Week 6 – Supply Chain Management

 

Strategy for management of upstream and downstream supply chain Argos.

Upstream Supply Chain basically all Argos’s transactions, dealing with other intermediaries and suppliers (same as buy side e-commerce).

Downstream Supply Chain basically all Argos’s transactions, dealing with other intermediaries and customers (same as sell side e-commerce).

Argos has a supply chain, minimum number of networks, its suppliers and customers.  Argos supply chain management consists of materials, processes, human capital and information between suppliers and customers ensuring maximum customer service for all.  This creates great advantages to business, reduces data errors to 0,reduces order lead time, improves management control and benefit functioning of supply chain.

 

 

There are two types of Supply Chains (Push and Pull)

Although in my opinion I feel Argos operates a Pull system because of its customer demand/satisfaction emphasis.  

 

Pull Model, advantages for Argos, very forceful, because planned level of production/service delivery not dependant on forecasts (maybe inaccurate).  Operated in response to Argos customer demands and also emphasises on delivering value to their customers.

 

Downside of pull model from Argos customers’ point of view, in the troll on the market, being 1^st mover could experience pain.

 

Argos have ethical trading conditions in their supply chain.

 

Vertical integration

Amount of supply chain activities Argos undertakes and have controlled access within the company.  Argos has distant relationships with its suppliers.   Argos business carries out the work by themselves, e.g. updates the Argos web site.  Therefore they don’t have to pay anyone else to carry out maintenance within the website. 

 

Disintegration

 

Argos has a wide range of network suppliers, also using disintegration Argos is outsourcing all the time.  Argos here basically focuses on any core capabilities and most importantly cost reduction.  Argos ways up all options available, such as whether to pay another company to maintain/update the Argos website.

 

Virtual integration

Argos have a majority of supply chain activities, they control these outside their business using linked third parties.  Argos also has a close relationship with all its suppliers (Sony, Samsung, Fisher-price etc).  They have suppliers who assembly component parts.  Argos uses a dot-com approach within their virtual integration.

 

 

Partnership Management

                       

Argos does not have any partners.  Home Retail group de-merged from its parent company GUS plc, October 2006.  Argos is a solo company and therefore does not have any shareholders but in saying this have shareholders in a different form, e.g. a long time serving employee may have some shares in the business, but this does not affect the company in terms of decision making.  Shareholders are brought in when the company needs money, basically they sell pat of the business in this process.

 

 

Value Chain

 

Basically this takes into consideration the value (benefit of each product, what it costs and the benefit of each interface between individual products which Argos sales to its customers and cost).  This is a fairly simple process, start product/service worthless as nothing being created, as manufacturing process tacks place, this increases value right up until the end product.  The likes of argos.co.uk website its worthless until customers start buying product(s)/service(s).  many transactions flowing daily, generating a profitable service.

 

Procurement and fulfilment strategies

Procurement basically resources all goods and services at a low as price as possible by a business organisation.  Argos must remain competitive throughout their trading habits and keep everything consistent, e.g. offer leaflets once every 2 months.  All factors must be taken into consideration by Argos, e.g. price of item, postage costs, interest, fluctuation (up/down).

 

Fulfilment basically is the name given to how companies carry out their dealing with customers in terms of orders.  This starts from Point of Sale (POS) until product/service arrives at customers’ front door.  Many organisations use their own courier (Argos, Famac, Parcelforce).

 

For Argos to preserve a 1^st class service, their strategy needs to work closely with both suppliers and customers.

 

Week 5 – E-Business Strategy

Threat of substitute products

 

Substitute products being much cheaper and perhaps equal in design, quality and can satisfy same basic need.  The buyers have a great choice and are not limited to one company such as Argos to purchase their wanted product(s); they have many sources in which to do this. (E.g. A kettle at £49.99 and one at £9.99, Product-to-product specification).  Perhaps even products which consumers don’t need and can do without (insurance as all electrical products come with a standard 12 month/year warranty or experience packages (cars, flying, paintballing, go-karting vouchers, it would be nice but certainly it’s not essential to have.

 

If you can beat them join them.  A way to get round this is have your own range, e.g. Argos Value Range.  Businesses such as Argos, can claim that the product they are selling is better than substitute products as they have a proven track record, genuine, original and in return have a slightly dearer price.

 

Argos can use their name and reputation as a means of selling different products, e.g. If Argos is selling it, the product must be good (customer saying/thinking).

 

Argos also plays on the fact they have an established good customer service policy, e.g. returns policy and customer satisfaction.  Therefore any new competitor to the market will not have established this (Argos has longer experience within this area).

 

 

The threat of the entry of new Competitors

 

Existing and potential competitors can influence the average industry profitability.  Entry barriers only exist whenever it becomes difficult or non- economical for a company to replicate (duplicate) the current position.  E.g. many benefits would be associated with bulk buying (Argos buying thousands of same product), investment into technology, how they choose to cannel their distribution creating easier access for competitors (Amazon, Curry’s, Woolworths, E-bay), may be contract costs involved and finally certain products/brands, which cannot be copied, exclusive to one company (e.g. Argos Value Range or certain fisher type products (exclusive to Argos))

 

 

The intensity of competitive rivalry

 

This is the most valuable and most obvious contribution of the ‘five force’ areas for Argos to consider.  As there are many competitors (head-to-head competition).  Habit of driving costs down, e.g. a particular model of Samsung TV, agreed with manufactures only supply to Argos.  No need to be competitive as only company selling this item. Can advertise claims, cheapest you can get anywhere and they don’t tell people that it’s not available to buy anywhere else (Innovation).

 

Argos must price product correctly, e.g. if a product is to expensive no body will buy, if product is cheap, company wont make profit but will beat competitors.  Argos has to get this right to survive in a successful wealth background.

 

Price an item not to make profit, classified as a lost leader, gets customers interested in other products, which have profit margins, e.g. Toaster selling for £3.74 for a two week promotional period.

 

An example outside Argos would be the current rising cost of fuel and attitude of oil companies and retail suppliers.

 

 

The bargaining power of customers

 

Bargaining power of customers cut down in Argos case as Argos produce a catalogue and flyers that are widely distributed throughout the United Kingdom with prices widely known.

 

Currently in a recession, every customer knows that overall sales are down, the customer can be more aggressive in buying stance (only buy product if there is a reduction in price)

 

Seasonal goods (tents, Christmas merchandise, patio sets), because it’s out of season they may be bought at a much lower cost, resulting in a higher profit margin.

 

 

The bargaining power of suppliers

 

Argos source products which they stock/sell and ensure customers get what they want, at a price they see at a good value.  This in return results in a higher profit margin and passes better value to the customer.  Any decision made by Argos is unpinned by choice, value and convenience.  E.g. TV manufactures Samsung, Sony any product under warranty to be serviced by themselves, extra cost to Argos as a company.  Might demand that Argos is not allowed to sell product under certain price or they will refuse to sell them the product.  They may demand that spare parts are only available from their firm and at an expensive price.

 

Suppliers have already got a lot of bargaining power as they are usually manufacturing merchandise in vast quantities and therefore can dictate where to buy a bit/part from a particular source (cheapest supplier for large quantity of items).  Argos is a high power company as they have many channels and a well known reputation nationwide. 

 

Week 4 – E-Environment

 

From looking at terms and conditions for purchasing on Argos website, I feel that they are fairly standard and overall satisfactory for all.

 

Terms and Conditions

 

• Register and Password
• Delivery only UK Mainland and Northern Ireland
• Video games are age restricted (legally)

 

Most goods when purchased have a 30day money back guarantee although this does not apply to the likes of mobile phones, mp3 players, digital cameras and gift vouchers.  The company can justify these actions as someone may purchase a camera for the likes of a wedding then return it a few days later.

 

If any difficulties occur methods to resolve these are as follows, e-mail, phone, letter form or in store.

 

I feel Argos’s E-Environment terms and conditions are just as good as its fellow competitors (Amazon) and in some case better (E-Bay).

 

 

Registration process for Argos

 

 

Website offers secure online shopping and security measures to avoid credit card details stolen, hacked into and personal identification stolen.

 

When accessing ‘Login’ or ‘checkout’ pages through browser this automatically goes into a secure mode and use standard security protocols (happens before any personal information or payment details are entered in by the user).  You can check for this facility by looking for a key icon, which would be situated on the grey bar at the bottom of your screen or by a locked padlock (image found on screen).

 

This helps keep the information secure from unauthorised access from other Internet users.  Basically encryption creates billions of code combinations and this is to protect transactions made with the Argos website (this in done in an individual basis, per each transaction).  Most recent browsers offer 128 bit encryption resulting in customer details being kept as safe as possible all the time.

 

Argos only accepts sales to those using a Secure Socket Layer (SSL). 

 

 

Cookies

 

A cookie is basically an element of data, which Argos can use to send to send to a customer/potential customers web-browser and stored on their computer system.  The purpose, to see who has seen which advertisements, pages, frequent page visited and determines most popular pages of the website.

Allows us to make website more users friendly and can also have permanent cookies allowing us to save password on website resulting in users not needing to remember.

 

 

Bibliography

 

http://www.argos.co.uk/static/StaticDisplay/includeName/privacyPolicy.htm

http://www.argos.co.uk/static/StaticDisplay/includeName/TermsAndConditions.htm

http://www.argos.co.uk/static/StaticDisplay/includeName/Security.htm

Week 3 E-Business infrastructure – Argos

I have been asked to explore the Internet for information on my chosen website and target specially data, which places my site in context; for example, competitors, industry averages and growth rates.

 

Above we have a daily reach line graph for Argos and this is done out in terms of percentage throughout a 6 month timescale.  The general trend is up and highest in July.

 

Reach for argos.co.uk, percent of global Internet users who visited the site.  Yesterday was 0.082%, 1 week Average 0.0647%, 3 month Average 0.0605% and a 3-month change is up 16%.

 

Reach in simple terms measures the number of web users who visit an individual site.  It measures all global Internet users (measured by Alexa) E.g. www.argos.co.uk

 

http://www.alexa.com/data/details/traffic_details/argos.co.uk

 

 

Above we have a daily traffic rank trend for Argos and this is done out in terms of web users who have visited the site.  As you can see the trend is rising most of the time and the all time high was towards the end of July and the low being May.  This is based on a 6-month timescale. 

 

 

Traffic rank monitors millions of web users and data got from others to find out various traffic data sources.  This information in return is counted, sorted, computed and giving a traffic rank.  It is a complicated process.

 

Traffic Rank for argos.co.uk, (Alexa traffic rank based on a combined measure of page views and users (reach).  Yesterday was 891, 1 week average 1, 125, 3 month average 1, 213 and a 3 month change is up 276. 

http://www.alexa.com/data/details/traffic_details/argos.co.uk

 

 

Above we have the daily page views in terms of percent over a 6-month timescale.  As you can see the percentage is up and down but in general stays around the same level, the month high is in July and the lowest being recorded in June. 

 

Page Views per user for argos.co.uk (the number of unique pages viewed per user per day for this site.  Yesterday 9.1, 1-week average 8.61, 3 month average 9.01 and a 3-month change is down 10%.

 

Page views takes into consideration the amount of pages viewed by individuals who visit the site (www.argos.co.uk).  Individuals who access the same web page multiply times on the same day are only counted once regardless of how many times it is viewed.

 

 http://www.alexa.com/data/details/traffic_details/argos.co.uk

 

I discovered that 94.4% of argos.co.uk users came from the United Kingdom.  A few more popular being India, 0.8%, United States 0.6%, Ireland 0.5% and Pakistan 0.3%.

 

Argos.co.uk traffic rank in order of countries: United Kingdom 39, Ireland 845, Pakistan 3452, India 10, 352 and United States 74, 160.

 

I have also carried out some research into some of my competitor’s sites also, this can be found below. (Amazon and Curry’s)

 Amazon

 http://www.alexa.com/data/details/traffic_details/amazon.co.uk

Reach for amazon.co.uk (percent of global Internet users who visit this site).  Yesterday 0.271%, 1-week average 0.262%, 3 month average 0.2622% and 3 month change is down 9%.

 

 http://www.alexa.com/data/details/traffic_details/amazon.co.uk

Traffic Rank for amazon.co.uk (Alex traffic rank based on a combined measure of page views and users (reach).  Yesterday272, 1-week average 268, 3-month average 264 and a 3-month change down 14%.

