ETD: 719 Manual before computer; Amazon order processing
sucks; Tax hurts London shopping; Cut-Rate Swedish Retailer Enters the
Italian Market; E-Commerce - total price reporting
E-Tailer's Digest
etd_post@gapent.com
Tue, 09 Sep 2003 06:44:27 -0400
E-Tailer's Digest --- Everything for the Retailer
Issue #0719 September 9, 2003
George Matyjewicz, Moderator mailto:georgem@gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Manual before computer
[3] Amazon order processing sucks
[4] Tax hurts London shopping
[5] Cut-Rate Swedish Retailer Enters the Italian Market
[6] E-Commerce - total price reporting
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[1] Greetings.
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Hi All:
My thanks to Joe Dweck, Jacques Chevron and Phil Glowatz for those
excellent special reports. It really helped me out while I was in
London. I had some issues connecting to the mail server, so these reports
were a life saver. The specials are at the site at
http://etailersdigest.com/resources/Specials/
London was interesting. Their coverage of the news is rather unique. They
are not shy about reporting everything and anything. And they have some
retail issues.
I will return to London the end of this month. I have one special report
for that week, and will need one more. If anybody needs more information,
let me know mailto:georgem@gapent.com?Subject=ETD_Need_Info_Special_Reports
If you are flying at any time between now through December, don't forget to
listen to SkyRadio, especially the section on Sarbanes-Oxley and the
interview with list member Jim D'Arcangelo. He is offering a $25 Barnes &
Noble gift certificate for the first person who quotes him from the
interview. Post it here.
Today we have a response/add on to Joe Dweck's special report. And a
personal experience with the horrible service at Amazon.
Get ready for a new "congestion tax" in a city near you. It works in
London and many cities are looking at it seriously.
How are you presenting your products and prices online? Check out Jan
Owens post on E-Commerce.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem@gapent.com
http://www.etailersdigest.com
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[2] Manual before computer
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Joe Dweck's report spurred some thought...
Focus on what you CAN do. Then measure it, for measurement focuses you on
continuous process improvement. That's what Demming was all about. When
you focus on what you CAN do, you start getting creative about improving it.
Monitoring usually requires custom software. Software YOU can probably
write YOURSELF. You must outline it. By doing that, YOU OWN the
process. All too often, someone decides to go out and buy a package. They
seek experts. But what are the experts experts at? SELLING the
software!!! Selling THEIR approach to things! Buy their software, and you
compete the same way with everyone using that software -- and throw away
most of your Imagination! This is an economy of imagination! Your only
way of competing in this economy is imagination. (But that's another story.)
Start with the calculator. Don't you DARE touch that spreadsheet! And even
then, keep asking yourself if the numbers make sense. Creative DOUBT!!!
Do it on paper. Diagrams, maps, where the numbers come from, what they
influence... Look at where you can get the numbers... Multiple sources,
multiple ways. Supplier Bias... Oh, people lie. They bias numbers in
subtle ways.
Now you've got the numbers. Crank them through your calculator several
ways. Write down every question that comes to your mind! Use 3x5 cards, one
per question. Write down every source for your data too, use a different
color of 3x5 cards for each source. Stick them on the wall or your door
with _push-pins_. Post-it's fall after a while. These are going to be
there for a while...
Don't touch that spreadsheet yet!!! Computers kill imagination three ways:
They stress you both by that glaring blinking screen. They show you that
you don't understand them. They are too fast to let you to think what is
happening. You NEED that imagination boredom spawns!
On my weekly keywords reports, I would slow the system down for the first
reports of the run, having intermediate results scroll across the screen at
every step. ALQ, Acceptable Lot Quality testing, or whatever you want to
call it; I wanted to be in touch with what was going on, to let it spark my
imagination.
I never know what I am doing! As a friend once wrote, "If I knew what I was
doing, it wouldn't be research!"
Our competition knew what they were doing, knew what tools they needed,
bought expensive database tools and hired people who KNOW how to make
_databases_ work the way database systems should work.
Using that calculator, you will learn to own your process. You can not own
a process you buy off the shelf!
Now that you have done your process YOURSELF for a few turns, you know what
you want. With that, you may pickup that spreadsheet.
Spreadsheets are nice in that each cell is a process in itself. Each cell
calculates something from other cells. Each cell has a formula. Know the
formulas! Check the results with your calculator. Mistakes do happen, and
have bankrupted companies. Wolf Computers for one, didn't get the formulas
right and though they were in the black when they were sinking hard. By the
time they realized they were out of cash, they were too deep to survive. DO
IT BY HAND every so often!
Once you have a spreadsheet, you can play what-if games. Just make sure you
clearly label your hypothetical spreadsheets, so you don't accidently run
the wrong ones. Happens!
For other processes, you can model things. Cellular
automata, probabilities, etc. Not as complex as you think!
What are the entities? What are their statistical variations? Write the
questions down and posts them on the wall above your desk! How does a
series of the interactions which you summarized to get your numbers,
produce your net profits? If you bought a package, you haven't a clue! If
you did the math by hand, you know EXACTLY how those numbers come about.
