pricing: competitive pricing finds scope from
potential decrease in charges and expenditures that he had to bear
while in brick-and-mortar mode of marketing.
 Better CRM
 Better Distribution Efficiency
 Soothing Website Design
 Transparency in Services.

Continued………..

 The aesthetic and easy handling facilities are two important terms
in this relation. The aesthetic provides initial attraction along with
keeping the visitor long held with the site.
 The maneuvering easiness keeps the visitor surfing it for long.
 The aesthetics of the website must provide soothing look and feel
and clarity of objects or scripts to the visitor along with sufficient
ergonomic considerations, so that the visitor does not feel tired at the
earliest.
 The careful placement of buttons and links provides ease in
handling it.
 Finally, the transparency of services creates faith on the visitor of
the site as well as on the customer of the business.

Challenges of E-Retailing:

1. Unproven Business Models
Most of the businesses on the Net were experiments in new areas and
did not provide enduring sources of profit. This was the primary
reason behind closing down of 90 per cent of the purely e-commerce
companies in the beginning of this century. Today, dot-com
businesses have matured a little. Still some of the businesses are at
experimental level and do not guarantee regular revenue.

2. Requirement to Change Business Process:
The traditional business may require the goods to be present at the
warehouse and inspected before being shipped to the customer, but in
electronic retailing, shipping of goods from one place to another to a
customer would not be possible. The retailer may appoint a local
supplier at the city where the customer resides and instruct the supplier
to deliver the goods. This would require by passing certain business
rules and a lot of faith on the local supplier. It would require business
confidence that the supplier would follow the instructions and deliver
the same product in good quantity and perfect quality. Merchandise
planning and demand analysis is also difficult in e-retailing, as
compared to traditional retail businesses.

3. Channel Conflicts
Companies selling through the Internet as well as through brick stores
may find their interest conflicting at many places. In electronic
storefront orders, the goods directly reach the end-consumer and so the
distributors and sellers may feel the threat to their existence. Most of
the time, it is seen that retailers tend to reduce price over the Net. The
sale at the brick store may store may drop because the retailer may tend
to sell more through the Internet as a result of reduction of prices.

4. Legal Issues:
 Proper laws have not yet evolved for Internet base transactions. E-
mail and digital signatures are now being recognized as valid for any
legal purpose.
 Value Added Tax (VAT) is yet another area that creates problems.
 Taxes on goods and services are still an issue. Since the taxes are
levied and shared by multiple government agencies at local, state or
federal level, there are no clear rules to guide retailers on that.
 In e-retailing, the place of billing, the place of dispatch of goods
and the place of delivery all differ. If these three places fall in
different jurisdictions of governments, levy and submission of taxes
would be a problem.

5. Security and Privacy:
 Despite a lot of security arrangements, such as passwords and
firewalls, we come across the news of website hacking and data
pilferages.
 The Internet being on public domain is more susceptible to
unauthorized peeping.
 People are wary of revealing information regarding their credit
cards and personal details on the Net because they can be
misused.
 Security of payment gateway is a major concern, which has to
be taken care of by the retailer by putting up pro

Single channel e-tailing:

Retailers that sell products solely on the Internet, benefit from their
focus on reaching their consumer targets, because they don‟t have to
manage the competition for company resources.

many e-retailers are doing well by taking advantage of niche markets
and connecting with their customers. Web-only retailers are especially
good at being found by their potential customers, and many of them
are gaining expertise in marketing through online social networks.

social media interaction has spread rapidly to older users, it is younger
consumers who interact on the channels that drive sales growth at
niche retailers such as Nasty Gal Inc.

9 Characteristics of Well-Designed E-Commerce Websites

1. Ease of Navigation
When attempting to sell products to visitors, the first requirement for
selling a product is that the shopper has to be able to find specifically
what he or she is looking for. Effective navigation is important to any
website, but it‟s especially critical for e-commerce sites. Lost visitors
will result in lost sales, so every effort should be made to have a site
with clear, logical navigation.
Examples:
Nike‟s online shop uses a vertical navigation menu. When you glide
over an item, such as “Men”, you will then be presented with options
for different product types, brands, collections, and sports, making it
easier to narrow it down and find what you want quickly.

2. The Design Does Not Overpower the Products:
A design that is excessive for no valid reason will usually do more harm
than good, as it will draw attention to the design of the site and away
from the products. There sites have chosen to keep the design simple
so that the products don‟t have to compete for the attention of visitors.

Examples:
Apple uses simplicity in the design of their products as well as anyone.
Their online store takes the same approach with a clean, attractive
design that does not provide any distractions for shoppers.

Shoe Guru is another very well-designed site that avoids anything
excessive. The page shown below lists the men‟s athletic shoes that are
available. The page simply provides a product photo, name, and price,
as well as a link to the product page for more details and purchase
options.

3. Easy Checkout:
If the checkout process involves too many steps or is confusing,
shoppers will wind up abandoning their cart with items left
unpurchased. Ideally, the checkout should involve a minimal amount
of steps and should be as easy as possible for shoppers.

Examples:
Add an item to your cart at White and Warren and you will immediately
see the contents of your shopping cart. You will be presented with the
options to continue shopping or to checkout. If you chose to checkout,
you can login as an existing customer or create a new account.

4. Branded:
Many shoppers are influenced in their purchasing decisions by the
brand, and so the need to establish a strong brand is import for both
online and offline selling.

Examples:
Oakley is a well-established brand that is recognized as a leader in their
industry. Their website does an effective job of working with their
existing brand. It is an attractive website that stands out from many of
the others that are selling sunglasses online.

5. The Design Style Matches the Products:
when designing an e-commerce site it‟s important to consider the style
of the products that will be available on the site. This is a little bit more
relevant for smaller stores with a specific type of product and for
websites of a particular brand or company that has established a
certain identity.
If the design style does not match very well with the particular
products that are for sale, there will be a disconnect that exists and
visitors may have a hard time relating to products and determining if it
is right for them.

Examples:
Innovative Baby sells clothing, furniture and other items for kids. The
design and color scheme of their website does a good job of matching
up with their products, but it still looks professional and appealing to
the adults who are likely to be the ones doing the shopping.

Design of the website matches the product:

6. Showcases the Most Popular Products:
Many e-commerce sites make an effort to showcase items that are
likely to be of interest to visitors, obviously with the intention of
helping visitors to find something that they will buy.

Examples:
Eddie Bauer uses a large portion of the homepage to promote an end-
of-season sale. There is a very large image and links to sale items in
several categories: men, women, bags and gear, and white sale.

Showcases the most popular products:

7. Promotes Related Products:
promotion of related products that the customer may also be interested
in. Promoting the right products that buyers are likely to be interested
in is key regardless of the approach that is used.

Examples:
The Company Store, visitors will be presented with related products
such as cleaning and storage products.

8. Effective, Accurate Product Photos:
Providing quality photos that accurately portray the product can help to
overcome this challenge and can make the buying decision easier on
visitors.

Examples:
REI includes many different pictures of products. The pictures show
the product from several different angles and stages, as well as packed
up. Potential buyers will be able to get a very good feel for the product
based on these photos, and not buying it because of a fear of the
unknown is much less likely than would be the case without as many
good photos.

9. Effective Site-Wide Search:
The type of search and the amount of options that should be offered to
narrow the search should be based on the size of the site and the items
that are available.
Example:
At Lee, after choosing the type of product you would like to look at, the
left sidebar will include some advanced search options that will narrow
down the products being displayed if you are having trouble with the
items that are shown.

Etailing introduction

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Etailing introduction