report comm on work (repaired)

SOUTH METROPOLITAN TAFE

Whether or Not It Is Profitable for Offline Fashion Business Retailers to Spread Their Market Online

HBU102 Communication Report Assignment

Ni Putu Dea Pradnya - 131603522

4/26/2016

This document is a report from a survey conducted with surveymonkey.com, determining if it is profitable for non-online fashion business retailer to spread their market online.

Table of Contents

Executive Summary………………………………………………………………………3-4

1 Introduction………………………………………………………………………………5-6

2 Methodology…………………………………………………………………………….6-8

2.1 Research………………………………………………………………………….6

2.2 Survey Questions……………………………………………………………. 7-8

3 Results and Case Study……………………………………………………………….8-12

3.1 Samples’ age ………………………………………………………………………………8

3.2 Average expenditure for clothing in a month ……………………………..9

3.3 Consumer’s preference of in store vs. online ………………………………9-10

3.4 Preference options …………………………………………………………………….10-11

3.5 Consumers’ existing favorite brand availableness of online features/services………. 11

3.6 Consumers’ opinion about whether unpopular local brand should spread their market to

online to enter new competition with online business………………………………………………………….113.7 Consumers’ buying behavior ……………………………………………………….11

3.8 Consumers’ opinion regarding retailer’s online feature ……………....12

3.9 Concerns regarding online store ………………………………………………....12

3.10 Solution to trust issues …………………………………………………………….....12

4 Conclusion and Suggestions………………………………………………………...12-13

5 References…………………………………………………………………………………...14

NI PUTU DEA PRADNYA - 131603522HBU102 COMMUNICATION ENVIRONMENT – REPORT ASSIGNMENT

Executive Summary

Every daily activity nowadays almost cannot be separated from internet, thus every business acknowledges this and not only using internet as part of their business process but too connect with their consumer. Using the terms bricks-and-mortar which is the traditional physical store with no online service and clicks-and-mortar with both physical store and online store business strategy, this report focus about bricks-and-mortar fashion retailer especially those unpopular local brands that threaten to be replaced by online store to analyze should they spread their market to online and shortly transform their existing bricks-and-mortar business strategy to clicks-and-mortar one. What it is mean by ‘spread their market to online’ is basically having online marketing or advertising in the first place, furthermore build a website with online catalogue, online purchase (local or international) and necessarily make a cooperation with 3rd party or other company and to simply having a mobile application, thus the scope of this report are only discussing the effectiveness of clicks and mortar strategy in consumer’s point of view, linked them with the worthiness of changing the business process and finally gather all the idea in general. We received the necessary information through an online survey as a direct approach to the consumer that likely used the internet in a daily basis, it was conducted from 38 samples in a particular range of age and financial situation, therefore there are lots of limitations on the research such as too general opinion of the consumers but not concerning how the business process will change and affect the company, the quantity, age range and occupation of the samples limited into a particular group.

A primary research was conducted in March 2016 in one week period. It is a simple form of online survey through a website Survey Monkey entitled ‘WHETHER OR NOT IT IS PROFITABLE FOR OFFLINE FASHION BUSINESS RETAILERS TO EXPAND THEIR MARKET TO ONLINE” and set as the report’s fundamental question, with 10 questions of multiple choice and short opinion answers. The link of the survey websites was spread through e-mail and social media to approach the samples, it is only required for 20 samples, and it was occurred that it received over 38 responses but not all the samples answers all the question completely. This paper also include some data from secondary research from some journals and articles about the recent situation in fashion business retailers competition, the samples of some business strategies used by existing firms, discussion about which is better and etc. There are some specific mathematical and financial data regarding the operation of online sales and the effectiveness of the decisions, this report only took the general conclusions to support our findings and as a set of the background’s issues of this reports.

We assumed and concluded the results of the survey by case study supported by existing articles as a based theory, it is easily concluded because there were points of opinions from the samples that answer the fundamental questions of this reports.

