How should Zara plan its on line presence to increase its customer satisfaction and profitability?

Presented by sibani

Design driven : 11000 per year Twice weekly shipment of new product to all stores. Small batch production creates a demand and encourages impulse buying. Stores located on premium shopping street. Pricing is market based not cost based. Store growth without more advertising. Zara spends 0.3% of total revenues on advertising and marketing.

MAIN 3 FACTORS OF SUCCESS

Short lead time: More fashionable clothes. Lower quantities : Scarce supply. More style = More choices and chances of hitting it right.

ON-LINE STRATEGY

SUPPLY CHAIN STRATEGY

Provide all store SKUs online. Price identical to all stores. Delivery options -free store pick-up in 3-5 days -home shipping in 48 hours. Free return policy within 30 days.

Centralized distribution center in Spain. Jump in product return rates and left over inventory. Dependent on increase demand to justify transportation cost. Challenges of online Sale forecast.

How should Zara plan its on line presence to increase its customer satisfaction and profitability?

Have to strengthen its image among customers mind. Zara have to focus on promotion to be popularise. Should provide different merchandise to the customer width and depth wise. If the price of online merchandise kept little low, it can bring attention of customer more. Have to be successfully convert its offline business success to online. Regional distribution center will be key to distribution.

GROWTH RATE
12000
10000 8000 6000 4000 2000 0 GROWTH RATE

India is close to 10 million online users and growing at an estimated 30% per annum. By end of 2010, the e-commerce market in India is expected to be 31,598 crore. The e-commerce market is projected to grow to 46,520 crore by 2011, which then will be a 400% growth in the last 5 years.

There is a huge opportunity in India for online business. Online presence will be more reach to people CHALLENGES Low uses of internet Very small group use credit or debit card for purchase. Lack of awareness and education of potential customers. Largely fragmented market. Variation in geographic area.

STRATEGY Promotion of product and online purchase benefits. Discounts and loyalty programmed will be crucial. To reach various geographic region in India, they have establish regional distribution center