online shopping

Santa’s Sleigh is not quite fast enough

Posted on by josephb30113f14
This is an example how the holiday season disappointed customers

Last year was a terrible Christmas for many families in the United States. The majority of those families were those that put off their online holiday shopping until the last minute. UPS and FedEx were the two companies that were in the spotlight last year with an estimated 2 million late packages that did not get delivered on time for Christmas. This was due to both bad weather and the lack of planning and preparation these companies had to perform.

The holiday shopping season in 2013 was a record breaking one with more customers than ever shopping online with Amazon, Target, and Wal-Mart to name a few. However, the shipping companies were not the only ones to blame for the disastrous holiday shipping dilemma. Many of the large online retailers were offering customers expedited shipping and/or guaranteed delivery without actually paying the additional fees to the shipping company for that service. For example, if you ordered a product online and the company promised to deliver in two days that doesn’t necessarily mean that the company paid UPS or FedEx to get the package there by those specific days. Retailers were not expecting to pack and ship the amount of orders they did nor were they expecting bad weather around the country or UPS and FedEx to not have the ability to support the large number of packages going through the system. All of these were issues that lead into packages not being delivered on time.

For the upcoming holiday shopping season in 2015 retailers and logistics companies are altering their plans for the massive amount of expected purchases. Shipped goods are expected to rise as much as 11 percent when compared to last year. So you may ask, what are they doing different from last year to support this growing industry of online shopping? More and more of the big box retailers with online and brick-and-mortar stores and also some of the smaller ones are offering more and more options to place your order online and then pick it up in store a short time later. They are also preparing to ship some orders from store locations instead of from a central warehouse, which could significantly decrease transit time.

UPS and FedEx are hiring about 10 percent more seasonal workers than last year to help process, sort and deliver packages. They are also investing enormous amount of money to more efficiently run their operations such as automated sorting.

With these adjustments in place the online stores and shipping companies are supposed to be a lot more effective at delivering packages on time than they were last year.

If you had a position of authority in one of the big box online retailers such as Amazon, Target or Wal-Mart, how would you improve operations?

 

Sources:

http://www.detroitnews.com/story/business/2014/10/26/fedex-ups-plan-holidays/17975401/

http://kctv.images.worldnow.com/images/24306338_BG1.jpg

http://www.dispatch.com/content/graphics/2013/11/27/holiday-shipping-art-ga1pqp1u-1holiday-shipping-jpg.jpg

Companies are wanting to automate sorting such as this

 

Fast Fashion to Hit the U.S.

Posted on by spr1321mbator

 

H&M Hennes & Mauritz AB is a Swedish retail clothing company that is known internationally for its affordable fashion for men, women, and children. With 2,776 stores in 48 markets, H&M has been ranked the second largest clothing retailer in the world. Though the clothing company has gained a reputation for being fashion forward, the same cannot be said about its ability to keep up with online shopping demand. H&M currently offers online shopping to customers in just eight of its 48 markets around the world: Sweden, Norway, Denmark, Finland, Germany, the Netherlands, Austria, and the United Kingdom, but none in the United States. This has U.S. customers scratching their heads in confusion and growing impatient. The retailer stirred up excitement back in January 2011 with a tweet that stated:

“Good morning is an understatement! H&M has decided to have online shopping in the U.S. at the turn of the year 2011/2012! Stay tuned for more.”

Unfortunately, two years have passed and H&M has failed to deliver on that promise. The retailer is still “not set up for mail order, phone orders or e-commerce at the present time”. However, there is still hope for U.S. customers. H&M’s 2013 Expansion Strategy revealed: “Investments will also continue within online sales. H&M plans to launch online sales in the US, the world’s largest market for e-commerce.” Business Week also reported that shopping from H&M’s website could happen as early as Summer 2013.

Entering the U.S. online retail market goes beyond satisfying millions of America’s fashion lovers. “The U.S. online retail market is the biggest in the world; research firm Forrester estimates it will reach about $260 billion this year. Taxes vary by state, shoppers expect free shipping, and returns are common”. The process is quite complex and H&M has cited “issues with security, customer service, logistics, and the assortment of items offered” as reasons for delay. But the longer the retailer waits, the more demanding customers become. Not only are U.S. customers looking for the ability to shop online, but they are also expecting the company to have smartphone applications available, too. H&M says they will meet this demand. For investors sake, H&M cannot disappoint  because the company’s competitors have already figured out how to engage their U.S. customers in online shopping.

