E-tailing - Exploring New Horizon in Apparel Retailing


By

Hemanth Y
B.E. (E&C), MBA
Faculty and Trainer
Al-Ameen Institute of Management
 


Abstract

Retailing has witnessed a dramatic change in the business across the globe. The term e-retailing or e-tailing is the buzzword used in most of the retail organizations. This has given way for the retail outlets to do business over Internet. Most of the organizations are transforming their business models in electronic format. The acronym E-tailing   represent the electronic mode of retailing or Electronic retailing which means the business process is done through E-Commerce Websites. The website acts as a front end which reflects the transaction process on the website. The study is an attempt to understand the various aspects of retail business process like merchandising, order fulfillment etc., .Besides this, to know the business models available to retailers.

Keyword(s): e-tailing, retailing, internet, e-commerce, apparels

1. Introduction:

The acronym E-tailing is electronic retailing or e-Retailing .It is the concept of selling of retail goods using electronic media particularly through the Internet medium. There are thousands of storefronts or e-commerce sites on the Internet that are extensions of existing retailers or start-ups.  Penetration of computers and proliferation of the Internet has given rise to many new forms of businesses, such as business process outsourcing, call centre based customer relationship management, remotely managed educational and medical services and of course, electronic retailing. E-retailing is an independent business model with specific process involved in it .The Apparel retailing business can be categorized in several models pertaining to the business.

This paper discusses about the Business model of an organization online. In general Internet. Serve as a communication backbone for the business. Eventually, the models give way for the company to go in right format to generate revenues and restraining the brand image of the company by putting right strategies in place for example display of right merchandise on the websites. Usually most of the websites are designed around a electronic catalogue format with specifications of the merchandise and auction sites.

With recent research confirming that more and more shoppers are choosing to buy apparel online rather than on the high street, retailers and brand owners need to evolve their business models towards a multi-channel strategy. But while investing in e-commerce is now a priority for many companies, which factors are critical to its success? This article takes a look at various factors which transforms a traditional model to Click and mortar business model.

E-Retailing, either as an extension of the existing retail/distribution business or an altogether new start-up, has many advantages.  Traditional brick-store retailers are placing more emphasis on their electronic channels and evolving into multi-channel retailers to increase their reach and support their retail channels. The new start-ups in e-retailing can be launched from a small room with one PC attached with the outside world through the Internet.

2. Business Models:

B2C e-commerce is a phenomenon involving many different types of retailer, different products, different approaches to the organization of the supply chain, and hence a wide range of "models". A common distinction made in relation to retail businesses operating in the B2C marketplace is that between:

  • Bricks & Clicks or Bricks & Mortar, i.e. firms which already existed as traditional retailers (with physical premises for their sales) but made the transition to e-commerce by offering their products on the Internet.
  • Clicks & Bricks or Clicks & Mortar, i.e. firms which launched directly into e-commerce, i.e. have no sales physical outlets, but subsequently added a logistical back office.

The category which has until now shown the greatest survival power is the former. It was the newly established "e-tailers" which were hit hardest by the 'shake-out' in 2000. The major advantage of established retailers is their knowledge of customer behaviour and experience in managing stocks (and ability to meet orders). It is generally felt however that over the next ten years a new generation of clicks&bricks e-tailers will emerge in which the logistics is organised on a firmer basis.

From the point of view of the transport implications, it is useful to distinguish a wider range of types of B2C e-commerce:

  • retail chains, who have added the option of online orders to their normal operations,
  • small apparel retail businesses offering a specialized service or product line;
  • mail order companies who have extended into online ordering;
  • wholesalers or producers using e-commerce to sell directly to customers;
  • pure "e-tailers" (online retailers without physical outlets).

The fourth group could, in a sense, be considered a development of B2B e-commerce (since an electronic media is used to contact the customer directly instead of through a business, i.e. a retailer)

For mail order firms, the transfer to e-modes is a relatively simple process, as it affects only the purchasing end of the process rather than the delivery network. In this respect, due to their experience in distribution, they have a considerable advantage over new e-businesses. The failure of the many e-tailers has been put down to lack of experience in logistics and inability to deliver orders reliably and on time.

E-commerce has made it feasible for some producers/wholesalers to offer their products directly to customers (and hence eliminating the retailer as intermediary). In some cases, e.g. furniture producers, although orders were previously taken through a retail outlet, the goods were often delivered directly to the final customer anyway,.

The last category, small retailers, can include businesses of very diverse type, and often offering a very narrow product range or highly specialised service (specialised sportswear, custom-made clothing, etc).

The relative weight of each category is changing over time, and varies according to the country, as it is influenced in part by the retail structure. In countries such as Italy, which has a large proportion of small independent retailers, these tend to be better represented than in countries, such as the UK, which are dominated by large retail chains.

