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Unit 7: Delivering Services on the Web
headquarters for the latest analysis! He went on to give content support to Star News and Notes
then branch off into running his own independent satellite television channel, NDTV.
2. Retailing: Retailing is a technology-intensive industry where distribution and information
systems can build competitive advantages. Indian retailers can work closely with their
vendors to predict consumer demand, shorten lead times, reduce inventory holding and
thereby, save cost through two innovative logistics techniques – cross-docking and
electronic data interchange. Some of the technology adoptions that greatly enhanced the
competitiveness in the industry are:
Universal Product Code (UPC) - Popularly called the ‘bar code’, its universal adoption in
1972 by the manufacturers and retailers changed the power equation in retailing and
would similarly benefit Indian retailers. The bar code contains the following information:
Product category (say, shampoo)
Brand particulars (say, Lux)
Variant particulars (say, pink color, and in 250 gm.)
Batch number of manufacture
Expiry date particulars
Price details
Manufacturer’s details, etc.
The reason for adopting the UPC then was to ease sales registry and bottlenecks in checkout/
payment counters in retail stores. By gunning scanner beams on the bar codes, the retailers not
only cleared their counters quickly but also were now in possession of a huge amount of data.
Before 1972, product manufacturers like Unilever and Procter and Gamble were powerful as
they had the brands and were constantly in touch with the consumer through market research
initiatives. The brands brought in the customers into the retail stores who could then try other
merchandise. The companies drove hard bargains with the retailers for margins and stocking of
new unknown brands.
After 1972 it was the retailers who could know with deadly accuracy, especially after integrating
the sales data from all its chain stores, which products in which variant formats were moving at
which time and where. Still there were two crucial data that the retailers did not possess:
Who were the customers who bought the merchandise?
Why did they buy the particular merchandise?
Mega retailers like Wal-Mart got the first information fortuitously through the popular
adoption – this time by the customer – of another concept: the credit cards. With every purchase
paid by credit or charge cards, the retailers had access to customer data – name, address, occupation,
income, family size, educational qualification, etc. They could do brand tracking and analyse the
customer’s shopping pattern and habits. The second information they got through regular market
research and by the development of Customer Satisfaction Index (CSI). This information gave
Wal-Mart a decisive competitive advantage and they leveraged this exclusive knowledge to
their advantage in inventory management as well as in driving hard negotiations with the
vendors. They could drive down the cost of goods purchased and transferred the benefit to the
customers by way of lower prices.
After knowing the consumer preferences, Wal-Mart went many steps further. They went in for
private label brands (brands owned by Wal-Mart) sourced from their vendors. Today, there is
gentle irony in the changed scenario since 1972: Unilever and P&G are the biggest captive
vendors of Wal-Mart-owned brands! The power really had shifted.
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