REI Climbs the Web Mountain

Shailesh Dewan (104)

Angad Singh (325)
Priyul Savani (116)
Mohini Singh (326)
Today’s Agenda
Company & Industry Analysis

Logical and Physical Design

Keys Reasons for Success

Multi-channel retailing
Company & Industry
Analysis
REI.com
Recreational Equipment Inc.

Headquarters :Kent, Washington, United States.

Industry: Sporting goods and outdoor gear.

Employees: 9,500

Business Model: Click and Brick

Website: www.rei.com, www.rei-outlet.com, www.rei.co.jp.

Industry Analysis and Competition
The outdoor sporting goods and apparel industry is a multi
billion dollars revenue industry in the United States.

REI is amongst the leaders of the market; faces a tough

competition from companies such as:
 Eastern Mountain Sports
 L.L Bean
 Bass Pro Shop
 Cabela's
 Mountain Gear
 Sierra Trading Post.
Industry Analysis and Competition
Eastern Mountain Sports and L.L Bean have very well
developed multichannel retailing.
Easter Mountain Sports offer free pick up at a store near
you (same as REI). It has a strong customer-centric
policy.
L.L Bean is renowned for its return policy.
Cabela’s has a very functional website but the
connection between website and stores is not very deep.
Bass Pro Shop and Sierra Trading Post have not used
multichannel retailing to the maximum potential.
Short Analysis of REI.com
Functionality: 9/10
Informational: 10/10
Ease of use: 8/10
Redundant Navigation: 8/10
Ease of Purchase: 9/10
Multi-browser functionality: 9/10
Simple Graphics: 9/10
Legible text: 8/10
Industry Analysis and Competition
Logical and Physical Design
 System Design
System Design Specification: a description of the main
components of a system and their relationship to one
another.

The System design can be broken into two parts:

Logical Design

Physical Design
Logical Design:
Data flow diagram that describes the flow of
information at the site, processing functions that must
be performed, and databases that will be used.
Description of the security and emergency backup
systems and controls that will be used.

Physical Design:
Translates the logical design into physical components.
Logical Design
Physical Design

Courtesy: IBM & Cisco.

Key Reasons For REI.com’s
Success
Reasons for REI.com Success
 Huge customer base before launch of REI.com

 First Mover Advantage- Launched REI.com in 1996

 Overcoming Cannibalization myth- realizing the power of web at the right time

 MULTI-CHANNEL APPROACH
Integrated, seamless channels
“Let customer choose how they want to shop”
 Physical Retail Stores- Direct
 Online (114%)
 Kiosks at Retail stores (48%)

 Benefits of Multi-Channel Integrated Approach

 Increases Trust and Loyalty
 Increase in profitability
 Increased personalization
 Drives customers to Physical stores
…
 Timely upgradations of Technology
1996- REI.com launched using Netscape Merchant Server Software; in-house
design
1998- REI-Outlet.com using IBM Net.Commerce; migrated REI.com to IBM
Net.Commerce
2002- IBM WebSphere
Prior to 2002, their infrastructure was a mix of S/W applications both in-house
and a variety of vendors. Later they realized that it was better to rely on a single
vendor

 In-store pickup (40% of online orders) & Multi-Channel Gift registry services

 SEO- Skillful website designing

 NetConcepts- to improve search engine results
 Mercent Retail- to manage referrals
Exclusive Online Features

 45,000+ products; over 5000 pages of in-depth product information,

expert gear advice , interactive community system, complete adventure
travel service
 Wide-ranging customer features- refer web customers to near by
physical stores having sales, can e-mail coupons for bike helmets
redeemable at local stores or online
 REI affiliate partnership program , exclusive online bargain offers
 REI-Outlet.com offers overstocks, seconds at rock-bottom prices
 24 X 7 service to any person, any where

 Increasing International reach

"With REI Online, it’s as though we’ve been able to open a store in every country
in the world," observes Hyde, VP of REI Online
HOW WELL THEY MANAGE
MULTI-CHANNEL RETAILING?
A multichannel retailer is a company that sells
directly to the public via more than one
distribution channel.
Most multichannel retailers sell through mail
order catalogs and "brick & mortar" retail stores.
Some multichannel retailers sell online as well.
Rei.com – multi channel retailing
 The success of REI has been its efforts to make itself as accessible as possible
to its customers through multiple shopping channels i.e. via in store
shopping, on phone and web site.

 REI Inc. is leveraging its in-store online kiosks with a free ship-to-store
delivery option. It’s also planning a free ship-to-store policy on web sales.
REI’s service is unique in that it provides customers with a much broader
selection of products than is available at many of its stores .

 Moreover, REI says the in-store pickup presents an ideal opportunity for
cross-selling.

 While at the store, customers use portable scanners to identify items for
their registries.
Stocking its Web site with rich content on product features and specifications to enable
comparison shopping, REI has ensured that shoppers are drawn to the site whether they
intend to browse, research or buy.

REI’s new multi-channel gift registry has been well-received by customers, acquiring
6,000 registry lists and thousands more new customers in just the first eight weeks.

Gift registries can be set up, monitored and updated through the in-store kiosk, or at
REI.com.

All modifications or purchases to the list—whether made online, over the phone, or in
the store— are updated in real time to ensure that product and quantity information is
accurate.
DRIVERS
Multi- channel retailing growth of REI.COM is
essentially driven by :-
Consumer
Cost Saving
Stategic Competitive Advantage
 To create high-value, multi-channel customers, REI chose to
develop its enhanced e-commerce functionality using WebSphere
Commerce and the WebSphere software platform from IBM.
 Nearly 40 percent of all the orders generated on the REI.com Web
site are now delivered to the stores for pickup.
 And one-third of those customers who chose to pick up orders in
the store purchase additional merchandise during that visit at an
average order size of $90.
 These store sales have led to an 800 percent increase in paddling
category sales and a healthy 1 percent increase in total store sales.
Thank You!!