E-Retailing

UNIT 13 E-RETAILING
Structure
13.0 Objectives
13.1 Introduction
13.2 E-Retailing
13.2.1 Components of E-Retailing
13.2.2 Advantages of E-Retailing
13.2.3 Shortcomings of E-Retailing
13.3 Challenges in E-Retailing
13.4 Brick and Mortar Retailing
13.4.1 Integration of Brick and Mortar with E-Retailing
13.4.2 Opportunities from Integration
13.5 Multi Channel Retailing
13.6 Challenges for Adoption of Digital Commerce
13.7 Essentials of Online Retailing
13.8 Future of E-Retailing
13.9 Let Us Sum Up
13.10 Key Words
13.11 Terminal Questions

13.0 OBJECTIVES
After reading this unit, you will be able to:
● describe e-retailing;
● discuss advantages and shortcomings of e-retailing;
● discuss the components of e-retailing ;
● describe the challenges in e-retailing ;
● explain brick and mortar retailing;
● discuss multi channel retailing; and
● explain the pre-requisites for online retailing.

13.1 INTRODUCTION
In earlier units of this course, you have studied the tools and applications of information
technology which are used by the retailers to run their retail stores and to serve their
customers in the best possible way. There are various IT tools which are used by the
retailers like POS, RFID, visual display of merchandise, electronic payment system and
social networking etc. IT has revolutionised the business process and it has brought
changes in the business operations. Internet has provided an extra edge to the customers
New-a-days, buyers prefer to shop as per their convenience and comfort from their
homes for various reasons. While surfing internet, we often see many advertisements 205
IT Application in regarding various offers and schemes of products for online purchases. This is termed
Retail
as e-retailing (popularly known as e-tailing). E-retailing simply means retailing over
internet or selling of retail goods on the internet. In simple words, we can say that e-
tailing refers to shopping through the internet or other media. In this unit you will learn
about e-retailing, its components, advantages and shortcomings, challenges faced by e-
retailers, role of IT in e-retailing, and brick and mortar retailing. You will further learn
about multi channel retailing, pre-requisites for online retailing and future of e-retailing.

13.2 E-RETAILING
Electronic retailing (e-tailing) is a buzzword for any business-to-consumer (B2C)
transactions that take place over the Internet. Business-to-consumer (B2C) transactions
refer to transactions that occur between a business or company (dealing in goods and
services) and a consumer. E-tailing refers to the sale of goods online (Figure 13.1 shows
online retailing). Companies like Amazon and Dell created the online retail industry by
putting the entire customer experience. These experiences may run from browsing
products to placing orders to paying for purchases on the Internet. The success of
internet buying and selling encouraged more traditional retailers to create an online
presence to augment their brick-and-mortar outlets (business that have physical presence
rather than virtual or online). Although e-retailing is an independent business model with
certain specific constituents like; trust model, electronic transaction process, etc. In real
sense it is a subset of e- commerce by nature.
In current context, we shall explain how a retailer of a brick-and-mortar outlet can use
e-retailing in meeting the needs of the customers and increase sales revenue.

Figure 13.1: E-Retailing

Source: [Link]

13.2.1 Components of E-Retailing

Electronic retailing or e-tailing refers to the direct sale of products, information and
service through virtual stores on the web which is designed around an electronic catalogue
format and auction sites. There are thousands of storefronts or e-commerce sites on the
206 Internet that are extensions of existing retailers or start-ups.
There are certain essential ingredients for an electronic retailing business to be successful. E-Retailing
You must consider these components well in advance before setting up an electronic
storefront. Let us learn the components of E-Retailing. These are as follows:
● Attractive business-to-consumer (B2C) e-commerce portal: The interfaces
and navigation should be user friendly and pleasing. The site should have a strong
sense of branding.
● Right revenue model: Revenue model should be accurate and there is
transparency in terms of service levels and pricing.
● Penetration of the Internet: As the e-commerce portal is in addition to the
existing brick-and-mortar infrastructure aimed to bring in customer loyalty. The
retailer should keep in mind the local internet penetration for better success.
● E-Catalogue: It is a database of products with prices and available stock. The
retailer can provide value added service by giving price and feature comparison
between products. This would enhance the value of the e-commerce portal for the
customers. The retailer can indicate special benefits available to customers under
the loyalty programme thus making the customer feel special.
● Shopping Cart: The customers can select the products that they wish to purchase
and fill their shopping cart. The Shopping Cart can be designed in a way that it
could allow the customer to store their preference and previous purchase history
for easy selection. This adds value to the shopping experience and save time.
Finally, as in a real store, at the time of checkout, the system calculates the price to
be paid for the products. The experience should be seamless and without errors.
● A payment gateway: Customer makes payments through his/her credit card or e-
cash. The payment mechanism must be fully secure.
● Support Services in E-Retailing: The electronic retail business requires support
services, as a prerequisite for successful operations. These services are required
to support the business, online or offline, throughout the complete transaction-
processing phases. The following are the essential support services:
● Communication backbone
● Payment mechanism
● Order fulfilment
● Logistics

