Omnichannel Distribution PDF

OMNICHANNEL DISTRIBUTION Valérie Apicella-Magentie FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION WHO AM I? Consultant specializing in the definition of value- creating strategies.....

OMNICHANNEL DISTRIBUTION Valérie Apicella-Magentie FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION WHO AM I? Consultant specializing in the definition of value- creating strategies.. I help companies develop internationally, define their physical and digital strategies and support Start-ups in their fundraising. I lead client-employee workshops to co-create a CX vision, a digital strategy and a roadmap to deploy, including team monitoring and training. Graduated from the ESCE & London Business School [email protected] FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION PEDAGOGICAL APPROACH The educational approach is intentionally interactive. Students are strongly encouraged to participate and ask questions. The method is based on 50% theory illustrated by examples, videos and reading and 50% applied exercises and case studies. Documents to read between each session as a pre-introduction to the following session. Students are strongly encouraged to share their experience with the group. Point of method on the case studies: Case studies and homework will be done in groups or individually; And will be delivered in the requested format (written + oral submission).The document should be titled with the family name(s) of each participant in the group, the name of the program, the title of the assignment, and the name of the subject taught : Eg FIRST NAME_LASTNAME_PROGRAMME_CASE_OMNICHANNEL_DISTRIBUTION). And email to [email protected]. The date given is the submission deadline, after this date the homework will no longer be read. FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION EVALUATION Continuous monitoring § 10% class participation, involvement in business cases § 40% business cases (written & possibly oral) Final exam § 50% final exam FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION OBJECTIVES – KEY TAKEOUTS § Why does distribution strategy matter ? What is omnichannel distribution ? § Grasp the characteristics and rationale of the main channels & formats. § Understand the objectives sought by luxury brands when choising a distribution partner. § Be able to identify, challenge an existing omnichannel distribution strategy. § Provide suggestions to optimise or develop new. FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION SURVEY Why is it important for companies to be clear on their distribution strategy ? 1.key element of the Marketing Mix 2.has an impact on the cost to market a product 3.from an economic perspective – a major determinant on the bottom line 4.determine market & customer access 5.all to differentiate from competition 6.foster brand immersion 7.influence brand perception FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION Why does distribution strategy matter ? – Michael White, Business Strategist (“sales and marketing channels”) Michael White – Business Strategist https://youtu.be/I0ZUSJGzxqA FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION IMPORTANCE OF THE DISTRIBUTION STRATEGY – ALL OF THE ABOVE ! Ø DISTRIBUTION IS A KEY ELEMENT OF YOUR MARKETING STRATEGY Distribution (Place) is one of the classic « 7Ps » of Marketing Mix ( Product, Price, Place, Promotion, Physical Evidence, People, Process) Ø DISTRIBUTION CHANNELS’ CHOICES IMPACT YOUR BOTTOM LINE Distribution channels are how you reach your market and grow revenue, whether you are B2B or B2C. It impacts your PRICE (revenue, cost to market). Ø IT IMPACTS THE COST OF SUPPLY (STORAGE, TRANSPORTATION, ACCESS TO MARKETS), & COST OF OPERATIONS PHYSICAL EVIDENCE operations, PEOPLE (training, customer service), PROCESSES (IT, supply chain) Ø IT IMPACTS THE BRAND PERCEPTION, REACH TO THE TARGETED CUSTOMERS, AND FOSTERS BRAND IMMERSION FOR INTERNAL USE ONLY  OMNICHANNEL DISTRIBUTION DISTRIBUTION CHANNELS - DIFFERENT OPTIONS DEPENDING ON THE DESIRED LEVEL OF COMMERCIAL GRASP & DEGREE OF CONTROL C Full control Partial control Low to zero control H O I C E S High involvement Medium involvement Low involvement O P ? ? ? T I O N S FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION