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Slide 1
MultiChannel Retailing By Thia Mullen and Jennifer Hill
Slide 2
Why are Retailers using Multiple Channels to Interact with
Customers? Customers want to interact in different ways Each
Channel offers different benefits for Customers The retailers can
also reach more customers by using multiple channels
Slide 3
More reasons for becoming a Multi-Channel Retailer Increase in
Share of Wallet For example: Eddie Bauer, single channel customers
spend $100 -$200 per year, dual-channel customers spend $ 300-$500
per year, tri channel customers spend $800-$1000 per year Overcome
Limitations of Existing Format Provide services more cost
efficiently Leverage of Existing Assets Brand Name, Inventory,
Customer Database Develop Insights in Customer Shopping
Behavior
Slide 4
Dollars spent at different channels: Average annual dollars
spent by JCPenney customers
Slide 5
Why are Retailers using Multiple channels to Interact with
Customers? customer Customers buy what they want, When they want,
Whenever they want
Slide 6
Assignment One Create a video explaining two issues of
multichannel retailing Jessica Clutter Shannon Franke Shaina Lacher
Stacia Wakeley Aaron Monteith Jennifer Cooper
Slide 7
Store Channel Benefits o Browsing o Touching and Feeling
Products o Personal Service o Cash and Credit Payment o
Entertainment and Social Experience o Immediate Gratification o
Risk Reduction
Slide 8
Catalog Channel Benefits Convenience Safety Portability and
easy access
Slide 9
Assignment Two Create a podcast to highlight a company that
uses all three levels of multichannel retailing and explain if it
makes them more successful or not. Amanda Stewart Matthew Sullivan
Cassie Furcher Rechinda Bryant Matthew Walden
Slide 10
Assignment Three Create a screencast or digital storytelling to
explain three of the capabilities needed for multichannel
retailing. Tasha Dorrnick Milton Law Lindsey Danielson Rick Nunez
Jessie Drury
Slide 11
Internet Channel Provides convenience offered by catalogs and
other non- store formats Compared with store and catalog channels,
has potential to offer greater selection of products More
personalized information about products and services in relatively
short amount of time Unique opportunity to collect information
about how consumers shop
Slide 12
Internet Channel Broader Selection Compared with the other two
channels, vast number of alternatives available to consumers
Consumers can easily visit and select merchandise from broader
array of retailers Retail websites typically offer deeper
assortments of merchandise than are available in stores Enables
them to satisfy consumer demand for less popular styles, colors, or
sizes and still keep overall inventory costs low
Slide 13
Internet Channel More Information to Evaluate Merchandise
Important service offered by retailers is provision of information
to help customers make better buying decisions Depth of information
at retailers website can provide solutions to customer problems
Retailers can provide as much information as each customer wants
More information than the customer could get through store or
catalog
Slide 14
More Information to Evaluate Merchandise Information on an
electronic channel database can be frequently updated and always
available Customers can format information so they can effectively
use it when evaluating products Virtual communities networks of
people who seek information, products, services and communicate
with one another about specific issues
Slide 15
More Information to Evaluate Merchandise Social shoppers people
who participate in virtual communities Some social shoppers will
may spend two or three times amount of time traditional shoppers do
May not make a purchase Experience of shopping they enjoy more than
product or service
Slide 16
More Information to Evaluate Merchandise Many retailers have
added ability for customers to post reviews Provide valuable
feedback to buyers about what is liked or not liked Retailers
ideally suited to offer problem-solving sites for customers Have
skills to put together merchandise assortments, services, and
information
Slide 17
Internet Channel Personalization Potential benefit is ability
to personalize information for each customer economically Catalogs
cannot tailor merchandise and information to needs and preferences
to individual customers Provide personal service at a low cost
Slide 18
Personalization Personalized Customer Service To improve
customer service from an electronic channel, many retailers offer
live, online chats Online chat Economically attractive for
retailers Cost is less than an email and 1/3 the cost of a phone
call
Slide 19
Personalization Personalized Offering Retailers can personalize