The discussion of every survey question includes some graphic or table to support interpreting the multiple choice answers, and several paragraphs of summary for the short opinion answers. The findings were consumers constantly spend $10-$50 for clothing, with preference 70% buying in-store and 30% online, the reasons are vary, despite individual’s preference on convenience or environment because whether they have time or not to go to the store, mostly because they are able to touch and try the products directly before they actually do the transaction which they cannot do in online store, but the rest 30% may coming from the same consumer, because averagely they prefer both ways. Based on their opinions, they all agree that unpopular local brand should have online feature or service importantly to reach new customer, as they are not popular. Also, to reduce time


because it is simpler if the retailer has online catalogue then customer will have the option to buy online as well as going in store. Furthermore, online marketing on social media which has direct link to the website itself is far the most effective way to attract or discover more customers, as there are some people that may be not exposed by physical advertisement, which may lead to possible international market. So it helps the both the consumer and the retailer itself to reach each other, align with several consumers’ behavior revealed that they often compare the price from online and offline or doing window-shopping in store as showroom, and it suggest that it is more effective for the retailer to have their own online service. The fact that bigger part of consumers’ existing favorite brand have online features or service really helps them as they have basic online feature or service that retailer at least had is a mobile app; online catalogue real time or not which let the customer purchase online, may show the store location or the nearest one available (company with multiple branch), unpopular local brand is highly suggested to have this as people may not recognize their products or just heard from friends which make it highly doubted for new customer, they may not know the store location or simply have no time to visit the store.

So it is highly suggested that it is profitable for offline especially unpopular local brand retailer build online service to reach online market to discover more customer and make it easier for the existing customer. Thus to make it effective, retailer also need to address the problem and solution regarding to progress online market. The focus of this study is clothing products, thus it has to match with one’s body, with online-purchasing, customer need to be sure of themselves and predict before they actually buy it; how often the product received is extremely differ from the picture or the descriptions offered; wrong size, wrong color, bad quality, or anything lower than expectation. Then on the other hand there is additional cost for sending the product. Addressing how consumers’ make sure of themselves to buy online; they read reviews, comments and testimonies from the previous consumer, some consumer may ask about return policy in case of wrong size, color etc. The solutions that may solve or decrease the problem were; the retailer should provide good product and services in the first place, the retailer also should gather all positive reviews from previous customer, providing a proper return policy and make the website and advertisement as attractive but still simple as possible as internet-user are visual-oriented.


1 Introduction

Retailer business nowadays use click-and-mortar business model strategy which the business run the physical store along with internet channel since the population of internet-user has increase rapidly over decades, therefore it attracts many firms to do e-commerce, thus the mass increase of business retailer both physical and online market or dual-channel are driven by consumer’s favor of convenience and changing lifestyle of internet-using as people is back up by knowledge of technology. This business model includes the traditional operation of physical store retail and online features from websites to mobile application that enable the consumers to view the products and or buy it online directly, show the nearest store location and etc. From department store to specialty store, retailers have expand their existing traditional store to internet channel, but there are still lots of traditional retailer or so called bricks-and-mortar business model strategy especially used by local brand stores which are already in a severe situation to be replaced by online store. In a fashion business retailer, big international company as ZARA, H&M succeeded the practices of clicks-and-mortar business strategy; it is an inspiration for local brand store to adopt such plan to not only internet-marketing but to the extent of e-commerce. Indeed it will require a big change and budget to transform the business process and may not necessarily effective for the bricks-and-mortar company to do so but there are many companies that form alliance with existing e-retailer or so called pure play company, for example Toys R Us with Amazon.com to sell toys online.

