Electronic Commerce and Blue Martini free essay sample

JR Electronics is a mom-and-pop shop for the modern age. Joe and Rachelle Friedman started the business as audio equipment store in 1971.They funded the original business, a 500-square-foot storefront near New York’s City Hall, with the money the received for their wedding. Over 35 years, the Friedman expanded the business, adding records, equipment , cameras, computers, movies, and games. Today, JR Electronics encompasses a lucrative catalog business and 10 specialty electronics stores covering 300,000 square feet of retail space on that same city block in Manhattan. Among the stores are the famed J 8R Music World and JR Computer World. The JR empire sells nearly every type of electronic device imaginable. However, the Friedmans have resisted the advice of suppliers, such as record companies, who have told them the only way to survive and compete with big box stores was to become a chain. Rachelle Friedman explained that â€Å"by staying on the blockwe maintain control, which the chain stores lose. † How does JR continue to survive with only one location in an industry dominated by Wal-Marts, Best Buy, and Circuit City? Quite appropriately. The Friedmans have their son to thank for that. Jason Friedmans is the vice president of e-commerce for JR Electronics. In 1998, Jason, who started out as the company’s database manager, lobbied his parents to invest in the Web as an outlet for the company. JR went online using e-commerce software developed by InterWorld Corp.. a highly regarded product of the first dot-com boom. InterWorld’s Commerce Exchange served JR well enough to satisfy the notion that e-commerce would play a major role in the company’s future. In 20000, JR was ready to upgrade to a new version of the InterWorld software, which was touted as being much more robust than the previous version that JR had installed. Within a year, the upgrade process at JR was thrown off track as the dot-com bust brought about the demise of InterWorld. Jason Friedmans was forced to continue development of JR’s online presence without support from the software vendor. He and his staff managed to piece together a costommized e-commerce application that could handle the 400,000 products that J8R sold. However, the solution did not support some of the features that online retail competitors offered, such as the ability to collect and display customer reviews and provide information on inventory statistics, and shipping time. By that time, 30 percent of J8R’s $400 million in revenue being generated by JRcom. Friedmans was looking to inject new life into the Web site. With a staff of 50 IT workers backing him up. He explored ways to ensure that the JR.com would remain as popular a destination online as the bricks-and-mortar store was in the real world. For the new site, he chose an e-commerce platform from Blue Martini and a CRM package made by Loyalty Lab. In addition, Friedmans planned to bring JR.com in line with Web 2.0 concepts by populating the site with videos and introducing customer reviews. Those features were valuable tools that customers could use to educate themselves about products and comparison-shop before they committed to buying. In May 2006, JR unveiled an online loyalty program to encourage shoppers to visit JR.com directly rather than connect from a link on another site, such as a price comparison search engine. The strategy intends to raise the number of unique visitors to the site and, as Jason Friedman put it, relieve JR from â€Å"ï ¬ ghting over pennies with our competitors. For participating in the program, customers receive gift cards equaling 2 percent of their purchases. If successful, the loyalty program will keep past customers from giving their business to other stores, as well as entice new cust omers to join the JR community. Catalog shoppers are also eligible for loyalty rewards. Mark H. Goldstein, CEO of Loyalty Lab, noted that JR already had a loyal customer base as a result of its top-notch customer service and focus on building relationships. All that the company lacked was a program that recognized customer loyalty. Loyalty Lab’s CRM package helped ï ¬ ll that void by hosting the modules that enabled JR customers to register for accounts, manage their accounts, and redeem the incentives they have earned. J8R marketers can control the services from Loyalty Lab with simple graphical online tools using any standard Web browser. Goldstein point to additional benefits for JR from the program in form of saving what he call â€Å"the Google tax.† This is the 20 to 30 percent charge that J8R pays to search sites when visitors are directed to J8R from another site, a fee that J8R avoids when shoppers visit J R.com directly. JR selected Blue Martini as its new e-commerce platform because Blue Martini functions well with J8R’s ERP software fr om a technical perspective. The two systems are able to exchange data easily. Blue Martini provides a better opportunity to share the strengths of J 84Rs bricks-and-mortar channels online. By doing so, the company hopes to achieve a greater competitive advantage over its chain store rivals. Blue Martini has to showcase online the standout features of a visit to a JR Electronics store. Only then can customer throughout the country respond to the business with the same sense of loyalty as those who physically visit the stores in lower Manhattan. J8R has plenty of advantages, or differentiators, to showcase. Its prices are very competitive, yet it maintains a vast