...Online vs. Retail Shopping Online vs. Retail Shopping Once upon a time there was no such thing as the internet. Everything you needed and wanted had to be purchased in person. Now days you can sit in the comfort of your home, place of work, car, or even the local coffee shop and purchase most things through the internet. Is this the new frontier of shopping, or will there still be a place for a walk-in retail store. I have seen a lot of retail stores close and I am constantly wondering if it is because of on-line shopping. In the days before the internet any shopping you needed to do had to be accomplished by physically going out to the store that had the item you wanted. Fighting traffic, getting to the store early for the best sale, scrambling to get an item of limited quantity, these were the glory days for retail stores. These days you can purchase most anything you want or need without leaving the comfort of your home. Furniture, electronics, clothes, toys, and even groceries can all be purchased online and delivered right to your door. More and more people turn on their computers and shop for what they need instead of going out and braving the crowds in the retail stores. “Online retail sales aren’t growing at the torrid pace they once were, but they continue to grow steadily. Forrester Research put out a new five-year forecast today predicting that e-commerce sales in the U.S. will keep growing at a 10 percent compound annual growth rate through 2014....
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...being altered which increases value for the consumer as the retailer “middle man” is being cut out. Where merchandiser has direct access to the consumer. Banking industry has followed suit to create BPAY, Paypal etc. * Product Segmentation * Clothing * Small Goods * White Goods * Food * Music * Movies * Services * Industry Life Cycle – Fig 2.8 Page 2.19 * Early stages of the Growth Cycle * Remote Environment * POLITICAL – Change in legislation – ie. Tariff attached to every purchase. Negative * ECONOMIC – Exchange rate fluctuations – most online shopping growth is coming from intl. Labour Costs – need to reduce in order to make retail shopping more competitive. Positive * SOCIAL – Better Security – with entering personal banking information for online payments. Work/Life balance – Convenience and time poor. Positive * TECHNOLOGICAL – More efficient. Very dependent on advancing technology. Cost of production is reduced as the “middle man” ie. Retailer is reduced. Positive * ENVIROMENTAL – Logistically – more trucks on the road to make deliveries. Increased Packaging. Negative * LEGAL – Actually changing the legislation – to allow companies to ship to Australia. Positive More positives than negatives – industry will grow at faster than average rates. PG 2.35 Porter’s 5 Forces 1. Threats of new entrants Industry is attractive. No significant...
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...missed earnings until 2005. The new problem is that could Best Buy continue afford this costly strategy to service their customers in their regular price advantage stores. 2. Recommendations In the past, Best Buy’s competitive advantage was lowering price due to the large amount purchase of merchandises and providing famous name-brands that their customers are familiar with. But these strategies may not profitable today because Best Buy’s new conception “Customer-centricity”, which have to spend more to offer more service-base business activities to their customers. The cost to service one customer may higher than the gain, especially many people just go to Best Buy to inquire the information of products and make a purchase in Wal-Mart, or online stores. Best Buy should implement “Customer-centricity” to the specific high-end customers who willing to purchase high-end products no matter the price. Meanwhile, just have some general sale forces at those normal customer electronics zones to have to largest margin based on the original price advantage. In this way, it will cost less on the sales force and continue provide the Customer-centricity strategy to some specific kinds of customer segments in their stores, and have the competitive advantage based on the lower price compare to their competitors, Wal-Mart, Amazon, and some other price leader...
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...Team Sheen Marketing Plan (Adam, Philip, Jamie) : Hotels.com Introduction Hotels.com is an operating company of Expedia, Inc. that provides reservation services for hotel rooms and other places to stay. The company was founded in Dallas, TX in 1991 as Hotel Reservations Network (HRN) as a toll-free telephone service, offering consumers a one-stop source for discounted hotel rooms in major cities. In 2002 HRN introduced Hotels.com and the brand 1-800-2-Hotels. Hotels.com gives travelers one of the widest selections of accommodation on the net, including both independent and major chain hotels as well as self-catering in over 130,000 properties worldwide. The company offers a one-stop shopping source for hotel pricing, amenities and availability and also specializes in providing travelers with accommodation during sold-out periods. SWOT Strengths: * Hotels.com offers rooms at discounts of up to 70% * Low Price Guarantee: Allows you to be certain that you have gotten the best deal on your stay. If you find a lower price, Hotels.com will either refund the difference or allow you to cancel your stay with no penalty. * Hotels.com includes 360-degree virtual tours, property descriptions, rate calendars, maps, and more than 1 million guest reviews. * Independent hotel options (Bed and Breakfasts). Weakness: * Mobile technologies * Vacation Packaging * Cruises Opportunities: * Tax refunds * More people staying home (flexible stay options) ...
