Planning and Executed its Electronic-Commerce Strategy by Argos - Essay Example

? Evaluating the Use of E-Commerce in a ‘Brick and Click’ Organization That Balances E-Commerce with a Continued High Street Presence [Institute Name:] Executive Summary This paper covers an analysis on how the company, Argos, has planned and executed its e-commerce strategy to maintain a valued online and high street presence in the target market. The paper begins with the introductory background of the company Argos, which entails that 74% of the company’s total sales comes from the high street stores whilst the rest of the 26% is generated from the online trade. The Argos business intent is to maximize customer convenience through catalogue assortment and availability across online and street stores. The business model of the Argos Company is built around three foundations. These include Argos strong information technology and communication systems, the company’s multi channel approach and finally the organization’s efficient supply chain management systems and alliance with UPS. The company has designed an integrated multi channel systems for consistent communication and distribution across traditional street stores, website, television, telephone, mobile devices etc. For this purpose, Argos has created click and collect online service, text and take home SMS service, ring and reserve telesales service, and Argos Direct home delivery service to ease consumer shopping experience. The E-business strategy of Argos is both businesses oriented and consumers focused. Both suppliers and consumers use the same web platform for transaction and trade. This is because Argos’ e-business supports and promotes the secure transaction through 128 bit SSL. This feature of Argos entails modifications for supply chain in e-commerce and it has surfaced as a channel of distribution for inbound and outbound logistics. This role has emerged in addition to the communication role of e-commerce between the company and customers; however, this also has further extended to interaction between suppliers. Moreover, the e-commerce is now deemed as a channel which contributions are surpassed from generating online sales to generating traffic to the street stores. Evaluating the Use of E-Commerce in a ‘Brick and Click’ Organization That Balances E-Commerce with a Continued High Street Presence Introduction This paper is an evaluation of e-commerce practice by a click and mortar company. The organization which is chosen for analysis is Argos, which is a UK based company. The paper studies and analyzes the business model and electronic business strategy of Argos, and determines how the company plans and executes its online business strategy to sustain balance between its online sales channel and offline counterparts. It also identifies how the organization, Argos, has designed and aligned its strategic business objectives in leveraging the broad commerce activity, i.e. assessing its business activity online and across the offline stores. Background of the company Argos is a UK based retail division of Home Retail Group, established in 1973. The group owns two separate divisions of Home Retail and Argos. Argos is a preeminent catalogue based retail chain which has both online and offline store presence of over 700 stores across UK and Ireland. The Argos catalogue comprises general merchandise products across a diverse assortment of categories such as furniture, sound & vision, photography, baby products, Do It Yourself goods (DIY), PC & games, personal care, garden & pets, household appliances, home wares, sports & leisure, toys & games, office, and jewelry & watches. The contemporary business orientation of the retail organization of Argo had historical foundations in traditional catalogue business which operates through telesales; however, today the customers’ base at Argo has provided a wide multi channel commerce facility for order placement through telephone, physical stores, electronic online stores, mobile phones, and social media. The organization Argo is a team of around thirty thousand people that serves a customer base of around 130 million and generates sales of 4.3 billion pounds of which 74% is offline sales and the rest of 26% is online trade. Argos’ business intent is to maximize customer convenience through catalogue assortment and availability across online and offline stores. In this regard, the company maintains a marketing mix that pursues its business intent. Besides alleviating customers’ expediency and palliating shopping experience, the Argos business focus has also embarked upon responsible retailing practice, serving environment and community through human and ecosystem friendly business activities. The product strategy of Argos is comprised of over 19,000 environment friendly recycled items across 80,000 product lines; this eases consumers and provides a wide variety for choice and selection of the best products for their consumption and use. The organization escalated its communication from traditional media to a more dynamic contemporary high-tech electronic mobile and Internet media. It has always adopted a sensitive pricing strategy for its products to cater the demands of the changing market and customer needs. The distribution strategy of Argos also has transcended beyond mere traditional physical stores approach or mere online approach to a more radical multi channel approach. Business model Time has witnessed that the business model of Argos has always been dynamically accommodative in responding to the challenges of the external market and business environment. The organization’s business model is characterized by the effective integration of diverse business operations and partners, through successful