offerings for each customer Customers can personalize web pages
Retailers can personalize promotions Can test different promotions
in real time If a 5% discount works better than $5 off, stay with
more successful promotion
Slide 20
Selling Merchandise with Touch-and-Feel Attributes Due to
problems of providing touch-and-feel information, apparel retailers
experience more return rates 20% on purchases made through an
electronic channel 10% on purchases made in stores
Slide 21
Touch-and-Feel Role of Brands Brands provide consistent
experience Helps overcome difficulty of not being able to touch and
feel Because consumers trust familiar brands, name brands sell
successfully Not just through electronic channels, but also through
internet, catalogs, and TV home shopping
Slide 22
Touch-and-Feel Using Technology Retailers using technology to
convert touch-and-feel information to look-and-see information
Websites going beyond basic images and using 3D imaging and/or zoom
technology The use of image-enhancing technologies has increased
conversion rates and reduced returns
Slide 23
Touch-and-Feel Using Technology To overcome limitations
associated with trying on clothing, apparel retailers started using
virtual models Enable consumers to see selected merchandise looks
on an image with similar proportions
Slide 24
Touch-and-Feel Gifts Some information in a store is not much
better than the information provided electronically Stores offering
little benefit over an electronic channel in terms of useful
information provided about some merchandise Buying gifts
electronically offers benefit of saving time and effort of packing
and sending gifts
Slide 25
Touch-and-Feel Services Some service retailers have been very
successful over the internet Look-and-see attributes of offering
can be presented very effectively online
Slide 26
Using the Internet to Improve Multichannel Shopping Experience
An electronic channel can provide valuable insights into how and
why customers shop Insights on if customers are dissatisfied or
satisfied with experiences Valuable information for assortment
planning would be customer willingness to substitute one brand for
another Collecting data as customers navigate through a website is
easy
Slide 27
Perceived Risks in Electronic Shopping Two critical perceived
risks Security of credit card transactions on the internet Almost
all retailers use sophisticated technologies to encrypt
communications Potential privacy violations Consumers concerned
about the ability of retailers to collect information about:
Purchase history Personal information Search behavior
Slide 28
Evolution Toward Multichannel Retailing Four reasons
traditional store-based and catalog retailers are placing more
emphasis on electronic channels Electronic channel gives
opportunity to overcome limitations of primary existing format
Retailers can reach out to new markets Providing multichannel
offering builds share of wallet Enables retailers to gain valuable
insights into customers shopping behavior
Slide 29
Overcoming the Limitations of an Existing Format Greatest
constraints facing store-based retailers is size of stores Amount
of merchandise that can be displayed and offered for sale in stores
is limited By blending stores with internet-enabled kiosks,
retailers can expand assortment to customers
Slide 30
Overcoming the Limitations of an Existing Format Another
limitation is store-based retailers face is inconsistent execution
Knowledge and availability vary across stores and within a store at
different times during the day Difficult for retailers selling new,
complex merchandise
Slide 31
Expanding Market Presence Electronic channel is attractive to
firms with strong brand names but limited locations and
distribution Some retailers are widely known for offering unique,
high-quality merchandise, but require customers to travel
Slide 32
Increasing Share of Wallet Offering an electronic channel may
lead to some cannibalization If used synergistically with other
channels could result in more total purchases from a retailer
Traditional single-channel retailers can use one channel to promote
services offered by other channels
Slide 33
Increasing Share of Wallet A stores website can be advertised
on: In-store signs Shopping bags Credit card billing statements
Point of sale receipts Print or broadcast advertising Physical
stores and catalogs also advertisements
Slide 34
Increasing Share of Wallet Store-based retailers can leverage
stores to lower cost of fulfilling orders and processing returned
merchandise Customers can be offered opportunity to pick up and
return merchandise at retailers stores Many retailers will waive
shipping fees if customer picks up merchandise in-store
