631 D 56 Ee 4218730 F 278 B 45 B 4

Copyright ©2009
Fairchild Books
• All rights reserved. No part of this presentation covered

by the copyright hereon may be reproduced or used in any
form or by any means–graphic, electronic, or mechanical,
including photocopying, recording, taping, or information
storage and retrieval systems–without written permission
of the publisher.
ISBN: 978-1-56367-6332-1
GST R 133004424
Unit I
The Road to Multichannel

Retailing
Chapter 1
Evolution and Impact
Multichannel Retailing Defined:
Electronic and Mobile Methods
• E-retailing—Online and other electronic
transactions involving goods and services
for personal, nonbusiness use
• E-commerce—Includes consumer and business
sectors, encompassing all goods and services
sold on the Internet
• M-commerce—Selling through cell phones
and personal digital assistants that are Internet
equipped
• S-commerce—Selling through social media
• I-commerce---Selling through interactive kiosks
L. Poloian 5
Chapter 1 ©2009 Fairchild Books, A Division of Condé Nast Publications.
Multichannel Retailing Defined:
Bricks, Slicks, and Clicks
• Multichannel Retailing Integrates:
– Brick-and-mortar stores (bricks)
– Direct marketing methods: catalogs and direct
mail pieces (slicks)
– Online (clicks)
– And much more!
L. Poloian 6
Discerning Channels from Vehicles
• Channels—Conduits through which sales

are transacted: ordering online, making a
catalog or store purchase
• Vehicles—Promotions or other
techniques used to reach and inform
customers
L. Poloian 7
Organizational Structures
• Pure-play—One channel
• Dual-channel—Two distinct channels
• Multichannel—Two or more channels (triple play)
• Electronic spin-offs—Companies that traded through
other electronic means before opening online stores
• Nontransactional sites—Web sites used
for information, not commerce
L. Poloian 8
Why Adopt Multichannel Retailing?
• Reach more customers

• Provide customer convenience
• Compete more effectively
• Grow the business
• Balance risk
• Achieve profitability
• Expand globally
L. Poloian 9
Justification for Multichannel
Retailing
• MCR is a strategic
imperative for
growth
• Expands
customer
convenience
• Adds retail
format options
• Increases
customer
expenditures
L. Poloian 10
Roots of Multichannel Retailing
Early History and Origins of the Internet:
• 1960s—U.S. Department of Defense

developed ARPAnet
• 1989—World Wide Web developed
in Switzerland
• Early 1990s—Mosaic (first Web
browser) became Netscape Navigator
• 1994—Amazon.com first major pure-play
L. Poloian 11
Roots of Multichannel Retailing:
Obstacles to Development
• Economic downturn in 2000-2001and 2010
• Bursting of dot-com bubble
• Scarcity of money for development
• Battles within companies for control and resources
L. Poloian 12
Roots of Multichannel Retailing:
Current Status
• Multichannel retailing accepted as the norm

• Online sales grow more slowly in economic
downturns and as the industry matures
• Business practices become more efficient
• Customers reached worldwide
• Cyber Monday?
L. Poloian 13
Impact of Multichannel
Retailing:
Worldwide Internet Usage
• 2000—350 million users
• 2005—765 million users
• 2009—1.17 billion users
In 2008 the number of Internet users in

China (253 million) surpassed the U.S. (220
million) for the first time.*
* Sources: China Internet Network Information Center and Neilson Research
L. Poloian 14
Impact of Multichannel
Retailing:
Online Performance Measures
• Revenue growth
• Gross Margin or Profitability
• Annual sales
• Impact of holiday sales periods
• Other performance measurements:
– Click-through rates
– Shopping cart abandonment rates
– Customer service metrics
– Web site design evaluation
L. Poloian 15
Top Multichannel Retailers:
Online Trends
• In 1999 only 27 of the top 50 online retailers
were multichannel
• In 2009, 41 of the top 50 were
multichannel retailers
• Of the top 10 online retailers only
Amazon.com and Newegg.com were pure-play
retailers
L. Poloian 16
Worldwide Internet Usage:
Penetration Rate
• Penetration rate:
• measures the percentage of the population
that purchases a product or service—not
simply Internet usage
– The highest penetration rates are held by:
• United States
• Japan
• South Korea*
*Source: InternetWorldStats.com
L. Poloian 17
Top 5 E-retailers for 2009
Rank Company Comments
1 Amazon.com Well diversified product mix;

