Omni channel strategy in online retailing the case of magestore

HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - NGUYỄN TRỌNG PHƯƠNG OMNI CHANNEL STRATEGY IN ONLINE RETAILING: THE CASE OF MAGESTORE CHIẾN LƯỢC BÁN HÀNG ĐA KÊNH TRONG BÁN LẺ TRỰC TUYẾN: TRƯỜNG HỢP CỦA MAGESTORE LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2020 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - NGUYỄN TRỌNG PHƯƠNG OMNI CHANNEL STRATEGY IN ONLINE RETAILING: THE CASE OF MAGESTORE CHIẾN LƯỢC BÁN HÀNG ĐA KÊNH TRONG BÁN LẺ TRỰC TUYẾN: TRƯỜNG HỢP CỦA MAGESTORE Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS NGUYỄN VIỆT KHÔI HÀ NỘI - 2020 CAM KẾT Tác giả cam kết kết nghiên cứu luận văn kết lao động tác giả thu chủ yếu thời gian học nghiên cứu chưa công bố chương trình nghiên cứu người khác Những kết nghiên cứu tài liệu người khác (trích dẫn, bảng, biểu, công thức, đồ thị tài liệu khác) sử dụng luận văn tác giả đồng ý trích dẫn cụ thể Tơi hồn tồn chịu trách nhiệm trước Hội đồng bảo vệ luận văn, Khoa Quản trị Kinh doanh pháp luật cam kết nói ……………, ngày …… tháng …… năm ……… DECLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration Date………………………… LỜI CẢM ƠN Đầu tiên, xin gửi lời cảm ơn trân trọng tới giáo viên hướng dẫn tơi, PGS.TS Nguyễn Việt Khơi có lời khun giúp đỡ tơi bước hồn thành luận văn này, khơng luận văn khơng thể hồn thành Thứ hai, xin cảm ơn đặc biệt tới Ban Lãnh đạo cơng ty Magestore cung cấp cho tơi số liệu giúp tơi hồn thành luận văn Cuối quan trọng, xin cảm ơn PGS TS Hồng Đình Phi, thầy Khoa Quản trị Kinh doanh cung cấp cho kiến thức thời gian học Đối với tôi, thời gian học tập đầy thời gian tốt đời ACKNOWLEDGEMENT Initially, I would like to express my deepest gratitude to my supervisor, Assoc Prof Nguyen Viet Khoi for his advice and involvement in every step throughout my research process, this master thesis would not have been completed Secondly, I would like to send my special thanks to Magestore management board for giving me the data to support my thesis Last but not least, I really appreciate Professor Hoang Dinh Phi and many other professors of Hanoi School of Business for providing me knowledge during my study here This is the best time of master student life CONTENT ABSTRACT INTRODUCTION Rationale Literature review 11 Research Methodology 14 Thesis structure 15 CHAPTER I: OVERVIEW OF OMNICHANNEL STRATEGY 17 Definition of omnichannel strategy 17 The development of omnichannel 19 2.1 The transition from single channel to multi-channel 19 2.2 The transition from multi-channel to omnichannel 20 2.3 Comparison of three models: Multi-channel, Cross-channel and Omni-channel 21 The necessity of having omnichannel in today’s world 26 3.1 Increasing number of customers shopping across channels 26 3.2 The increase in customers’ expectation 28 3.3 Inventory visibility 28 3.4 Fulfillment process optimization 30 3.5 Boost sales 30 3.6 Customer service 31 3.7 Marketing 31 Requirements on omnichannel strategy 32 CHAPTER II: RESEARCH METHODOLOGY 35 Research method 35 1.1 Interviews 36 1.2 Case study – Decathlon Japan Omnichannel Sports Retail 37 Data collection and analysis 38 CHAPTER III: ANALYSIS OF MAGESTORE’S OMNICHANNEL SOLUTIONS AND ITS APPLICATION IN RETAILERS’ OMNICHANNEL STRATEGY 40 Overview of the company and the industry 40 1.1 Overview of the industry 45 1.2 General information about Magestore 46 1.3 Product overview 47 Analysis of products responding to omnichannel retail needs 50 2.1 Point-of-sales (POS) 50 2.2 Inventory Management 59 2.3 Order Fulfillment 67 2.4 Purchase management 71 SWOT analysis for Magestore applying OmniChannel Retailing model 73 CHAPTER IV: RESEARCH RESULTS 76 Strengths and weaknesses of Magestore’s products 76 Recommendation 78 2.1 Customer understandings 78 2.2 Management system and security 79 CONCLUSIONS 80 Research achievements 80 Research limitations 80 Suggestions for future research 80 ABBREVIATION No Abbreviation Definition B2B Business to Business B2C Business to Customer POS Point of Sale CRM Customer Relationship Management IT Information Technology US United States SKU Stock-Keeping Unit ICT Information & Communication Technologies ICSC 10 DC 11 Magestore 12 CSV Comma-Separated Values 13 XML eXtensible Markup Language International Council of Shopping Centres Distribution Center Magestore technology joint stock company LIST OF FIGURES Figure 1: Omnichannel Customer Experience 19 Error! Reference source not found 21 Figure 3: Retail sales 27 Figure 4: ASEAN - E - commerce Markets and Penetration (2014 - 2020) 41 Figure 5: Top Online Shopping Websites in ASEAN 43 