Chapter 3 Multichannel Retailing McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

3-2 Questions ■What is multichannel retailing? ■What are the unique customer benefits offered by the three retail channels – stores, catalogs, and the Internet? ■How are internet retailers overcoming limitations unique to their channel? ■Why are retailers moving toward using all three channels? ■How do multichannel retailers provide more value to their customers?

3-3 What is a multi-channel retailer? Retailer Digital Vision / Getty Images Steve Cole/Getty Images The McGraw-Hill Companies, Inc./Andrew Resek, photographer A multi-channel retailer is a retailer that sells merchandise and/or services through more than one channel. They may use a combination of store, catalog, and/or internet.

3-4 Benefits Provided by Store Channel ■Browsing ■Touching and feeling ■Personal service ■Cash and credit payment ■Entertainment and social interaction ■Immediate gratification ■Risk reduction Royalty-Free/CORBIS (c) Brand X Pictures/PunchStock

3-5 Benefits Provided by Catalog Channel Convenience Information Safety Hoby Finn/Getty Images

3-6 Benefits Provided by Internet Channel ■Convenience ■Broader Selection ■More Information to Evaluate Merchandise Capability to provide more information than is available in the store or in a catalog. Information can be easily updated and is always available Virtual Communities ■Personalized Information Information is tailored to individual consumers to help them make quicker and better purchase decisions Customized Information -- Side By Side Comparisons Personal service – online chats

3-7 Side-by-Side Comparison

3-8 Personalized Customer Service

3-9 Virtual Communities ■These are networks of people who seek information, products, and services and communicate with one another about specific issues via the internet. ■Examples: IVillage – Women IVillage Pricegrabbers.com; Epinion.com–product comparisons and reviews Pricegrabbers.comEpinion.com Flypaper.com – talks about fashion Flypaper.com ThisNext.com, Kaboodle.com, Wists.com, StyleHive.com – social shopping that combines shopping and social networking ThisNext.comKaboodle.comWists.comStyleHive.com

3-10 How Can the Internet Channel Overcome Limitations? Use technology to convert “touch and feel” information into “look and see” information ■ 3-D Imaging ■ Zoom Technology ■ Live Chat ■ 360 Degree Viewing ■ Virtual Models conversion rates: % of consumers who buy the product after viewing it Technology increases conversion rates

3-11 My Virtual Model: Try It On Link to My Virtual Model H & M

3-12 How to Sell Over the Internet …and eliminate returns Branding: National brands provide a consistent experience for customers to overcome not being able to touch and feel. The McGraw-Hill Companies, Inc./Jill Braaten, photographer How Can the Internet Channel Overcome Limitations?

3-13 Why are retailers moving toward using multichannel retailing? ■Traditional store-based and catalog retailers are placing more emphasis on their electronic channels and evolving into multichannel retailers. Why?. Expands market presence, retailers can reach out to new markets Provides more purchase options for customers and consequently builds the retailer’s share of wallet Enables retailers to gain insights into customers’ shopping behaviors Sales through the internet are growing at over 20% per year

3-14 How do multichannel retailers provide more value to their customers? ■Integrated Shopping Experience Communicate with customers anytime, anywhere through multiple channels Website, Store, Kiosks, Handheld Devices ■Merchandise assortment offered in each channel ■Pricing across channels

3-15 Multichannel Shopping

3-16 Source: Progressive Grocer, 01 Feb 00; Grocery Headquarters, 01 Feb 00.  Consumer does not find desired item in the store.  Consumer goes to kiosk to search for product  Kiosk links to chain’s web-site allowing consumers to find and purchase item  Consumer places order online for home delivery or store pick-up at a later time Illustration of Multi-Channel Integration