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...Specially, when you have the access to all kind of electronic product on websites like Amazon. Best Buy need to develop its inventory management so as to display and deliver products to their customers on time. Especially when there has been blunders like which made The Company to apologize to thousands of customers after the orders placed after Thanksgiving couldn’t be delivered in time for Christmas. Another trouble which Best Buy is facing is - it is unable to provide a free home delivery unlike Amazon and EBay. Also these online websites provides facilities like picking the product from the customers place if the customer wishes to return the order. This has deprived Best Buy from a huge crowd to potential customers. There is a severe need that best buy should make some strategies to develop a system of free home delivery. One more factor which bothers most to a lay man is paying high prices. Best Buy should work out some plans to compete online websites and also some emerging electronic store which intend to sell products keeping low margin money. Serving the customer in better way seems like a past policy of Best Buy. when...
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...Best Buy Case Write-up | | Best Buy Case Write-up | | I. Company Problems Best Buy is experiencing several difficulties that have arisen due to problems within the internal and external environment that Best Buy is operating in. The largest problem, as we see it, is that Best Buy has failed to adapt to the current age of retail. Currently consumers have seem to have a preference to buying electronics online (Amazon), directly from the manufacturer (as in Apples case), or from a more convenient location where other products can be purchased (Walmart). Although Best Buy does have an online store it simply cannot compete with the powerhouse of Amazon. Amazon has a firm grip on online retail that Best Buy is not likely to make a dent in. Best Buy simply cannot undercut Amazon. Aside from not adapting to the current market place, Best Buy has problems elsewhere. Best Buy has made crucial mistakes in its overseas ventures that have turned some of their international stores into business disasters. In order to compete in an international market Best Buy needs to do better research regarding the demands of consumers in EACH international market they enter to avoid more embarrassing situations such as what happened in Turkey and China. II. General Environment Threats/ Opportunities Some opportunities in the general environment that Best Buy has is the opportunity to successfully integrate into the Asian and European markets...
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...e-book. The company attains their high value-added differentiation by customer-focused information services such as holding online customers’ preferences and providing customization. One of the main competitive advantages of the company is unique bundling of several recourses such as service and distribution. Amazon was initially an online bookseller that directly shipped orders to customers; however, the company grew substantially and soon established a distribution network through which it could ship millions of items to customers all over the world at the lowest costs possible. Operating 10 websites in more than 45 countries now gives Amazon a strategic advantage in its diversity. Amazon was founded in 1994 in the state of Washington DC, USA. It strategically competes internationally by attaining the lowest prices amongst its competitors. With regards to book selling, Amazon’s biggest competitor is Barnes and Noble. While Barnes and Noble enjoys the spoils of selling in the physical world and online, Amazon is stuck in the cyber world (which evidently keeps costs down but doesn’t help with the sales). Side by side with Barnes and Noble, Amazon faces another fierce competition of WalMart and CostCo Sales. It began as the worlds biggest book store and now it’s the worlds biggest everything store. Competition: Amazon competes mainly with Ebay for online commerce and with Barnes and Noble when it comes to books. Since Amazon sells a wide range of products such as movies, books...
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...Resources: Best Buy number one resource are their employees that have the skills and knowledge about what they sell. This makes them a service oriented company. They want to help customers realize the benefits of technology and technological changes so they could enrich their lives in a variety of ways through connectivity. p. (24-1) Capabilities: They have been very successful in a series of acquisitions. They have the ability to effectively determine where to expand. They have become a global company with acquisitions in Canada and China. They have many different markets with consumer electronics, Geek Squad Centers, Builders and Remodelers with Pacific Sales Kitchen and Bath Centers. Also acquired Speakeasy Inc. Provider of broadband, voice data and information technology services. Core Competencies: The company has the Centricity Model which was built abound a significant database of customer information, to construct a diversified portfolio of product offerings. They have also gained valuable experience in the process of integrating companies under the Best Buy family through acquisitions. And they have a talent of retaining their sales staff. Which are trained with the knowledge of all the equipment they sell. Finding of Facts #1: Available cash and long-term debt is not desirable. This is due to the acquisition of assets. (P.24-5) Recommendation: Best Buy should space out acquisitions so their available cash is not stretched so thin. It is great that...
