Principles of Retail Logistics

Abstract

E- retailing is a move that is gaining a lot of momentum amongst retailers. This has made internet marketing a very competitive arena especially when companies such as Amazon.com continue to enjoy profits in less than ten years. To be in a competitive position a better understanding of the key success factors in e-retailing is necessary. This report pinpoints the key factors that determine success in e-retailing and it is particularly focused on Hong Kong market. The report further examines the situation of the market in terms of structure and suitability to the new food and non food products. This has been discussed in terms of advantages and the existing challenges that retailers and consumers face with e-retailing. Examples of companies that are making use of e-retailing in Hong Kong have also been mentioned in this report.

We will write a custom Principles of Retail Logistics specifically for you
for only $14.00 $11,90/page
308 certified writers online
Learn More

The paper also emphasizes on the logistics which should be put in place to ensure efficiency of all operations during the implementation of the strategy.

Key principles of e-retailing

There are fundamental factors that determine the success of venture into e-retailing business. The success of the company with its food and non food products on the internet would be largely dependent on how well or professionally the logistics would be managed. This is because it is indeed a fact that logistics have been the divers of growth in e-retailing for companies such as Amazon.com who continue to experience profits and growth that is centered on e-retailing. Three main principles would be fundamental for any e-retailing business. The first factor would be good inventory management. This would mean that product selection on the website would be limitless for the customers. This coupled by a good search engine has to ensure that stocks are always available. There should be no excuse at all by the management that the products are out of stock. (Ernst & Young 2005)

The second important factor would concern the distribution of the products. The logistics managers on the ground have to ensure that the distribution channel of the products is excellent so as to meet and satisfy the needs of the customers. Any delays in product delivery after purchasing online would not sound well to the customers. Good practice in the distribution would call for customer’s satisfaction and retention. This would be facilitated by excellent design of networks whereby even the physical stores would not be necessary as deliveries would be made from the distributors, or warehouse. Transportation is also a very vital factor that would determine the success of the e-retailing strategy. This goes hand in hand with distribution of the product. Good transport system to be adopted for delivery of stocks would be instrumental to maintaining customers in this business. The products should be delivered to the customers as promised because any delays cannot be tolerated by the customers. Thus the logistics managers will have to see to it the deliveries are undertaken as pre arranged with the customers. (Gefen, Karahanna and Straub 2003 p67)

Current Hong Kong e-retailing market structure

The current market structure in Hong Kong is indeed conducive for e-retailing. First of all Hong Kong presents a large market base for the wine products because of the existence of many internet users in the region.

E-retailing would require handling of large amounts of products than has been the case before and this would require large fleets of trucks. The good thing that this is well established in Hong Kong therefore it would really be instrumental in the implementation of the strategy.

Hub and spoke networks are also well developed in Hong Kong and it would facilitate the transportation and delivery of products to the customers especially those who would order for the wines. The environment in this particular market would not bring about many issues since it is conducive and it will allow the distribution and delivery of the products to customers in a very efficient way using the well established distribution networks like those which have been used by companies such as Amazon.

Get your
100% original paper on any topic done
in as little as 3 hours
Learn More

Since the business is in Hong Kong and the products are supposed to be sold through the website and reach the customers in the same market, direct deliveries of products to the customers would be easy for the food and non food products. To add on this Hong Kong is an important venue for setting up business because of the talent and service structure that is in existence in this location. Besides, this location is inexpensive as compared to other locations when dealing with overseas business. The Hong Kong market is an ideal and conducive environment for investing in e-retailing for the company as already there are structures in place to support the business and there are other companies that are using a similar strategy. (Gibbs, Kraemer & Dedrik, 2002)

Analysis of e- retailing in Hong Kong

E-retailing is a fast growing sector which can be utilized to reach out to a larger number of customers in the market. Amazon.com has achieved a lot of success in terms of profits within less then seven years of its venture into e-retailing. This has been achieved through the provision of low cost books which are also reviewed by a panel of experts. This demonstrates that an evaluation of a website like Amazon is essential and indeed provides a clear picture of how success can be achieved in e-retailing. By getting into e-retailing the business would have made it easy for the customers as they would save a lot of time than in the traditional way of purchasing. Communication with the customer would be greatly enhanced by this new strategy as the logistics managers would ensure that all the customer queries are well taken are of in the website. This would be facilitated by an efficient customer care service starting from the website to the delivery of the products. Bearing in mind that this is a first moving industry , e-retailing would within a short time span start even selling food products and this would be of great importance to the organization since all systems would have been put in place in the sense that it will not be a beginner in e-retailing. With e-retailing there is a high market potential if the company is in a position to replicate the reliability of the store retailers. This is a fundamental issue that would contribute towards building confidence in the consumers and hence winning their loyalty to the company products. The prices of the products would be favorable to the customers in this strategy. Personalization of the presentations of the websites and the products would be instrumental towards attracting more customers since they would have an opportunity to choose the outlook of products and hence the products would be tailored to address their desires.

There are also challenges that are expected in this so attractive move.First of all concerning the customers, it is vital to note that some of them who do not have the knowledge would not be in a position to access the products online. It would also cost the company highly for initial set up of the website and other costs related to distribution networks of the products. Another problem would involve adequately meeting the needs of the consumers especially with the high expectations they would have from the company. The threat of other competitors is on the higher side with e-retailing as the customers would choose for themselves the website that would be impressive to them. The customers have an easy access to the different competitor sites. Credit card and security worries would be considered to be disadvantages to the business before of the cases which have been associated with this type of business in the past. There would be also difficulties in returning goods for a refund in cases where the customer is not satisfied with the product. Due to this issue some customers would not find the business reliable and would lack confidence in the process. Examples of companies which have already introduced e-retailing in the Chinese market include Vinoteca Warehouse services which offers food items on their website.Vinfolio is another company that sells wine online in Hong Kong. Oriental Logistics wine services is yet another example of an online store offering both goods and services to customers in Hong Kong. In short there are many advantages in this type of marketing and selling that if the company is not in a position to make the move then chances are high that the competitors will do it.