Figure 6: Growth in Number of Internet Users ( CAGR%, 2015-2020) 44 Figure 7: Internet Users by country (million 2015 -20) 45 Figure 8: OmniChannel system 48 Figure 9: POS General Sale Process 54 Figure 10: POS Order 55 Figure 11: POS Return Order 56 Figure 11: POS Return Order 59 Figure 13: Stock Taking Screen 60 Figure 14: Stock sending screen 61 Figure 15: Sending stock workflow 62 Figure 16: Transfer stock - Request stock workflow 64 Figure 17: Customer return workflow 65 Figure 18: Dropship workflow 67 Figure 19: Order Fulfillment process 70 Figure 20: Example of Order listing 71 Figure 21: Process of purchase management 73 LIST OF TABLES Table 1: Other terms for Omnichannel 18 23 Table 2: Comparison of three models 25 Table 3: Examples for comparison among models Table 4: An overview of requirements on OmniChannel Strategy 34 37 Table 5: Questions for open interviews 47 Table 7: Magestore’s development journey 53 Table 8: Features list of POS software Table 9: Feature list of purchase management 72 Table 10: SWOT analysis for Magestore 75 Table 11: Strengths and weaknesses of Magestore’s products 76 ABSTRACT The world of commerce in business to business (B2B) and business to consumer (B2C) is changing rapidly and it will change even faster in the years to come Today’s empowered customer expects a consistent buying experience across all retail channels – online, offline and both combined Retailers, for example, must offer store pickup for goods ordered online According to Forrester Research (2014), 71% of all customer expect to view instore inventory online, while 50% expect to buy online and pick up in-store However, only a third of retailers have operationalized even the basics such as store pickup, cross-channel inventory visibility, and store-based fulfillment Besides, retailers must also make sure that customers choose how they return goods – either ship them back or bring them to the nearest store And this is when omni-channel retailing becomes indispensable, which involves seamlessly integrating the customer experience across all interaction channels – in-store, on the web and on mobile devices The understanding on omni-channel retailing, in Vietnam, however, is still in its very premature stage Therefore, this paper explores what omnichannel retailing is, what the requirements for an omnichannel strategy are and how these requirements are being met by solutions provider, with the aim of giving an overview on the omnichannel ecosystem and all the basics revolving around it All these questions are resolved by looking into the case of Magestore, an omnichannel solution provider that targets foreign markets The research is conducted using qualitative research method including interviews, meetings and case studies from clients working with Magestore To take a further step with the research, the author will choose to look deep into one specific product of Magestore and how it is solving the needs of retailers to give an in-depth analysis on the response of the company’s product and how it may be improved · Step 5: Deliver packages: User will be able to view the details of orders including which items are in the package, shipping information and tracking number from the shipping carrier 69 Figure 19: Order Fulfillment process Source: User Guide for Magento Order listing This dashboard classifies orders into types: Awaiting payment, back orders, hold orders, complete orders and canceled orders It is designed to allow users to have one view of all types of their orders 70 Figure 20: Example of Order listing Source: Purpose – Website UI Kit Report The software can show types of reports that record how many orders have been picked and packed including: · Fulfillment by warehouse (total/ daily) · Fulfillment by staff (total/ daily) 2.4 Purchase management Magestore Purchase Management module aims to provide a comprehensive solution for a retailer’s business This module eases the process of managing suppliers, quotations, and purchase orders, keeping things neat and tidy Full feature list of purchase management Supplier Supplier list View the supplier with summarized information - Total SKUs, purchase order value, date of the last purchase order 71 Create Create/ edit a supplier with information - Supplier information and suppliers product list (SKU, supplier SKU, cost, discount, tax) Assign Assign products to the supplier manually or via a CSV file products Pricelist View the price list for each product of each supplier Single Create/Edit the price list for each product product Multiple Import CSV files to create the