A day in retail is dominated by incredible number of transactions both internally and externally with suppliers and customers. In the Indian Retail Environment, we usually interact with 2 business modes.The first kind of retailers are doing business with a standalone POS system and the other kind are using a generic ERP along with a separate POS. All the lines that you post in this page is really very knowledgable and necessary to keep in mind for every business owner.Thanks for sharing such a great post with us. The synergies between physical stores and the online retail site, allow Bricks and Clicks retailers to (at best) break-even on their expensive delivery activities, and still make a profit overall. But drop shipping is less popular for online food retailing, because of low item prices and low margins, high fixed delivery costs and the necessity to combine products from many different suppliers. Fulfillment of online food retailers is a set of expensive activities, that in physical supermarkets is done FOR FREE by consumers. Mobile food shopping is also increasing, but retailers have to find ways to prevent small orders and high delivery costs. For online food niche retailers it is possible to select product categories that are profitable, because delivery costs are lower than gross margins. Online retail does not use planograms for websites, because the space-management algorithms calculate the minimal product stock necessary to prevent out-of-stocks. Online retail entrepreneurs do not suffer from the (largest) problem of shoplifting by customers.
Motivation for this article is the analysis of commercially successful and commercially failing online grocery retailers.
It is the ultimate challenge to develop an exception to this rule and the solution to this dilemma. These three solutions should be combined into a powerful Internet strategy, that should be executed in an excellent way. Cap Gemini was even prepared to predict a percentage between 30 and 40 %, but the influential Verdict Research tuned the market potential of online retailing down to 3 % in 2004 for the total retail sector and 2.33 % for the grocery sector. Fact is that in the year 2012 the online food market in the USA and in Europe is less than 0.3 % of total food sales. There are four basic reasons why online grocery shopping will never become popular by consumers. Distribution costs of online grocery retailing are twice the distribution costs of traditional supermarkets. The next table is an overview of supply chain activities and cost structure of each scenario, including traditional retailing. Niche online retailers use their quality image to reach for example 10 to 15 % of their own customers and 5 to 10 % of the rest of the market. The niche target group will consist mainly of affluent service oriented double income families, who are willing to pay the extra service fee. Many e-commerce analysts assume, that consumers will prefer to order their heavy bulk products online, and visit the store for the rest of their grocery needs. Online food retailers are also differentiating their business to financial services like banking, insurance and mortgages.
Walmart USA concentrates its Internet venture on its large non-food assortment, and use online food retailing as traffic builder. In traditional advertising every commercial message is targeting a specific consumer profile with a specific message. The other major advantage of Internet is the ability to really communicate in two directions. Communication with different customers may focus on special products, like low fat or sugar free assortment. Retail organizations also use their website to inform their customers about their internal processes.
The most promising communication feature is the possibility for customers to respond to the retailers information and marketing mix elements. Communication with other stakeholders of the company requires much attention but opens many opportunities.
In case of communication with other stakeholders each target group must have a professional contact in the company, who is responsible for content and direct response.
When the home shopping market increases, professional service providers will develop distribution networks for general use by different online retailers. The decision of Peopod to change delivery from stores to delivery from central warehouses improved handling efficiency but also increases capital investment and the average distance to the customer. Any successful online retailer has to work hard and intelligently on a large number of critical success factors.
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And the key to success lies in the efficient management of these transactions.And thus an intelligent retailer would pick the right store management software and not just a simple billing solution. And hence both parties lack control over the daily POS activities.After a close monitoring of the situation Ginesys has developed one solution which is synced and gives the retailer peace of mind and allows him space to expand his business empire. It will provide clear definitions and also understanding why these terms are important for your online retailing business.
Big Data is not just traffic or conversions, but also the pairing of behavior (clicks, open rates, time spent on site), demographic (age, gender, income, family composition, address), social information (tweets, shares, etc.), timing, and much more.
