Fashion World Case Study Analysis
Many retailers see the Internet and e-commerce as a means of becoming more competitive, reducing costs and improving service to consumers. Customers expect to find the right product in the right place at the right
time all year long. Customer buying patterns have also changed and this has had a great impact on clothing retailers.
For clothing and accessories retailers and other multi-channel sellers, the growth of e-commerce operations is critical to their success. Fashion Land’s target audience shops online and that’s where the market is headed. Consumers who shop Web sites of retailers like Fashion Land and shop retailer’s other channels as well are more valuable to a company than those who shop a single channel. While traffic at leading pure-play sellers outstrips that of traditional retailers, the multi-channel shopper buys more.
Introduction
This documents and outlines a business strategy for Fashion Land’s electronic commerce initiative. It includes specific objectives, costs and benefits of accomplishing each objective. Also included are recommendations regarding what will be outsourced, which Web hosting service should be hired, and the type of staff that should be hired.
Business Strategy
Creating a business strategy for this e-commerce initiative includes having a clear vision and road map to help with the implementation. While many companies may have the best intentions with respect to improving their operations, implementing change can be an exhausting and frustrating process. This is why outlining a detailed road map becomes crucial to the overall success of any e-commerce initiative.
E-commerce and other technological improvements should be used as tools to defend against competitive threats, optimize opportunities, improve customer service, streamline processes and reduce costs. Once objectives have been defined, Fashion Land can then build a game plan. Fashion Land’s strategy is to not only have a major presence on the web, but also to increase sales and improve business processes. When designing and implementing Fashion Land’s e-commerce Web site, they must remember who their target audience is – females between the ages of 15 and 35, who are regular users of the Web.
E-commerce is often left on the drawing board because companies get caught up on the day-to-day demands of their business. Creating a committee made up of employees and management is beneficial in ensuring responsibilities are allocated and progress is monitored. This committee would be responsible for ensuring planning and implementation goals are achieved.
Objectives
Fashion Land should use e-commerce as an overall strategic building tool and to integrate all facets of its retail store operations. Their overall objective should be very clear before launching any e-commerce initiative. Fashion Land’s main objective is to create a user friendly, interactive and hip new Web site that will improve competitiveness and increasing sales. Other objectives include:
• Integrate information from all of its stores and suppliers into a single access point.
• Enhance customer service.
• Employ experienced staff with retailing e-commerce experience especially in operational and administrative areas.
The Web site development process should follow a solid understanding of its target audience, information architecture and technical requirements, including database development and platform concerns.
Benefits
Benefits to Fashion Land for implementing a Web site are:
• Increase value to customers (target audience)
• An attractive sales channel
• Used to complement business strategies and improve competitive positions
• Lower operational costs
• Organized and timely access to data, applications, and services at the corporate level
• Enhanced knowledge sharing, communications, and collaboration
• Improved customer service to the Web site’s user population
Potential Challenges
• Defining an e-commerce strategic plan and business needs
• Not having the financial means to support certain e-commerce initiatives.
• Companies often waste resources on e-commerce initiatives or do not invest when they should because they can’t effectively evaluate the potential payoffs of their investments.
• Securing IT resources
• Securing financing
• Getting the right Software and Internet Vendors
• Getting the right Web design firm
• Integrating software systems from different vendors (technical and financial challenges)
Web Site Features
The primary features of the Fashion Land Web site along with a description of the elements are shown below. The Web site should be designed and worked on with the help of outside web organizations.
General characteristics of a well-developed e-commerce Web site include:
• Fun and easy to navigate site – Make the shopping experience a pleasurable experience by making it user-friendly and easy to navigate. Remember the three-click rule: If a customer can’t accomplish what he or she wants to do within three clicks, then the system isn’t working right.
• Quick download time – A major complaint among Internet users is long load times. According to All Things Web Research, “80 percent of web users cite download time as the number one problem” [www.pantos.org/atw/]. Pages should be fast loading and not keep customers waiting. A couple of seconds is ideal, 10 to 15 seconds is ok, but take more than 20 seconds and your customer is gone.
• Pages that appear professional – Clean and simple is better than cluttered and complicated. Fashion Land is all about fashion and style and the site should be designed to display and highlight what they are selling. The Web site should reflect good use of the elements of art and principles of design, while at the same time should be designed for online shopper usability. Fashion Land should not get caught up in the latest bells, whistles, glitz, and flash at the sacrifice of service and sales.
• Clear and accurate product information and representation – Since customers cannot actually see, touch, and feel products in person, the graphic representations must be clear and visually accurate. Product descriptions must be thorough and eliminate any guessing. The more clearly and accurately Fashion Land represents their products on the Web site, the less time they will have to spend answering questions about products and restocking returned merchandise from dissatisfied customers.