pricelist for multiple products products Quotation List of View the list of quotations on the website and their information quotations Search/ Search, filter and sort the list of quotation on one or multiple Filer/ Sort conditions CSV or Export the list of quotations to CSV or XML files XML files Create Create a new quotation with related information in the quotation quotations listing page Add ways to add/update products to a quotation - manually from all products suppliers’ products, from low stock product list, from supplier needs product list, from back order product list and via a CSV file Emails Send a quotation email to the suppliers Table 9: Feature list of purchase management The process of purchase management includes these following steps: 72 > Step 1: Purchase staff create request for Quotation: A Quotation is the proposal of price and quantity of goods that store owners send to suppliers The quotation will become purchase order when a seller sends confirmation of price and availability of products stated in the quotation > Step 2: Purchase Manager validates request for Quotation > Step 3: Purchase Staff Send Request for Quotation to Supplier > Step 4: Purchase Manager Approves Purchase Order > Step 5: Purchase Manager Confirms Purchase Order > Step 6: Purchase Staff Complete Purchase Order Figure 21: Process of purchase management Source: User guide for Magento SWOT analysis for Magestore applying OmniChannel Retailing model Strengths  Weaknesses E - commerce has increasingly  Low investment is the biggest developed in these days Therefore, weakness applying OmniChannel Retailing technology will be expensive Model is an efficient way to keep Therefore, the website of store the just interest of customers in 73 aims as at improving advertise and Magestore’s products    demonstrate the products The cost of wage for labour is  The management system of store reduced, which will save the total is cost of company This will lead to information and hasn’t been lower price of products updated yet Applying OmniChannel Strategy  basically used for store Payment system is not various, means that company has to develop mainly by cash and credit card the technology, which will improve Other payment is not available the infrastructure because the company lack of Update more payment methods payment support devices instead of traditional methods by  The security of management card, system, especially customers’ Samsung pay, VN pay, , which information hasn’t been focused will support the customers in yet.Therefore, the management shopping and paying online system is always at risk of being using QR code, Credit hacked Opportunities   Threats E - commerce is now a high - The traditional way of shopping profit market with the potentiality and paying is now one of the is up to 10 billion USD in 2022 biggest difficulties that company The using has to solve Changing the smartphone of Vietnamese is more customers’ shopping habits will than 70%, even the countryside can take a long time to achieve percentage of be up to 50% These people all can    Magestore is not the only store be potential customers of the store that OmniChannel Strategy isn’t a new Strategy Therefore, Magestore retailing model in the world so has to cope with other stores or Magestore can learn the experience even big companies to attract from other companies and co customers and widen the market 74 applying OmniChannel  operations The instability of internet connection is such a difficult problem that Magestore has to focused on because with E commerce, no Internet means no purchase Table 10: SWOT analysis for Magestore 75 CHAPTER IV: RESEARCH RESULTS Strengths and weaknesses of Magestore’s products Strengths and weaknesses of Magestore’s products in response to omnichannel retailers’ needs Requirements Strengths Weaknesses Inventory visibility x A single brand with consistent information x Adjust assortment to channel x Insights through analytics Inventory allocation strategy x Return logistics x Cross channel fulfillment strategy x Increased availability & reduced delivery time x x Table 11: Strengths and weaknesses of Magestore’s products Inventory Visibility Magestore’s Point-of-sales has a function of synchronizing online and offline orders in real time Retailers can choose to run the system online or offline In case they are running it online and the internet connection is lost All the orders and transactions can still be made and saved, which will then be uploaded online when the internet is back Currently, the system can deal with the data of 100.000 SKUs with 