Author: Hao Hu, Ben Thomson
Advisor: Dr. Donald Rosenfield
MIT SCM Research FestMay 24-25, 2011
e-Commerce Fulfillment Models for Luxury Brands in China
MIT SCM Research Fest 2
Agenda
May 24-25, 2011
−Polo Ralph Lauren−The Chinese Market Place−Luxury Consumer Segmentation−Research Question−Methodology−Case Studies −Managerial Insights−Questions
MIT SCM Research Fest 3
Ralph Lauren
−Established In 1967, With $4.9 Billion Dollars In Annual Sales
−Aggressively Targeting China For Expansion • 54 Physicals Store Fronts In China Since 2010• Catering To High End Chinese Consumers With Blue,
Black, Purple, And Collection Items• Launch e-Commerce To Better Service Existing
Customers And Reach New Ones
May 24-25, 2011
MIT SCM Research Fest 4
Motivation / Background
May 24-25, 2011
Internet Penetration by Region (Dec 09)
2009 2010 2011 2012 2013 2014 2015
$29.1$48.8
$72.2
$94.6
$117.2
$138.4
$159.4
US $billions
China Online Retail Market Forecast
(Wigder, Sehgal, Evans, & Johnson, 2010)Internet Penetration > 28.9%
28.9% > Internet Penetration >25.6%
Internet Penetration < 25.6%
− 40% Of The Chinese Population Has Connected To The Internet Since 2000 (500 Million Users)
− $130MM In e-Commerce Sales Of Luxury Apparel With Double Digit Growth In Consumer Base (2010)
MIT SCM Research Fest 5
Luxury Consumer Segmentation
May 24-25, 2011
• Growing Number Of Luxury Shoppers Reside In Emerging Tier 2 – 4 Cities • Increasing Numbers Of Consumers Are Purchasing Luxury Items, Formerly
The Domain Of The Very Wealthy
www.P1.Cn - China's New Young Affluent Luxury Consumers
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Question / Challenges
May 24-25, 2011
Which Supply Chain Model Will Work?
Given The New And Fast Growing Market
What Are The Most Common & Innovative e-Commerce Fulfillment Models For Luxury Brands In China?
18 Primary Markets
22 Secondary Markets
Given High Service Level Expectations
How Can PRL Provide A Luxury Shopping Experience Through e-Commerce Fulfillment?
How to Create a New Supply Chain Operation When Few e-Commerce Models Exist In Similar Markets and Operating Conditions
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Methodology− Luxury Fashion Companies Were
Interviewed Focusing On:
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•Strategy •Distribution•Fulfillment •Delivery•Customer Service •Information Technology
− Case Studies Were Created for Luxury Fashion Brands Based On Current Operations
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Case Studies
May 24-25, 2011
−Strategy
Segment Services By Customer And Region
−Service Level
In House Customer Service
−DistributionLocate Near Largest Customer Base In Shanghai
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Case Studies
May 24-25, 2011
−Fulfillment
Outsource To A Trusted 3PL
−Delivery
Outsource Regular Deliveries To FedEx And EMS
−Information Technology
Integrate Offline And Online Customer Databases
Interlink e-Commerce And Retail Inventory Systems
MIT SCM Research Fest 10
Managerial Insights
May 24-25, 2011
−Customer Segmentation−Outsource Non-Core Functions• Pick, Pack And Ship
−Keep Critical Functions In-house• Inventory Management• Customer Service• Concierge Service For Luxury Role Models In Major Cities
−Important To Be Near Largest Customer Base For Fast Delivery Times
11
Thank You!
&
Questions?
May 24-25, 2011 MIT SCM ResearchFest
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