• Displaying an in-stock inventory count for products – Important feature particularly for items that tend to be in short supply (latest fashions). Shoppers do not want to waste time ordering an item that is not even available.
• Real time answers through self-help features, e-mail, and a toll-free number – Internet shoppers want answers and they want them quickly and the key to customer satisfaction is having someone available to answer questions in a timely manner, preferably in real time via phone or e-mail.
• Good prices and clear representation of all charges – Price is a major factor in closing a sale, so Fashion Land’s prices must be competitive. Any additional charges such as shipping, handling, special delivery, gift-wrapping, custom or special orders, etc. should be clearly presented to the customer.
• Payment options – Most Internet shoppers want to buy online in real time; however, there are people who prefer to purchase using an alternative method. Offer customers various means of ordering and paying for the items they select. Fashion Land should offer visitors the opportunity to order online, in-store pickup, by telephone number (preferably a toll-free number), by fax, or by mail.
• Secure transactions – Customers consistently indicate credit card security is a primary concern when shopping online. Statistics indicate that you lose 50 to 60 percent of potential sales when you don’t offer a secure transaction site. Fashion Land must include a statement about their website’s security system to help alleviate fears of using a credit card online to make a purchase.
• Easy to use return or exchange policy – Online shoppers want the same or even better return and exchange policies that they are used to receiving in traditional retail. Fashion Land’s return policy should be clearly stated on their Web site and should be as liberal as possible.
• Quick processing and delivery time – “We want it now” is the motto of Internet shoppers. It is critical that Fashion Land has a delivery plan and system in place before going online. Informing customers as to when they can expect delivery at the time they place the order and after they place the order is important.
• Shopper privacy – Many consumers are concerned about protecting personal information and are leery about how the information they provide at Web sites might be used. A privacy statement or policy should be posted on the Web site, explaining to customers what information will be collected about them and how you use it
• On-line Showroom – Fashion Land should create an online “Showroom” that would allow consumers to see the entire retailers items, with an easy to use order entry or assortment-planning interface.
• Online Product Catalog – Fashion Land should include an online product catalog that offers good quality and accurate graphic representation of each product they are selling. This is fundamental to selling on the web since customers cannot touch and feel the products.
• Ordering System/Shopping Cart – Fashion Land should incorporate an ordering system that is easy to use to allow customers to pick and choose the products they want to order from the Web site and online catalog. Also, online shopping carts are important since they allow customers to place items they choose into their own personal virtual shopping cart.
• Customer Communication System — In addition to an ordering system, the Web site needs to incorporate a way to communicate with customers. There should be a telephone number on each web page where customers can call with questions and there should be an easily accessible e-mail system where customers can send questions. Remember, your competition is just a click away!
Web Server/Hosting Options (See Table 1 for Pricing)
When it comes to Web Servers, Fashion Land has two basic choices: purchase their own or rent space on a web server. Buying one’s own servers can be costly both in initial hardware and software and in maintaining the system. If Fashion Land does not have the necessary skills, they will also need to hire someone to set up and maintain the servers and that can be quite expensive.
The key to success is finding the right balance between outside and internal support. Fashion Land will need to bring in another company to provide the outside support for their project and work with the internal project team. The first step in determining which parts of a project to outsource is to create an internal team that is responsible for the project.
Outsourcing and Web Building/Hosting Services
Most retailers like Fashion Land choose to rent space on a server. Either way, Fashion Land will pay a monthly fee to an ISP to host the site or server. Many e-commerce solutions providers have teamed up with ISPs and Web hosting services, a trend that is certain to make it very easy for Fashion Land to find a one-stop solution for doing business on the Internet. These new partnerships often combine site hosting and Web site set-up and credit card processing into a single package specifically designed for e-commerce beginners like Fashion Land.
Another option, called the “one-stop” method of getting an e-commerce site up and going for minimal costs and in minimal time is to use a web building/hosting service. These are services that take you through the entire process of setting up your Web site starting with securing a domain name and going all the way through the marketing of the site. This is a real viable option for many small retailers; especially those that have a small budget dedicated to this effort, or just want to start out on a small scale.
I am assuming that Fashion Land does not have the time, talent, budget, staff, expertise or inclination to build their own Web site in-house. In that case, they should out-source it to a company or person with expertise in building a Web site.
Costs
My recommendation to Fashion Land is to go the “one-stop” option above. I based my recommendation on the following factors: functionality, reliability, cost, security, bandwidth/ server scalability, backup and disaster recovery.
