Tesco, the UK-based supermarket giant embraced the online option quite aggressively. Was is the right time for this information systems incorporation into the existing customer relationship architecture of Tesco? A similar program of WebVan, an online retailing system had failed to survive the acid-test.
The answer is not quite obvious. Considering the value proposition to the customer and the customer relationship management (CRM) boost to the company brought in by the internet based technology were strikingly different.
For Tesco, the transaction-tracking system would mean a better identification and relation to the initiator, that is, the customer. Data of the items purchased, the frequency of purchase, the timing/season of purchase, the overall spending of a single customer per month would be invaluable for inventory management and for meeting customer demand smoothly. The database would identify the customer through login ids and classify him into whatever category the company had defined….based on parameters like age, sex, address and so on. Marketing Intelligence could then crunch these data and inform the customer about products they were more likely to buy, based on their previous purchases. This would lead to a smarter sales forecast and easier shelf-space allocation.
For the customer, the incorporation of the new interface would provide an option to shop online at the comfort of his home. The system would remember previous shopping lists. It would inform them about new offers/discounts on products that they would want to buy. The order placed online and paid for (through credit card/debit card) would then be delivered to them at a minimal delivery cost.
A few questions crop up immediately. What was the Internet penetration in the market served by Tesco? Even if the customer has access to the Internet, would he be willing to use the service as an alternative to roaming around the retail store and dumping stuff into his basket? How easy would it be for a customer to order for perishable items, like fruit and vegetable, milk and meat? To answer one has to challenge the thinking process of a customer, which is often that he expects the most stale item to arrive at his doorstep. He would think of the store as taking advantage of his absence. Would a customer be willing to submit his personal details to the retailer website during his first login?
There were a few risks to be considered by Tesco before they went on with the implementation of online retailing. For a retailer giant like Tesco it was easy to spend on it without a rigourous analysis. Nevertheless, the sales did increase and the online shopping trend contributed around 3% of sales for Tesco. Given the volumes, this was a healthy investment. In fact, they are now ready for any change in customer behaviour, based on the shift from shopping physically to clicking into a purchase online.
Shounak's Daydreams 