13.2.2 Advantages of E-Retailing

Whether it is conventional brick and mortar retail store or extension of the existing
business or a new start-up, there are many advantages from e-tailing. E-tailing provides
lots of opportunities to all types of retailers. Let us learn advantages of E-Retailing.
These are as follows:
i) Price and selection: Online shopping provides quick deals for many items with
many different vendors. E-tailing provides the facilities of online price comparison
which makes selection quite easy and fast.
ii) Opportunities to reach new markets: E-retailing gives retailers an opportunity
to reach new markets which is physically not possible.
iii) Provides home shopping experience: E-Retailing overcomes some limitations
of the traditional formats. For instance the customers can shop with the ease and
comfort of their homes (Figure 13.2 shows advertisement for online shopping).
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IT Application in
Retail

Figure 13.2: Online Shopping

Source: [Link]
iv. Extension to leverage: For the existing retailers, it is an extension to leverage
their skills and grow revenues and profits without creating new business.
v. Valuable insights: E-commerce software also traces the customers’ activities on
the internet. It enables e-retailers to gain valuable insights to the customers shopping
behaviour.
vi. 24 hours shopping: Online stores are usually available 24 hours a day. Many
customers who have internet access both at work and at home go for online
shopping. Moreover, increasing fuel costs, large mall crowds and time constraints
are motivating buyers to shop online. Retailers can get the order from any customer
living any place at any time of the day. E-tailing removes the barriers of time and
space.
vii. Reasonable cost: E-Commerce channels are definitely efficient and they are
highly cost-effective retailers. Retailers do not have to pay a heavy price (rent) for
shops in costly shopping malls.

13.2.3 Shortcomings of E-Retailing

The online retailing (e-retailing) process suffers from various drawbacks. There are
some drawbacks of E-Retailing. Let us learn them one by one.
i) It lacks an emotional shopping experience that the customer can get in a personal
shopping store.
ii) It is exposed to intangible merchandise (i.e., virtual display of merchandise).
Therefore, it does not provide sensory support to the customer. The customer
cannot hold, smell, feel, or try the product.
iii) Online customers are reluctant to part with their credit card debit cards or net
banking details on net, fearing they may be misused. It arises security issues.
Customers are not yet convinced about the foolproof status of this method.
iv) It provides impersonal services which the Indian customers are not exposed to.
They are rather used to the tangible personalised services which they may miss in
online retailing services.
v) It is lacking in family shopping experience. The Indian customers enjoy shopping at
the weekends, and particularly during festive seasons and marriage occasions.
vi) There is always a sense of fraud in the mind of customers while shopping online as
208 customers are unable to inspect the product before purchase.
The advantages of e –Retailing outweighs its drawbacks. Thus it is showing a positive E-Retailing
inclination rate across the boundary.

Check your Progress A

1. What is e-tailing?
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2. List any three advantages of e-retailing.
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3. Discuss in brief the major components of e-retailing.
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13.3 CHALLENGES IN E-RETAILING