utilization of information and technology into its retail business systems and operations, since its startup. The business model of Argos has sprawled out into three broad categories of: information technology and communication systems at Argos, multi-channel approach of Argos, and logistics & supply chain systems. Argos has combined information and communication technologies to integrate its inbound and outbound operations in a wide variety of ways. It has used IS and ICT to ease the flow of information to first enable efficient and effective operations and, secondly, to facilitate open communication which is crucial for backward suppliers’ integration and forward customers’ assimilation. It has used electronic information systems in its POS, point of sale structures to eliminate transactional error and to add accuracy to the system. It had used Information Systems, IS, to monitor stock levels, auto replenishment, track consumer demand, anticipate market trends and avoid out of stock situations. The multi channel approach has linked all Argos’ communication and distribution channels through information technologies and systems to create value for customers. This includes identification of the different channels that Argos may use and build capabilities into for delivering a sound personalized customer experience through product assortment, low cost, deliverability and promotion. The logistics and supply chain systems of Argos are integrated and assimilated for both electronic commerce and physical store business. The adoption and execution of multi channel approach requires integration of a widespread supplier base of Argos. This identified to the management of Argos the need for designing and establishing a supply chain system (SCS) which would enable coordination of logistics operations in a cost effective and timely manner. In this regard, Argos introduced a nominated carrier system in collaboration with UPS Company to smoothen its inbound logistics operations. This eliminated the fatigue of managing various cross transport ting, assembling, collecting and delivering of products from over 700 suppliers of Argos. As a result of the integrated supply chain system, all the aforementioned activities were performed by UPS as one sole distributor of Argos which saved cost, time and effort of managing scattered operations, and enhanced Argos’ control and efficiency over inbound operations. Next, Argos used an advanced inventory planning system in collaboration with Retek Incorporation to manage stocking of goods in accordance with the changing customer demands to cut inventory levels and save cost and space. Recently, Argos has established a large capacity as a central distribution centre for its operations, which allows thriving execution of extremely mechanized supply centre, to manage integrated direct imports operations and output whilst handling the goods returned. The elaboration of these three components determines the business model of Argos. Multi Channel approach of Argos The contemporary business world has been confronted with so many communication media and information technology choices that it seems an important but critical decision for them to make the best of their capabilities in pursuit of deliverance of customer value. Initially, with the advent of electronic commerce, the companies adopted it as a separate IT tool or method for making sales. Today the modern business players have recognized the value and worth of online existence in addition to and in support of traditional stores’ being. Argos is one of those contemporary business entities that has managed to optimize the use of various channels for distribution and communication to expand its reach to the targeted and prospective customers base, both physically and virtually. This has been achieved by Argos through effective strategic planning to cater the growing UK consumers’ demands for easiness and convenience, and emerging shopping trends and habits have further led the company to maintain strong presence across diverse channels of distribution and communication. The company’s multi channel approach has mounted for being responsible of making over half of its sales. This is because, unlike others, Argos neither restricted nor segregated the operations and sales of the e-commerce and the traditional retailing practice for the target market; rather, it integrated the two practices as channels to leverage one for the other. This approach has balanced the high street presence of Argos retails with its esteemed online existence. With the evolution of information technology and communication media, Argos designed a multi channel approach for its customers to maximize convenience for them and curtail cost for itself by linking effectively the diverse channels of physical, online, electronic (mobile and TV), social, and telephonic distribution and communication. This has been planned and executed in a manner that ensures availability to the customers whenever and wherever they want without fatigue or discomfort. Argos’ customer can access the company’s product assortment choices through their cell phones, landlines, laptops, televisions, physical retail outlets and virtual online stores. When we focus on Argos’ distribution, the company has designed television distribution for ease customers’ shopping at home; it has created alliances with Vodafone to provide direct, handy and itinerant catalogue access to the mobile customers; created text and take home SMS service; ring and reserve telesales service, Argos direct home delivery service; the company has created click & collect online service on the website; all these multi channel services are established to add customer convenience which is the business intent of