Online Department Store
Industry
Lau, Hee-hang
Li, Rui
Montet, Francis
Nagarajan, Sainath
Major
Online Department Stores
Traditional Department Stores:
Discount Stores:
•Macy’s
•Neiman Marcus
•Nordstrom
•Bloomingdale’s
•Sears
•Kohl’s
•May (Kaufmann’s, Hecht’s)
•JC Penney
•K-Mart
•Wal Mart
•Target
•Ames
Potential Competitors:
•Specific Stores: CompUsa, BestBuy
•Online Stores: Buy.com, Shopping.com, Yahoo!shopping
Overview
• KMART
• Browse + Select Items and add to Shopping Cart
• Enter Shipping and Billing Information
• FREE Delivery
• SEARS
• Search + Compare Items
• Contact: Online / Toll Free / Nearest Store
• Delivery to certain areas (based on ZIP code)
• WALMART
• Search + Compare Items and add to Shopping Cart
• Checkout OR Speedy Checkout (MyWalmart)
Sample Front Page – Walmart, Sears
Signup Page - MyWalmart
Shopping Menu
Customer Profile
• Who are the customers
– JC PENNEY: The 2 out of 5 most important segments
• “Starting Out with JCPenney - between 18 and 35 years
old; usually single, or young families with no more than
one child” (19%)
• “Modern Spenders - between 35 and 54 years old; most
often they are married with up to two children” (27%)
• “The median annual household income of these targeted
customer segments is $48,000.”
Source:
http://www.jcpenney.net/company/jcpinfo/
Customer Profile
• Who are the customers
– KMART: Consumers looking for “price, quality, service,
product mix and convenience” Source: KMART Corp.,
10K, April 1999
– SEARS: Customers looking for “competitive price and strong
assortment of national brands complemented with
outstanding proprietary brands …throughout all stages of
their lives via any delivery channel they select” Source:
SEARS ROEBUCK & Co., 10K, March 1999
– WALMART: Customers looking for “low prices on quality
merchandise that offers exceptional value.” Source: Wal
Mart Stores Inc., 10K, April 1999
• 45% of customers are women
Customer Acquisition
• How they attract customers
– Strategic Marketing Alliance with ISPs: Getting them to the
front door!
• WALMART + AOL Marketing Alliance
– Money Back Offer ($5 KMART Cash Card for each item 
use @ Store)
– Free Shipping (KMART)
– Affiliation with Web Portals (KMART-Yahoo!, Macys-Yahoo!,
mall.com, Ames-Excite)
– School Programs (JC Penney  $30 m to JCPenney CAN DO
Afterschool) (Target  Take Charge of Education $18 m)
– Broadcast Advertising (Most)
– Direct Mail (JC Penney)
– Referrals (KMART’s “Tell a Friend”)
– Digital Postcards (Bloomingdales, Ames)
– Shopping Spree Sweepstakes (SEARS, Bloomingdales)
Value Proposition
• Value Added Relationships
– STRATEGIC Value: The Walmart-AOL Marketing Alliance
• Value for AOL: new segments of mass market
• Value for Walmart: greater success for the site. New AOL 5.0
for Walmart customers will have automatic access to the
Walmart site.
• Value for Walmart Customer: Sense of security and
identification with trusted brand name. Signaling.
• Value Added Features
• Checking Order Status Online (TARGET)
• “a high level of customer service, excellent credit offerings,
installation and service.” (SEARS ROEBUCK & Co.)
• Online Shopping Assistants (SEARS)
• Multilingual (Neiman Marcus – Japanese, Bay - French)
• Multiple Ship To Addresses (Neiman Marcus – handled offline)
Value Proposition
• Additional Value Added Features
–
–
–
–
–
–
Match Lowest Competitor Price (WALMART)
Rollback Prices (WALMART)
Travel Services (Target, WALMART)
True Internet Color (Bloomingdales – for garments)
Clubs for Special Occasions (TARGET “Club Wedd” for weddings)
Online Photo Center (WALMART)
• Store, Share, Download, Print (@ $0.86/copy), Save, Email, Gift
Printing
– Wish List, Reminder List, Gift Registry, Purchase History
(MyWalmart, JC Penney, SEARS)
– Store and Allied Services Locator (WALMART-Pizza Hut)
– Free Internet Access, Webpage, Email (KMART-Bluelight)
– Horoscope (Neiman Marcus)
– Personalized Tailoring (Neiman Marcus – “Pick-Me-Up”)
Price Comparison
• Sample prices
– Fisher-Price© Activity Dome
• TARGET
–
–
–
–
Unit Price
Standard Shipping(7-10)
Rush Shipping(4)
Express(1-2)
$49.99
$ 8.95
$13.95
$21.45
• WALMART
–
–
–
–
Unit Price
Standard Shipping(5-8)
Premium Shipping (3-5)
Express Shipping (2-3)
$49.96
$ 4.00 + $0.97 per item
$ 6.00 + $2.47 per item
$12.00 + $5.97 per item
• FISHER-PRICE.com
– Item NOT Available
• Jeannies Kids Club on Yahoo! Shopping
– List Price
– Shipping (calculated)
– Standard Shipping Rates
handling
– Express Delivery Rates
$35.99
$14.05 (@ 13 lbs.)
$ 0.70 cents per pound + $4.95 packing and
$20.00 added to Standard for Next Day Air
$10.00 added to Standard for 2nd Day Blue
Customer Experience
• Product Satisfaction
– Returns at Brick and Mortar Store (Most)
• Channel Management
– Online store and catalog complement each other (JC
Penney)
• Order catalog online
• Shop from a catalog – enter item number online
Repeat Business
• Turning one-shot customers into repeat
customers
– MyWalmart: Increases stickiness
• Captures personal information, payment options, billing
information and customer preferences
• Reduces transaction cost
– E-mail updates and special offers for registered customers
(KMART, SEARS, JC Penney)
– Online logistics support. E.g. online repair scheduling and
parts ordering (SEARS)
– $5 KMART cash card for each item ordered
– Focus on private brands to build customer loyalty and
encourage repeat purchases (JC Penney)