100.000 clients checking out in store 76 Moreover, Point-of-sales is connected with Inventory Management Therefore, the inventory information will be updated automatically with any actions in store And the other way around, if the inventory for specific is low or zero, cashier at store will know and inform their clients With its ability of real-time synchronization, Magestore’s POS and inventory management module have well met this requirement of omnichannel strategy A single brand with consistent information With its ability of real-time update on stock, Magestore’s products can ensure a consistent experience from website/ to store for clients However, it still lacks the ability to manage other channels including social media, kiosk, call center To be able to this, the company will need to integrate its products with marketing automation functions This will help provide a seamless experience in the way like, for example, if an item is out of stock, the ad runs for this item will be stopped til the item is back in stock Adjust assortment to channel The same as the second requirement, the company’s products have not yet met this requirement because of its lacking in functions of marketing automation The modules will not be able to analyze clients’ purchasing behaviors and show them products of high purchase possibility Insight through analytics With each module, Magestore can provide the most necessary list of reports that assist retailers in their management This includes: For Point-of-sales: 10 types of reports related to sales, order lists, staff, location and payment methods For order fulfillment: types of reports to record how many orders have been picked and packed: Fulfillment by warehouse (daily/ in total), Fulfillment by staff (daily/ in total) For inventory management: instant inventory reports to control product quantity by SKU Inventory allocation strategy 77 Currently, the inventory management system only has assisted warehouse managers to complete their tasks and update the data to the system However, for those tasks that require action suggestions and planning Return logistics Similar to the previous requirement, Magestore’s products especially POS and inventory management module can only resolve part of the return logistics issue for retailers On Point-of-sales, users can handle returned items by changing its quantity and update it in inventory However, the refund is still being processed and not ready for selling To be able to assist retailers to handle return items, there are many aspects related to Point-of-sales, inventory allocation and order fulfilment needed to be done Cross channel fulfillment strategy As said in previous requirement analysis, current products by Magestore not have the ability to gather data and give action suggestion related to planning As to help retailer with cross channel fulfillment, the system will need to be able to define the most suitable method and location to fulfil an order over all channels Increased availability and reduced delivery time The last requirement is a combination of the success of all previous requirements Besides, it requires effort from retailers themselves to train staff and adapt to the new working environment as well as the new system This requirement, however, is currently not within Magestore’s products’ reach as they are only able to satisfy the basic needs of small-to-medium retailers Recommendation 2.1 Customer understandings Company has to understand thoroughly the demands of potential customers to provide them with the highest quality of service Therefore, it is necessary that Magestore should analyze deeply the customers to find out their favorites, habits of shopping, trends… and foresee all the upcoming difficulties As a result, Magestore should frequently carry out the survey about demand and feedback of customers about the products The aims of the survey is to look for information from the 78 customers: Who are they, Where they from, How is their budget, What are their demands, What type or trend of product is their favourite, What channel they often use and, more importantly, Do they satisfied with the products etc Surely, each type of customers will have different bias channels or devices, which is used to find information about the products of Magestore Therefore, the company has to gather those information to classify customers and set up suitable method to provide information about Magestore 2.2 Management system and security With the high development of technology, setting up a management system is so important to Magestore that they