Most Bricks and Clicks companies offer web-to-store services such as in-store pick ups and returns: the website acts a traffic builder for the store. Consumers can make a purchase from their home, and pick up the order whenever it’s convenient for them, instead of paying for shipping and waiting for the order to arrive.
More specifically, conversion is often used to describe when a site visitor converts to a customer, making a purchase. The term may also apply to third-party companies that inventory products and ship orders on behalf of an online store.


Orderpicking of single SKU’s and home delivery may cost more that 15% of the retail price, but consumers are often not willing to pay more for home delivery than 5% of the basket price. They do NOT include shopping domains that provide free downloads, product reviews or purchasing incentives such as coupons. Mobile shopping is an increasingly common trend due to the popularity of smartphones and tablets.
Niche retailers have to identify market segments and deploy unique and targeted strategies to address their market’s needs. Just because you have a website, a mobile app, and a physical store doesn’t necessarily mean that you are an omni-channel retailer. The other causes of shrinkage will also be lower due to inventory control systems, professional order-picking and delivery processes, and checks and alarms by consumers receiving the goods. SKU data represent all attributes of an item, including price, style, brand, size, color, and more. And the experience as wholesale supplier of two well managed but failing online grocery businesses.
Home-shopping of groceries is no fun, it adds complexity to your lifestyle and it is more expensive than buying at the supermarket. Traditional channels are extremely efficient, because consumers perform most of labor intensive work for the retailer: order-picking in the store and transportation of goods to the home.
Peapod once delivered from local stores, but in 1999 the company switched to direct delivery from central warehouses. The company planned to develop 26 automated warehouses in populated areas all over the USA.
Webvan offered free delivery for orders US$ 50 and over and a delivery fee of US$ 4.95 for orders under US% 50. And when turnover stays low, the combination of low prices and high service means a very negative bottom line. This strategy is particularly effective for traditional retailers with a high market share and an affluent customer base. The other niche group are consumers who do not have easy access to a supermarket of choice. In practice consumers will try to order enough products to avoid the delivery fee, in most cases set at an order amount of above 100 US$ or the equivalent in Europe.
The best example is wine, because successful wine selling requires professional information about the product and its use.
The Belgian food retailer Colruyt used online non-food retailing not only as an important margin rich extension of the food assortment, but also as a traffic builder for the supermarkets. Internet is the perfect channel for targeting different consumers and other stakeholders of the company. Alternatively an Internet site has a menu structure, which makes it possible to communicate a whole range of messages to a wide range of interested target groups. This important feature of Internet already has a great impact on the internal and external organization of any company.
Most professional websites already have a special section for shareholders (annual and quarterly reports), potential employees (vacancies and working climate), suppliers (category management approach) and the media (latest news). If this is organized in a professional way, the Internet communication will strengthen external relationships and internal responsiveness to the market.
This will reduce the transportation costs by approximately 30 % and the total additional online grocery shopping costs by approximately 1.5 % points.
The use of local satellite stations increased capital investments but also had a positive effect on vehicle fill-rate and vehicle utilization.
This service element was impossible to maintain, because it tripled the already extremely high transportation costs. These factors are critical because failure to excel in one of them may damage the company considerably. Online customers must have absolute trust in the retailer, because the retailer takes control of most of the shopping process. Each marketing mix element must be promoted on the site, and the site must be promoted in traditional promotion channels. High investments in information technology and marketing must at least in the long term be covered by high turnover.
The author invites readers to supply feedback, constructive criticism and new scenario’s to make online food (and non-food) retailing profitable. This diploma will set you apart by gaining the skills and knowledge needed to manage sales, visual merchandising, and retail security. A Bricks and Clicks business also has the advantage of aligning store branding and online branding: the store brand acts as confidence builder (and traffic builder) for the website. They also do NOT include e-commerce sites such as auction, travel reservation or financial sites. It is shopping online using a computer, only with a smaller screen and often with a special app.
You must combine all channels in marketing, logistics and information technology, to give customers an ideal experience.
Common causes of shrinkage include: employee theft, shoplifting, administrative errors, and supplier fraud.
