1. Internet shoppingmall (LGeshop) JAGUAR TEAM Techno-MBA Park minshin, Hwang jungah MIS-MBA Shim kyungsub 2001 Fall KAIST Techno MBA MGT645 Electronic Commerce

2.

• Characteristics of eShop

• LG CATV Homeshopping

• LGeShop

• Growth Starategies of LGeShop

Contents

3.

• Explosive growing

• Market Size (forecasted in Aug. 2000)

(W billion) Characteristics of eShop 2,680 (91.4) 1,400 (115.4) 650 (140.7) 270 (237.5) 80 - Andesen Consulting 1,715 (86.2) 921 (86.1) 495 (129.2) 216 (120.4) 98 (110.8) 465 LG Research 2003E 2002E 2001E 2000 1999 1998

4. Characteristics of eshop

• 2. Low entry barrier

• Little regulation

• Low capital

• # of shopping mall: 800 (99) 2,000 (Jun 01)

Characteristics of eShop (W bilion) 00 01

5.

• 3. Demographic

• Shopper : 2.9mil (1Q01) 14% of total netizen

• #eShop over 500,000 visitors : 13 (Mar01)

• • Lotte (1.3mil), Interpark (1.1mil), Samsung (1.0mil), Lgeshop (0.9mil)

• Shopper analysis

Characteristics of eshop Characteristics of eShop

6. Characteristics of eshop

• 4. Competitors

• HansolCSclub, Samsungmall, eHyundai, Lotte.com etc. but there are not much differences each other

Characteristics of eShop Korea Institute for Electronic Commerce

7. Characteristics of eshop

• 4. Competitors

• Samsungmall, HansolCSclub and eHyundai excel in delivery

• Lotte.com excels in system

Characteristics of eShop www.samsunmall.co.kr www.csclub.com

8.

• Computer & peripheral

5. Product Category Characteristics of eshop Characteristics of eShop Electronics books, stationery others food and nuitrition cars and sports goods clothes and beauties ticket, travel toys flowers other services

9. Classification of eshop

• Portal-based mall

• • Yahoo shopping, Daum, Lycos, Naver

• • Brokerage: Lower cost, higher efficiency

• • Disadvantage in one-stop customer service

• Pure on-line eShop - Samsungmall, interpark, buynjoy(KT), happy2buy(Sktel) - Based on strong IT infrastructure - Strong influence of parent company

• Off-line based eShop - Lotte.com, e-hyundai, hansol CS club, LGeshop: - Established based on off-line shopping mall - Advantage of merchandising, delivery system

10. LG homeshopping LG CATV shop CATV and Catalog shopping LGeshop.com Internet shopping mall

11. LG TVshop

• Launched in 1996

• Market leader among the two players (LG: CJ39 = 60:40 in 00))

• Market size

• Bargaining power and higher margin structure

• • merchandizing from small and medium companies.

• Well-off Customers with 30~40 yrs housewives

• • purchase high price products: home appliances, electronics, clothing..

(W billion) 25 30 90 27.5 163.3 369.9 % of growth 1,630 1,304 1,003 528 414 157 Market size 2002E 2001E 2000 1999 1998 1997

12. TVshop vs eShop Market characteristics low moderate very high low eShop moderate high moderate high TVshop Customer loyalty Bargaining power Competition Entry barrier

13.

• Customers age

TVshop vs eShop

• Customers gender

• Purchased product

10 20 3 30 40 2 20 30 1 eShop TVshop ranking 69 20 male 31 80 female eShop TVshop CDs, video tapes Apparel 3 Computers Fashion goods 4 Travel/services Foods 5 Software Electronics 2 Books Household goods 1 eShop TVshop ranking

14.