withstanding economic slump
2 Staples Expects one-third of sales to come from
Web
3 Office Depot Using m-commerce features and
customer services
4 Dell Upgrading customer service in very
competitive market
5 HP Analyzing customer metrics carefully
Source: Internet Retailer. “Top 500 Guide.” 2008 Edition: p86-94
L. Poloian 18
Lessons Learned from Top Retailers
• Some perform better than expected

• Sales may not keep pace with technological
advances-Technology is driving retail
• High costs of doing business change selling
channels
L. Poloian 19
Deployment Strategies
• Some started as brick-and-mortar retailers
and later added online stores (Macy’s)
• Some began as online retailers then added
catalogs and/or stores (Red Envelope)
• Many catalog companies added brick-and-
mortar and online stores (Sears)
• Depends on the company and its resources
L. Poloian 20
Factors Shaping the Retail Industry
• Technological Advances
– Hardware, software, gadgets
– Social networking
– Virtual worlds
– Advanced search
– Web analytics
• Customer Dynamics
– Aging but active baby boomers
– Technology savvy
young people
– Value consciousness
– Empowered Consumer
L. Poloian 21
• Industry • Merchandising
Consolidation Polarity
– Mergers – From luxury to low-
– Acquisitions budget goods
– Larger companies – Assortments seem
but fewer of them fragmented
– Wide variety
of consumers
L. Poloian 22
• Supply Chain Initiatives • Global Retail Expansion

– Shorter merchandise – Globalization continues
production cycles-QR – Business and non-business
– Faster time to market sectors affected
– EDI – Many global challenges
– Greater use of Web for including the economy
design and production-CAD
– Growth of RFID
technology
L. Poloian 23
• Emergence of China
– Major power shift
– Chief exporter to the
U.S. and the world
– Human rights and
intellectual property issues
– Retail activity and growth
– Inflation
– Huge disparity between
real China and new
consumer
L. Poloian 24
• Multichannel Emphasis
– Significant influence on retailing today
– Emphasis on integration across channels
– Huge potential if done correctly
L. Poloian 25
• Organized Retail Crime • Customer Privacy

– Major negative movement and Security
– Involves groups of people – Capture and use of personal
engaging in theft and data concerns customers
scams – Data breaches causing ID
– Copyright infringement theft
– Counterfeit – Phishing online
– Significant losses – Spam
to retailers
L. Poloian 26
• Sustainability
– Growing interest in
environment by
retailers and consumers
– Retailers involved in eco-
friendly building
products and utilities
– Concerns about carbon-
neutral emissions
– Renewable fibers and
materials
– Sustainable Practices
– Index
L. Poloian 27
Summary
• Multichannel retailing:
• creates more value and options for
customers
• fuels growth for proactive retailers
• Adds management challenges
• Requires consistency and message
integration
• Platform Integration
L. Poloian 28

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Copyright ©2009

• All rights reserved. No part of this presentation covered

The Road to Multichannel

• Channels—Conduits through which sales

• Reach more customers

• 1960s—U.S. Department of Defense

• Multichannel retailing accepted as the norm

In 2008 the number of Internet users in

1 Amazon.com Well diversified product mix;

5 HP Analyzing customer metrics carefully

Source: Internet Retailer. “Top 500 Guide.” 2008 Edition: p86-94

• Some perform better than expected

• Supply Chain Initiatives • Global Retail Expansion

• Organized Retail Crime • Customer Privacy

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