beyond pt 0 23/1

New value could be created as consumers seek more convenience and their habits
evolve becoming more accustomed to ordering online, for example
greengrocer.com.au, and so changes will occur in the grocery industry and its
manufacturing suppliers. The industry is considering how to respond to these
changes. This opportunity will need to be assessed, captured and addressed by
the industry. E-commerce will enable manufacturers to offer value added services
for their products through web-enabled devices, including in the future
web-enabled refrigerators or microwaves ovens. The aim will be to enhance the
consumer’s total experience.
Interview: Rick Vosila, Unilever,
IRG member, 27 July 1999
Manufacturers may be in a position to offer lower prices by delivering
directly to the consumer, circumventing intermediary warehouses.
There is a lot of inefficiency in the trips from source to customers adding cost
(including insurance), complexity and the danger of damage. The industry can
create more value for customers by reducing handling. There are also
opportunities for new services, such as removing old items and the packaging of
the new, agreeing to delivery times and keeping to them.
In the stationery industry, where there are three or four major players and many,
many outlets, improvements could be made by avoiding warehousing and delivering
direct to the outlet, and also by the generation of invoices and payments.
Interview: Paul Orton, ABOL,
IRG member, 9 July 1999
Another initiative in grocery is Efficient Consumer Response (ECR). This will
change the way trade is conducted with customers. E-commerce will facilitate this
as the industry changes. More frequent deliveries of smaller lots are envisaged,
perhaps straight to supermarkets rather than grocery distribution centres.
Value could also transfer due to ECR supported by e-commerce. ECR will reduce
the amount of stock in the supply chain, though some will necessarily remain.
Direct sales to the consumer from the warehouse may occur, bypassing the
physical supermarket—either by current retailers or new entrants or new entrants
to the industry.
Interview: Rick Vosila, Unilever,
IRG member, 27 July 1999
A significant cost of sales is after sales service. For business-to-customer
transactions in particular, it is expected that savings in the cost of after
sales service will be achieved by placing manuals and databases at the
reach of customers on the Internet, thereby enabling customers to help
themselves. Naturally, there will continue to be some cases that will
require human assistance, so automation should result in a reduction
rather than elimination of staff employed to handle customer queries
(e.g. in call centres).
Costs of direct selling
However, the cost of direct selling on the Internet may be the souring of
traditional distribution lines. The choice to undertake direct selling may
therefore involve some commercial risk.
Furthermore there are additional costs to direct selling that may make
direct selling (as opposed to selling through traditional distribution
agreements) unprofitable.
If companies decide to expand their presence on the Internet, the costs to
companies will be in the hiring of skilled personnel to run these sites and
business services and programming costs of development, etc.
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