Online Retail Selling: Barriers to Success


i.            Increasing consumers’ comfort levels: Online retailers need to improve convenience and value for customers and assist them in overcoming their concerns about security and trust.

ii.            Resolving technological limitations: The ability for online retailers to deliver unique experiences is linked to technology improvements. The internet is still constrained by lack of bandwidth and problems with reliability.

iii.            Rapidly scaling internal operations: Online retailers face the challenges of managing significant growth, internal organizational change and developing and scaling their customer service and fulfillment infrastructure—all while the technology is still evolving.

iv.            Engineering comprehensive convenience: Customers identify many convenience problems with today’s online environment. Among them are the need for customers to reenter personal data on different sites, the vide variation in customer service across sites and the lack of coordination between online and offline retail environments on the part of retailers using both channels.

v.            Resolving channel conflict: many offline retailers believe that there is a risk of cannibalizing sales through existing channels by going online. Many manufacturers fear alienating their existing distribution partners by providing an alternative channel for customers to purchase. These perceived channel conflicts are keeping some traditional retailers and manufacturers from joining the Internet.

vi.            Developing low-cost distribution: Distribution system can be expensive. Online fulfillment systems are still developing and there is a disconnect between what is required and what is currently offered by existing offline systems.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

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Financial Analysis: Real Problems


The term financial analysis  when applied to new products conjures up visions of sales forecasts and profit calculations. By using traditional financial analysis, we can get a good read on the current proposal.

 Actually, sales forecasts and financial analysis systems are no problem as such. We have an immense warhead of forecasting methodologies, most based on many years of experience. We know, for example, what makes for sales. This model does an excellent job and serves as the basis for some very advanced mathematical systems used by some of the most sophisticated new product marketers in the world. And every firm has people who can make an income-statement-based net present value calculation (using discounted cash flow methods). We have had years of experience with it.

 The financial model requires product cost, prices, the current value of money, probable taxes on the future income, the amount of further capital investments that will be required between now and when we close the books on the product and much more.

 They will never be certain, even after living out the product’s life cycle. Sales will be known, but we might have had a better marketing strategy. Costs are always just estimates. We will never know the true extent to which a new item cannibalized sales from another product. If we had not marketed the new item a competitor probably would have. And on and on.

 The fact is, we rely on estimated. Management’s task is ot to make the estimates as we can and then manage around the areas of uncertainty in a way that we do’t get hurt too badly.

 On minor product improvements we do this pretty well. On near line extensions, we also do well, but with more misses. Totally new products, using technologies never so applied before, are pure guessing games.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight