NFK Ltd, a fashion clothing retail company venturing into online sales for the f
ID: 1211949 • Letter: N
Question
NFK Ltd, a fashion clothing retail company venturing into online sales for the first time hopes to increase sales revenues overall, but are also concerned that their online sales maybe at the expense of sales in their existing outlets. They are also considering the potential opportunites and risks of entering into relationships with affiliates who may direct potential customers to their website. Discuss the issues facing this company, suppoting your answer with appropriate real world examples.
Note: 4 - 5 pages long.
Explanation / Answer
NFK LTD. want to enter into online sales, I
It is a great decision to enter into online sales, The companies strategy seems to be right, Today most of the companies that are exclusively in store sales have big problems,
The rent of the store is one big problem, After the global financial crisis many exisitng business have very difficult time with their store rental payments, This will reduce drastrically through online sales
Online sales is probably the only way forward for most companies in market today, It is difficult for them to understand this, but inevitably they have to adjust and adapt. If not they will just go bust
Challenges:
Inventory management, Warranty and repalcement are some of the most challenging tasks of online business, The biggest trouble always is from inventory management, In online we have observed that single product gets sold too much and other products just wont have such momentum, If you are in manufacturing business it is very difficult to adjust supply chains to meet the criteria..
Warranty: Stores have great advantage of taking back the product from customer and replacing it easily, but in online sales it would be very difficult to do the same. The process will now involve shipment tracking, Inward, Shipment inspection and replacement. This will consume huge time and costs company lot of money
Relacement: If the product you sold is not what the customer want he would ask for replacement.Then you have to go through all the process again loosing your time and money
Online affiliates: Afflilates can be wonderful but they are very expensive, They would atleast take away anywhere from 30-40% of your profit. This will create huge problem for your business.
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