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Tài liệu Omni channel strategy in online retailing the case of magestore

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HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN TRỌNG PHƯƠNG OMNI CHANNEL STRATEGY IN ONLINE RETAILING: THE CASE OF MAGESTORE CHIẾN LƯỢC BÁN HÀNG ĐA KÊNH TRONG BÁN LẺ TRỰC TUYẾN: TRƯỜNG HỢP CỦA MAGESTORE LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2020 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN TRỌNG PHƯƠNG OMNI CHANNEL STRATEGY IN ONLINE RETAILING: THE CASE OF MAGESTORE CHIẾN LƯỢC BÁN HÀNG ĐA KÊNH TRONG BÁN LẺ TRỰC TUYẾN: TRƯỜNG HỢP CỦA MAGESTORE Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS. NGUYỄN VIỆT KHÔI HÀ NỘI - 2020 CAM KẾT Tác giả cam kết rằng kết quả nghiên cứu trong luận văn là kết quả lao động của chính tác giả thu được chủ yếu trong thời gian học và nghiên cứu và chưa được công bố trong bất cứ một chương trình nghiên cứu nào của người khác. Những kết quả nghiên cứu và tài liệu của người khác (trích dẫn, bảng, biểu, công thức, đồ thị cùng những tài liệu khác) được sử dụng trong luận văn này đã được các tác giả đồng ý và trích dẫn cụ thể. Tôi hoàn toàn chịu trách nhiệm trước Hội đồng bảo vệ luận văn, Khoa Quản trị và Kinh doanh và pháp luật về những cam kết nói trên. ……………, ngày …… tháng …… năm ……… DECLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article. The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given. The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration. Date………………………….. 1 LỜI CẢM ƠN Đầu tiên, tôi xin gửi lời cảm ơn trân trọng nhất tới giáo viên hướng dẫn tôi, PGS.TS. Nguyễn Việt Khôi vì đã có những lời khuyên và giúp đỡ tôi từng bước hoàn thành luận văn này, nếu không luận văn đã không thể hoàn thành. Thứ hai, tôi xin cảm ơn đặc biệt tới Ban Lãnh đạo công ty Magestore vì đã cung cấp cho tôi số liệu giúp tôi hoàn thành luận văn. Cuối cùng nhưng rất quan trọng, tôi xin cảm ơn PGS. TS. Hoàng Đình Phi, và các thầy cô của Khoa Quản trị Kinh doanh đã cung cấp cho tôi kiến thức trong thời gian tôi học tại đây. Đối với tôi, thời gian học tập tại đầy là thời gian tốt nhất trong cuộc đời. ACKNOWLEDGEMENT Initially, I would like to express my deepest gratitude to my supervisor, Assoc. Prof. Nguyen Viet Khoi for his advice and involvement in every step throughout my research process, this master thesis would not have been completed. Secondly, I would like to send my special thanks to Magestore management board for giving me the data to support my thesis. Last but not least, I really appreciate Professor Hoang Dinh Phi and many other professors of Hanoi School of Business for providing me knowledge during my study here. This is the best time of master student life. 2 CONTENT ABSTRACT ............................................................................................................... 8 INTRODUCTION...................................................................................................... 9 1. Rationale ............................................................................................................ 9 2. Literature review .............................................................................................. 11 5. Research Methodology..................................................................................... 14 6. Thesis structure ................................................................................................ 15 CHAPTER I: OVERVIEW OF OMNICHANNEL STRATEGY ........................... 17 1. Definition of omnichannel strategy.............................................................. 17 2. The development of omnichannel .............................................................. 19 2.1. The transition from single channel to multi-channel ...................... 19 2.2. The transition from multi-channel to omnichannel ........................ 20 2.3. Comparison of three models: Multi-channel, Cross-channel and Omni-channel ................................................................................................... 21 3. 4. The necessity of having omnichannel in today’s world ............................... 26 3.1. Increasing number of customers shopping across channels .......... 26 3.2. The increase in customers’ expectation ......................................... 28 3.3. Inventory visibility ......................................................................... 28 3.4. Fulfillment process optimization ................................................... 30 3.5. Boost sales ...................................................................................... 30 3.6. Customer service ............................................................................. 