You have learnt about components, advantages and shortcomings of E-Retailing. Let us
learn the challenges in E-Retailing.
E-retailing is totally a new concept in India and online retailing is a tedious task here. E-
tailers face so many problems and challenges in this process. The following are the
major challenges faced by e-tailers :
I) Resolving channel conflict: If a seller is a click-and-mortar (both web and
physical presence) company, such as Levi’s or GM. It may face a conflict with its
regular distributors when it sells directly online. This is known as channel conflict.
This situation can alienate the regular distributors. Channel conflict has forced
some companies (e.g., [Link]) to limit their B2C efforts. Others (e.g., some
automotive companies) have decided not to sell direct online. An alternative approach
is to try to collaborate in some way with the existing distributors whose services
may be restructured. For example, an auto company could allow customers to
configure a car online. It requires that the car be picked up from a dealer, where
customers would arrange financing, warranties, and service. IT tools can facilitate
resolution of channel conflict.
II) Resolving conflicts within click-and-mortar organizations: When an
established company decides to sell direct online, it may create a conflict within its
existing operations. Conflicts may arise in areas such as pricing of products and
services, allocation of resources (e.g., advertising budget) and logistics services
provided by the offline activities to the online activities (e.g., handling of returns of
items bought online). As a result of these conflicts, some companies have completely
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IT Application in separated the “clicks” (the online portion of the organization) from the “mortars”
Retail
or “bricks” (the traditional brick-and-mortar part of the organization). Such
separation may increase expenses and reduce the synergy between the two. The
decisions about how to organize the online and off-line operations and whether or
not to separate them, can be facilitated by IT tools. In addition, Group Decision
Support System (Group DSS) can be used to resolve conflicts.
III) Organising order fulfilment and logistics: E-tailers face a difficult problem of
how to ship very small quantities to a large number of buyers. This can be a
difficult undertaking, especially when returned items need to be handled. IT-supported
decision models can help with scheduling, routing, shipments, inventory management
and other logistics-related decisions.
IV) Determining viability and risk of online e-tailers: Many pure online e-tailers
faced the problems with customer acquisition, order fulfilment, and demand
forecasting. Online competition, especially in commodity-type products such as
CDs, toys, books, or groceries, became very fierce, due to the ease of entry to the
marketplace. So a problem most young e-tailers face is to determine how long to
operate while they are still losing money and how to finance the losses. In deciding
on new EC initiatives, or on an entire dot-com company, a risk analysis is needed.
A DSS modeling can be helpful in such cases.
V) Identifying appropriate revenue models: Many dot-com companies were selling
goods at or below cost, with the objective of attracting many customers and
advertisers to their sites. One early dot-com model was to generate enough revenue
from advertising to keep the business afloat until the customer base reached critical
mass. This model did not work. Too many dot-com companies were competing for
too few advertising dollars, which went mainly to a small number of well-known
sites such as AOL and Yahoo. In addition, there was a “chicken-and-egg” problem.
Sites could not get advertisers to come if they did not have enough visitors. To
succeed in e-Commerce, it is necessary to identify appropriate revenue models.
VI) Requirement to Change Business Process: The process of procurement,
storage and logistics in e-businesses is different from that in traditional brick-store
businesses. The e-retail organization has to carefully redesign and integrate various
processes to suit the new e-business. Traditional sections of departments and
management hierarchy may pose hindrances and bottlenecks in the process of
order processing and shipments. For example, the traditional business may require
the goods to be present at the warehouse and inspected before being shipped to
the customer. In electronic retailing, shipping of goods from one place to another to
a customer would not be possible. The retailer may appoint a local supplier at the
city where the customer resides and instruct the supplier to deliver the goods. This
would require by passing certain business rules and a lot of faith on the local
supplier. It would require business confidence that the supplier would follow the
instructions and deliver the same product in good quantity and perfect quality.
Merchandise planning and demand analysis is also difficult in e-retailing, as compared
to traditional retail businesses. IT can play a great role in defining these processes
and ensure compliances.
VII) Legal Issues: Proper laws have not yet evolved for Internet based transactions.
Validity of e-mails, digital signatures and application of copyright laws is being
checked by various government authorities. E-mail and digital signatures are now
being recognized as valid for any legal purpose. Value Added Tax (VAT) is yet
another area that creates problems. Taxes on goods and services are still an issue.
Since the taxes are levied and shared by multiple government agencies at local,
210 state or federal level, there are no clear rules to guide retailers. In e-retailing, the
 place of billing, the place of dispatch of goods and the place of delivery all differ. If E-Retailing
these three places fall in different jurisdictions of governments, levy and submission
of taxes would be a problem. IT needs to understand these implications and built in
a proper system to take care of them and ensure compliance.
VIII) Security and Privacy: Security is one of the major challenges in the digital
world. Despite a lot of security arrangements, such as passwords and firewalls,
we come across the news of website hacking and data pilferages. The Internet
being on public domain is more susceptible to unauthorized peeping. People are
suspicious about disclosing information regarding their credit cards and personal
details on the Net because of a fear that they can be misused. Cyber criminals
have exploited the Internet weaknesses and have broken into computer systems,
retrieving passwords and banking information. Security of payment gateway is a
major concern, which has to be taken care of by the retailer by putting up proper
security layers. IT has to ensure proper established framework that can have
multiple layers of security. IT should also ensure inter-operability between systems.

