Case Studies on Successful ECommerce

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Case Studies on Successful E-Commerce
APEC OVOP Training Workshop on E-Commerce20-24
August 2007, Chinese Taipei

• Arnold Chao, Ph.D., MBA
• Partner, e-finity group inc., Canada
• a.chao_at_e-finitygroup.com

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Agenda

• Introduction
• Strategic Issues
• Case Study Wal-Mart
• Case Study CSIONet
• Case Study Roots Canada
• Summary

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Introduction

• e-finity group inc.
• Objectives
• Scope
• Purpose of E-Commerce

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e-finity group inc.

• Royal Insurance
• ING Insurance
• AXA Insurance
• Cebra Inc.(BMO)
• Lombard Insurance
• Basis 100/Allstate Insurance, CGU
• Beaver Lumber Co./Home Hardware
• Sears
• McDonald
• LCBO
• Riverside Healthcare Facilities
• Lennox Addington General Hospital
• Saugeen Memorial Hospital
• Orillia Soldiers Memorial Hospital
• St. Elizabeth Health Care
• Hospital Santa Fe (Mexico City)

• Royal Bank of Canada
• CIBC
• Bank of Montreal
• Bank of Nova Scotia
• TD Bank
• National Bank
• Bank of Ireland
• REDBANK Chile
• InfoLink Systems, Trinidad
• Suriname Bankers Association
• Bell Canada
• Telus Corporation
• Northern Telecom
• IBM
• Unisys
• ATT Global Services
• Siemens
• TeleCayman (Grand Cayman)

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Objectives

• Review e-commerce related business issues,
  challenges, and strategies based on real-life
  case studies of successful companies/organizations
  
• Identify critical success factors that can be
  used to formulate e-commerce strategies and
  implementation plans
• Focus on strategic and business issues

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Scope

• Narrow Definition
• E-Commerce is the buying and selling of goods and
  services on the Internet
• Broad Definition
• E-Commerce is the exchange of value between
  organizations and between customers/consumers and
  organizations facilitated by IT, at both ends,
  including the use the Internet.

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Purpose of E-Commerce

• To increase velocity and reduce the cost of
  procurement before, during, and after the
  transaction
• To access new customers and suppliers to increase
  revenue, reduce costs of customer
  acquisition/retention, improve profitability,
  market share, and competitive position

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Strategic Issues

• Establishing Trading Partners Relationship
• Positioning within an Industry Value Chain
• Defining Interfaces with Trading Partners

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Establishing Trading Partner Relationship
Supplier
Intermediary
Customer
Relationships between Participants/ Trading
Partners
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Establishing Trading Partner Relationship
Raw Material Producer Manufacturer
Retailer Distributor
Supplier
Customer/ Consumer
Intermediary
Customer
Relationships between Participants/ Trading
Partners
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Establishing Trading Partner Relationship

• Categories of Trading Partner Relationship
• B2B, B2C
• C2B, C2C
• G2G, G2B, G2C
• B2G, C2G

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Positioning within an Industry Value Chain
Customer
Intermediary
Supplier
Supplier
Intermediary
Intermediary
Supplier
Intermediary
Supplier
Customer
Value Chain Industry Structure
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Defining Interfaces with Trading Partners

• Categories of Interfaces
• Broker
• Auction
• Exchange (proprietary, shared, public)

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Case Study Wal-Mart

• Background
• B2B Thrusts
• B2C Thrusts
• Critical Success Factors

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Wal-Mart Background

• Worlds larges most successful retailer
• Founded in 1962
• 3,300 retail stores in the US
• 1 million workers
• Growth via expansion
• Geographically
• More products/services (super-centers,
  pharmacies, groceries, )
• Value Proposition
• Low cost
• More selection
• Integrating online offline services

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Wal-Mart B2B Thrusts

• E-Commerce Thrusts Supply Side
• Predominant trading partner in retail
• Cost control via SCM integrated with B2B
• Move to Internet EDI (Applicability Statement 2)
• Data synchronization using UCC and EAN Intl
• Results
• Getting the right product to the right place at
  the right price - break 3 day barrier with direct
  shipment to stores
• Reduce inventory, storage requirements
• Increase availability shelf space for display

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Wal-Mart B2C Thrusts

• Wal-Mart.com started in 1996
• Deemed a failure
• Lack product selection, e.g.
• Sells two 31-36 inch TV sets Circuitcity.com,
  40
• Sells 4 DVD players Amazon.com, 19
• Difficult to use
• Not profitable as a virtual company with its own
  logistics, warehousing, ordering, and shipping

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Case Study Wal-Mart - B2C

• E-Commerce Thrusts Customer Side
• Spinned off Walmart.com as separate company with
  Accel Venture as minority partner and moved it to
  the Silicon Valley. Walmart.com has been since
  been re-acquired.
• Integrating online offline channels (e.g.
  placing pharmacy order online and pickup at local
  store)
• Moving upscale in certain categories of
  merchandizing

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Wal-Mart B2C Thrusts

• Challenges in B2C
• Demographic Wal-Mart customers not key
  Internet users. (Medium income of online
  consumers - 60,000 where Wal-Mart customers -
  25,000)
• Competition Kmart provides free internet access
• Potential cannibalizing in-store sales (focus on
  markets where there is no stores and new market
  segments)
• Strength
• Highly efficient physical stores make managing
  returns an advantage over Amazon.com
• Logistics
• Use Wal-Mart.com to entice customers to stores