31 3.7. Marketing ........................................................................................ 31 Requirements on omnichannel strategy ....................................................... 32 CHAPTER II: RESEARCH METHODOLOGY ..................................................... 35 1. Research method......................................................................................... 35 1.1. Interviews............................................................................................. 36 3 1.2. 2. Case study – Decathlon Japan Omnichannel Sports Retail ................. 37 Data collection and analysis ......................................................................... 38 CHAPTER III: ANALYSIS OF MAGESTORE’S OMNICHANNEL SOLUTIONS AND ITS APPLICATION IN RETAILERS’ OMNICHANNEL STRATEGY ..... 40 1. Overview of the company and the industry................................................ 40 1.1. Overview of the industry.......................................................................... 45 1.2. General information about Magestore .................................................... 46 1.3. Product overview .................................................................................... 47 2. Analysis of products responding to omnichannel retail needs ..................... 50 2.1. Point-of-sales (POS) ................................................................................ 50 2.2. Inventory Management ........................................................................... 59 2.3. Order Fulfillment ..................................................................................... 67 2.4. Purchase management .............................................................................. 71 2. SWOT analysis for Magestore applying OmniChannel Retailing model .. 73 CHAPTER IV: RESEARCH RESULTS ................................................................. 76 1. Strengths and weaknesses of Magestore’s products .................................. 76 2. Recommendation ........................................................................................ 78 2.1. Customer understandings .......................................................................... 78 2.2. Management system and security. ............................................................ 79 CONCLUSIONS ...................................................................................................... 80 1. Research achievements ................................................................................ 80 2. Research limitations ................................................................................... 80 3. Suggestions for future research .................................................................. 80 4 ABBREVIATION No. Abbreviation Definition 1 B2B Business to Business 2 B2C Business to Customer 3 POS Point of Sale 4 CRM Customer Relationship Management 5 IT Information Technology 6 US United States 7 SKU Stock-Keeping Unit 8 ICT Information & Communication Technologies 9 ICSC 10 DC 11 Magestore 12 CSV Comma-Separated Values 13 XML eXtensible Markup Language International Council of Shopping Centres Distribution Center Magestore technology joint stock company 5 LIST OF FIGURES Figure 1: Omnichannel Customer Experience 19 Error! Reference source not found. 21 Figure 3: Retail sales 27 Figure 4: ASEAN 6 - E - commerce Markets and Penetration (2014 - 2020) 41 Figure 5: Top Online Shopping Websites in ASEAN 43 Figure 6: Growth in Number of Internet Users ( CAGR%, 2015-2020) 44 Figure 7: Internet Users by country (million 2015 -20) 45 Figure 8: OmniChannel system 48 Figure 9: POS General Sale Process 54 Figure 10: POS Order 55 Figure 11: POS Return Order 56 Figure 11: POS Return Order 59 Figure 13: Stock Taking Screen 60 Figure 14: Stock sending screen 61 Figure 15: Sending stock workflow 62 Figure 16: Transfer stock - Request stock workflow 64 Figure 17: Customer return workflow 65 Figure 18: Dropship workflow 67 Figure 19: Order Fulfillment process 70 Figure 20: Example of Order listing 71 Figure 21: Process of purchase management 73 6 LIST OF TABLES Table 1: Other terms for Omnichannel 18 23 Table 2: Comparison of three models 25 Table 3: Examples for comparison among models Table 4: An overview of requirements on OmniChannel Strategy 34 37 Table 5: Questions for open interviews 47 Table 7: Magestore’s development journey 53 Table 8: Features list of POS software Table 9: Feature list of purchase management 72 Table 10: SWOT analysis for Magestore 75 Table 11: Strengths and weaknesses of Magestore’s products 76 7 ABSTRACT The world of commerce in business to business (B2B) and business to consumer (B2C) is changing rapidly and it will change even faster in the years to come. Today’s empowered