But webrooming is used by food buyers to compare product prices in order to choose the favorite retailer store. The pitfalls and success factors cover the entire marketing mix, the logistics system, information technology and internal organization. Andersen Consulting used to predict a market share of online grocery shopping of 20 % in the year 2003.
On top of those disadvantages: traditional supermarkets are fighting for consumer loyalty by improving their marketing mix and increasing their efficiency.


Online shopping is less time consuming than traditional shopping, but it adds complexity to your lifestyle. The distribution costs of home-shopping are twice as high as the costs of traditional food retailing, and most consumers are not willing to pay the extra 15 %. In recent years Efficient Consumer Response and Category Management had a significant and positive impact on quality and efficiency of traditional supermarkets. Direct home delivery from a dedicated warehouse is appropriate for an online business with a high market share in a medium size densely populated area. Outsourcing the delivery process to logistics service providers may add efficiency but will also increase complexity costs].
Note that this is not a recent startup, but that this company has been in business since 1989. But it also shows that in order to gain market share over traditional supermarkets the company had to invest heavily in price reduction and sales promotion.
These retailers can develop an online channel as service offering, as market development strategy and as barrier against new entrants. In this way a company like Albert Heijn has the potential to reach about 10 % of total customers and win 2 % of total market share online. For online grocery retailers the sale of mainly bulk products is the quickest road to bankruptcy, since these products are the loss leaders of the grocery business. This category is related to food and is therefore an expected extension to the online food business. Consumers could order the non-food articles online, but had to collect the merchandise at the store. Other products that benefit from information are wines, private label products, vitamins and food supplements.
However the disadvantage of Internet distribution of coupons is fraud: the possibility to change rebate figures by the PC. Internet makes it possible to use customer complaints as powerful drivers for quality improvement in the company.
Jeff Bezos solved the sore knees of employees (and himself!), who were packaging books sitting on the floor, by issuing knee protectors. It is interesting to show the most important effects of some home delivery alternatives on these distribution cost elements. The online retailer must exceed the product offering of traditional competitors in order to create loyalty to the business. Most American online retailers charge prices 3 to 5 % lower than traditional retailers, with the effect that gross margins do not cover the costs. Even more important is the necessity of a high market penetration and a dense customer network, in order to optimize delivery costs.
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And product information on the website is a welcome addition to instore and packaging information.
Mobile shopping apps are also used to enhance the in-store shopper experience, by providing product information and consumer specific suggestions. Because market potential of online grocery shopping appears to be low, online grocery retailers try to gain market share by lowering consumer prices (and margins). Food retailing has always been a very competitive business, and in recent years super-marketing has become a professional science that is constantly improving the value to the consumer. Online retailers have to pay well trained and professional employees to do this work without errors. Home delivery from a central warehouse via satellite stations is appropriate when the area is larger and the market share is lower. The Webvan case is interesting because it was a combination of high investments in buildings and equipment, and high customer service like a 30 minute delivery window. In the USA this would be the recommended approach for successful local chains, in the UK for Tesco and in The Netherlands for Albert Heijn.
His partner suggested the idea of purchasing some packing tables, so he told with laughter on TV.
European online retailers tend to charge 5 to 8 % higher prices than normal, but they will be exposed by price comparing websites. Result is a low margin operation with extremely high operating costs: the ultimate nightmare of every entrepreneur. After ordering online you first have to be at home and make sure that the goods are properly received. Of course there is a small niche market for expensive home-shopping services: affluent PC-minded and service oriented consumers and consumers with no easy access to a nearby store. In the USA, Europe and now also in India, China and South America very competitive stores with Every Day Low Prices and high service levels are gaining market share and are making the food business a war zone for new entrants. An additional 5 % of costs are spend on information technology, order management and after sales service. The additional costs are even higher in case of low market penetration or sub standard execution. Only when an online business focuses on special products and on rich information content, online shoppers will become interested and stay interested.




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