This business strategy (click-and-mortar) practices and results seem to suggest any bricks-and-mortar or traditional retailers to change their business process to add internet channel, or shortly transform into clicks and mortar retailers. Concerning the poor situation of local brand market and its marketing, the purpose of report will discuss and analyze the reason and benefit of clicks-and-mortar business strategy and address these following questions:

1. Should traditional retailers expand their market to online market, to the extent of changing their business process?

2. Is it profitable for them or only benefit the customer?

This paper only focus to the fashion business retailer that the products were generally clothing goods, regarding the problem should or should not local brand store adopt the changes. What it is mean by ‘spread their market to online’ is basically having online marketing or advertising in the first place, furthermore build a website with online catalogue, online purchase (local or international) and necessarily make a cooperation with 3 rd party or other company and to simply having a mobile application, thus the scope of this report are only discussing the effectiveness of clicks and mortar strategy in consumer’s point of view, linked them with the worthiness of changing the business process and finally gather all the idea in general. We received the necessary information through an online survey as a direct approach to the consumer that likely used the internet in a daily basis, it was conducted from 38 samples in a particular range of age and financial situation, therefore there are lots of limitations on the research such as too general opinion of the consumers but not concerning how the business process will change and affect the company, the quantity, age range and occupation of the samples limited into a particular group.


This report is organize as follows; In the section after this will shows the review of the methodology of the research including the survey questions, thirdly this report will discuss and analyze every question and answer in the survey with brief explanation and some graphs of the data, and finally the conclusion, and suggestion by the author regarding the findings of the research. The necessity of this report and survey were to help bricks-and-mortar especially but not limited to local brand fashion retailers to decide ways to improve their business to flow with the trend globally with concrete opinions from the consumer, with its conclusions and some suggestions, from various references and examples.

To explain the minimum quantity and quality of the samples and survey questions; this report is conducted as an assignment to finalize a trial for a survey, therefore there are procedures that have to be fulfill and in a simplest way possible to conduct the survey and report the results.

2 Methodology2.1 Research

In order to receive a reasonable and genuine data directly from the consumer, a primary research was conducted in March 2016 in one week period. It is a simple form of online survey through a website Survey Monkey entitled ‘WHETHER OR NOT IT IS PROFITABLE FOR OFFLINE FASHION BUSINESS RETAILERS TO EXPAND THEIR MARKET TO ONLINE” and set as the report’s fundamental question, with 10 questions of multiple choice and short opinion answers. The link of the survey websites was spread through e-mail and social media to approach the samples, it is only required for 20 samples, but it was occurred that it received over 38 responses. The target sample was teenager age between 17-25 years old, the reason were this particular group of age are the one who use internet on a daily basis, concern much about fashion and strongly driven by the changing lifestyle and trends, and more importantly are the most local brand or fashion retailers’ target market, in theory this group is mostly still supported financially by their parents so their buying pattern is stable and not affected by any economic problems. And as this teen generation are called Y and Z, social media has such a significant effect for their life, they want to buy things to appeal more, they want to share the experience of what happen, or what and where they buy a product. So unpopular or unexposed brand or retail place would be so called anti-mainstream would attract them more, thus the company should reach these customer the online-way.

This paper also include some data from secondary research from some journals and articles about the recent situation in fashion business retailers competition, the samples of some business strategies used by existing firms, discussion about which is better and etc. There are some specific mathematical and financial data regarding the operation of online sales and the effectiveness of the decisions, this report only took the general conclusions to support our findings and as a set of the background’s issues of this reports.

The author interpreted and concluded the results of the survey by case study supported by existing articles as a based theory, it is easily concluded because there were points of opinions from the samples that answer the fundamental questions of this reports.


2.2 Survey Questions

There are 10 questions in the survey including multiple choice and short answers. The reason behind choice of the questions was based on the author’s opinion, how to ask as simple and general as possible but also could address the question required.

1. What is your age? it is to ensure the target sample2. How much do you usually spent for clothing in a month? (in aud)

- Less than $10- $10-$50- $50-$70- $70-$100- Above $100

It is to determine how much averagely they spent money for clothing in a month to calculate if they are potential target consumer

3. About what percentage you prefer buying in store or online?- 100% in store- 50:50- 100% online- 30% in store, 70% online- 70% in store, 30% online

It is to determine how the consumers’ preference of their buying patterns 4. What is your reason behind this choice? (related to question no.3)

