E-COMMERCE (DOES AND DON TS) AND THE GOOD EXAMPLES. Dr. Herbert Kotzab, Professor, CBS, Vejle, E-commerce Overview. E-Commerceeftermiddag

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1 E-COMMERCE (DOES AND DON TS) AND THE GOOD EXAMPLES Dr. Herbert Kotzab, Professor, CBS, Vejle, Slide 1

2 Welcome to the session in advanced e- commerce! That means the instructor finds the subject confusing. If s/he didn't, the session would be called elementary ecommorce. Slide 2 Luis Alvarez Nobel Prize in Physics in 1968

If s/he didn't, the session would be called elementary

3 Agenda 1. What type of retailing is e-commerce? 2. Megatrends ecommerce 3. Some logistical challenges 4. Some empirical benchmarks 5. Key learnings 6. Reflections Slide 3

4 1.1 What is retailing? Retailing is the sum of actitivites that assist the exchange of goods/services between organizations. Slide 4 Assortment (quality/quantity): to offer a end-user oriented bundle of products/services set of marketing processes Promotion-, adviceand credit: to ease the buying process set of logistics processes all activities, which help to overcome distances

5 1.1 Retailing is not rocket science Slide 5

6 1.2 Electronic Commerce? E-Commerce = the use of IT to integrate value chains Slide 6

7 1.2 Three alternative definitions of the relationship between e- commerce and e-business Slide 7

8 1.2 Where to place E-commerce? Slide 8

9 Megatrend E-commerce Slide 9

10 2.1 What is the expected development of E-commerce? Turnover Developement Introduction Growth Maturity Decline DIY Discounter Hypermarkets Supermarkets Department-Stores Category Killers E-Tailing Time Slide 10

Decline DIY Discounter Hypermarkets Supermarkets

11 Is there a potential market for E- commerce? Slide 11

12 There is a e-buying behavior! Slide 12

13 The e-channel-dilemma WASHINGTON, Sept. 21 The rampant growth of Internet usage has hit a brick wall, according to a new survey released Thursday. Of those currently without Internet access, 57 percent said they have no plans to go online. But while aging baby boomers and senior citizens have little affinity for the Internet, those under 30 have a lust for the online life that could, within a generation, drive Internet penetration levels to surpass those of TV. Slide 13

Of those currently without Internet access, 57 percent said they have no plans to go online.

14 Let s have a look at some benchmarks Slide 14

15 3.1 A regular set up of distribution channels Slide 15 Distribution of goods of various producers through wholesaler and retailer Consumer is responsible for last mile and collects goods at store level No direct producer consumer interaction

wholesaler and retailer Consumer is responsible for last

16 3.2 The E-commerce promise Slide 16 Direct interaction between producer and consumer Direct distribution of goods from producer to consumer Producer is responsible for last-mile

17 3.2 There are how many ways to organize the last-mile? Flow Process Design problem Design alternatives Information flow Order entry What kind of order is accepted? Conventional media (e.g. fax) Call center Electronic data communication Fulfillment flow Picking and Where is the Retail outlet Local warehouse Central distribution center packing picking and packing done? Who is doing the Own people 3rd party picking and packing? Reverse flow Receiving How is the By consumer Via parcel service By delivery driver shipment getting back to sender? What can be Items with Rented items Damaged and Recyclable items returned? refundable deposit perished goods What is happening Immediate refund Credit for next order New delivery of the in case of returns Payment flow Prizing What pricing model is chosen? Minimum order volume and charge Minimum order volume Service charge same/other product No charges Monthly membership fee Source: ECR-Europe 2002 Slide 17

problem Design alternatives Information flow Order entry What kind of order is accepted? Conventional media (e.g. fax) Call center Electronic data communication Fulfillment flow Picking and Where is the Retail outlet Local warehouse Central distribution center packing picking and packing done?

18 3.2 One way to organize the last mile Slide 18 Same-day delivery out of decentralized distribution centers For time-sensitive goods, especially food

19 3.3 The Webvan-example Slide 19 Webvan promised to revolutionize the supermarket industry. But only 2% of online shoppers bought groceries online in the past year, researchers say. Webvan lost $830 million since being founded in ech/ week.htm

Webvan lost $830 million since being founded in 1996. http://www.usatoday.

20 3.3 We forgot to calculate. Internettets betydning for kæder i dansk detailhandel Fra offline til online (1/3) Slide 20 Hypermarkeder Online Gennemsnitligt salg (Rabat) Forsendelse og håndtering Omsætningsafgift 7.00 Kunden betaler Salgsomkostninger Forsendelse og håndtering Bruttoavance Driftsudgifter Leje Arbejdskraft og butik Udvikling af websted 2.90 Markedsføring I alt Driftsoverskud per ordre Kilde: Lindström, M. e-tailhandel. Clicks, Bricks & Brands.(2001) Beløb i USD. Nielsen et al. 2001

00 (Rabat) -10.00-20.00 Forsendelse og håndtering 11.00 Omsætningsafgift 7.00 Kunden betaler 97.00 91.00 Salgsomkostninger 67.41 57.

21 3.3 because E-Commerce logistics is expensive Slide 21 McKinsey-Quarterly, 2000

22 3.4 Recently in the news Amazon shares down on surprising profit drop 26/4/2011 Amazon has been spending significant cash for the last several quarters on improving its infrastructure -- opening new distribution centers to meet demand from its increasing number of premium "Prime" customers. Chief Financial Officer Tom Szkutak said the company has announced nine new fulfillment centers, and of those one is open and one is gearing up to launch soon. The remainder will open this year -- and Amazon could announce even more. Slide 22

23 Let s have a look at some benchmarks Slide 23

24 4.1 Even though it is Amazon.com Slide million German customers in 2010! Number 1 e-tailer in Germany

25 4.1 1st quarter 2011 profit 9.86 billion US-$ = + 38 % Slide 25

26 4.2 From B2B to B2C Slide 26

27 4.3 skagenfood.dk not a e- commerce company Slide 27

28 4.4 lego.com the channel-conflict Slide 28

29 4.5 The e-grocery hero Slide 29

30 4.6 A Swiss success story coop@home Slide 30

31 5. Let s sum up Slide 31

32 5.2 There will be a revival of former logistics concepts e.g. city logistics Slide 32 GCI/CapGemini (2008)

33 5.3 However, this is going to really revolutionize ecommerce! Slide 33

34 What so what now what? Slide 34

35 6.1 Old wine in new bottles? Slide 35 Doody/Davidson (1967)

36 6.2 Remember, how it should be.. Not e-commerce. but -commerce! Slide 36

Last Mile Innovation: Driving Customer Experience

Last Mile Innovation: Driving Customer Experience National Postal Forum March, 2014 Presenters Ed Van Buren @emvanburen Principal Deloitte Consulting LLP Ed Panzarella Director Deloitte Consulting LLP