Structure and implementation of logistics

A number of issues or measures would have to be put in place to ensure efficiency in the implementation of the e-retailing strategy. This shall concern that handling of goods, security, and customer service, storage, transport and delivery of the goods to the customers both locally and internationally. (Santos 2003 p235)Since there is going to be a larger volume of goods to be handled there are certain logistic measures that would be required to be put in place for efficiency. This would call for new distribution centers. Overall, the logistics managers would be required to structure the system in a very unique way that would ensure success in the marketing, sell and delivery of products.

The first structural issue would concern the way the stock inventory would be managed in the virtual stores. This would call for efficient mechanisms to ensure that there is easy accessibility to the stocks by all visitors. This means that content would have to be checked and updated on regular basis to ensure that they have a strong impact on the customers by building confidence in the system. Bearing in mind that the website is the only means the customers would understand the product, it would be important for system designers to ensure that it is attractive and functional. Support and services on the website would be a very important issue in the structure of the strategy. The FAQ section should contain the key points most consumers would be looking for so as to achieve satisfaction. In terms of structure the handing of products would also matter. The logistics managers would put measures in place to ensure the safety of the stored goods. To guarantee this , there will be need for 24 hours guard of the products and well positioned CCTV cameras.

This will be essential in assuring the customers that their goods and handled well and are secure before being delivered to them. Professional handling would also be extended to both incoming and outgoing products in the warehouse.

Concerning transportation and delivery of the purchased products the logistics manager would ensure that there is real time delivery and tracking of individual product slots. This is all geared towards delays in product delivery that can make the customers think twice.

We will write a custom
Principles of Retail Logistics
specifically for you!
Get your first paper with 15% OFF
Learn More

For the food products there will be need for temperature controlled Lorries that would facilitate home delivery of products. This would be well taken care of by the logistics department.

The company shall also endeavor to see that there is a comprehensive insurance on the transport system to ensure that the products are well protected and catered for in case of eventualities like accidents or theft.The logistics department shall also put systems in place to ensure that there is hustle free clearance at the customs department. This will save the customers a lot of time which can be spent in the customs department just to clear the already purchased goods. (Urban, Sultan, and Qualls, 2000 p13)

To foster efficiency in all operations of the e-retailing business the management shall hire qualified and experienced staff to work in the customer service department. This staff will ensure smooth flow of activities for the sake of satisfying the needs of the customers in terms of quality service and products. The logistics shall be focused on ensuring that the customers are convinced that it is wiser and more convenient to go shopping for food and non food items on the website than using the traditional method because of all the logistic and structures which will be put in place to implement e-retailing.

All these measures and structures shall be put in place to ensure customer satisfaction and henceforth loyalty to the company’s products and services. (Santos 2003 p235)

Conclusion and Recommendations

The success of an e-retailing strategy entirely depends on how well logistics are managed in a company. This means that logistics managers in the company have a significant role to play to ensure that key factors are in place for the success of e-retailing. The Hong Kong market based on the success of companies such as Amazon.com is a viable market for e-retailing. With all the necessary key factors put into consideration wine products can achieve great success than competitors who are already in business in the Hong Kong market.It is vital for the management of the company to recognize the fact that it is indeed the logistics that are actually going to drive the whole process of e-retailing into success in the Hong Kong market. The strategy of e-retailing is bound to pick up if all the necessary logistics are well structured to ensure that there is quality service and thus customer satisfaction in the end of it. It is highly recommended that the management considers all the logistics issues for them to ensure that there is customer satisfaction which is actually the one to sustain the strategy and achieve the expected market targets using e-retailing. (Rao 1999 p90 )

References

Arnold Maltz, Elliot Rabinovich, and Rajiv Sinha —Logistics: The Key to e-Retail Success, Supply Chain Management. 2004.

CNNIC (2006) 17th statistics report on the The internet development in China. China The internet Network Information Center.

Not sure if you can write
Principles of Retail Logistics by yourself?
We can help you
for only $14.00 $11,90/page
Learn More

Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). e-Business and e-Commerce Infrastructure. McGraw-Hill. ISBN 0-07-247875-6

Ernst & Young 2005, The path to success for retailers and consumer brands in China.

Fernie and Sparks ,Segmentation of online Consumers in the UK. Pg. 169

Gefen, D., Karahanna, E. and Straub, D.W. 2003, ‘Trust and TAM in online shopping: An integrated model’, MIS Quarterly, vol.27, no.1, pp. 51-90

Gibbs, J., Kraemer, K.L. & Dedrik, J. 2002, Environment and Policy Factors Shaping e-commerce Diffusion: A Cross-Country Comparison. Centre for research on information technology and organisations, University of California.

Mullaney, T.J. 2004, ‘E-tailing finally hits its stride’, Business Week, No. 3913; pp.36

Miller, Roger (2002). The Legal and E-Commerce Environment Today (Hardcover ed.). Thomson Learning. pp. 741 pages. ISBN 0-324-06188-9.

Rao, B. 1999, ‘Developing an effective e-tailing strategy’, Electronic markets, vol. 9. no.1-2, pp. 89-92.

Urban, G., Sultan, F. and Qualls, W. 2000, ‘Placing trust at the center of your The internet strategy’, Sloan Management Review, vol 42, pp.1-13.

Santos, J., 2003, ‘E-service quality: a model of virtual service quality dimensions’, Managing Service Quality, vol 13, no 3, pp.233-246. Web.

Check the price of your paper