- Price, comparison between offline and online- Time limits, the time consumer actually receive the products- Convenience, the prefer way of doing the buying process- Environment, the surroundings and situation they prefer while buying- Additional costs, tax or shipping costs(for online)- Not having to queue, benefit of online- Able to touch and try the products, benefit of in storeIt is to determine their reason of buying process’ preference in the question before

5. Do your favorite clothing brands have online service to purchase the products?6. Would you agree that some unpopular local brand retailers should spread their business online to

compete with online competitor? Why? This is the fundamental question to show the consumer’s point of view regarding the issues

7. Have you done these?- Go to retailers as a showroom before purchasing products online- Go to retailers and compare the price with online store

To determine consumers’ behavior and the benefit of having owned internet channel 8. Do you agree at least retailers have a mobile app? (To purchase, show the nearest shop, etc.)9. What are your biggest concerns about buying products online?

It is to show the problems about e-commerce before actually doing so as prevent act to avoid problems.


10. How do you make sure of yourself buying products online?It is the consumers’ behavior to trust online products with its solution of their concerns.

The following section will discussed furthermore about the questions’ choice and its answers.

3 Results or FindingsThis section will analyze each of the survey questions to describe the idea of how it addresses the fundamental questions. Mind that not all the samples (38 in total) answer all the questions so the quantity for each question may differ.

3.1 Samples’ age

10

27

1

samples' age

17 or younger18-2021-29

The response received achieved the target purpose of this report, mostly teenager despite of the gender, age between 17 to 20 years old. As stated before, the reasons behind choosing this particular age group were they are the one who use internet on a daily basis, concern much about fashion and strongly driven by the changing lifestyle and trends, and more importantly are the most local brand or fashion retailers’ target market, in theory this group is mostly still supported financially by their parents so their buying pattern is stable and not affected by any economic problems.


3.2 Average expenditure for clothing in a month

less than $10 $10-$50 $50-$70

7

28

3

average expenditureaverage expenditure

The chart shows that averagely most of the samples spent $10-$50 for clothing in a month, thus it is significant enough to benefit company as mostly teenager spent their money to appeal more on social media, as a competition, within trends that always changing, they will still always buy new things to not look as ordinary.

3.3 Consumer’s preference of in store vs. online

100% in store (A)

50-50 (B) 100%online (C )

70%online 30% instore

(D)

30% online 70% in store

(E)

0

2

4

6

8

10

12

14

16

18

20

onlinein storesa

mpl

es


This chart shows the percentage of consumers’ preferred place to purchase clothing products. Mostly consumers’ still prefer buying in store but also the online-way, there is no one from the samples choose 100% online, and mainly choose 70% in store and 30% online, it shows that 70% of the samples actually prefer both ways to purchase products.

Related to this chart of preference, the next chart will show the reason of consumers’ choice

3.4 Preference options

Option Samples Preference’s category (from chart 3.3)

Price 22 A,B,D,ETime limit 12 A,B,EConvenience 14 A,B,EEnvironment 8 A,B,EAdditional cost 4 ANot having to queue 4 B,DAble to touch and try the product 26 A,B,D,E

Related with the data above we will look again at the previous chart (3.3) of percentage whether they prefer buying in store and or online, then link them together, to see what is the reason behind their preference and choice of options available, they could choose more than one option above. The previous chart’s categories already labeled by alphabet, the last column shows which categories of preference choose the particular reason/option in the first column

Shortly as example; category A which is people that prefer 100% buying in store because the price is worth it as they able to touch and try the product with no additional cost in online shipping and etc., we acknowledge the meaning of the options as follows;

- Price, some people prefer either in store or offline or both so they can compare- Time limits, the time customer actually receive the products, mostly in store-preferred- Convenience, 30% of the samples feel more easy and convenience to just sit and order from

everywhere online and 70% of them feel it's easier to go buy in store and receive the product immediately

- Environment, similar as convenience - Additional cost, consumer oftenly avoid online shipping cost - Not having to queue, for online-buyer- Able to touch and try the products, this is the most logical consumer behavior in purchasing clothing

products, and one of the biggest concern to avoid online store as possible


With this information, it shows the pattern of consumers’ basic buying behavior that would affect where should company improve their online service with the fact that mostly consumers’ still prefer buying in store but with big portion of opportunity to buy online as they couldn’t have the time to go to the store all the time.

