E-Retailing -A New Strategic Foundation and Business Tool for Textile and Garment Industry

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Introduction

E-Retailing:

Internet Retailing or e-retailing as is usually referred to as covers retailing using a variety of different technologies or media. It may be broadly be a combination of two elements.

Combining new technologies with elements of traditional stores and direct mail models
Using new technologies to replace elements of store or direct mail retail.

Internet retail also has some elements in common with direct mail retailing. For eg, e-mail messages can replace mail messages and the telephone, that are used in the direct mail model as means of providing information, communication and transactions while on-line catalogues can replace printed catalogues. As with direct mail businesses, critical success factors include:

Use of customer databases
Easy ordering
Quick Delivery

Operational elements that the Internet retail model shares with both the retail store and direct mail models include:

Billing of customers
Relationships with suppliers

There are, therefore, many elements that Internet retail and more traditional retail models have in common. Indeed many of the most successful Internet retailers have been those that have been able to successfully transfer critical elements from traditional retailing to the Internet, such as customer service and product displays.

The four challenges of E Retailing

Every on-line fulfillment operation, large or small, faces four main challenges:

Controlling customer data

As outsourcing arrangements proliferate and delivery services become more expert in using information technology, retailers risk losing their lock on consumer data. This knowledge, ranging from the socioeconomic status of customers to their buying patterns and preferences, helps intermediaries and shippers reduce costs, but they can also use it to compete with retailers.

Integrating on- and off-line orders

From an operations perspective, the easiest route for companies with a foot in both the real and the virtual worlds might be to enter electronic orders manually into the off-line order management system. This option makes most sense when the volume of on-line orders is higher; companies must decide how much integration they need. In a totally integrated system, Internet orders would be automatically transmitted through a processing center and transferred to the shippers manifest. Savings up to 30 percent are possible if the cost of long-distance telephone calls, data entry, timeserver operations, and error correction is reduced or eliminated and the cycle time between order and delivery is cut significantly. An integrated system with full ERP (enterprise resource planning) capabilities, for e g, can ensure that surges in demand dont retard key fulfillment operations such as data entry, inventory, and packing.

Delivering the goods cost-effectively

At present, every single transaction challenges e-tailors to deliver the goods quickly, cheaply and conveniently. The existing model for home delivery works well for letters and flat packages but not for e-tailings high volumes and wide variety of package shapes and sizes. But this is largely a technical and logistical problem, and it will be possible (though perhaps expensive) to solve it by developing new sorting and scanning equipment and by deploying larger delivery vehicles.

Handling returns

The problem of returns is encapsulated in an old saying in the book business: gone today, here tomorrow. Nordstrom, Bloomingdales, L.L. Bear, and other companies have built their sterling reputations partly on the ease with which customers can return defective or unwanted merchandise and the graciousness with which it is received. E-commerce retailers, with their emphasis on convenience and customization, must match this standard of service. At present, they do not.

Guide to E-Retailing Resources

To help e-retailers find the right solutions and service providers to take their Internet retail businesses to the next level, the publishers of Internet Retailer --the most trusted source of journalistic information on web-based retailing--comes the Guide to E-Retailing Resources. This 248-page Guide contains business profiles and vital product and client details on more than 378 solutions providers in 17 different market segments that now define the multi-billion dollar market for e-retailing solutions. The Guide to E-Retailing Resources provides strategic data on all competitors in the following segments of the solutions market:

Affiliate Marketing
Content Management
Customer Service
Delivery Services
E-Commerce Systems
Email Marketing
Fulfillment Services
Order Management
Payments Processing
Performance Monitoring
Research Studies/Books
Researchers / Consultants
Returns Processing
Search Engine Marketing
Site Search Solutions
Supply Chain Solutions
Web Analytics
Web Design / Hosting

Combined Disciplines with E-Retailing

E-Retail Traditional Retail Operations ("Clicks-and-Mortar")

Sites like macys.com and gap.com, as well as relative latecomers walmart.com and jcpenney.com, are evolving into online branches of brick-and-mortar operations. This kind of site is not limited to the rich, famous, and nationally well-branded. Many smaller stores have used the Web to broaden their market by opening online branches, which make available to Web shoppers goods that were once accessible only to people near the store.

The inverse image of this model is also evident: businesses that started out as Web e-retailers but have since added brick-and-mortar operations to their sales channels. Gazoontite.com launched its Web site selling hypoallergenic products before opening its flagship store in San Francisco. Additional stores have opened on both coasts and in the Chicago area.