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...Multiattribute Theory Leslie Jackson Consumer Behavior BUS 350 Instructor: Dr. Kirk Davis February/02/2015 Businesses use the Multiattribute Theory to discover what attributes consumers think are important when buying products. Using the Fishbein Model allows businesses to gauge what attitudes consumers have concerning products (Solomon, 2011). Looking at the scores that were achieved after completing the Multiattribute Theory of Wal-Mart, it is a fair assessment that my buying habits do not represent my attitude towards Walmart. While I do shop at Walmart, my attitude about Walmart is about convenience and price. I can get better quality at Costco and Target, but because price supersedes my desire for quality, I must shop at Walmart. Even though the test assessed Walmart with the most favorable evaluation, my attitude toward Walmart is not a favorable one. Every time I go to the store, I complain about what it offers and I would not shop there if I had more money. My attitude toward Costco and Target is actually more favorable but because they cost more, I do not shop there as often. I understand that our needs dictate our attitude towards products because when you do not have a lot of money, it is necessary to buy things that you can afford, even though you would like to buy the items that cost more. So if your needs dictate your attitude, the assessment is not a true statement of what your feelings may be about the product. If I need soap detergent to...
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...Best Buy- Circuit City Case-17% 1. Be an informed consumer evaluate where the replacement of highly paid workers with lower paid worker did or did not cause Circuit city to perform so poorly. How confident are you in your evaluation? Why? In evaluating whether or not the replacement of highly paid workers with lower –paid worker at Circuit City caused them to perform poorly I found several factors that lead me to believe this to be true. Circuit City started off being the number one retailer of electronics. It was faced with competition from Best Buy and other large retailers such as Wal-Mart. Circuit City was forced with making changes within the company to keep their position within the market that they didn’t take. In 2003 Circuit city announced the layoff of 3900 workers, following this announcement opening stock price from 2001 to 2003 declined significantly. Also, in 2007 Circuit City fired 3,400 of the highest paid store employees at that same time their customer satisfaction index declined. Circuit City’s compensation strategy was in direct correlation to the business tactic, it rewarded its knowledgeable top performers. Circuit City never considered that by eliminating top earning sales people for less experienced sales people that it would have an indirect effect on the company as a whole. No longer to do they employ skilled and knowledgeable professionals whom customers relied on. Ultimately, managing total compensation strategically means fitting the compensation...
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...BEST BUY CASE: Yiming Dong 1. What examples of environmental scanning do you see in the case? What role do you think environmental scanning has played in the company’s future? Although Best Buy is trying to become a perfect electronics retailer, it is not easy to deal with those challenges from external environment. For example, many other retailers, the economic climate has forced Best Buy to carefully consider its strategic options. In my own opinion, I believe that Best Buy will face more challenges in the future. Because as the improvement of technology and science, information is easier obtained by other competitors than before. So Best Buy must think about a good strategy to keep and hold the best information and technology. 2. Using the five competitive factors approach and the information in the case, do a brief industry-competitive analysis. Existing Competitors: We could find lots of products provided by Wal-Mart and Target that are same as goods from Best Buy. However, Best Buy is an electronics retailer, others are super market. Possible Competitors: There are also some possible competitors in the market. For example, we can buy some phones from Amazon and E-bey. Alternative Industry Providers: Although we could buy the same product in other places, there is no any electronics retailer like Best Buy. 3. What types of information do you think Dunn might want from each of the five general environmental sectors? I think that Dunn maybe want to get...
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...Case Study One Daniel Smith Southern Wesleyan University April 2, 2016 1) Think back on our discussion in the chapter section, Caveat Emptor-Be An Informed Consumer, evaluate whether the replacement of highly paid workers with lower-paid workers did or did not cause Circuit City to perform so poorly. How confident are you in your evaluation? Why? After reviewing the article, one can be confident that the replacement of highly paid workers was what made Circuit City perform poorly, which led to Circuit City closing. One can be confident that high paid skilled workers is what hurt Circuit City due to Best Buy being able to outperform Circuit City with less quality people and lower wages. Highly paid workers hurt Circuit City due to Circuit City not being able to compete with Best Buy; then replacing the high paid skilled workers with lower paid unskilled workers is what put Circuit City over the edge. The only way that Circuit City could compete with Best Buy is through customer service and when it replaces the high paid workers, it lost the customer service too. 2) Do you believe that the compensation changes at Best Buy are a major reason for its current difficulties? Since Best Buy is making cuts in departments that will not affect customer service, one can determine that the compensation changes are not a major reason for Best Buy’s current difficulties. The major reasons for Best Buy’s difficulties are increased competition from discount stores like Amazon...