13.4 BRICK AND MORTAR RETAILING

You have studied about e-retailing, its components, advantages, disadvantages and
challenges in e-retailing. Now you will learn about brick and mortar retailing and
opportunities arise from integration of brick and mortar retailing with e-retailing.
Brick and mortar retail store means a retail store that deals with its customers face to
face in physically constructed office building or store that the retailers owns or hire on
rent. Local grocery retail store is the example of brick and mortar retailing. In simple
terms we can say that brick and mortar retail store operates from a constructed building
and have physical presence rather than virtual or online presence. It may be a store built
of physical material such as bricks and mortars where customer can drive to and enter
physically to check, touch, see and purchase merchandise. Generally brick and mortar
term is used as the basis for the term clicks and mortar, a business that deals on the web
as well as from physical locations.

13.4.1 Integration of Brick and Mortar with E-retailing

Today‘s shopper expects convenience. Merchants integrating brick-and-mortar stores,
ecommerce sites and catalogues will increase repeat purchase rates and achieve higher
levels of customer satisfaction. In any multi-channel retail consumer interaction, traffic
and sales are being driven from one channel to the other. In “web-to-store” or “store-to-
web” situations, the limitations of one channel are mitigated by the strengths of the
other.
This calls for greater integration with both these business processes so as to maximize
the revenue opportunities. For this purpose the retailer needs to focus in the following
business process areas:
i) Centralised Order Fulfillment: The centralised order fulfilment includes:
● Common merchandise data base for item data, hierarchy across channel
● Merchandising operation through integrated platform for pricing, promotions
and offers
● Corporate wide CRM
● Offer consistent pricing and promotions
● Choice for customers to order through any channel and pick at any channel
211
IT Application in ● Distributed Order Management, consolidates all channel order and fulfill from
Retail
Distribution center
● Put away stocks and cross-dock stocks
● Re-allocate & Re-distribute the stocks based on demand in the channels
● Transport planning for courier to customer in web/ mobile/ Store channel
sales
● Customer returns on any channel is accepted irrespective of the channel that
was the purchase made on, and is accounted in inventory through POS or
Web Payment gateway
● Customer returns through Web/Mobile, the web/mobile should accept the
returns as a separate transaction or along with shopping list of purchase
ii) Supply Chain Synchronisation: It includes:
● Integration to store pickup order, inventory and billing
● Vendor to supply for all channels
● Visibility of inventory in all channel
● Near real-time POS data for inventory position for accuracy
● Ability to update channels on stock out items
● Ability to transfer the store pickup orders to delivery order if stock out
iii) Merchandising planning: It includes:
● Demand planning & forecasting for web / mobile / direct store
● Regular Ordering system for different categories
● Category sales planning for all channels and contribution to total financial
plan
● New product introduction in all channels
● Inventory planning for all channels based on the sales trends. (min /max/ re
order)
● Visual images selection for SKU for display in Mobile and Web
iv) Customer Profile: It includes:
● Single window registration for all channels
● Common Identity for every customer / family across the channel
● All channel bills pertain to customer to integrate in common database
● Schemes on rewards, pre calculated value before merge into common
database
iii) Metrics and Measurement: It includes:
● Measure across channel for consumer growth & satisfaction
● Effective loyalty program to track across channel
● Surveys to gather additional insight across channels
● Measure by category and not by channels
● Inventory reports on efficiency in utilization of inventory across channels
● Category performance reports across channels
● Marketing analysis reports to add value in all channels & enhance customer
experiences and conveniences
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13.4.2 Opportunities from Integration E-Retailing