With just a few weeks left till summer, anticipation for the launch of H&M’s online store will grow largely. Having only photo galleries of tasteful, trendy clothes and accessories will not be enough for die hard shoppers this year and if the project fails to launch, there could be dreadful consequences for the company. In ending, some important questions to consider are: Do you think H&M waited too long to enter the U.S. online market? Is this expansion strategy necessary in today’s retail industry? How do you think launching an online store will affect H&M’s competitors?  Finally, on a scale of 1-10, how important is online shopping for you? Does it affect the way you shop?

 

SOURCES

Business Week: http://www.businessweek.com/articles/2013-03-28/h-and-ms-online-troubles-u-dot-s-dot-shoppers-are-still-waiting

H&M Expansion Strategy: http://about.hm.com/AboutSection/en/About/Facts-About-HM/About-HM/Expansion-Strategy.html#cm-menu

Annual Report: http://about.hm.com/content/dam/hm/about/documents/en/Annual%20Report/Annual-Report-2012_en.pdf

Best Buy’s Comeback?

Posted on by spr1313fmohan

Would you rather go to Best Buy or shop online for the best deals? Most of us have become so accustomed to shopping online in the comfort of our own time and place. The internet has become a life saver for people who don’t know much about technology, in helping find out more information about products and finding the best deals. So, then why go to Best Buy?

Best Buy is relying on an employee who worked there for 26 years to help the business fix one main problem that has been bringing the corporation down tremendously, it’s customer service. Shawn Score, Best Buy’s senior vice president of U.S retail agrees that when it comes to customer service, Best Buy has let go. This is a big issue for Best Buy, mostly because 90% of its revenue comes from the stores.

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Score says he has a white binder on his desk with a list of “pain points” which catalog some of the main reasons why customers walk out of Best Buy: uninterested employees and out of stock items. Ever since Score was approached by Chief Executive Hubert Joly, he has been improving the stores with the lessons he’s learned from running Best Buy’s small mobile outlets.

Some of the things that Score has been changing in the stores are mainly for the employees. He’s encouraged more sales training so that the employees know a lot more about the products they’re selling. Score began an incentive pay to reward workers for increasing sales and customer satisfaction. He made sure that managers also schedule employees accordingly, so that the most experienced ones worked on the weekends when the stores are the busiest. These fixes have decreased Best Buy’s loss to a certain extent, from $1.82 billion last year to $409 billion in February 2013. 

These numbers might look promising for the future, however in the long run, there are many customers like John Hopper who no longer rely on the advices of Best Buy employees for things he needs to buy. Hopper has turned to the internet for his research purposes. According to Best Buy, 20% of electronics are bought online. This might seem like a small number but when Best Buy faces its online competitors who don’t have high operating costs because of labor and leases, it is a big deal.

Score is attempting to bring more customers into the store and actually make a sale. While, the sales rates haven’t improved, their customer service scores have gone up. Best Buy has also doubled its shares but is this enough for Best Buy to make a comeback? Best Buy has to take a lot of things into consideration at this point. In class we’ve learned about the ten critical decisions such as inventory managing, human resources, intermediate and short term scheduling. Will Best Buy be able to make strong decisions for the future? Do you think that they’re on the right path, considering that their customer service is improving or will online shopping take over?

Source: http://online.wsj.com/article/SB10001424127887324743704578444733449436900.html?mod=WSJ_mgmt_LeadStoryCollection

Video: http://www.youtube.com/watch?v=21SyJSTbjZQ – From last April.

Black Friday and the Capsim Connection

Posted on by w13trista

Okay, so if you’re like me, you’re already tired of all the annoying holiday shopping ads on TV that are all telling you that right now is the best time to buy (fill in the blank product here) right now!  And of course with Black Friday just past us, the ads were in full force with “door buster” deals and other extra perks for shopping early.  Added to the drama this year was the fact that value stores such as Wal-Mart and Target opened on Thanksgiving evening as opposed to 4 AM or whatever obnoxiously early time it was last year.  But now that the drama of the biggest shopping day of the year has died down a bit, I started to wonder if any of the ads and marketing strategies actually paid off for these brick-and-mortar stores.

