E-Business evaluate framework: A case study of GAP
Gap Inc. Is one of the world’s leading global specialty apparel retailers, offering clothing, accessories, and personal care products for men, women, children, and babies under Its five brands – Gap, Banana Republic, Old Navy, Paperclip and Athlete. How does going online impact the revenue? Gap Inc.
Has expanded their international through franchise, company-operated channels and online channel. In 2006, Gap Inc. Sold products online only in the United States.
Nowadays, the company operates international shipping from its e– amerce sites to more than 90 countries and fulfillment centers in Canada, United Kingdom, China and Japan. Once GAP Inc.
Introduces their e–commerce; the revenue increases by 22% in year 2010. There are many opportunities to increase the revenue by selling online like expand the market to the global stages. It can be reached to the customer that won’t have Gap Inc. Shop available to their countries. And It’s also provides 24 hours for customer to buy the products which It makes more convenience for the customer.
Moreover, with the help of website and Internet, the company can get the attention from difference segment of customer by having difference styles in each pages on the website. Also, it will be other means to do the marketing like free shipping worldwide. How does going online impact the cost? Facility – It reduces the cost of building the store in every province and countries in the world. For some area might have only few demands, so it would be better to send the products via shipping the products from DC.
And this way will be able to operates 4 hours, better than normal store that have limited time to open the store each day. Inventory – It is lowering the inventory cost by keep the inventory in the same places like DC and central Warehouse or risk pooling.
This way will be reduce cost In terms of share Inventory and uncertainty demand. Transportation – Normally, Gap Inc. Was using Third party or package carrier to ship the products when the product shipped within US or nearby area with small size Like Canada. And the company has central DC located In the mall countries like Japan and china to ship the products within
Asia zone. This way, it will be lower their shipping cost by achieving economy of scales.
Information – It will be easier to collect the customer information and the cost to collect it too. The company can collect customer’s personal information and their buying behavior through the website. This way will be a lot cheaper than do the survey in order to get the information about the customer. And it will be help to remain the customer loyalty by offer the best deal or service according to the customer history. Snouts e-commerce channel position Itself Tort inclemency or responsiveness?
Gap Inc. Is in the middle for both efficiency and responsiveness, which it fit to the firm’s strategy.
For responsiveness, the clothes must change the style every season to match the occasion. Also for efficiency, the company is also achieving in some times. Because Gap Inc. Has store available more than 3,000 places. So they can achieve the economy of scales by order with the large volume. Who in the supply chain can extract most value? In order to achieve the supply chain, the companies have to coordinate to reduce the total cost and maximize their profit.
So all of the companies within Supply chain will gain the benefit from doing online business. For example, upstream side, selling the product online will increase the demand. So the supplier produces more products, they can get more money. Downstream side, distributor can reduce holding cost by sharing the inventory and the customer will be more convenient like they don’t have to go out for shopping. It can save transportation cost and time.
Is the value to existing players or new entrants? It would be worthwhile to do e-business for both existing players and new entrants.
The benefit that the company can gain from doing business online is more than the cost of doing it. In terms of existing players like Gap Inc. , it is a good way to reach more customers like in difference segment or difference countries. Also, it is easier to collect customer’s information. In terms of new entrants, it would be a great chance for doing the business with lower cost and high value.
It takes minimum investment with lower risk because you don’t need to build the store or any facility.