Once integration is achieved, the retailer can provide value-added services to the
customers which work across channels. After the integration, there are some
opportunities, let us learn them one by one.
i) In-store pick up: In-store pick up is a process allowing your customers to order
online and pick up in your physical store. During the process, communication with the
customer primarily happens via email and instructs the shopper the steps necessary
to complete the transaction. In most cases, the order is fulfilled at the “brick-and-
mortar” store the same business day the order is placed online, with best practices
showing most orders filled within a two-hour period. The primary value to consumers
is that they receive their items almost immediately after purchasing. By using in-
store pick up, consumers pick up their merchandise at a special designated area.
Thus they may avoid heavy crowds at the checkout counter. This is a core reason
why in-store pick up is so popular during the holiday season, when last minute ordering
is often done online. The consumer also benefits from not having to pay shipping
costs. Sometimes the associated shipping cost of a product can be a critical factor to
cart abandonment. In-store pick up reduces this risk. The retail business also benefits
from the incremental purchases that are made when a customer goes to the physical
store to pick up online purchases.
From a technology perspective, in-store pick up needs to have some level of inventory
integration to work effectively. The integration of data is critical in being able to
display to the consumer the availability of products at their closest geographic store.
After a user selects the “in-store pickup” option and enters his pin code, the system
needs to cross-reference available store-level inventory data. This ensures that the
product is available within an acceptable distance. ‘PVR Cinemas’ is a very handy
example to this. The customers can view the availability of seats, choose the location
of the seats vacant or available and book the tickets online. The customer is given a
pin, showing which tickets can be obtained from ticket counters or ticket vending
machines (kiosk). This inventory accuracy is crucial to deliver a great shopping
experience. Integration does not have to work in real time, but needs to execute
multiple data checks throughout the day. Work your in-store pick up product availability
based upon thresholds. For example, once an inventory level reaches three in a store
location, do not display as available for in-store pick up. In-store pick up should not be
executed for all products. Focus on products with high shipping costs and products
that a consumer would typically want immediately.
ii) In-store returns: Returning a product purchased online can be an extremely
frustrating experience. Between determining if the retailer will pay for the shipping,
waiting in line at the post office and waiting for a refund, the returns process is
known for giving consumers headaches. Accepting online product returns in a
physical store is a tactic to make the returns experience pleasant and easier for the
customer. By displaying an in-store returns option on your site’s home page, product
page and within the shopping cart, a retailer reduces consumer purchase hesitation
and will likely drive conversion improvement.
Similar to in-store pick up, in-store returns generate incremental in-store purchases.
After receiving their refund, consumers frequently shop for and purchase additional
items while in the store. These actions can lead to order values that are actually
greater than the initial online purchase and drive higher lifetime consumer value.
The key to executing in-store returns is to have order management from the web
and the physical stores driven from the same database. By providing the in-store
associate the ability to look up information based upon order numbers on the packing
slip, the process can be verified and the transaction can be closed by the associate. 213
IT Application in iii) Emailed in-store coupons and promotions: Email is predominantly used as a
Retail
mechanism to drive web-store promotions. Multi channel businesses, however, are
realizing the value of emailing “in-store” or hybrid promotions to their mail lists.
”In-store” email promotions allow the consumer to print an email promotion (say
Rs.100 off a Rs.1000 purchase) and have it accepted at the retail store. For
businesses wanting to further track multi channel purchasing, consider generating
unique barcodes for each email that provide added levels of insight and security.
Hybrid emails allow promotions to be leveraged in-store and online via a purchase
code. By giving the consumer the ability to choose how they want to utilize the
promotion, a retailer builds a stronger service connection with the shopper.
iv) Store locator: Now standard among e-commerce stores, a store-locator function
must be able to find the closest stores based upon pin code while providing door-to-
door directions online. If retailers have a physical store network but do not provide
store locator functionality, retailers are dramatically behind the innovation curve.
All of these initiatives are geared toward achieving one objective i.e. closing the sale.
Check your Progress B
1. List the challenges which are faced by e-retailers.
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2. Explain brick and mortar retailing with example.
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3. Define click and mortar retailing.
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13.5 MULTI CHANNEL RETAILING

