e-business in the Retail Sector Elena Gaboardi

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1 e-business in the Retail Sector Elena Gaboardi e-business in Europe 2002, Brussels 1

2 Retail: a reshaped competitive scenario Increasing concentration (new stores and takeovers) Geographical expansion and diversification of sale format Entering new businesses Moving towards vertical integration e-business in Europe 2002, Brussels 2

3 This has been leading towards... More and more complex organisations (size and n of point of sales) Growing pressure on purchasing price Differentiation divert competition from price Exploitation of customer knowledge for marketing purposes e-business in Europe 2002, Brussels 3

4 Relevance of the ICT Amount of inter-company exchanges (network organisation of points of sale) Complexity of information (n of products, seasonal demand, different stock rotation times etc..) Enormous pressure of decision-making timeframes (trade off between availability of goods and minimum inventory) Key role in procurement and management of logistic flows e-business in Europe 2002, Brussels 4

5 Impact of e-business and evolution of the value chain in the Retail Sector 1 Procurement Logistics Store management Sales Customer retention 2 Supply chain optimisation and integration Interaction with customer 3 Minimising inventory cycle and stock shortage from 10% to 30% of the procurement processes Lower operational costs and improved service level 4 Suppl y Chain Management (SCM) Customer Relationship Management (CRM) 5 Business -to-business (B2B) e - marketplaces Enterprise Resource Planning (ERP) Business -to-consumer (B2C) e- commerce Procurement Logistics Store management Sales Customer retention Source: Developed from EITO (2001) 1 Present situation of the retail value chain 3 e-business impact on costs 2 Major impacts of e-business 4-5 e-business and e-commerce applications redefining the value chain e-business in Europe 2002, Brussels 5

6 E-exchanges: a slow development Traditional exchanges still prevail (e-exchange with suppliers occurs in 43% of enterprises having Internet access) EDI: the most widespread solution (38% of the largest enterprises own a EDI net) Internet-enabled EDI solutions still in the development phase On-line management of capacity and inventory: 16%of enterprises having Internet access Participation to e-marketplaces: 6.6% of enterprises e-business in Europe 2002, Brussels 6

7 Diffusion of EDI Diffusion of EDI and the relevant standard (% of enterprises, 2002) Total EU8 Large Medium Small EDI usage, out if which Private networksbased EDI Internet-based EDI Computational base: all enterprises for EDI usage; EDI user for the other two indicators Enterprise weighted Source: e-business (2002) e-business in Europe 2002, Brussels 7

8 Status of e-procurement About 26% of enterprises procure online (7% planning to adopt e-procurement in the next months) For most of them (>60%) online procurement accounts for less than 10% of total procurement More MRO than direct goods purchased online, especially by large enterprises Auction sales are gaining importance for MRO, perishable goods, private label merchandise and promotions e-business in Europe 2002, Brussels 8

9 e-procurement: an opportunity to exploit Key impacts on standardisation of processes, operations and communicaton coding. Very/fairly positive impacts are reported on: efficiency of internal processes (62 % of enterprises procuring on line) procurement costs and costs of logistics and inventory (>50%) relations with suppliers (50%) e-business in Europe 2002, Brussels 9

10 On-line retailing uptake: not as fast as expected About 10% of enterprises sell online (11% planning to go online ) 90% of them sell through company web site, 48% through marketplaces For about half of them, online sales account for less than 5% of total sales Barriers include: customers hesitance, shipment and delivery problems, capital cost e-business in Europe 2002, Brussels 10

11 ..but gaining momentum Very/fairly positive impacts are reported on: quality of customer service (67% of enterprises selling on line) efficiency of internal processes (57%) sales area (59%) e-business in Europe 2002, Brussels 11

12 Multi-channel retailers get the best results The physical channel complements with the virtual one, exploiting: experience with customer relationship brand reliability physical channel logistical support e-business in Europe 2002, Brussels 12

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