• Opened in 1998 as a supportive function for TVshop

• Reformed and took its own way from may, 2000

• Dramatic increase in sales & # visitors

• LGeShop revenue trend

LGeShop (W billion)

15. Critical Success Factor

• Synergy with TVShop

• • Merchandising, delivery, after-sale service

• • Co-promotion :VOD system

• Differentiated customer service

• • Refund service(within 30 days)

• • Pre-refund service

• • Recall service

• • Delivery on the appointed day service

• • Call center(24hours a day)

Critical success factor

16. Critical success factor

17. Strategy of eShop SCM POS EDI CRM Value chain Supplier management Inventory management Sales & marketing customer management Delivery Management price logistics customer service Customer loyalty Profit

18.

• Customer loyalty directly relates with Sales

• Sales = buy rate * customer transaction (price/buy)

Buy rate = buyer/ visitor Customer loyalty 6.7 11,050 739 Walmart.com 15.6 5,656 885 Jcpenny.com 10.9 8,680 942 Cdnow.com 11.4 8,317 951 barnesandnoble 13.9 28,534 3,962 Amazon.com Buy rate(%) Visitor (000) Buyer(000) Web site

19. Walmart vs JC Penny www.walmart.com www.jcpenny.com

20. Sales = buy rate * customer transaction (sales/buyer) KRNIC (Korea Internet Info Center) Mar ~ May, 2001(w) Customer loyalty w180,515 w209,017 Sales/buyer w525 bil w489 bil sales 2.91 mil 2.34 mil buyer 1Q 2001 4Q 2000 22,000 51,483 Sales/buyer Hyundai DS E-Hyundai

21. Strategy of eShop SCM POS EDI CRM Value chain Supplier management Inventory management Sales & marketing customer management Delivery Management price logistics customer service Customer loyalty Profit

22. Customers criteria for selecting eshop (KISDI, 2000.12) % Survey from 180 people who ever bought in the eshop Price

23. Critical factors of competition among B2C B2C companies considers the price the most critical factor in competition. Price

24. Price Strategy of LGeShop

• To establish SCM with suppliers

• • For the tight control for the inventory reduce cost

• Synergy with TVshop for bargaining power

• • with TV homeshopping, it can achieve the economies of scale in purchasing

25. Strategy of eShop price logistics customer service Customer loyalty Profit SCM POS EDI CRM Value chain Supplier management Inventory management Sales & marketing customer management Delivery Management

26. Evaluation E-mail Notification Pick, Pack and Ship Front Office Back Office Customer Interface Payment Process Ordering Web Hosting Payment Order Tracking Delivery, Customer Analysis Delivery Monitoring Receive Order, Connect Supplier And Deliverer Delivery Notification Order fulfillment Web Site Browse Search Item Selection Buy button Logistics

27.

• SCM with suppliers and transportation company

• Synergy with TV shop in delivering and storing

Logistics strategy of LGeShop

28. Strategy of eShop price logistics customer service Customer loyalty Profit SCM POS EDI CRM Value chain Supplier management Inventory management Sales & marketing customer management Delivery Management

29. The CRM System CRM system overview D3 Marketing Database Customers?Transactional Responses External Data Legacy System Data Strategic Analyses Data Mining Strategic Analyst Statistician Marketer Customer Build Customer DB Manage Campaigns Communicate with Customer (Call- Centre ) Customer DB Manager Management Evaluate Effectiveness CRMS Overvie Communicate with Customer (Marketing) Communicate with Customer (Sales) Customers? Responses

30. CRM system overview operational CRM Analytical CRM Collaborative CRM Process automation of customer contact point such as marketing, sales and call center Customer data analysis to establish marketing and sales plan for customer service Communication process to increase the harmony within the organization and between organization and customer

31. C/S Strategy of LGeShop

• To establish CRM to increase the customer loyalty

• Synergy with TV shop in conducting CRM

32. SCM POS EDI CRM Value chain Supplier management Inventory management Sales & marketing customer management Delivery Management price logistics customer service Customer loyalty Profit Conclusion

33. Thank you !