Due to high competition in retail sector, it is very difficult to serve the customers with a
single channel of retailing. Retailers are increasingly multiplying their channels, adding
Web platforms and call centers to brick-and-mortar stores to reach more and more
customers. Interestingly, customers do not use one channel exclusively to complete
their purchases anymore. As a matter of convenience, many customers use the
multiple channels to complete the purchase process. Consumers also are mixing different
channels for different activities. For example, a multi channel customer might research
a product at home by visiting a retailer’s online store, doing comparisons and reading
reviews about the product. If this user has specific queries that are not answered online,
he may then call the retailer’s call center. After completing his research, he may go
back to his computer, place an order online and then track the order status or shipping
214 details. Or he may place the order online and then pick up the product from a nearby
store instead of having it shipped from a warehouse. Look at figure 13.3 which shows E-Retailing
the channels used for retailing.

Figure 13.3: Channels used for retailing

While many retailers add different channels one-by-one to respond to rapid changes in
the marketplace and in customer expectations, disparate channels are no longer able to
drive customer satisfaction or revenue. This is due to Retailers’ inability to provide
consistent user experience and service levels. Certain channels such as Web call for
more product data whereas a mobile store front expects integration with location services.
Integrating multiple channels poses several challenges, due to different systems that
work using different technologies, organization structure that is already established
and the need to manage inventory across channels. It is important to identify
business needs and align integration road maps to satisfy these needs before embarking
on a multi channel integration initiative. Making product and pricing information and
inventory visibility uniform across channels poses huge challenges that should be dealt
diligently. Figure 13.4 shows the components of multi channel retailing.

Figure 13.4: Multi channel retailing

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IT Application in
Retail 13.6 CHALLENGES FOR ADOPTION OF DIGITAL
COMMERCE
In a country like India where a large number of semi urban and rural customers exist,
they generally want to see, touch and compare merchandise before purchase. Customers
are not much familiar with internet and digital commerce is a tough task here. Let us
learn main challenges for adoption of digital commerce.
i) Effectively using digital media: Overall, retailers are not able to leverage Internet
and Mobile as branding as well as customer acquisition medium. They look at
online sales and in-store sales as two different worlds. Retailers typically consider
their online presence as a means to overcome the physical limitations of offline
promotions, particularly catalogue and newspaper inserts, not as an integrated
channel.
ii) Provide complete experience to consumers across digital channels:
Retailers do not feature all the products available in stores online, and this presents
a cut off to the customers. They are not able to find the products that they are
looking for. Moreover, consistent product information across all channels of
marketing is not available. The customers do not get all the information about a
product like images, product features, and hence influencing purchase capabilities
which are required to drive sales using digital channels.
iii) Managing technology is not a retailer’s expertise: Technology is often a
capital intensive department and retailers are often weary of getting into an area
which they are not experts in. It is important for retailers to be able to acquire and
manage technology without requiring technical expertise or huge investments.
iv) Showcase products and offers: Consumers want to know of all the products
and offers available from a retailer. They also want to be able to quickly find the
product or offer that they are interested in. So product discovery and showcasing
is a critical challenge for most retailers.
v) Expensive & difficult to manage Payment systems & logistics: Getting a
flexible payment solution and logistics solution for retailers’ digital commerce
requirements is a complex job. It is hard to find affordable and reliable solutions
that will take care of such core requirements such as payment and shipping.
vi) A consumer lost online, is a consumer lost: Many retailers view online and
offline retail sales as different domains. The reality is that a customer who is
looking for a particular retailer and does not find that retailer or finds a competitor
or gets a not-so-good impression about that retailer on the Internet might choose
not to do business with that retailer.

13.7 ESSENTIALS OF ONLINE RETAILING

Retailing over internet is not as simple as running a brick and mortar retail store. It is
totally different and challenging task. Look at figure 13.5 which shows building blocks
for running a store online.