MAIN DEFINITIONS – FULL CONTROL DIRECTLY OPERATED CHANNELS (assets owned or leased to a third party) RETAIL STORE, OR ONLINE STORE: the brand sells the product directly to the end customer through a controlled network of shops. Usually mono branded i.e holding one unique brand. Physical stores also called « brick & mortar ». Online + Physical presence also called « click & mortar ». Eg Hermès boutiques + Hermes flagship store Rue de sèvres, Paris 6ème + direct online store @ hermes.com + social selling « shop in shop » & e-concessions formats @ WeChat, Luxury Pavillon, Instagram etc. FLAGSHIP STORES : Showcase the brand’s image, values & eco-system. SHOP IN SHOP, CONCESSION : the brand run the place with its own staff, manage its own stocks and deal directly with the end customer. DNVB: "digital native vertical brands", designate e-commerce pure-players who created a brand in a vertically integrated way i.e from the conception & factory directly to the consumer. These digital native brands are focused on the customer experience and hold an important community of fans & followers that share the brand & founders’ values. Eg Sezane, Bonne Gueule, Glossier, Le slip français etc FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION MAIN DEFINITIONS – MIDDLE CONTROL WHOLESALE TO : MULTI-BRANDS STORES (PHYSICAL OR ONLINE)- independent boutiques, department stores, concept stores or even e-shops (marketplaces, e-partners, e-concessions). The brand that chooses this distribution system sells its product, not to the end customer, but to the store. The wholesale partner has a direct relationship with the end customer. The store manages the inventories and unsold products. CORNER, CONCESSION IN DEPARTMENT STORES : multi-specialist retail businesses operated by a single trading company. Wide assortment of goods, large selling areas ranging from 2,500 to 92,000 m². Eg Bon Marché, Samaritaine (Paris), Bergdorf Gooman (NY), Isetan Shinjuku (Tokyo) etc. A brand can choose to 1/ sign up a corner in a department store (and own the stock & customer data) and at the same time 2/ sell wholesale to the department store (net sale, no stock management, no control on the discounts). MULTI-BRANDS OUTLETS : Off-price, discounted goods. Some outlets can be also run directly by the brand (Eg Sandro & Maje, Eg La Vallée Village (Paris outskirts) CONCEPT STORES : can represent multi brands or be ephemeral & run by a single brand to promote a special event, a product launch etc FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION RETAIL VS WHOLESALE - GREATER MARGIN CONTRIBUTION DYNAMICS OF A PRICE. WHOLESALE RETAIL WHOLESALER’S DISCOUNTS MARGIN FROM BTC COMPANY MARGIN SALES WHOLESALER’S COMPANY’S FROM STORE GROSS MARGIN (RETAILER’S) OPERATIONS COMPANY MARGIN GROSS MARGIN FROM BULK SALES COMPANY (BTB) GROSS MARGIN WAGES, RENTS, OPERATING COST TRAINING, COST OF SUPPLY, OPERATING COST MARKETING COSTS, MARKETING COSTS, OVERHEADS OVERHEADS PRODUCTION, COST OF GOODS COST OF GOODS PRODUCTION, STORAGE, STORAGE, TRANSPORTATION, TRANSPORTATION, IMPORT DUTIES IMPORT DUTIES DYNAMICS OF A PRICE. FOR INTERNAL USE ONLY OMNICHANNEL DISTRIBUTION MAIN DEFINITIONS – MIDDLE CONTROL WHOLESALE TO : MARKETPLACES, E-PARTNERS : represent multi brands, can buy the goods and manage the inventories or only act as an intermediary between the brand and the client, leaving the brand handling the logistics, shipment, customer service with the final client. Eg Tmall Luxury Pavillon (CH), Farfetch (UK), YOOX Net-a-Porter (IT, US), Mytheresa (GER), La redoute (FR) etc SECOND HAND, RENTAL STORES & E-PLATFORMS : Eg second hand : The RealReal (US),Vestiaire Collective (FR), etc Eg rental : Rent the runway (US), TO LOW CONTROL BRAND LICENCING, TMLA (TRADEMARK LICENCE AGREEMENT) : brand licensing means « renting » a company’s famous brand (or trademark) to another company that will pay royalties for using this brand (intellectual property). Eg EssilorLuxottica x Prada, Chanel, Tory Burch, Versace, Bulgari, for eyewear etc, Eg Coty x Burberry, Marc Jacobs, for cosmetics & perfumes etc, Eg L’Oreal x Prada for cosmetics & perfumes etc, ØMultiple formats to choose from depending on the brand’s vision, values and business objectives !! FOR INTERNAL USE ONLY