The impact of e-commerce on the logistics of the delivery chain is very different in each of the above categories. It will therefore be important in the future to be able to monitor the development of each. Below we look at typical delivery chains being used for supplying goods ordered online, and relate these to the different categories of retailer

2.1 DELIVERY CHAINS FOR B2C E-COMMERCE

There are certain essential parameters for an electronic retailing business to be successful.  One must consider these components well in advance before setting up an electronic storefront. 

The process of procurement, storage and logistics in e-businesses is different from that in traditional brick-store businesses.  The e-retail organization has to carefully redesign and integrate various processes to suit the new e-business.  Traditional sections of departments and management hierarchy may pose hindrances and bottlenecks in the process of order processing and shipments, for example, 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.

According to the  British Retail Consortium (BRC), Internet and home shopping sales in December 2008 were up a staggering 30%. In February 2009 they rose 12.3% year-on-year, while high street shopper numbers fell by 9.1%.

In many industries, such as apparel, companies are caught between a rock and a hard place. Product costs are rising and prices are falling. Companies need to find ways to reduce their costs.

e-Commerce enables a company to dramatically reduce the cost of taking orders by letting the buyer do the work. It is particularly beneficial when working with end consumers or many smaller or low volume business customers.

Business-to-consumer (B2C) e-Commerce goes much further than business-to-business (B2B), as it is a powerful marketing tool and can connect the seller directly to the end consumer to drive higher margin sales revenue. It also provides an excellent opportunity to gather customer data and build strong brand loyalty. Attractive  Business-to-Consumer (B2C) e-commerce portal which helps the consumer to know about the specifications of the merchandise available in the website.

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 which are incorporated in several Apparel Companies.

  • Communication backbone
  • Payment mechanism
  • Order fulfillment
  • Logistics

E-Business formats differ from one product to an other. To incorporate the required business format one should be able to understand the needs of the consumer in business processes. For example, if the Apparel Retail Store is following E-Catalog format, the website provides the database of new merchandise and services to be promoted on it. Besides this, the price tags for the merchandise are displayed on the storefront. To have the right model, the website should be designed in such a way that the interface should be user friendly.

Fig. 1 illustrates some of the delivery solutions which exist for online buying. The three most common basic alternatives are described below:

The supply chain on the left - [1] shown in yellow - represents the case of direct delivery from the producer or supplier to the customer. This is possible when customers are able to order online directly from the supplier/producer, or when the retailer passes an order on to the supplier. It is a possibility favoured by e-commerce and has obvious advantage for suppliers (since the retailer is cut out of the supply chain), but is currently limited in its development due to the lack of experience on the part of suppliers in organising the logistics. It tends to be used for infrequent orders for high value products, such as furniture or gastronomy (e.g. wine or special food products). The delivery trip may in some cases be very long.

The supply chain in the centre - [2] shown in orange - represents the arrangement which is most common for small/medium sized retail stores. In this case the order management is undertaken by the store itself and the goods delivery made directly from the store to the customer. From the transport point of view, it is the system most similar to the traditional way of shopping - the effect is simply the replacement of the customer's shopping trip by a local delivery trip which, when possible, is chained with other deliveries in the same area.


Fig 1 - Alternative solutions for B2C e-commerce deliveries

(Source: http://www.trg.soton.ac.uk/rosetta/workareas/5a_etd/etd_pr1_present.htm)

The supply chain on the right - [3] shown in blue - represents a new distribution pattern made possible by B2C e-commerce and consisting of the setting up of 'e-fulfilment centres' at which orders are picked and despatched. They tend to serve large regions and sometimes make use of 'intermediate' van centres for the local delivery.

It is observed in the Crédoc study that the future development and success of this last model involving dedicated e-fulfilment centres will depend on the volume of e-commerce trade because of the investment required. The picking of orders is expensive, so costs could be reduced through automation, but this will become more common when the whole market is less uncertain. Despite this, there are already examples of fully automated picking centres (e.g. Telemarket in the Paris suburbs).

In addition to the logistics aspects, it should be mentioned that this last alternative also has 'town planning' implications, since it would involve the construction of new warehousing facilities and distribution centres. Guidelines would possibly need to be drawn up regarding the location and other characteristics in order to avoid any negative effects on the landscape the environment in general, including an increase in traffic congestion.
 

--> Article continued on next page, click here  -->

Source: E-mail April 6, 2011

          

Articles No. 1-99 / Articles No. 100-199 / Articles No. 200-299 / Articles No. 300-399 / Articles No. 400-499/ Articles No. 500-599
Articles No. 600-699 / Articles No. 700-799 / Articles No. 800-899 / Articles No. 900-1000 / Articles No. 1001-1100
Articles No. 1101-1200 / Articles No. 1201-1300 / Articles No. 1301 Onward / Faculty Column Main Page