And in your mind, you can imagine. "Imagination is more important than
facts" - Albert Einstein. "This is an economy of imagination" -JVV-
In "The Entrepreneur's Manual", they talk about making toy pipe and tank
based models of their companies as an exercise; and how executives, even
those with large EDP systems, would keep the transparent water toys to play
with. They would pour colored waters in at the top, change the valve
settings to simulate the distribution of resources, and WATCH what effects
it would have on the flow through their models. It's play. But play brings
insight. You can't play with numbers you can't see. You can't play with
things you have no grasp of. That's why I say DO IT BY HAND FIRST!
I was asked in on a large sales support project. They had a fantastic
database! (More fantasy than real at that point...) The vendor's software
would do everything. We (vendor paid) programmers were tasked with writing
whatever reports client's marketing team wanted. Never having done it by
hand, they really didn't understand what they needed. $2.5 million dollars
later, they fired the MIS head, abandoned the effort "for technical
reasons". I called a friend who had a company providing reports of that
nature. He did trundled down and started his usual pre-pitch sales
investigation. He walked away, saying they hadn't learned anything, didn't
have a clue! And without that, he was smart enough to walk away! The other
vendor lost money, as did the would-be client co.
On a computer, either with a database or just a collection of interacting
batch files, you can re-create each of the entities in your model. (Why do
you think supermarkets have club cards -- so they can model your habits!)
You can tweak the parameters. You can make them random, so 10% of your
buyers will pay late, or early; buy more, or buy less. You can create
these entities from existing data. Then you can let them interact. (And
first run the old data to make sure your model produces something close to
what you know happened!)
Entity based modeling is a little harder than spreadsheet cell formulas.
But not THAT much harder! _IF_ -- IF and only IF -- you know what each of
the entities does! If you didn't run the numbers by hand, you have no feel
for what the entities really are. The boredom of doing it by hand inspires
the imagination! It's how our minds work. Use that.
In Summary:
You can only "own" (modify, improve) a system if you understand it. The
best way to understand it is to calculate it by hand using calculator and
paper a bunch of times, diagramming, mapping, etc. as you go. (Then teach
it to someone else, like a computer.)
Once you understand it, you can model it (entity based simulation, not just
a spreadsheet) and play with the model to see whether your ideas improve
it. In the process, your natural curiosity will uncover more and more
factors you can manipulate, and creativity will help you figure out how to
improve your process.
Much of this monitoring and reporting ends up being custom software. It's
something I've done, something I do today. But understanding how to create
software does NOTHING for understanding how YOUR business works. Only YOU
can do that. And if you don't understand your business, you don't own it,
you can't control it, and sooner or later, you WILL be road-kill!
Learn what you can measure. Learn what changes. Focus on what you can
change. Start to understand the details. Measure it's effects on the
bottom line. Shift your focus to the effects of change on your bottom
line. Model the process. Play with the model. Let the model inspire your
imagination. Test your ideas on the model. Break the model, not the business!
-JVV- (javilk@Mall-Net.com)
John V. Vilkaitis, Senior Consultant
Put your site on our couch, and make it WANT to work harder.
Web: http://www.SitePsych.com/
Field Office: 408-846-8518
Campbell, Ca 95008
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[3] Amazon order processing sucks
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I have never seen such poor service as from Amazon. They have some major
problems with their order processing. I ordered two books online, one
which was as a result of ordering the other. You know that trick - "others
who ordered book A also ordered book B." I asked for expedited service,
since they would have been good to read on the plane. The day I was
supposed to receive the order, I get an e-mail that said book A was no
longer in print and they would ship book B in 7-10 business days. Keep in
mind I wanted "A" and did ask for expedited delivery.
I told them to cancel the order. I got a note back, that said the order
was in process and they couldn't cancel it, and it would be here in 7-10
days! We went back and forth, and I finally said I would refuse the book
when it arrived, which I did.
The book arrived, was refused and I got another note from them stating that
the return "typically takes 7 to 14 business days to process
returned packages after they arrive at our returns center." I said not
problem. I'll simply notify Amex to charge them back. Then I proceeded to
notify the attorney general's office in my state and theirs.
Have you ever heard of anything so stupid? I'll stick with Barnes & Noble.
George
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[4] Tax hurts London shopping
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When I was in London in February, they just introduced a "congestion tax"
whereby cars entering the center of London during the hours of 7 AM to 6.30
PM from Monday to Friday were fined £5 ($8.00). If the congestion charge
is not paid up by 2200 (11PM) GMT it is doubled. If not paid by midnight on
the day of the journey, there is a penalty charge of up to £80 ($130).
In a huge urban surveillance scheme, 800 cameras at 400 points in and
around an eight-square-mile (21 square kilometer) chunk of the city center
monitor the licence plates of the motorists who drive into the area every
day. The charge is payable between 0700 and 1830 GMT from Monday to
Friday. Payments can be made by credit or debit cards, by text message and
at petrol stations, retail outlets and post offices.
I learned that they collected £32 million ($52 million) in three months,
and congestion has been reduced. So, it's here to stay (and may be coming
to a city near you, as many cities are watching this).