customer expects a consistent buying experience across all retail channels – online, offline and both combined. Retailers, for example, must offer store pickup for goods ordered online. According to Forrester Research (2014), 71% of all customer expect to view instore inventory online, while 50% expect to buy online and pick up in-store. However, only a third of retailers have operationalized even the basics such as store pickup, cross-channel inventory visibility, and store-based fulfillment. Besides, retailers must also make sure that customers choose how they return goods – either ship them back or bring them to the nearest store. And this is when omni-channel retailing becomes indispensable, which involves seamlessly integrating the customer experience across all interaction channels – in-store, on the web and on mobile devices. The understanding on omni-channel retailing, in Vietnam, however, is still in its very premature stage. Therefore, this paper explores what omnichannel retailing is, what the requirements for an omnichannel strategy are and how these requirements are being met by solutions provider, with the aim of giving an overview on the omnichannel ecosystem and all the basics revolving around it. All these questions are resolved by looking into the case of Magestore, an omnichannel solution provider that targets foreign markets. The research is conducted using qualitative research method including interviews, meetings and case studies from clients working with Magestore. To take a further step with the research, the author will choose to look deep into one specific product of Magestore and how it is solving the needs of retailers to give an in-depth analysis on the response of the company’s product and how it may be improved. 8 INTRODUCTION 1. Rationale Nowadays, the retail market is becoming extremely competitive, as a result of technology breakthrough that disrupts the habits and demands of consumers. And as customers are becoming more demanding on their experience, retailers are trying to find solutions to provide the best experience and differentiate themselves from others. This means they need to find ways to lower their costs to deal with competitive environment while increasing their service quality to fulfill the evergrowing expectations of consumers. Retailers, then, face the challenge of adopting new strategies and learning new skills to survive. With the impact of the Science and Technology Revolution, the retail industry has made significant progress thanks to the consecutive debuts of ecommerce and digitalized platforms. The additional emergence of E-commerce and digital platforms such as mobile channels or social media channels is changing the mixed retail business model and customer’s behavior. That is the reason leading to the gradual inferiority of the traditional single channel retailing model (which only approaches customers in a direct or online channel). It is obvious that Omnichannel Retailing will be the major trend in enterprises in the future. It is seen that one strategy is indispensable when talking about competing in retailing is “the omnichannel strategy”. This strategy has gained a significant amount of attention from all stakeholders including retailers, consumers, consultants, e-Commerce solution developers and even researchers (Deloitte, 2014). To explain in the most basic way, this strategy combines different channels of sales from online to offline with the aim of giving customers seamless experience through their entire purchase journey. It is not by chance that Amazon and Walmart, two leaders in the retail industry, opened real stores or online trading channels. That is the actual and obvious evidence for the increasing attention of modern enterprises to selling through associating their available channels. In fact, the so-called future of retail industry has been applied by enterprises in the US and European countries for more 9 that 7 years and it has shown astonishing results with the ability to take over the market and high growth rate. Even now, a senior citizen looking to buy a smartwatch might be texted a recommendation by a grandchild, then walk into a physical store to purchase. That same grandchild on the other hand, might spend weeks parsing smartwatch reviews, adding, then abandoning items in their cart on both mobile and desktop, before finally purchasing because of an enticing email offer. It’s a complex process, and it’s why omni-channel selling is so important. However, in Vietnam, the retail concept has just come to recognition over the last one year and enterprises are still vague about this new trend which is foreseen to dominate the retail industry worldwide in the upcoming years. It is reported that many retailers who execute the