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...inShare0 0 Comments In-Depth Analysis: Best Buy (BBY, AMZN, WMT, BKS, BGP) Best Buy (NYSE: BBY[FREE Stock Trend Analysis]) reported fourth quarter and full year earnings yesterday and failed to meet analysts' expectations. Best Buy reported revenue of $16.26 billion in the fourth quarter compared to $16.55 billion in the same period a year ago, or a decrease of 1.8%. Net income decreased by 16.4% from $779 million to $651 million. Thus, earnings per share fell from $1.82 to $1.62.This decrease largely reflects Best Buy's decision to spend $222 million in restructuring charges to focus its international efforts and drive supply chain efficiencies. Excluding restructuring charges, earnings per share rose for the quarter to $1.98 which beat analyst estimates. Nonetheless, Best Buy's stock price showed that investors were less than thrilled with the earnings news. Best Buy's share price fell 5.4% on the release of the earnings information. Best Buy struggled domestically: revenue fell 4% versus the prior-year period. Most notably, there was double-digit decline in sales of entertainment hardware and software and TVs. Consumer demand for new television technologies was not a significant revenue-generator. Where the domestic segment declined, it was offset by the 4% increase in the international segment. This increase is mostly due to new store openings and a favorable fluctuation in currency exchange rates during this time. As Benzinga readers already know, Best Buy has missed...
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...Will online storefronts wipe out brick-and-mortar businesses? COM155 July 1, 2012 Will online storefronts wipe out brick-and-mortar businesses? So consumers think they are knowledgeable shoppers, most look at every ads, coupons and bargain bins they walk past just to save a few bucks. At the end of the day they add up their savings and WOW the deals they got really saved money, but their excitement starts to wavier once they open their e-mail and there lies the deal of the day from Amazon and the product they just bought is much cheaper. As they look in awe at the deal and think to themselves, why didn’t I just go to Amazon and spend less? Were these prices really the cheapest out there? The employee’s at Best Buy said they had the best computer deals around and now they see the same product on Amazon for $100 less. When shopping consumers will shop anywhere and everywhere for the “great” deal of the day no matter if, it’s online or in a local store. The world’s largest retailer Walmart is not immune to the effects of this online shopping revolution. The one thing that Walmart could always count on was having the lowest price and up until the last decade it did but then something happened, Amazon. A company called BrandIndex that specializes in the tracking of brand perception among consumer’s scores retailers on their business. The scores are based on customer feedback, positive and negative, which can range from -100 to 100. They looked at the prototypical...
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...“Bricks-and-Mortar” vs. “Clicks-and-Mortar”: an Equilibrium Analysis Fernando Bernstein Jing-Sheng Song Xiaona Zheng The Fuqua School of Business The Fuqua School of Business Guanghua School of Management Duke University Duke University Peking University Durham, NC 27708 Durham, NC 27708 Beijing, China 100871 Forthcoming in European Journal of Operational Research The Internet has provided traditional retailers a new means with which to serve customers. Consequently, many “bricks-and-mortar” retailers have transformed to “clicks-and-mortar” by incorporating Internet sales. Examples of companies making such a transition include Best Buy, Wal-Mart, Barnes & Noble, etc. Despite the increasing prevalence of this practice, several fundamental questions remain: (1) Does it pay off to go online? (2) Which is the equilibrium industry structure? (3) What is the implication of this business model for consumers? We study these issues in an oligopoly setting and show that clicks-and-mortar arises as the equilibrium channel structure. However, we find that this equilibrium does not necessarily imply higher profits for the firms: in some cases, rather, it emerges as a strategic necessity. Consumers are generally better off with clicks-and-mortar retailers. If firms align with pure e-tailers to reach the online market, we show that a prisoner’s dilemma-type equilibrium may arise. Keywords: Supply chain management, Game theory, E-commerce, MNL model...
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