Submitted By:Ahmad SaroshShuchi MohanSurabhi LodhaDFT–VNIFT, Jodhpur

E-COMMERCE IN ZARA

• A flagship chain store of the Inditex group

• Based in Arteixo, Galicia, spain

• Founded in 1975 by Amancio Ortega and Rosalía Mera

• Expanded to over 1688 stores in 77 countries

• Produces about 11,000 distinct items annually

• Philosophy of “Fast Fashion” and “Lean Manufacturing”

• "Possibly the most innovative and devastating retailer in the world”

- Louis Vuitton, Fashion Director Daniel Piette

• “Spanish success story"

- CNN

INTRODUCTION

SUPPLY CHAIN MANAGEMENT

MARKET ANALYSIS

Market Summary

Market Needs

Market Trends

Market Growth

Women (60%) & men (25%),15 to 45 years & children (15%).Fashion conscious, Educated& relatively middle-class

ExclusivityAffordabilityDifferentiationExperience

Population trendsAn increase in the level of concentrationInternationalization in the clothing sectorE-Commerce & teleshoppingNew sense of style/fashion

2005 = 3.3 billions2005 till 2012 = 38%Which is equal to 4.5 billion

SWOT ANALYSIS

STRENGHTS

Brand loyaltyBrand awarenessEfficient distributionInformation technologyHigh fashion for modest price

WEAKNESS

Higher costs arising from vertical integration and training personnelLack of Overall E-commerceLacks information on item dimension

OPPORTUNITIES

Global market penetrationOnline market (expand into internet)Offer different styles in different stores within the same cityBrand image

THREATS

Fluctuation in exchange ratesMarket entry barriersDesign challengesGlobal competitorsLocal competitors

COMPETITORS

ZARA GAP INC H&M

Internationalisation Extensive and quick Slow and focused Moderate pace

Business model

High degree of vertical integration

Partial vertical integration. Control over design, distribution and sales. Production is outsourced

Partial vertical Integration.

Production Own production facilities. Outsourced from 1,100 suppliers Outsourced from 700 suppliers

Electronic commerce

On-line shopping facility available in few countries

On-line shopping facility for U.S. customers

On-line shopping and through mail order in the Nordic countries

Promotion Only 0.3% of its turnover. 3%-3.5% of its turnover 4% of its turnover

SALES TURNOVER

• Net sales for 2012 - €7.2 billion, 17% higher than 2011

• Gross profit - €4.3 billion, 19% higher

• Gross margin - 59.6%

• Net Income - €944 million (€1.51 per share), 32% higher

• Zara began online sales in China on 5 September 2012. Store sales

in local currencies have increased by 17% from 1 August to 17

September 2012

BUSINESS MODEL

•B2C model

•Vertically Integrated Retailer

5 keys of the Zara business model

1. Speed Uses JIT manufacturing

2. Decentralized Decision Making

3. No Advertising Marketing Strategy

4. Fashion Design Strategy – Low cost, fast turnaround of trends

5. IT Management Strategy - Utilize technology that is simple & cost-effective

WEBSITE ANALYSIS

www.zara.com

• Telefónica, the main service provider

• A in its aesthetic appeal, site navigation, product offerings, shipping, returns and company policies

• Upload speed of the website’s content is efficient

• Each image is displayed on a model , in multiple angles

• Easy customizable browsing by price , size , colour , category and characteristics

• FEATURES

1. NEW THIS WEEK 2. APPS3. CAMPAIGN 4. LOOKBOOK 5. PEOPLE 6. BY 7. INFO

– Stores – Newsletter– Contact us

RECOMMENDATIONS

• A more detailed paragraph on the company’s “ABOUT US”

• Include the merchandise and model specification in terms of item length,

neckline length, model height, size worn by model

• Offer more working mobile applications

 

NEED OF E-COMMERCE..???

• New avenues to new consumers

• Common promotional activities including price discounts and shipping cost

reductions

• Perpetual introduction of new pieces with short lead times

For

• Launched online shopping in Denmark, Norway, Sweden, Monaco, Poland and

Switzerland (total 18 European countries) in 2010

• In the United States on 2011 September 7

• Began online sales in China on 5 September 2012

• No option for online shopping in INDIA

PRESENT

ZARA IN U.S.A.

• “B2C STOREFRONT MODEL” or the “SHOPPING CART

TECHNOLOGY”

• Transaction fee model

• Easy delivery

• Exchange and return policy

WORKING OF THE E-COMMERCE MODEL

RECOMMENDATIONS

– Website optimization, including Search Engine Optimization

– Online promotional events.

– Customers interaction and feedback

– Identifying the products having the biggest appeal to the online customers

– Integration of transactional data from the online store and traditional stores

– Integration of online sales data with other company’s functional departments

– Integration of data collected from Zara’s online and offline sales with other retail

brands of INDITEX group.

PRIMARY RESEARCH

PROPOSED E-COMMERCE MODEL FOR INDIA

• B2C Storefront Model or the “Shopping Cart Technology”

• Transaction Fee Model

• Advertising Model• Fully featured Bespoke E com Site with

– Unlimited number of products– Full admin system with advanced features– Unlimited bandwidth and disk space– Complex shopping options– Multicurrency payments + multi language

• COSTSetup - including payment system setup - £1,000 /Year Build - £8,000 /Year Hosting - £30/MonthDomain Registration and SSL Certificate: £100/Year 

• OVERALL COSTCost for 1st Year: £9,460 Cost for Subsequent Years: £460/Year 

RECOMMENDATIONS

1. Offer some support to online shoppers

2. Keep up with consumer expectations

3. Embed search functionality into sites

4. Adopt a ‘global’ approach

REFERENCES

• http://mashable.com/2011/09/07/zara-ecommerce-us• http://www.slideshare.net/sahilm87/e-commerce-infrastructure

THANK YOU…