omnichannel strategy often face high operational costs and low extra income (Rigby, 2010). Looking into Magestore, from its experience of working with retailers and providing e-Commerce solutions, we want to find out what the factors that make and break an omnichannel strategy. From there, we also want to know the benefits of applying omnichannel and the most advisable of adopting it. In order to help E-commerce retailers and enterprises understand more clearly this new and practical trend, as well as to fully take advantage of Omnichannel’s benefits, it is necessary establish of exact definitions and appropriate analyses about the situation and potential of cross-channel retailing in Vietnam, especially with Magestore case. This will be a practical and reliable foundation basing on the world’s experience of developing this model and Vietnam’s current situation of E-commerce environment for enterprises to come up with methods and solutions to implement Omnichannel in their business and absolutely make use of their advantages, make profit, effectiveness for their enterprises themselves. Overall, the goal of this thesis is to gain insights on the requirements of omnichannel strategy and how e-Commerce solution developers can respond to that in their solutions for retailers. 10 2. Literature review Ana Mosquera, Cristina Olarte Pascual, Emma Juaneda Ayensa (2017), Understanding the customer experience in the age of Omnichannel shopping. Researches and analyzes Omnichannel environment, how customers approach it as well as recommend for enhancing Omnichannel retailing for enterprises. Customer Desires Vs. Retailer Capabilities: Minding The OmniChannel Commerce Gap (2014). Analyzes consumer expectations for OmniChannel experience Intensify and address OmniChannel’s position. The management of several channels has been investigated in disciplines such as marketing, retailing, and information systems (IS). Research in these fields has primarily examined the consumer perspective, particularly multichannel shopper characteristics and behaviour across channels (e.g., Ansari et al. 2008; Venkatesan et al. 2007). Another research stream has focussed on the company perspective and analysed channels’ effects on the performance of offline or online channel implementation (e.g., Avery et al. 2012; Geyskens et al. 2002; Homburg et al. 2014; Pauwels et al. 2011). In previous research on the management of several channels, studies primarily took a dichotomous viewpoint, making a clear distinction between online and offline channels. In many cases, consumers do not complete a purchase process using only one channel (Aubrey & Judge 2012). And 86% shop in various channels and (McPartlin & Feigen Dugal 2012) want to use channels simultaneously. Andrea Dixon, James W. Peltier, Shannon Cummins (2016), Omnichannel research framework in the context of personal selling and sales management: A review and research extensions. Researches and collects data about the development of Omnichannel retailing in context of sales and sales management that related to six issues: sales context, impact of technology, stages of sales process, relationships and company performance and the role of media also. Darrell Rigby (2011), The future of shopping. Points out future consumption trend, especially the development of E-commerce and upgradation of Omnichannel retail. 11 David Rygl, Norbert Beck (2015), Categorization of multiple channel retailing in Multi-, Cross-, and Omni‐Channel Retailing for retailers and retailing. Summarizes, defines and explains the differences among Multichannel, Crosschannel and Omnichannel. Dongwon Lee, Sangkyu Park (2017), An Empirical Study on Consumer Online Shopping Channel Choice Behavior in Omni channel Environment. Analyzes choice behavior in Omnichannel environment then gives recommendations for future development in this field. Euro Commerce (2014), E-commerce, Omnichannel retail, and EU policy. Analyzes E-commerce. omnichannel retail and factors affected. Document forecasts the development of Omnichannel through years and EU policy was enacted to encourage consumers on E-commerce. Mariette Frazer, Beate Elizabeth Stiehler (2014), Omnichannel retailing: The merging of online and offline environment. They defined clearly about Omnichannel and its features. Mohammad S. Rahman (2015), Competing in the age of omnichannel retailing. Proposes solutions for carry on tasks on promoting Omnichannel effectively. The consumer good forum (2015), Re-engineering the supply chain for the Omnichannel of tomorrow. Analyzes the relationship and the indispensability of supply chain and ominichannel retail. Wojciech Piotrowicz and Richard Cuthbertson, Guest Editors International Journal of Electronic Commerce (2014), Information Technology