Argos. In the attempt to leverage the use of modern channels for distribution, Argos has neither undermined nor has overlooked the operations of its street stores; rather, the company has ranked 2nd for balancing its online and physical retail presence. It uses secure socket layer standard for conducting online commerce with customers to ensure safety of confidential information against misuse and theft. Argos has made this possible by maintaining consistency in delivering communication and promotion messages across the diverse channels of distribution. The company has integrated both the channels of distribution and communication equally well. Analysis of E-business strategy of Argos Argos e-business strategy has sprawled across both the customers’ base and the business partners, i.e. the company operates in b2b and b2c categories of electronic commerce. The company effectively and efficiently maintains through continuous development and advancement of its information and communication systems. For instance, the company uses ICT systems and Retek inventory systems for prompt identification of stock levels to the supply chain members. All the operations at Argos from order taking, product picking, processing to delivering at store or at customer’s home, are electronically managed, validated and monitored by the ICT systems, which enhances coordination and control of the company internally and externally through organization of supplier’s operations and logistics, and second through fulfilling customers’ expectations. Argos secures business and consumer transactions by ensuring safe exchange deal through 128 bit secure socket layer application which makes even huge b2b and b2c transactions easier and safe through a common Argos website. The company’s e-commerce activities offer convenience, cost effectiveness, personalization, open communication and assortment to its customers to leverage its e-business strategies across traditional mode of business to pursue overall Argos business objectives. The Argos online sales makes up about just 26% of the total business, but the online ‘Click-n-Collect’ and ‘Text and Take Home’ service features are consciously designed to make the most of the multi-channel function of the e-presence. Total Argos e-commerce sales are above ?250m, but the supplementary multi channel sales are mounted to 15%. Therefore, limiting the focus to the mere online sales and judging the company’s e-commerce outcome is not a wise practice because the sole sales share of online channel medium might be low; however, its consumer effect is enormous in transferring and stimulating the customers’ action to the traditional vehicles of sales, which supports and maintains Argos’ high street store presence. Modifications in the Supply Chain for E-commerce model The business perspectives of e-commerce model have been dramatically changed over the past few years. E-business which has been deemed as a means of generating online prospects and creating sales leads has been changed from a mere sales perspective to a more dynamic and broad integrative channel perspective. According to the emerging channel philosophy, the e-commerce practice is not considered as an opponent sales option against physical retails; rather, it is envisioned as another channel for supporting the customers in their overall decision making process. Organizations have widened the scope and of e-business channel from mere sales to creating consumer awareness, evoking consumer consideration set, stimulating his purchase action and ownership of customers post sales for feedback and retention. But this is possible only when one has determined separate objectives for e-commerce and traditional retailing, and then linking the two to support each other and the total business activity. Thus, e-commerce has transformed its role from being consumer directed to business and supplier directed, which has further broadened the scope of activities in supply chain. In addition to the extended role of supply chain and communication, the e-commerce has been considered as a strategic tool for leveraging and redirecting the customers’ traffic to the traditional retail structure in a holistic manner. Since the reach of the e-commerce channel is wider than the reach of traditional distribution channel and communication media, the idea is to optimize the online reach to delimit the geographic boundaries at one hand and on the other hand, to maximize the traffic to other channels of distribution and communication, especially the street stores. This is the modified trickledown effect of the rich supply channels to the traditional sources. Conclusion This paper is an evaluation of e-commerce practice by UK’s pioneer and known catalogue retailer, Argos. The paper analyzed the business model and e-business strategy of Argos, and determines how the company has integrated its information and communication systems, multi channels supply and communication through consistent strategic planning and execution. The e-business strategy of Argos is designed to serve internal and external customers, i.e. to cater the customer demands and to support the suppliers’ activities. In an attempt to sustain a balance between its online sales channel and offline counterparts, Argos strategically direct and redirect the traffic to the traditional stores using its multi channel approach. This ensures its high street presence along with contemporary online competitiveness. Argos has designed and aligned its strategic business objectives in leveraging the broad commerce activity of e-stores and the street stores. Bibliography Albadr, B. H., 2003. E-commerce, Science and Technology, 65, pp. 14–9. Argos. About Us. 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