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E-tailing Deeper Penetration Implications,
Strategies and Comparative Analysis
Deeper e-tailing penetration implications
E-tailing is changing the value chain a
nd how players compete. Deeper penetration of e-tailing in the market
is likely to have implications for each stage of the value chain.
For manufacturers, existing go-to-market channels are challenged as e-tailers gain s
hare. Disruption to
traditional brick-and-mortar distribution, and the growth of consolidated e-tail channels, could reduce the
negotiating power of manufacturers and potentially squeeze their margins.
Deeper e-tail penetration: implications & potential strategies
Value chainImplications for industry playersPotential strategies to adapt
Manufacturing
Existing go-to-market channels challenged as e-tailer stake
share
Therefore less negotiating power and potentially lower margins
Direct-to-consumer sales (e.g., Whirlpool)
Differentiated assortment by channel (e.g., Nike)
Partnerships with e-tail players (e.g., Schneider)
Minimum Advertised Price (MAP)
Increased focus on cost reduction or brand/quality
Distribution
Increasingly challenged by direct-to-consumer or e-tail
partnerships
Therefore, increasingly difficult to add/retain customers and
maintain margins
Emphasis on DIFM sales (e.g., ABC supply)
Niche focus (e.g., D&H)
Collaboration through cooperatives (e.g., Affiliated Distributors)
Shift to e-tailing (e.g., Grainger)
Emphasis on service
Retail
Auto Specialty
Less in-store customer traffic and potentially lower margins
More customer engagement via digital means
Omni-channel approach (e.g., Staples)
Focus on store experience (e.g., Nordstrom)
Flexible fulfillment (e.g., Lowe’s)
Rationalize store footprint (e.g., Best Buy)
E-tail price match (e.g., Home Depot)
E-tail
Growth
Direct relationships with manufacturers
Local supply chain hubs (e.g., Amazon)
Drop-shipping direct from manufacturers
Integration with shop management & e-procurement SW
Expansion into physical stores (e.g., Bonobos)
In distribution, players are increasingly forced to adapt to new direct-to-consumer and e-tailing partnerships.
These new channels make it increasingly difficult to add and retain cu
stomers and maintain m
argins.
In retail, higher digital penetration can lead to less in-store customer traffic and potentially threaten margins of
key players. Established players have evolved their omni-channel strategies to increase customer engagement
via digital means, as customer expectations and preference continue to evolve.
Higher e-tailing growth has also led to more direct relationships between consumers and manufacturers.
Several strategies have been adopted by manufacturers and retailers to avoid price erosion and disruptions
caused by higher e-tailing penetrations. These lessons learned provide valuable insight into how traditional
players can successfully compete in the auto care industry.
Several key learnings from industries that have experienced similar disruption can be applied to the auto
care industry.
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