in Retail: Toward Omnichannel Retailing. Overview of current Omnichannel situation, relationship between technology and retail. Document also points out the orientation of Omnichannel in the future. Donald Carroll and Inés Guzmán, The New Omni-Channel Approach to Serving Customers. Analyzes the trend in many industries toward the use of multi-channel approaches to engaging with customers and show the experiences of customers while approaching Omnichannel. Analyzes successful cases of E-commerce models in the world and gives 12 recommendations for VietnamOmnichannel retail and its strategy are the most comprehensive development trend of E-commerce. Therefore, it has received a lot of attention from researchers from early days of presenting. However, many researchers were still confused among the concepts of three retail channel. After theoretical foundations were formed, researchers continue doing research to analyze the consumer behavior and come up with recommendations for enterprises. Nevertheless, these studies are based on general behavior and strategy of some specific countries, it is difficult to apply for Vietnam cases. Vietnam E-commerce Association, Vietnam E-commerce Index report 2017. The report is the result of conducted survey at thousands of enterprises across countries about E-commerce, retail channels and order fulfillment. Nguyen Phuong Chi (2010) Researching some successful e-commerce models in the world and lessons for Vietnam, Master of Economics thesis, 2010 3. Aims of research Facing the urgent need to promote businesses to improve their capacity and competitiveness, the study and application of retail solutions in e-commerce for businesses in Vietnam is necessary. On that basis, the content of the thesis focuses on the following main tasks: Systemize to clarify some issues of E-commerce Clarify the definitions, concepts, theoretical methods of Omnichannel. · Assessing the necessity of Omnichannel retailing and Omnichannel strategy · Retailers that purchased Magestore’s omnichannel solutions · Analyze the situation Omnichannel strategy in Magestore. · Research potentials, opportunities, difficulties as well as challenges when applying Omnichannel for Magestore. · Analyze Magestore omnichannel solutions and their supporting services · Recommendations and solutions for Magestore. 4. Objects and Scopes of the research 13 The objects of this thesis are to gain insights on the requirement of the omnichannel strategy, how the requirements are met in the omnichannel solutions and in the execution of the strategy. To identìy the scope of the research, we need to answer of three following research questions: What is the omnichannel strategy and why do retailers need to adopt it? What are the requirements for omnichannel strategy? How are these requirements being fulfilled and can be fulfilled by Magestore’s omnichannel solutions and retailers’ execution? 5. Research Methodology This thesis is done throughout the period of 3-month internship as a Business Development Representative at Magestore. Following the goal of this thesis, it is more descriptive of the factors deciding the success of omnichannel strategy. For this reason, the main approach using in the research is qualitative method. The qualitative method is a process of inquiries to understand a social or human problem, based on a complex built of holistic pictures, depicted in words with detailed information and reports which is executed in a natural setting. The main research method used in the course of the research is the material dialectical method, from a practical point of view about the applicability of the research topic, the system viewpoint, and specific historical views: consider things in specific circumstances; combining qualitative and quantitative methods for analysis and synthesis. According to Fink (2003), several occasions can be identified when a qualitative survey design is suitable, including these following four reasons, relevant to this study: first, the study is focused on exploring the knowledge and opinions of experts in a particular field. Second, the study intends to collect information in the participants’ own words rather than use predefined response choices. Third, there is not enough prior information of the study subject to enable either the use of standardized measures or the construction of a formal questionnaire. Fourth, sample size is limited due to access or resource constraints. a. Data collection methods 14 The research approach of this thesis is inductive, and it is qualitative research. The data was collected from secondary sources such as articles, journals, books, and reports. To learn about the Omni-channel, this thesis combines two types of sources: Internal documents: These are documents published by the company itself, such as company-generated reports, annual reports, or public information on the company's website. Company documents: These are books or other reports about the company, articles related to the industry and the company. These articles were taken from Google's b. Analytical methods - data processing The data collected was then analyzed such as descriptive statistical methods, data distribution to design statistical tables, comparison of indicators. c. Integrated methods In the thesis, a number of typical references were mentioned in the literature review. The conclusion is also summarized in the final section. 