Slide 35
Capabilities needed for Multichannel Retailing To effectively
operate and realize the benefits of multichannel retailing, firms
need to have the skills to: Develop assortments and manage
inventory Manage People in remote locations Efficiently distribute
merchandise to stores Present merchandise effectively in a printed
format and distrubute catalogs Present merchandise effectively on a
Web site Process orders from individual customers electronically
Efficiently distribute merchandise to homes and accept returns
Integrate information systems to provide a seamless customer
experience across channels
Slide 36
Who has these Critical Resources? Capabilities for
Multi-Channel Retailers
Slide 37
Resources Needed to Compete Efficiently in Internet Retailing
Easy to use website Management Information System Order Processing
Customer database Personalization software
Slide 38
Resources Needed to Compete Efficiently in Internet Retailing
Retailing Skills Managing Inventory Editing assortment Efficient
Fulfillment Systems Significant costs- last mile Picking and
packing individual orders Handling returns reverse
distribution
Slide 39
Resources Needed to Compete Efficiently in Internet Retailing
Strong Brand Name and Image Build traffic Reduce customer perceived
risk Complementary Merchandise One stop shopping Lower shipping
costs Availability of Customer Information Tailored presentations
personalized
Slide 40
Why did Internet Retailers Fail? Lack of Skills to Succeed in
Internet Retailing Consumers Prefer Multi-Channel Retailers
Slide 41
Why did Internet Retailers Fail? They had skills in Web Design
They had systems to manage transaction They did not have skills in
brand recognition They did not have skills necessary to build
consumer trust They did not have skills to build assortments,
manage inventory, and fulfill small orders to homes They did not
posses sufficient resources to evolve into multichannel
retailers
Slide 42
Catalog Retailers are ready for internet retailing Ready to
take orders Handling returned merchandise Able to deliver Extensive
information about their customer personalization Database already
in place Visual merchandise same online as in catalog
Slide 43
Why are store-based retailers moving multi-channel retailers?
Sales through an electronic channel are growing at over 20% per
year Multi-channel retailers can attract more customers and satisfy
existing customers better The growth of sales in stores is
declining
Slide 44
Impact of Internet Shopping on Stores Sales
Slide 45
Which Channel is the most Profitable? Bricks and Mortar,
Salespeople Attracting Customers to Store Distribution Centers
Restocking Returned Merchandise Building, Refreshing Web Site
Attracting Customers to Web Site: Customer-Acquisition Costs are
huge but Customers switching costs are tiny. Picking, Packing,
Mailing Small Orders to Home Restocking Returned Merchandise Stores
Electronic Retailers
Slide 46
Will Manufacturers Bypass Retailers and Sell Directly to
Consumers? Advantages Retailers have over Manufacturers Retailers
sell many brands allowing the customer more variety Retailers
distribute directly to the customer Retailers collect and use
Information about Customers Widespread Disintermediation is
unlikely.
Slide 47
Issues in Multichannel Retailing Integrated Shopping Experience
Communicate with customers anytime, anywhere through multiple
channels Intergrating legacy systems for seamless customer
interface Brand Image Maintain the same image to their customer
accros all channels Merchandise Assortment online and in store
Pricing
Slide 48
Multichannel shopping
Slide 49
Illustration of Multichannel Integration 3-49 Source:
Progressive Grocer, 01 Feb 00; Grocery Headquarters, 01 Feb 00.
Consumer does not find desired item in the store. Consumer goes to
kiosk to search for product Kiosk links to chains web- site
allowing consumers to find and purchase item Consumer places order
online for home delivery or store pick- up at a later time
Slide 50
Opportunities to Enhance online shopping Order online, Pick up
at store Product available in store available on website Kiosk
available in store to order items not available in store Web sites
features in store deals and coupons/promotions Ad Circular
available on website
Slide 51
Shopping in the Future Great advantage to have customer
database shared by all channels and integrated across all systems
Sales associate and store systems able to offer superior customer
service based on the database Technology also supports retailers
business model Promises to offer customers products and services
which would provide best shopping experience
Slide 52
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assignments