In a Forbes.com article posted on November 28th, the author suggests that rather than Black Friday sales results giving us a glimpse of the holiday season’s hottest items or predictions on whether this holiday season will be better or worse than last year, consumers’ shopping and purchasing trends and habits are changing and that retailers should be cognizant of these changes if they are to have a successful holiday sales season.

For example, the traditional big shopping days such as Black Friday are less and less appealing to consumers with Black Friday sales down 1.8% from 2011.  Whether stores open on Thanksgiving night or at 4 AM on Friday, consumers find neither time convenient.  They are choosing to shop at more schedule-friendly times or even online.  With e-commerce and personalized electronic ads becoming more and more prevalent, is it any surprise that Black Friday online says were over $1 billion, which made it the largest (dollar wise) online shopping day of 2012 so far?  This is a 26% increase from online sales on Black Friday 2011!

Another message retailers need to interpret is that consumers may be becoming calloused to the inundation of sales ads.  As we learned in our marketing class last quarter, mass media is not nearly successful as it used to be.  Retailers need to create more personalized, relevant ads for their target market and cut through the incessant advertising noise that bombards consumers every day.

This article got me thinking about our Capsim simulation and how some of these concepts might apply.  Although we just started and we’re all still forming our strategy, there are some key concepts that we’re putting into practice this quarter.  It will be key for us all to identify our target market, know and understand the needs/wants of that market and then create products and a marketing campaign that our target market will be receptive to.   Although there is no Black Friday in the Capsim simulation (which I think we’re all thankful for!) for us to use as a basis for purchasing trends such as the Forbes.com article suggests, we will hopefully put into practice some of these key business concepts as we move through the 7 Capsim rounds.

11:11 Make a Wish – China’s Cyber Monday

Posted on by f1224sshelhamer

Many may know and participate in the United States huge rush for online shopping after Thanksgiving, also known as Cyber Monday.  However this ranks as the second largest e-commerce event in the world.  In the recent years, an online shopping extravaganza has emerged for China.  It began in the 1990s by college students who did not have a significant other.  As a replacement for Valentines Day, young adults without partners began treating themselves to dinners and gifts.  The concept of the date arose by November 11th or 11-11 which has 4 singles (for singles).  It has now erupted into possibly the busiest online shopping day in the world.

The simple items have now evolved into jewelry, TVs, and even cars.  The event has also spurred the need for different marketing techniques and price cuts.  As the article mentioned, some retailers have promised discounts up to 70 percent off.  The deals are very hard to resist and resemble many aspects of the United States’ Cyber Monday.  Halfway through the day,  approximately $1.6 billion in sales have been accumulated by means of the largest website for online shopping in China, tmall.com.  This amount has surpassed the $1.25 billion that United States online retailers took in last year’s Cyber Monday according to the article’s source comScore, a research firm.

Companies have also had to begin planning and forecasting sales and delivery services months in advance.  Alibaba, the largest Chinese operator of e-commerce, has requested additional lounge chairs and made reservations for rooms in nearby hotels for their employees to take much need breaks and relaxation.  According to the article,  more than 800,000 delivery personal will be working Sunday with the additional 75,000 hired seasonal workers.  And one of the largest companies has even expanded their operating capacity by 50 percent.

Although the idea of a large shopping spree day online in China may be different from the United States, there are many similarities when it comes to the businesses and their preparation.  Do you see a growing trend in online shopping in American or believe that making the trip to the store is necessary?  In my opinion, I believe it matters in the nature of a product to either purchase it from a picture on the screen or physically taking the good off the shelf.