3.5 Consumers’ existing favorite brand availableness of online features/services

yes; 32

no; 6

It shows that how in the competitive environment; mostly the consumers’ existing favorite brands already have their own online features or services, thus whether it is popular or not, having online features/services help a lot to be well-known and reach the customer.

3.6 Consumers’ opinion about whether unpopular local brand should spread their market to online to enter new competition with online business

With 38 responses received, averagely customers’ opinions regarding this question are aligned. They all agree that unpopular local brand should have online feature or service importantly to reach new customer, as they are not popular. Also, to reduce time because it is simpler if the retailer has online catalogue then customer will have the option to buy online as well as going in store. Furthermore, online marketing on social media which has direct link to the website itself is far the most effective way to attract or discover more customers, as there are some people that may be not exposed by physical advertisement, which may lead to possible international market.

3.7 Consumers’ buying behaviorThe 7th question asks if the consumers’ have done these 2 things (can choose both): 1. Go to retailers as a showroom before purchasing products online – 13 people2. Go to retailers and compare the price with online store - 15 people

It shows that mainly all the samples done those things, how customers’ often compare online vs. offline, but instead of using retailers just as a showroom to buy from another online store, it is best for the retailer itself has their own online catalogue so the company can reach both ways to match with customers’ demand.


3.8 Consumers’ opinion regarding retailer’s online featureThe 8th questions asks whether the consumer agree if at least retailer has a mobile app; all the answers are yes, the basic online feature or service that retailer at least had is a mobile app; online catalogue real time or not which let the customer purchase online, may show the store location or the nearest one available (company with multiple branch), unpopular local brand is highly suggested to have this as people may not recognize their products or just heard from friends which make it highly doubted for new customer, they may not know the store location or simply have no time to visit the store.

3.9 Concerns regarding online storeBased on previous chart of preference option (3.4), because it is clothing, it’s all about how the product match and comfort with one’s body, mostly the reason there is nobody choose to buy product 100% online is because they are not able to touch and try the product. Seeing online competition alone, or so called pure play business strategy, there are already a mass quantity of online store from hand-made, fake brands to real luxury brands, so it is hard to trust whether one is official or trusted. But the biggest concern are how often the product received is extremely differ from the picture or the descriptions offered; wrong size, wrong color, bad quality, or anything lower than expectation. Then on the other hand there is additional cost for sending the product. So retailer need to understand these problems and address some plans to prevent these from happening in order to gain consumers’ trust.

3.10 Solution to trust issuesThe last question asks even with the problems occurring which lead to trust issues and doubt regarding online store; how consumers’ make sure of themselves still decide to buy online. The answers were varying; mostly new customer will firstly see the reviews and comments from previous customer and their testimonials about the products, even how company design their web including their online advertisement are critical things of how to persuade customers; lame, old or too simple or amateur design would make a perception that how unattractive the website and so does the product. Furthermore, some consumer may ask about return policy in case of wrong size, color etc. So related to the previous customers’ concerns about online stores, they already give idea of how to prevent it from happening, despite the retailer should provide good product and services in the first place, the retailer also should gather all positive reviews from previous customer, providing a proper return policy and make the website and advertisement as attractive but still simple as possible.

4 Conclusion and Suggestion

The concern that this report issued were whether or not offline retailer or so called bricks-and-mortar Company to spread their market online to the extent of changing their existing offline business process to which basically having online marketing or advertising in the first place, furthermore build a website with online catalogue, online purchase (local or international) and necessarily make a cooperation with 3rd party or other company and to


