Dot Com and multi channel

Question 1

Define dot coms and multi-channel

Answer 1

Dot coms: operate through the online channel: e.g. Amazon

Multi channel: operate online and stores : e.g. Tescos

Omni channel: everything works smoothly in MC

Question 2

What are the pros and cons of multi channel approach? (5 &2)

Answer 2

PROS

• use store collection return
• develop relationship with customer
• greater reach, better data collection
• pick up order, 40% more likely to buy other things
• owned media: staff uniforms, tags, stores

CONS

• harder for stock control
• have to bear cost of stores

Question 3

What are the pros and cons of dot coms? (4 &5)

Answer 3

PROS

• centralised and scaleable
• simpler, flexible, avoid cost of store network
• greater market reach
• lower fixed costs, higher margins

CONS

• easy to copy= competition
• separate place for return
• more regulation, consumer rights online increased
• no personal interaction, additional cost of staff
• loose control of third party collaboration

Question 4

Why is it hard to make money from online grocery market?

Answer 4

• as soon as player win significant customers, competition reacts by going online, which leads to cannibalisation
• delivery costs are high, so rarely covers charge due to high competition + homogenous products
• grocery industry competed away cost of delivery
• not an opportunity but an expensive profit curbing necessity

Question 5

What are the drivers of online grocery?

Answer 5

1. greater provision and promotions
2. channel switches
3. click and collect services ( temperature controlled locks, drive through stores, collection points)
4. ease of use
5. low cost delivery

Question 6

What challenges does online grocery present for retailers?

Answer 6

1. Sustainability: waste
2. Series of smaller shops: change in consumer behaviour
3. Shift from weekly super market shops to shopping more often in smaller basket