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Showrooming or Demon Shoppers

Article from Wall Street Journal on Target and customers using Target as a "Showroom". Relates to E-Commerce Topic.

Target Corp. is tired of being used.In one of the starkest signs yet that chain stores fear a new twist in shopping, Target is asking suppliers for help in thwarting "showrooming"—that is, when shoppers come into a store to see a product in person, only to buy it from a rival online, frequently at a lower price.WSJ's Ann Zimmerman has details of Target stores making efforts to deter shoppers from 'showrooming', the act of viewing a product in the store and then purchasing it online from another retailer. AP Photo/The Telegraph, John BadmanLast week, in an urgent letter to vendors, the Minneapolis-based chain suggested that suppliers create special products that would set it apart from competitors and shield it from the price comparisons that have become so easy for shoppers to perform on their computers and smartphones. Where special products aren't possible, Target asked the suppliers to help it match rivals' prices. It also said it might create a subscription service that would give shoppers a discount on regularly purchased merchandise.Enlarge ImageCloseReutersVendors are likely to have little choice but to play ball with Target because of its clout as the second-largest discount chain. "What we aren't willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands," according to the letter, which was signed by Target Chief Executive Gregg Steinhafel and Kathee Tesija, Target's executive vice president of merchandising.Showrooming is an increasing problem for chains ranging from Best Buy Co. to Barnes & Noble Inc., at the same time that it's a boon for Amazon.com Inc. and other online retailers. This year store sales overall edged up 4.1% during the holiday shopping season, while online sales jumped 15%. And while online sales represent only 8% of total sales, that is up from just 2% in 2000.Other retailers also are likely to take steps similar to Target's plan, according to Deborah Weinswig, Citigroup retail analyst, who mentioned the letter in a research note Friday and said it was likely to have gone to suppliers of consumer electronics, health and beauty products and food.Vendors are likely to have little choice but to play ball with Target because of its clout as the second-largest discount chain. Major suppliers, including Kraft Inc., TV maker Vizio and Procter & Gamble Inc., either wouldn't confirm they received the letter or didn't return calls seeking comment.Target declined to comment other than to issue a statement saying that it "has long prided itself on having truly collaborative vendor partnerships and we continually work with our vendors to remain competitive in the ever-evolving retail environment."Some analysts said Target's new tactics are unlikely to reverse the showrooming trend, because they fail to address the root problems traditional retailers face. Online-only retailers have significantly lower labor costs and, at least, for the time being don't collect sales tax in most states.More important, the growing competition from Amazon is based on a different business model entirely: Amazon can sell products so cheaply because it uses its other profitable units—such as cloud data storage and fees it charges others to sell on its website — to subsidize the rest of its business."The traditional retailers are still doing business the old way while Amazon has reinvented the model," says Sucharita Mulpuru, retail analyst at Forrester Research. "Wal-Mart and Target are willing to sell a few things at a loss. Amazon's whole business is a loss leader."Consumer preferences are also moving to online. "That is where we're heading," said Adrianne Shapira, retail analyst at Goldman Sachs. "You can try and dance around it, but it's a fact."Retailers like Target and industry giant Wal-Mart Stores Inc. have a lot of catching up to do, as analysts estimate their websites account for only 1% to 2% of their annual sales.Target had a tough Christmas season, with sales at stores open at least a year rising just 1.7%, about half of what the company expected. As a result, Target recently lowered its fourth-quarter earnings per share range to between $1.35 and $1.43 from $1.43 to $1.53.The company said sales were particularly disappointing in electronics, movies, books and music—products whose sales have migrated most significantly to the Internet. Those products accounted for 20% of Target's annual sales of $65 billion in 2010, down from 22% in the prior year.This fall Target relaunched and upgraded its website, which had been operated by Amazon for the last decade. But the site crashed several times, most notably when shoppers rushed to buy a special line of items made by Italian fashion house Missoni.Target has a long tradition of getting suppliers to provide exclusive products. It has teamed up for years with fashion designers to offer time-limited discount clothing collections, and it recently announced it will open a series of temporary boutiques featuring clothes, food and home furnishings from popular regional stores.These programs set Target apart from less fashionable rivals such as Wal-Mart, but "they are completely immaterial" to the company's bottom line, said Colin McGranahan, retail analyst at Sanford C. Bernstein.

http://online.wsj.com/article/SB10001424052970204624204577177242516227440.html

E-Commerce Podcast(Pt. 2)

Keywords:

1)Information Assymetry: Someone in the transaction has better information than the other party

2) Dynamic pricing

3) Disintermidation: Internet remove an intermidary, direct consumer sales

Follow a period of reintermidation

4)Digital Marketplace: Ease, marginal cost is low

5)Portals: Yahoo!, Google, Bing!

6)E-Retailer: Amazon

7) Sales Revenue Model

8)Free-meum: Free for standard, have to pay to get premium service

9) Transaction fee revenue

10) Affiliate Revenue

11) Niche Marketing: Little data points spreaded out

12)E-Commerce Marketing: Can appeal to mass Market

13) Razor Blade Strategy: Give away razor but charge high prices for blades

Create a platform and charge high prices for accesories and services

A Few Myths About E-Commerce

1)Setting up business on internet is less costly[easy to start, hard to manage]

2) Making money on the web is easy

3) If you launch a site, customer will come to it

4) Privacy is not important on the web

6)Most important part of E-Commerce is the technology

8) Flash plug-ins makes a website better[Flash should not be incorporated on website]

10) E-Commerce will cause brick and mortart companies to disappear

12) Too late to get on the web

E-Commerce Podcast Notes(Pt.1)

E-Commerce is anything dealing with the electronic purchasing of an item

Keywords:
1)Netscape: First online navigator. Considered the father of Mozilla Firefox
2) Social Media
3) Apps: The development of apps is similar to the emerging of the Internet in the 1990's
4) Contemporary E-Commerce
5) Channel Integration
6)Ubiguity: the state of being everywhere at once.
Ubiguity reduces searching costs for consumers
7) Global Reach vs Traditional Commerce: Place is local or regional
8)Demon Shopper: Use a retailer as showroom and buys product at another store
9) Brick and mortar: A company that has a physical location

E-Commerce Facts
The internet makes Black Friday and CyberMonday hassle free when someone wants to shop.

In 2006, E-Commerce revenue growing fast in retail international trade

E-Commerce is technology dependent

Online consumer sells grew by $309 billion increased by 14% over 2010

Content is King, it attracts people to websites
Example: YouTube & Facebook users drives content. Crowdsourcing

Zappos use reverse logistics and focus on customer service

Number of people that own an e-reader doubled from last year

Mobile E-Commerce consisted of purchasing ringtones

B2G
B2E
G2C
G2E
G2G
B2B
B2C
C2C

Target E-Commerce Utilization

I chose Target.com because this is the company that I am currently employed by as a Guest Service Team Lead. Target uses the internet to make our guests' lives a breeze. From pre-ordering of Twilight to the credit/debit card sign-up, everything is included on-line.