simply having a mobile application. With the target samples of teenager and adult teenager, which the population that backed up by the knowledge of internet-usage for everyday life and importantly their social life, an online survey with 10 questions consist of multiple choices and short opinion answers had conducted and received 38 responses. The results in previous chapter shows that mostly consumers constantly spend $10-$50 for clothing, with preference 70% buying in-store and 30% online, the reasons are vary, despite individual’s preference on convenience or environment because whether they have time or not to go to the store, mostly because they are able to touch and try the products directly before they actually do the transaction which they cannot do in online store, but the rest 30% may coming from the same consumer, because averagely they prefer both ways. Based on their opinions, they all agree that unpopular local brand should have online feature or service importantly to reach new customer, as they are not popular. Also, to reduce time because it is simpler if the retailer has online catalogue then customer will have the option to buy online as well as going in store. Furthermore, online marketing on social media which has direct link to the website itself is far the most effective way to attract or discover more customers, as there are some people that may be not exposed by physical advertisement, which may lead to possible international market. So it helps the both the consumer and the retailer itself to reach each other, align with several consumers’ behavior revealed that they often compare the price from online and offline or doing window-shopping in store as showroom, and it suggest that it is more effective for the retailer to have their own online service. The fact that bigger part of consumers’ existing favorite brand have online features or service really helps them as they have basic online feature or service that retailer at least had is a mobile app; online catalogue real time or not which let the customer purchase online, may show the store location or the nearest one available (company with multiple branch), unpopular local brand is highly suggested to have this as people may not recognize their products or just heard from friends which make it highly doubted for new customer, they may not know the store location or simply have no time to visit the store.

So it is highly suggested that it is profitable for offline especially unpopular local brand retailer build online service to reach online market to discover more customer and make it easier for the existing customer. Thus to make it effective, retailer also need to address the problem and solution regarding to progress online market. The focus of this study is clothing products, thus it has to match with one’s body, with online-purchasing, customer need to be sure of themselves and predict before they actually buy it; how often the product received is extremely differ from the picture or the descriptions offered; wrong size, wrong color, bad quality, or anything lower than expectation. Then on the other hand there is additional cost for sending the product. Addressing how consumers’ make sure of themselves to buy online; they read reviews, comments and testimonies from the previous consumer, some consumer may ask about return policy in case of wrong size, color etc. The solutions that may solve or decrease the problem were; the retailer should provide good product and services in the first place, the retailer also should gather all positive reviews from previous customer, providing a proper return policy and make the website and advertisement as attractive but still simple as possible as internet-user are visual-oriented.


5 References

Bernstein, F., Song, J., & Zheng, X. (2008). “Bricks-and-mortar” vs. “clicks-and-mortar”: an equilibrium analysis.

Europeam Journal of Operational Research, 187(3), 671-690. Doi: 10.1016/j.ejor.2006.04.047

Marketest.co.uk. (2016). Fashion shopping questionnaire. Retrieved from

http://www.marketest.co.uk/market-research-questionnaire/99/clothing-accessories-fashion-shopping

Online vs Offline – do retailers need to up their game to avoid continual losses to online rivals? (n.d). Retrieved

from https://www.surveymonkey.com/r/?sm=Ks%2FefPV5gmgy9Ob7gOEN3w%3D%3D

Schlossberg, M. (2016). One sentence reveals how teen generation z is killing gap, abercrombie, and j. crew.

Retrieved from http://www.businessinsider.com.au/generation-z-is-killing-gap-abercrombie-and-j-crew-

2016-2

Steinfield, C., Adelaar, T., & Liu, F. (2005). Click and mortar strategies viewed from the web: a content analysis

of features illustrating integration between retailers’ online and offline presence. Electronic Markets,

15(3), 1-30. Retrieved from https://msu.edu/~steinfie/EM_2005.pdf


https://msu.edu/~steinfie/EM_2005.pdf

http://www.businessinsider.com.au/generation-z-is-killing-gap-abercrombie-and-j-crew-2016-2

http://www.businessinsider.com.au/generation-z-is-killing-gap-abercrombie-and-j-crew-2016-2

https://www.surveymonkey.com/r/?sm=Ks%2FefPV5gmgy9Ob7gOEN3w%3D%3D

http://www.marketest.co.uk/market-research-questionnaire/99/clothing-accessories-fashion-shopping

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