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Wal-Mart B2C Thrusts

• Leading e-Commerce sites (comScore Media Metrix)
• eBay 34.4 million visitors
• Amazon 25.6
• Yahoo Shopping 24.5
• Dell 11.4
• Barnes Noble 8.2
• MSN Shopping 7.3
• Wal-Mart 6.5 (13)

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Wal-Mart Critical Success Factors

• Consistent business technology strategies
• Focused on SCM integrated with B2B exchange with
  trading partners
• Ability to dictate standards and procedures on
  B2B
• Exploit advantage of physical store presence
• Balancing the different distribution channels
• Long term commitment to both B2B and B2C
• Experimentation with different approaches
• Different store formats
• Different merchandizing strategies for
  Wal-Mart.com

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Case Study CSIO-Net
Centre for Study of Insurance Operations

• Background
• B2B Thrusts
• B2C Thrusts
• Critical Success Factors

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CSIO Background

• Property Casualty Insurance in Canada
• 30 insurance companies
• 3000 brokers
• Insurance companies are the dominant trading
  partners but with limited control over
  independent brokers
• B2B e-commerce were conducted over a proprietary
  EDI VAN in the past and is being migrated to an
  Internet based EDI service provided by CSIO

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CSIO Background

• The Centre for Study of Insurance Operations
  (CSIO) is Canadas national standards
  organization of
• property and casualty insurance companies,
• broker management system vendors and
• independent insurance brokers
• Dedicated since 1981 to improving the efficiency
  of the broker distribution channel.
• CSIO is the organization responsible for
  overseeing the development, implementation and
  maintenance of industry standards for EDI, Forms
  and XML

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CSIO B2B Thrusts

• Challenges
• Legacy rating systems used by insurance companies
• A variety of broker management systems used by
  brokers
• High cost of proprietary EDI VAN services
• Incompatibilities
• Data standards
• Mode of operation

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CSIO B2B Thrusts

• Result 70 Reduction in Network Costs

3,000 Brokers
30 Insurance Companies
EDI VAN (IBM/Advantis)
FITS
FITS
Extranet (Bell)
FITS
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CSIO B2B Thrusts
Commercial Consumers
Insurance Co.
Brokers Independents Captive Direct
Broker Management Systems
Rating Engine Property records Vehicle
records Driver records Credit records
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CSIO B2C Thrusts

• B2C Services
• Some insurance companies implemented B2C
  interfaces bypassing brokers
• Requiring major enhancements to backend legacy
  applications to support B2C requirements
• Negative response from brokers
• Competition from other B2C services

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CSIO Critical Success Factors

• Co-operation between insurance companies and
  brokers
• Technology to facilitate the B2B interface
• Detailed implementation plan

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Case Study Roots Canada
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Case Study Roots Canada

• Business Background Challenges
• A high end apparel retailer for men, women, and
  children, known among some as the Canadian Gap
• About 125 stores in Canada, 5 in the US, and 30
  in Asia
• Official outfitter of the 2002 Winter Olympics
  and also outfitted Canada and three other nations
  in 2004.
• Not a dominant player in its market space

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Case Study Roots Canada

• Competition major changes in industry
• Mainstream retailers - Sears.com, Walmart.com
• Sears purchased Lands End
• Specialists Gap.com, Bluefly.com
• Complex shipping operations
• High return rates
• Sears online sale growing at 40 to 50, store
  sales slumped

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Case Study Roots Canada

• E-Commerce Thrusts
• Prior to 2002 information site front for Sears
• Re-launch Roots Canada site in 2002 growth slow
  in Canada as population has closer local access
  to stores and less comfortable with online
  purchases
• View the Internet as just one of many e-commerce
  channel
• Marketing Research - Retailers should determine a
  long-term strategy to allow customers to access
  the web from numerous devices, the ones we know
  of today and the ones we dont know of yet

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Case Study Roots Canada

• Critical Success Factors
• View the Internet as just one of many e-commerce
  channel
• Tighter and more customer-serving integration of
  information across web, store and call centers
• More online video and a move toward web TV
• Emergence of the cell phone and other wireless
  devices as both online shopping and payment
  devices
• Social retailing as well as social networking
• New web site applications such as a site search
  feature that, similar to Like.com for Internet
  search, enables shoppers to search for products
  based on particular characteristics like color or
  fabric.

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Case Study Roots Canada

• Critical Success Factors
• Social networking sites enable small retailers to
  play on an equal field with larger retailers in
  building brands. Big brands cant generate and
  dominate trends the way they used to,
• Roots Canada already is getting significant
  traffic from ThisNext.com and other sites
  including MySpace.com, Facebook.com,
  TotallyLoveIt.com and ShareYourLook.com.
• Integrated business and technology channel
  management

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Summary
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Impact of E-Commerce

• Power shifts among participants
• B2B/SCM no longer domains of large organizations
• Heterogeneous markets subject to more new
  entrants
• Homogeneous markets subject to more domination
• Changes to industry structure due to changes in
  value chain and access to new partners and
  customers
• Changes to interfaces among trading partners with
  establishment of public auction and exchange sites

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Critical Success Factors

• Proper focus on Supply/Demand side of e-commerce
• Enhance contribution in industry value chain and
  access to new suppliers and customers
• Increase integration of B2B and B2C interfaces
  with internal SCM and CRM applications

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Implementation Challenges

• Data standards integrity
• Inter-operability
• Mode of operation
• Scheduling
• Error handling and recovery
• Interconnection/Integration of SCM/CRM with B2B
  B2C

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