E-Retail Catalog Operations

In this category are well-known catalog merchants like Lands' End, which has expanded its popular direct merchant business through landsend.com. For catalog retailers, expansion to the Web is a relatively easy development. They already conduct most of their sales through remote media and are already equipped to handle customer service and order fulfillment.

This model also has an inverse, in the form of dot-coms that have added print catalogs or other print sales tools to their online site offerings. Print sales tools can serve as a tangible reiteration of an e-retail brand and its product offerings. Garden.com, for example, added a print catalog to the many merchandising techniques the company uses to drive sales at its Web site.

The consistent, physical reminder of your name and brand can be an important aspect of your marketing, regardless of whether you intend to achieve sales through both a print catalog and your retail site.

E-Retail Web Site Content

Selling goods is a complementary component of business for these sites, which may rely on other sources of revenue for some portion of their business. Other components may include community building, editorial and informational content, product reviews, and recommendations or other features to draw users to the site.

The combination of targeted information and retail is a powerful one that cannot be easily replicated offline. To be sure, many traditional retailers of all kinds offer their customers print newsletters, loyalty programs, educational opportunities, and more. However, the Web uniquely enables customization of that content, allowing customers to pull from the site exactly the content they want and need, when they want it, and, many times, in the form they want it. From the e-retailer's perspective, this customization is automated; the company need not employ envelope stuffers to select and mail the appropriate materials to a customer on a regular basis. From the customer's perspective, this feature creates the experience of becoming a "market of one," with a direct relationship to the retailer.

Content and e-retail sites may mix their revenue streams in a variety of ways with any number of tools such as membership programs, advertising, sponsorships, retail, subscriptions, and syndication of content. Affiliate programs, which credit a referring Web site for sales made through the site, can make almost any site a de facto e-commerce site. For the purposes of this book, we considered sites that rely on product sales of 50 percent or more of their revenues.

The Process of Customer Relationship Management

"Retail companies have two important elements: products and customers! These two elements have to form the focus of strategic developments."

-IT Director, Coop Switzerland

The Strategic Foundation of Customer Relationship Management

"If we were to assume that the customer' does not exist, it would be ideal to have a category management procedure for every main target group that matches their specific requirements!"

-IT Director, GIB Group

As is the case with category management, customer relationship management is highly dependent on the type of strategy used by the individual retailer and on the conditions prevalent on the individual market. Retailers first have to ask themselves what the company stands for, what the target markets are, how the company operates within these markets and what the relevant customer requirements in its specific industry segment are. These factors determine:

1. The degree of differentiation a retailer uses to look at his customers and the way he approaches these differences.
2. The criteria used to group customers.
3. The criteria used to analyze customer groups.
4. The form of customer care and the necessary level and nature of individualizing the contact between the company and its customers.

Based on these strategic issues, companies with innovative, marketing-oriented approaches to retailing will take a more systematic approach to customer relationship management and put it on a strategic level. A move in this direction is already evident.

The paper provides an example of how best to approach customer relationship management. The overall process described was developed from the results of the interviews and covers all relevant areas and aspects from a strategic and tactical perspective.

This process is not intended for widespread industry implementation: it is a best-practice scenario that can be tailored to each companys specific requirements. We, the authors, believe that strategic customer management processes can be structured in a similar manner to category management.

Figure below clearly underpins the importance of strategically orienting retail for customers in the future:

Strategies for Consumer Integration

Supply Chain Management and the efficient management of "back-end" processes form the basis for strategic retail marketing. If these processes suffer from insufficient merchandise flow and poor merchandise availability, thus preventing retailers from reacting quickly to market conditions, this will inhibit strategic, customer-oriented retail marketing from the outset.

Category Management represents the first step towards shaping a retail company that is capable of fulfilling customer requirements. However, category management alone will only allow retailers moderate success in achieving a clearer profile that distinguishes them from their competitors and in increasing growth. After all, it is still the product and the assortment that are at the center of their attention. Category management enables retailers to plan their product and assortment management strategically. The authors as well as numerous retail managers believe that customer relationship management has been, and in part still is, lacking this clear strategic direction. When we consider the current retailing situation, we can see that a certain potential for differentiation does exist thanks to private labels and assortment bundling, yet it is still the same A grade brand names that are to be found on the shelves next to the private labels. Thus, retail managers believe that having a strategic focus for customers and their requirements will be a decisive factor in ensuring growth, even in saturated markets. The interviews clearly showed that focusing on customer requirements will be the key factor for success in the future.

Analysis

Most sectors of the retail business are now clearly moving towards target group-oriented marketing. In many service sectors this trend is not new. However, it is also being introduced increasingly in traditional market areas. In grocery retailing, in particular, new approaches for achieving differentiated marketing can be seen. Tactical approaches to systemizing customer relationship management in retailing already exist in many companies. Many areas customer loyalty programs in particular - have experienced a marked move from financial to service-oriented benefits. This move is a very welcome one, as up until now these tools have rarely been integrated in a strategic customer relationship management process and they are thus rarely included in global concepts for professional customer group management. The interviews showed that customer relationship management will certainly gain in importance in the future, though how it will be implemented still remains somewhat unclear. The customer relationship management process discussed in this research paper document therefore represents a comprehensive basic concept rather than a specific strategy that can be implemented uniformly.

Integrating Buying Phases

The second basic strategy for tactical customer relationship management is focusing on comprehensively satisfying customer requirements at all stages of their buying processes. This means that the marketing mix activities that come into play when a product is purchased are insufficient. Retail experts would therefore welcome more intense contact with customers in all phases of the buying process. Customers have an increasing number of possibilities to buy merchandise without actually entering "brick and mortar" stores and, therefore, retailers can no longer rely on in store customer contact.

The traditional, store-based perspective, where all buying activities take place in stores, must be called into question. As a result of this development, after-sales marketing in its broadest sense is increasing in importance. This includes customer loyalty programs that - according to retail managers - become extremely significant when considering the situation of saturated markets in many retail segments and also as a consequence of this situation - the increasing importance of securing the loyalty of existing customers. The various loyalty programs, customer card systems, customer clubs, and other after-sales marketing activities that already exist are indicative of this increasing trend. Loyalty programs are one of the most widely-discussed aspects of customer relationship management in recent times.

Advantages of E-Retailing

Sheer convenience
Wider choice
Better value
Unique gifting opportunity
Saves time and strain
Micro targeting
Mass personalization
Know customer preferences
Integrated source of information.

Conclusion

Finally to conclude that eTailing isn't just about building a pretty website. An established management consulting firm will bring in the requisite skills to evaluate business plan, check out revenue models, help identify potential alliances and integrate supply chain processes with e-commerce initiatives.

As per the projection by Internet and Online Association of India (IOAI), online shopping will increase to Rs. 2300 crore by 2007.Today, around 38.5 million Indians use internet and the figures are likely to reach at 100 million by 2007-08.Through online sales, some retail majors want to reach small towns where they do not have the outlets. When most are planning to go e-retailing, some are of the conventional view that it is essential to have look, feel and experience while shopping garment e-retailers should follow the above mentioned strategies

The most and important concentration is focused on back-end systems. Customers keep coming back only if earlier shopping experiences have been pleasant and successful. Quit gloating over the 70% success rate of on-line purchases. Integrate! Integrate! Integrate! Treat your eTailing site as the customer-facing end of a supply chain, not as a stand-alone antenna for attracting Web-travelers. Focus on building strong bonds between every link in the supply chain (order processing, order status tracking, payment status, inventory level reporting, and procurement) and build B2C store-front.

In this intricate business world, the e-retailing will become tremendous business strategic concept, and it may very helpful and most profitable method of business process in coming decade to the textile and garment industries.

ABOUT THE AUTHORS

K. UMANATH
Research Scholar
Department of Commerce
Bharathiar University Coimbatore-641046
E-mail:vku_mphil@rediffmail.com
Mobile: 098659791

K. Umanath did his M.Com (CA) (2006) in Department of Commerce and computer applications, Cherrans Arts Science College kangayam. At present he is doing research program in the Department of Commerce, Bharathiar University, Coimbatore. He Presented 10 Seminar papers in various National and International conferences. Among this 2 international level conferences, 1 international symposium and 7 national level Seminars.

Right now doing one elaborate research about export performance of agriculture products of India

J. UDHAYAKUMAR
Research Scholar
Department of Commerce
Bharathiar University
Coimbatore-641046
E-mail:udhai_mphil@yahoo.co.in
Mobile: 09994108520

J. UdhayaKumar did his M.Com (2006) in Department of Commerce Pioneer Arts and Science College, jothi Puram, Coimbatore. At present he is doing research program in the Department of Commerce, Bharathiar University, Coimbatore. He Presented 9 Seminar papers in various National and International conferences. Among this 2 international level conferences, 1 international symposium and 6 national level Seminars.

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