inventory that rarely leaves customers disappointed. JR also has a reputation for being at the leading edge of new technology. The company has a penchant for being the ï ¬ rst retailer to sell new products or the latest versions of already popular products. Furthermore, JR is known to have a good sense for technology trends, such as the transition from VHS to DVD and the rising popularity of Apple products. JR often caters to those trends before other stores are prepared to do so. Aside from good prices, perhaps the element of JR that appeals to customers most is its sales staff. Customers who enter J8R stores know that the workers they encounter will be well informed and adept at explaining the features and specifications of even the newest and most high-tech products. With Blue Martini, JR will try to emulate the expertise of its sales staff online. The platform provides a Guided Selling application, which collects input from the shopper and produces a narrowed-down view of the product catalog that is tailored for the requirements and preferences of a particular customer. Customers are able to view products by brand, price, popularity, size, and availability of special offers. By providing interactive recommendations, J8R can put more information about products in the hands of the customers, which makes them more comfortable in their purchases. Comprehensive product descriptions, product reviews from customers and other sources, and comparison grids will also make it easier for shoppers to understand and select products. Going a step further, Blue Martini enables JR to deepen its Web content with videos, including hundreds of clips that feature staff members giving tutorials on speciï ¬ c products. The videos bring a personalization to the online shopping experience that normally would be available only in a bricks-and-mortar store. J8R even ï ¬ lms the videos in its actual stores. The new e-commerce platform will also enhance the capabilities of software that JR hand to run its Endece Web site search software separately from the InterWorld site. The Endece software helps customers find, analyze, and determine relevancy in search results but these features could not be fully utilized in that environment. On the new site, JR can integrate Endeca with its PowerReviews customer reviews to help customers refine and sort products. Endeca also features merchandising functionality that JR will now be able to deploy for tracking the activities of customers across the JR.com site. The new JR.com launched in March 2007 with a host of new customer conveniences. If a customer selects a product that is out of stock, the site is prepared with a list of similar products. The site also has real-time integration with store inventory, so onsite purchases are reï ¬â€šected in the availability of products online. J8R has also made the checkout process more efï ¬ cient so shoppers arrive at ï ¬ nal price more quickly. The shipping section has been restructured to improve the accuracy of delivery dates and shipping fees. Jason Friedman recognizes that, despite the increased functionality provided by Blue Martini, his company is still limited by having physical stores located solely in New York City. He notes that where chain stores can offer customers the option of ordering merchandise online and picking it up that day in person at the nearest store, JR can only make that option available to customers in the New York City area. However, he feels that emphasizing e-commerce carries great potential for the business and represents the companys future. Maris Daugherty, a senior consultant with J.C. Williams Group, a global retail consultancy, believes that JR should not expect too much too soon. She says that there is space in the retail market for a niche entity like JR, but success will likely come from a long-term focus rather than a short-term revolution. Sources: â€Å"J8R Music Turns to Iby,†Adweek, August 19, 2.008, www.jr.corn, accessed August 28, 2008; Laton McCartney, Mid-Market Case: JQR Electronics Pumps Up the Volume, BaselineMagazine, March 13, 2007,- â€Å"J8R Electronics Taps Loyalty Lab’s On-Demand Suite for First Shopper Loyalty Program, Rtmilestonescom, accessed May 1, 2007; and JE?R Electronics Migrating to Blue Martini E-Commerce Platform, Internet-retailer com, November 8, 2006. CASE STUDY QUESTIONS 1. Analyze JR Electronics using the competitive forces and value chain models. What is its business model and business strategy? How does it provide value? 2. What is the role of the Internet in JR’s business strategy? Is it providing a solution to JR’s problems? Why or why not? 3. Can J8R keep up with the competition since it is more or less a local brand competing with nationwide chains? How would you measure its success in keeping up with the competition? 4. Visit JR’s online store at JR.com. What features described in this case are you able to find on the site? How effective is the implementation of these features? Do they seem to be achieving the goals that JR set for them? 5. Compare JR.com to the Web sites of Circuit City or Best Buy. Evaluate them in terms of product selection and availability, tool for providing product information and customer service, and ease of use. Which site would you use to purchase a computer or MP3 player? Why? 6. What do you think of the notion that JR’s new Web site and emphasis on e-commerce are not likely to result in a short-term windfall but should be part of a long-term growth stategy? How does this concept fit in with the company’s stategy?