216
 E-Retailing

Figure 13.5: Building blocks for running a store online

There are some very important points which should be kept in mind while deciding to go
for online for retail. Let us discuss the essential points one by one.
a) The Commerce Platform: It is very important to select appropriate platform for
digital commerce foray. The choice a retailer makes at the beginning will have a
long term impact. The choices one needs to make are:
a) Service Model vs. Owning the platform
b) Using a standard platform vs. building your own platform
c) Using Open source vs. proprietary platforms
b) Logistics Partner: It is very important that orders received get executed within
the promised time window. The logistics partner should be able to integrate his
systems with retailers’ systems so that orders flow through uninterrupted and supply
chain visibility is available to the customers. In certain payment options such as
Cash-on-Delivery (COD), the partner should be able to collect the payment. Reverse
logistics includes handling customer returns and non-delivered goods.
c) Payment Gateway: Retail store should be able to accept the customer payments
using various methods. Most common include:
a) Credit Card and Debit Card Payments
b) Net banking
c) Using Digital Gift vouchers
d) Cash on delivery
e) Payment at Store in cash
d) Digital Marketing Agency: In order to drive customer traffic to retail online
store, retailer needs to engage a Digital Marketing Agency. The scope of work for
such agency includes:
a) Content Creation for catalogue including photographs, videos and detailed
product specifications
b) Writing reviews, blogs
c) Search Engine Optimisation to make easier for customers to find retail store
and merchandise
d) Managing the loyalty programme
e) Running campaigns on leading portals using advertising networks such as
MSN, Google, etc.
217
IT Application in f. Engaging with customers on social media platforms such as Facebook, Twitter,
Retail
Google+ etc.

Figure 13.6: Retail operations platform

Source: (IDC, 2011)

Model for online retailing

a) Common process models: For online retailing there are some common process
models and these are:
i) Web Store linked to one store: The online store front uses catalogue of
the items available at one particular store in the chain. The orders received
are executed through POS. Integration is in batch mode.
ii) Web Store linked to warehouse: The catalogue exposed on the online
store reflects stocks available at the warehouse. Execution takes place from
the warehouse itself. Integration may be event driven/real time or in batch
mode.
iii) Each physical store has a web store front: Here, each Point of Sale
(POS) is linked to the web stores and customers may place order online but
pick up from the store. In some variant, it allows pre-booking of new models/
items on the web front end. Payments may be online of offline.
b) Models for web stores: For web stores, some models are:
i) EBO on Popular Platforms: Many brands / retailers launch their online
store on popular portals such as [Link] or [Link]. This gives
them shorter time to launch and get online footfalls due to the traffic delivered
by the portal. As a part of marketing campaigns, highly effective to get noticed
but difficult to sustain due to high investment required to maintain high visibility.
ii) Store at the Marketplace: Many a brands / retailers set up their online
stores on E-commerce Hubs or Marketplaces such as MartJack Exchange
or Amazon. This gives them access to technology infrastructure which is
very scalable along with advanced tools to manage the content as well as to
run targeted campaigns. The operating costs are moderate.
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 iii) Stand alone Stores: Mature retailers prefer to make their own platform a E-Retailing
destination for online shoppers. The technology platform can be on software-
as-a-service model or can be owned by the retailer. Integration with the
supply chain systems is must.
iv) Pure play: These are the retailers who do not have physical stores. They
may have physical supply chain of their own or it is managed by their suppliers.
v) Social Commerce: The retailer opens his store on social platforms such as
Facebook.

Who owns Multi channel Retail in the organization?

In some organizations, IT owns the multi channel commerce. There are few where
marketing owns the same. In mature organizations, the multi channel team is a part of
the operations.
Analytics for Multi channel Commerce
The metrics used for digital commerce is different from the offline retail. Tools such as
Google Analytics provide you with ready to use tools (look at figure 13.7).

Figure 13.7: Analytics for multi channel commerce

Check your Progress C

1. What is multi channel retailing?
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IT Application in 2. List the essentials of online retailing.
Retail
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3. Explain in brief the models for web stores.
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13.8 FUTURE OF E-RETAILING

You have already learnt about E-Retailing, challenges in E-Retailing, Brick and Mortar
retailing, multi channels retailing and essentials of online retailing. Let us learn about
future of E-Retailing.
E-tailing is a new concept in India. With limited internet users, this industry (e-tailing) is
growing very fast and there is much to be achieved yet. Many growth drivers are in
favour of e-tailing- demography, economy, changing lifestyle, exposure to new ideas
etc. Indian’s generally do not shop online. They shop merchandise after touching, seeing
and after price comparison. Many times they gather information on the net. Indian e-
tailing websites like [Link] are offering shopping along with price comparison.
Future of e-tailing in India is bright with many sites like [Link], [Link],
[Link], [Link] etc. are providing good services and major retailers like
VishalMegaMart is also entering in this line. FMCG’s like Amway is giving additional
option to shop online, this shows the shifting trend towards e-tailing. With the advent of
new innovations like Web 3.0 retailing system will go in hand-in-hand. In this highly
competitive environment customers want full value from their shopping with full
convenience and ease. Online shopping is not only more convenient for customers with
hectic lifestyles but also gives a better deal for their money. Figure 13.8 shows online
shopping.