The provider to use is P&B’s Net-Portal Web Host. P&B (www.probo.com) provides “one stop shopping” to simplify connecting to the Internet. Because P&B has partnered with leading Internet service providers such as Verizon and QWest, Fashion Leader would not have to deal with multiple vendors and confusing choices to connect to the Internet. P&B’s leasing package includes setup, ISP charges, hardware, perpetual warranty, and ongoing technical support. If needs change, P&B can customize Net-Portal products to meet new requirements.
Net-Portal Web Host is a no-hassle web server that allows companies to publish web pages on the Internet, send and receive e-mail, and surf the Internet. The Net-Portal Web Host also allows companies to create a private, local Intranet to share confidential information with employees.
Setup is simple since the Net-Portal Web Host is pre-configured. After an Internet name is registered and the phone connections are made, companies simply add web pages and they are on the net. What I like about P&B is they will also help create Fashion Land’s web pages-of course for a fee.
Per Probo.com, monthly pricing includes rental of a Net-Portal product, ongoing hardware warranty, limited technical support, Internet service provider charges and local telephone company charges. This should accurately represent Fashion Land’s expected total amount associated monthly costs for a Net-Portal product solution.
The price listed below in Table 1 is the total of the two associated bills Fashion Land will receive each month. They will be billed for the telephone company charges on their regular phone bill each month, and will receive an invoice from Probo each month for everything else. There is also a one-time setup charge that varies from installation to installation. Please note that these prices are based on a one-year service commitment.
Table 1
Telco and Speed Net-Portal Internet Gateway
Net-Portal Mail Host
Net-Portal Web Host
Verizon — 768k/128k $120 $140 $155
Verizon — 384k/384k $150 $170 $185
Verizon — 768k/768k $210 $230 $245
Verizon — 1.5M/768k $340 $360 $375
QWest — 256k/256k $115 $135 $150
QWest — 512k/512k $170 $190 $205
QWest — 768k/768k $220 $240 $255
QWest — 1M/1M $375 $395 $410
QWest — 4M/1M $1400 $1420 $1435
QWest — 7M/1M $2400 $2420 $2435
* The Verizon 768k/128k package is really a 256k/64k package that has the potential to see speeds of 768k/128k.
Source: http://www.probo.com/pricing.htm
Staffing
Fashion Land must employ experienced staff with retailing e-commerce experience especially in operational and administrative areas. An internal project manager must be assigned to the Web site project to manage the internal staff, as well as the P&B (hosting firm).
Web Design and Creation Costs
Prices typically begin at $5,000 for up to 15 pages. (The Shopping Cart for the number of products you sell will be billed separately). This includes:
• Custom graphical page headers containing Fashion Land’s logo and slogan
• A custom graphical site navigation system that is maintained throughout the site
• Up to 15 graphics (photos, logos, or line art – does not include product graphics)
• A full-text Search Page (Search Engine) for the contents of their site
• A custom on-line response form with results being E-mailed directly to Fashion Land
• Site map
• Setup and interface to one of the shopping cart products
• Link to approved credit card processing service (Payflow Link, Payflow Pro, or PayPal).
• Unlimited E-mail links
• Unlimited external links to other sites
• Registration with Major Search Engines
• Additional pages average between $300 and $400 each, depending on layout/content requirements.
Source: E-Commerce Site Package from Webfoot.net
Platforms/Server Requirements
Platform: Windows XP/NT/2000, Unix (Solaris, HP-UX, AIX), Linux
Web Server: Apache, iPlanet, IIS
Database: SQL Server, Sybase, Oracle, DB/2, Informix
Hardware Server: 300-500MHz, 256MB, 100MB – 10GB
Telco Speed: QWest — 7M/1M (http://www.probo.com/pricing.htm)
Potential Issues and Risks
E-commerce presents a world of opportunity for doing business, reaching global markets and purchasing without leaving the home or office [Epstein, 2004]. E-commerce can provide opportunities to improve business processes, just as phones, faxes and mobile communications have in the past. However, just as any new business tool has associated issues and risks so does e-commerce.
Since Fashion Land will be engaging in on-line sales using credit cards, they will need to protect the credit card information from being intercepted, both during the transaction and when it is stored on a server. Similarly, if they have confidential customer information, they will also want to ensure that this information is not accessible.
Companies have the responsibility to deal with some of the legal issues such as how to form contracts, abide by consumer protection laws, create privacy policies and protect databases [Bond, 2003]. Most of the legal issues surrounding electronic commerce are not new. Lawyers should, however, be able to recognize the increased significance of certain legal issues to the online environment.
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References
Bond, Robert, 2003, “International Legal Issues of E-Commerce” Legal Updates, http://www.faegre.com
Epstein, Marc, October 2004, Start to Measure Your E-commerce Success, Harvard Business School-Working Knowledge For Business Leaders, http://hbswk.hbs.edu/item/4401.html
All Things Web, http://www.pantos.org/atw/