have to first focus on Basically, the management system such as CRM, statistic analyzation, automatic marketing etc play an irreplaceable part in managing data neat and tidy However, information security is one of the biggest problems for not only Magestore but also every E - commerce company Therefore, Magestore should control the system strictly and frequently check the security of the system, find out and fix the bug as soon as possible This step is so important because the security in management system influences the trust of customers Nevertheless, setting up a system is not an easy work and it can be a burden on the company’s finance Therefore, the most suitable solution to this problem is to buy the default management system from some Omnichannel company such as Bizweb, Haravan… instead of setting up the system themselves By this way, Magestore can save their money as well as take advantage of the existing tools 79 CONCLUSIONS Research achievements This study contributes to both the theoretical and practical dimensions of analyzing organizational culture of a startup In the theoretical view, this study contributes to the understanding of what organizational culture is, how it was formed and developed in the and how the three levels of corporate culture are like in context of startup AhaMove, following the model of Edgar Schein In the practical view, this study maybe an useful reference document for the studied company (AhaMove) which desires to foster its corporate culture to gain higher employees’ job satisfaction and productivity Findings from this study will also significantly provide several positive contributions to many other startups in general and AhaMove in particular to actively change and improve organizational culture in the future Research limitations Some limitations should be taken into account when considering the results Like every research ever conducted, there will always be limitations on different aspects of the work The most easy-to-see limitation of this research is the lack of primary data in the form of wide questionnaires as the data obtained from interviews can be quite subjective Besides, those interviews conducted are mainly used for an exploratory descriptive purpose of the omnichannel strategy from Magestore’s view as a solution provider And it is impossible to see the outcomes of the thesis as fixed on the company as its products are constantly improved Secondly, within the time-span of the internship and research process, it is difficult to obtain and analyse a meaningful amount of data And, for the company to listen and act accordingly to the suggestion of the research is not feasible due to the typical characteristics of software development which requires intensive resources and concentration Suggestions for future research In the future, the author may continue the research by digging deep into only one specific product that Magestore is offering to analyze its suitability for the 80 market requirements and suggest the improvements possible By doing deep research, the author believes the outcome can be of more realistic use to Magestore management board and also stakeholders relevant to the purpose of the thesis 81 REFERENCES English documents Aberdeen Group “The 2012 Omni-channel Retail Experience, Aberdeen Group”, 2012 Carroll, D and Guzman, I “The new omni-channel approach to serving customers”, available at https://www.accenture.com/be- en/~/media/Accenture/ConversionAssets/DotCom/Documents/Global/PDF/Industries_2/accenture-new-omnichannel-approach-serving-customers.pdf, 2014 (accessed on 10/02/2018) Deloitte “The omnichannel opportunity: Unlocking the power of the connected consumers”, available at https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/consumerbusiness/unlocking-the-power-of-the-connected-consumer.pdf, 2014 (accessed on 10/02/2018) Fink, A., “Analysis of Qualitative Surveys” Fink, A (ed.): The survey 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OVERVIEW OF OMNICHANNEL STRATEGY Definition of omnichannel strategy The cross -channel retailing concept (Omnichannel) was first time introduced by Darrell Rigby in the report “Future of shopping” in. .. concepts, theoretical methods of Omnichannel · Assessing the necessity of Omnichannel retailing and Omnichannel strategy · Retailers that purchased Magestore? ??s omnichannel solutions · Analyze the situation... promoting Omnichannel effectively The consumer good forum (2015), Re-engineering the supply chain for the Omnichannel of tomorrow Analyzes the relationship and the indispensability of supply chain