Figure 13.8: Online shopping

220 Source: [Link]
According to a study by Indian Council for Research on International Economic Relations E-Retailing
(ICRIER), India’s unorganised retail sector is expected to grow at about 10 per cent per
annum with sales rising from USD 309 billion in 2006-07 to USD 496 billion in 2011-12.
The study further suggests that organised retail is likely to grow at a much faster pace
of 45-50 per cent per annum and quadruple its share in total retail trade to 16 per cent by
2011-12. The study also revealed that the majority of unorganised retailers indicated
their preference to continue in the business and compete rather than exit. This represents
futures scenario in which both unorganised and organised retail not only coexist but also
grow substantially in size.

13.9 LET US SUM UP

Electronic retailing (e-tailing) is a buzzword for any business-to-consumer (B2C)
transactions that take place over the Internet. E-retailing simply means retailing over
internet or selling of retail goods on the internet. In simple words, we can say that e-
tailing is nothing but shopping through the internet or other media. There are certain
essential ingredients for an electronic retailing business to be successful like attractive
business-to-consumer (B2C) e-commerce portal, right revenue model, e-catalogue, proper
payment gateway and support services in e-retailing etc. E-tailing provides so many
advantages like price selection, opportunity to reach new markets, extension to leverage
and 24 hours presence etc. There are so many challenges which are faced by e-tailers
like channel conflict, legal issues, security and privacy issues etc. To be successful
retailer, it is important to integrate the brick and mortar retail store with e-retailing. It
provides lots of opportunities. In present era, no single mean of retailing is sufficient to
serve the customers, therefore retailers are using multi channels for their retail stores.
Most of the conventional brick and mortar stores have now become the click and mortar
store and enjoying the benefits of this integration of brick and mortar store with e-
retailing. But retailing over internet is not as simple as running a brick and mortar retail
store. It is totally different and challenging task. There are some very important points
which should be kept in mind while deciding to go online for retail like selection of
appropriate platform, integration with logistics partner and proper payment gateway
etc. E-tailing is a new concept in India. With limited internet users, this industry (e-
tailing) is growing very fast and there is much to be achieved yet. Many growth drivers
are in favour of e-tailing- demography, economy, changing lifestyle, exposure to new
ideas etc. Online shopping is not only more convenient for customers with hectic lifestyles
but also gives a better deal for their money.

13.10 KEY WORDS

E-Retailing : Retail activities over internet.
Brick and Mortar store : Retail store which deals with its customers in
a physically constructed building rather
virtually.
Click and Mortar store : Retail store which deals with its customer both
in physically and virtually.
Multi channel retailing : A marketing strategy that offers customers a
choice of ways to buy products.
Business-to-Consumer (BLC) : A transaction, that occurs between a company
Transaction and a consumer.
Online Payment : Payment through debit or credit card over
internet. 221
IT Application in
Retail 13.11 TERMINAL QUESTIONS
1) What is e-retailing? Explain the components of e-retailing
2) What is meant by online retailing? Discuss the advantages and shortcomings of e-
retailing.
3) “E-tailing is a new concept in India and online retailing is a tedious task here”
Comment on this statement.
4) Explain brick and mortar retailing with examples.
5) Is it fruitful to integrate brick and mortar retail store with e-retailing?
6) Describe the multi channel retailing with examples.
7) Explain the essentials of online retailing?
8) Discuss the various models for online retailing.

Activity: Visit any retail store and mention the channels they are using for their
retail activities and try to find that is this store a click and mortar retail
store?

REFERENCES/ FURTHER READINGS

Girdhar Joshi, “Information technology for retail”, Oxford University Press, 2009.
[Link]
tailing_Paper.pdf
[Link]
[Link]
[Link]
[Link]
[Link]
eCommerce
[Link]
[Link]
buying-and-merchandising/
[Link]
[Link]
[Link]
[Link]
[Link]

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