Retailers aren't too happy about the tax. John Lewis, one of the country's
largest retailers, said the tax has hurt their flagship store on Oxford
Street (sales down 7.3% since the tax was instituted, while other stores in
their chain were up 1.7%). And the tax will hurt all city retailing.
OTOH, Arriva, London's largest bus operator with 1,450 buses, claims the
quality of transport provision has improved, more people are travelling by
bus and London is easier to get around as a result.
I think we will see it in NYC soon. Now, all we need is to see it in L.A.
and Atlanta and maybe we'll all live longer ;-)
George
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[5] Cut-Rate Swedish Retailer Enters the Italian Market
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In an article in the NY Times, Eric Sylvers notes that Hennes & Mauritz (H
& M,) the store that sells cheap knock-offs or high fashion or
fashion-forward looks a very low prices, will open a store in Milan in
September. The question is whether the fashion-obsessed Italians will warm
up to overtly cheap fashion, especially when sold not far from
power-central of the fashion world (almost around the corner from Armani,
et al.) It also has located the store a short distance from Benetton and
Zara shops, which are after a similar market. H & M plans a gradual entry
into Italy, especially given the slowing economies in many regions.
H & M now has 900 stores in 17 countries, and had opened 100 stores a year.
2002 sales were $6.2 billion. It has had some growing pains, but largely
gets things right. Almost a third of sales are generated in Germany (and
three times the sales volume in its home country, Sweden,) which has been
in an economic recession. Italy is also confronting a slowing economy, but
they like clothes. A slow entry under difficult circumstances may focus H
& M's efforts in really figuring out what is really successful in the
Italian market. The store has had some difficulties in the U.S., and earns
only 5% of sales here, and looks at the U.S. as a growth opportunity when
it finds the right locations and the right store sizes (some were too big.)
Key competitive advantages for H & M include both quick 3-month complete
drawing-board-to-market time frame to adapt to hot-selling design ideas --
only Zara is quicker. Also: cost controls are a priority, e.g. its
employees travel coach class, not business class, and other money-saving
measures similar to Wal-Mart.
Regards,
Jan Owens
University of Wisconsin - Parkside
owens@uwp.edu
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[6] E-Commerce - total price reporting
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In the NY Times "E-commerce Report" Bob Tedeschi notes that more web
sites are showing total costs of the purchase, i.e. item, taxes, shipping
charges, extra fees, etc. It also notes that most will still quote an
initial base price, and then show all the add-ons. Otherwise, consumer may
just quickly look at the prices in an initial search, without paging
through, which will make the "all charges shown" site seemingly less
price-competitive.
Of note: Travelocity now has a "total pricing" approach that, for example,
shows the one-day rate, and then has a tab for "total price" that shows
taxes and other fees that would be incurred, itemized and then totaled. It
does not include add-ons like prepaid gas or insurance.
In contrast, Expedia shows a daily rate in a similar example. Other
information is listed on a "car details" page, which lists a 13% sales tax,
an 11% "concession recovery fee," and a "facility charge" of $2.20 a
day. Nowhere is the total charge shown, not even when the customer makes
the reservation.
Travelocity notes that the policy was the result of many calls of
frustration about the add-on charges that were not clearly
disclosed. Travelocity worked with Sabre, its parent company, to provide
complete and clear information. Exepdia and Orbitz are exploring similar
programs for car rentals.
The article notes that this policy does not yet apply to booking
hotels. This is enormously frustrating because hotel agents and travel
agents often KNOW the price of the add-ons up front. (Jan's note: I
conduct in this area of "missing price information," and customers are
enormously frustrated with such policies. My own peeve is hotels that
add-on a non-negotiable "resort fee" that I cannot decline -- and they KNOW
this charge going in without disclosing it at the time of booking. SOME
hotels are getting better at noting this at the time of booking, but it is
still REALLY irritating, especially when i expect the "resort" items to
come in the room package, e.g. use of the hotel's pool. Unlike high-priced
minibars that I can choose to use or not, the resort fee is non-negotiable
and known up-front to the hotelier. Why can't they tell ME before I check in?)
Phil Terry, of Creative Good, an Internet consultant, is quoted as saying
that companies that provide full-disclosure earlier in the process will
have an initial advantage over other retailers that do not, or hide behind
the waffle-y response, "Consumers know that taxes, etc. will be
added." The logic is that customers will migrate to the sites that offer
not only competitive prices, but make the whole process easier to
comprehend, i.e. make it easier to buy with confidence.
Regards,
Jan Owens
University of Wisconsin - Parkside
owens@uwp.edu
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Links to follow
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GAP Enterprises, Ltd. http://www.gapent.com/
Sarbanes-Oxley 2002 http://www.sarbanes-oxley2002.com
E-Tailer's Digest http://www.etailersdigest.com
ETD Archives: http://topica.com/lists/etailer/read
Prior to 29 Dec
1999 http://etailersdigest.com/archives/index.htm
Marketing Your Web http://www.gapent.com/myweb/
Automated Press Releases http://www.automatedpr.com