6. Thesis structure This thesis consists of introduction, three chapters, conclusion as following INTRODUCTION - Rationel, - Literatures - Aims of Research - Objects and Scopes of research - Research Methodology - Thesis Structure CHAPTER 1: OVERVIEW OF OMNICHANNEL CHAPTER II: RESEARCH METHODOLOGY 15 CHAPTER III: ANALYSIS OF MAGESTORE’S OMNICHANNEL SOLUTIONS AND ITS APPLICATION OMNICHANNEL. CHAPTER 4: RESEARCH RESULT CONCLUSIONS 16 IN RETAILERS’ CHAPTER I: OVERVIEW OF OMNICHANNEL STRATEGY 1. Definition of omnichannel strategy The cross-channel retailing concept (Omnichannel) was first time introduced by Darrell Rigby in the report “Future of shopping” in 2011. At that time, he defined cross-channel retailing as a model in which retailers sell their products to customers through as much approaches as possible: traditional distribution channels, website, email, social networks, phone switchboards, broadcast, etc. However, this definition by Rigby was said to be unclear and can easily be mistaken for Multichannel retailing model. Since then, there have been hundreds of reports, researches about crosschannel model to form an exact definition and complete the theory of this model. One definition that will be used throughout this thesis is: “Omnichannel can be defined as a synchronized operating model in which all of the retailers’ channels are aligned and present a single face to the consumer, along with one consistent way of doing business.” Rigby (2011) describes Omni-channel retailing is an “integrated sales experience that melds the advantages of the physical stores with the informationrich experience of online shopping” whereas Verhoef et al., (2015) argue that Omni-channel retailing consists of “synergistic management of the numerous available channels and consumer touch points, in such a way that the consumer experience across channels and the performance over channels is optimised”. According to Deloitte (2014), a successful retailer must be able to deliver a consistent brand, level of service, information independent of which channel, place or time consumers are reached. To sum up, a successful omnichannel strategy makes sure consumers may experience many different touchpoints with the brand but they have one unified view about their experience. Omnichannel means an consumer-focused approach, which helps retailers to keep a consistent image in consumers’ eyes despite the increasing number of touchpoints they develop with the brand itself. Other terms for Omnichannel are used in literature are as follows: 17 No. Terms for Omnichannel It is about seamless integration of channels and data. Since consumers 1 don’t distinguish between channels, retailers will have to support seamless integration among and between each of them (Simmons, 2013) 2 3 Omni-channel is the unified experience that the consumer has, going from every single touch point with a brand (Steve Mast, 2013) Omni-channel need the right technologies that can deliver consumers the unified experience in an efficient, enjoyable manner. (Webcredible, 2012) Integrated retail: Enable our consumers to shop anytime, fulfill anywhere 4 any time and pay any way. With a shopping experience that is simple, seamless, relevant and rewarding (Dimalo, 2014) Omnichannel retailing is an integrated sales experience that melds the 5 advantage of stone stores with the information-rich experience of online shopping. Omnichannel can be defined as a synchronized operating model in which 6 all of the company’s channels are aligned and present a single face to the customer, along with one consistent way of doing business (Carroll and Guzman, 2013) Successful omnichannel strategy is contingent upon providing a 7 consistent on-brand experience across all channels, which requires that a retailer possesses an intimate understanding of the potential and peculiarities of each (Ginsberg, 2013) Table 1: Other terms for Omnichannel Overall, it can be understood that omnichannel aligns channels and provide consumers with consistent experience. This experience covers all aspects of the 18
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