 

Article Source : http://finance.yahoo.com/news/singles-day-chinas-online-shopping-070856623.html

Taking Online Shopping Offline

Posted on by f1234erose
Online Shoppers who choose to forgo shipping chargers visit Walmart to pick up items ordered online.Link to NYTimes article “Luring Online Shoppers Offline”

Online shopping has caused retailers such as Macy’s, Best Buy, Sears and The Container Store to loose millions in sales. Consumers have had such a profound obsession with purchasing a product at the lowest price possible that almost every product sold at traditional retail stores is constantly being matched up with prices online. Currently, Best Buy is even going to the extent of customizing the bar codes on their products so they cannot be scanned by consumers so they are able to look up online prices from sites such as Amazon.

To avoid having in store sales reach an all time low, retailers are attempting to lure consumers into the store by promoting their own online operations on site. Walmart has made an effort to add Web return centers, pickup locations, free shipping outlets, payment booths, and drive-through customer service centers for online sales to appeal to the growing amount of online shoppers.

Retailers like Walmart believe that they could potentially have an advantage over their online retail competitors due to the fact that shopping offline eliminates the expensive shipping fees. Walmart gives customers a variety of options such as being able to order products from their online website and then being able to pick it up and pay for it at the store, thus appealing to customers who have a trend of preferring to pay cash for products.

From focusing on the cash option, Walmart has seen a dramatic rise in demand due to promoting online pickup at their stores, which now accounts for half their sales. As a whole, Walmart has the advantage of appealing to customers that do not have a bank account of credit cards. In addition, the in store pickup also appeals to consumers that favor to buy items in bulk that do not qualify for online purchases.

Fellow retailers of Walmart such as The Container Store and Sears have taken on site purchasing to a new level by promoting a drive-through service that allows for consumers  to get what they need on the go. This service has also seen great success because it appeals to the consumers who shop online because they do not have the time to navigate their way through the retail store to purchase the products they need. Recently, a new trend has shown that customers who used this pick up  service have caused them to visit 50% more than customers who regularly shop in the store.

The competition between traditional retailers and e-commerce companies will continue to exist, but the efforts made by the traditional retailers to keep up with online shopping have been greatly significant. With all the new bells and whistles added to their offline services, will retailers truly be able to take shopping offline for good?

Source: http://www.nytimes.com/2012/07/05/business/retailers-lure-online-shoppers-offline.html?_r=0

Peace of Mind

Posted on by maryama502

Nowadays it’s rare to hear about someone who did not shop or order a product online. I remember my first time I decided to buy a book from Amazon since year 2000 and I felt that I’m not going to receive the book and the money I paid is gone as I didn’t shop online before. The second step after placing the order is the invoice; there were multiple options for shipment based on duration and the higher the duration (number of days from placing the order to delivery) the cheapest it costs. As a result, Amazon allows me to adjust my invoice based on my preferences and urgency on receiving my order; I place my choice as the most urgent as I remember it was three days. Next day my friend told me that I can track the shipment then I login to Amazon and look for tracking shipment, it was showing that my order has left the U.S. and it’s in London ready for shipment to Bahrain. At last I got my book after three days as I requested and I was happy and surprised at the same time.

Amazon packages

How Can Amazon or any online shopping portal handle customer orders shipment? Do they do it by them self or do they outsource it to other company?

When I receive my order it was packed in FedEx box then I realized that Amazon is outsourcing the function of online tracking,
handling delivery and customs clearance.

We have learned from our first session that Operations Management has ten critical decisions and one of them is supply chain management. It is obvious that Amazon supply chain manager find outsourcing logistics is advantageous in improving delivery reliability and speed.

As Amazon is focusing in its core business, the concept of outsourcing supply chain is now entrenched as best practice in most sectors. Whether the business is shipping within Asia or across the globe, FedEx is in the business of providing integrated supply chain solutions to customers. The many benefits of an efficient supply chain will help contribute to the business most important goal – improvement of bottom-line profits.

Benefits that can be achieved by working with FedEx include:

  • Visibility of inventory flowing through the company supply chain
  • Reduction of unnecessarily high inventory levels
  • Enhanced customer service by meeting tight deadlines and complex requirements
  • Reduced warehousing costs

 

Is FedEx more efficient in handling shipment, delivery and custom clearance than if Amazon did it by itself? Is Amazon driving down cost by having FedEx as a partner ?

Watch the amazing video about FedEx http://www.youtube.com/watch?v=Cdm2t952jYg

For more information about FedEx please visit www.FedEx.com