1. Web, Nonstore-Based, and Other Forms of Nontraditional Retailing
Chapter 6
Web, Nonstore-Based, and Other Forms of Nontraditional Retailing

2. Chapter Objectives
To contrast single-channel and multi-channel retailing and their integration
To look at the characteristics and strategies of the major nonstore retail institutions, especially direct marketing and direct selling
To consider to role and scope of web retailing
To discuss other nontraditional forms of retailing such as auctions

3. Figure 6-1a,b: Approaches to Retailing Channels

4. Integrating Store and Non-Store Retailing
In general, store retailing is saturated, and much of the retail growth potential lies in multi and cross-channel opportunities. While retail diversification provides some growth potential, many existing retailers are struggling to integrate existing brick-and-mortar operations with non-store options. Some of these non-traditional forms of retailing are quite new, such as virtual retailing, and others have been around for some time, such as catalog retailing. The convergence of several trends, notably internet usage and technological advances, further impels the expansion of non-store retailing forms/experience.
Fall 2007 Preview Catalog
Integrating Store and Non-Store Retailing

5. Nontraditional Retailing
Nonstore Retailing
Retailing strategy that is not
store-based, especially direct marketing and direct selling
It exceeds $375 billion annually
80% comes from direct marketing
Web-based is fastest growing
Nontraditional Retailing
Nontraditional retailing also includes
formats that do not fit into the store
and nonstore-based categories:
Video kiosks Auctions
Airport retailing Fairs, etc.

6. Characteristics of Direct Marketing Customers
Customer is first exposed to a good or service through a nonpersonal medium and then orders by mail, phone, fax, or computer
Annual U.S. sales exceed $300 billion
FTC Telemarketing Sales Rule
Characteristics of Direct Marketing Customers
- Married Desire convenience,
- Upper middle class unique items,
years old good prices
Strategic Business Advantages of Direct Marketing
Strategic Business Limitations of Direct Marketing
Reduced costs
Lower prices
Large geographic coverage
Convenient to customers
Ability to pinpoint customer segments
Ability to eliminate sales tax for some
Ability to supplement regular business
Products cannot be examined prior to purchase
Costs may be underestimated
Response rates to catalogs under 10%
Clutter exists
Long lead time required
Industry reputation sometimes negative

7. Data-Base Retailing Costs
In almost all situations, Customer Relationship Management (CRM) presupposes that the dialogue was initiated by your customer. You respond to the customer, attempting to turn the dialogue into a relationship-building (and selling) opportunity. It’'s usually the right thing to do, but it’s an entirely reactive process. The customer is pulling information from you.
Successful retailers do not sit idly and wait for customers to initiate selling opportunities. It doesn't happen often enough to drive growth. At its heart, retail marketing is a proactive exercise. That means you need to push your sales offer to them.
It is the integration of proactive database marketing with reactive customer relationship management that makes the one-to-one connection rewarding for both of you. Your customers respond to an offer when you make it, and you respond to their needs when they ask. When the two converge, the result is a shared experience that completes the marketing cycle.
Being successful in the marketplace is not a matter of choosing whether to be a relationship marketer or a database marketer. In almost all situations, how well your overall marketing works is largely a function of how well you fit the two together.
Collection, storage, and usage of relevant customer information
name
address
background
shopping interests
purchase behavior
Observation of rule
Next Generation Data-Base Marketing
It is important to understand that database marketing has evolved to a point today where many companies are able to access and sift through large and complex volumes of information to make more informed decisions about the means and costs of their customer marketing investments.
Data-Base marketing success needs answers to questions like:
Which customers do we target for a particular promotion?
How do we tailor our message for that particular customer group?
Which customers are most valuable over the life of the relationship?
What distinguishes our best customers?
How do we find/develop more customer relationships of this kind?
Data-Base Retailing Costs

8. Selection Factors by Customers
Emerging Trends
Selection Factors by Customers
Company reputation and image
Ability to shop whenever consumer wants
Types of goods and services
Availability of toll-free phone number or Web site for ordering
Credit card acceptance
Speed of promised delivery time
Competitive prices
Satisfaction with past purchases and good return policy
Evolving activities
Changing customer lifestyles
Increasing competition
Increasing usage of dual distribution channels
Changing media roles, technological advances, and global penetration
Figure 6-4: Executing a Direct Marketing Strategy

9. Media Selection Outcome Measures Advertising Trends Printed catalogs
Direct-mail ads and brochures
Inserts with monthly credit card and other bills (statement stuffers)
Freestanding displays
Ads or programs in mass media
Banner ads or hot links on the Web
Video kiosks
Advertising Trends
Outcome Measures
Overall Response Rate
Average Purchase Amount
Sales Volume by Product Category
Value of List Brokers

10. Table 6-1: Snapshot of U.S. Direct Selling Industry
Direct selling involves the person-to-person sale of a product or service in a location other than a retail store.
Table 6-1: Snapshot of U.S. Direct Selling Industry
Door-to-Door
Multi-Level Marketing
Party-Plan Selling
Consultative Selling
TSG Direct Selling
Selling fish in Laos

11. Figure 6-8: Five Stages of Developing a Retail Web Presence
The Role of the Web
Project a retail presence
Enhance image
Generate sales
Reach geographically-dispersed customers
Provide information to customers
Promote new products
Demonstrate new product benefits
Provide customer service (e.g., )
Be more “personal” with consumers
Conduct a retail business efficiently
Obtain customer feedback
Promote special offers
Describe employment opportunities
Present information to potential investors, franchisees, and the media
Figure 6-8: Five Stages of Developing a Retail Web Presence
1. Brochure Web Site
2. Commerce Web Site
3. Integrated Web Site
4. The ‘Webified’ Store
Figure 6-6: Web-Based Retail Sales Projections
5. Site Integration

12. Lack of personal communication
Web Strengths
Recommendations for Web Retailers
Using the Web
information
entertainment
interactive communications
Develop or exploit a well- known, trustworthy retailer name
Tailor the product assortment for Web shoppers
Enable the shopper to click as little as possible
Provide a solid search engine
Use customer information
Shopping Online
selection
prices
convenience
fun
Reasons NOT to Shop Online
Trust
Fear
Lack of security
Lack of personal communication

13. Non-Traditional Retailing
Vending Machines
Video Kiosks
Airport & Border Retailing
Auctions
Fairs et al.
Large group of prospective shoppers
Captive audience
Strong sales per square foot of retail space
Strong sales of gift and travel items
Difficulty in replenishment
Longer operating hours
Duty-free shopping possible
Structure Value and Ownership
-English -Commodity
-Dutch -Collectible
-Japanese -One of a kind
Street Vending
Chapter 6 Discussion Questions: 7, 8