  

 

http://www.alexa.com/data/details/traffic_details/amazon.co.uk

Page Views per users for amazon.co.uk (the number of unique pages viewed per user per day for the site).  Yesterday 6.32, 1-week average 6.83, 3-month average 6.75 and a 3-month change are down 3%.

Amazon.co.uk user come from many countries, but the most popular being United Kingdom with 61.7%, United States 7%, Germany 3.1%, India 2.7% and Ireland 1.8%.  These are only a few of the most popular countries using amazon.co.uk

Amazon.co.uk traffic rank in terms of countries, most popular being United Kingdom with 14, Ireland 50, Germany 589, India 645 and United States 1, 275.

 Curry’s

 

 

  

 

 http://www.alexa.com/data/details/traffic_details/currys.co.uk

Reach for currys.co.uk (percent of global Internet users who visit this site).  Yesterday 0.031%, 1 week average 0.0251%, 3 months average 0.01747% and a 3 month change is up 15%

 

http://www.alexa.com/data/details/traffic_details/currys.co.uk

Traffic Rank for currys.co.uk (Alexa traffic based on a combined measure of page views and users (reach).  Yesterday 2, 889, 1 week average 3, 573, 3 month average 5, 278 and a 3 month change is up 1, 523.

 

http://www.alexa.com/data/details/traffic_details/currys.co.uk

 

Page Views per user for currys.co.uk (the number of unique pages viewed per user per day for the site).  Yesterday 4.3, 1-week average 4.25, 3-month average 4.71 and a 3-month change down 2%.

 

Currys.co.uk users come from the following countries, United Kingdom 95%, Ireland 0.8%, India 0.6%, Pakistan 0.5% and United States 0.5%.  These are only a few of the most popular ones.

 

Currys.co.uk traffic rank in there countries, United Kingdom 160, Ireland 1, 923, Pakistan 12, 530, India 55, 227 and United States 269, 455.

 

I have been asked to explore the purchasing aspect of my chosen website and describe the different steps in this process in terms of technology being used. 

 

There are many different ways that an Argos customer can purchase their chosen item these are, in store, online, by phone, by sms followed by in store collection (reserve item(s)).

 

The Argos website offers secure online shopping and security measures are in place to avoid anything bad happening (e.g. credit card details stolen, hacked into, personal identification stolen).

 

As soon as a potential/existing customer accesses the ‘login’ or ‘checkout’ pages their browser will automatically go into a secure mode and use standard security protocols (happens before any personal information or payment details are entered in by the user).  You can check for this facility by looking for a key icon, which would be situated on the grey bar at the bottom of your screen or by a locked padlock (image found on screen).

 

Whenever Argos users have clicked either ‘login’ or ‘checkout’, as I have mentioned above secure mode is enabled meaning all details entered are encrypted.  This helps keep the information secure from unauthorised access from other Internet users.  Basically encryption creates billions of code combinations and this is to protect transactions made with the Argos website (this in done in an individual basis, per each transaction).  Most recent browsers offer 128 bit encryption resulting in customer details being kept as safe as possible all the time.

 

Argos only accepts sales to those using a Secure Socket Layer (SSL).  This type of software prevents revealing any kind of personal information through a secure connection. 

 

I discovered Argos.co.uk uses further online security measures by participating in MasterCard Secure Code and Verified by Visa.  This service is provided by the credit/debit card companies.  For this users will be asked to register, it’s basically an online shopping code identifying the end user.  It’s the online equivalent of a chip & pin process, currently used on the high street to purchase/order items.

 

Online you are able to check the latest prices and availability, reserve your item online, so that it’s ready for in store collection, order extra (Argos Extra) items either for delivery or in store collection.

 

All Argos orders placed on the Argos website can only be delivered to mainland UK and Northern Ireland.

 

Transactions online at www.argos.co.uk

 

The first thing you must do is enter your wed address in (URL) (www.argos.co.uk), select/browse categories, add item(s) to basket, proceed to checkout, your then asked to login if you’re an existing customer or register if you’re a new customer, enter personal details, payment details (still needed to be entered in if you are an existing customer to strengthen security), in some occasions depending on item select a delivery date, Item arrives at your door and finally enjoy.

I am now going to show how to purchase an item using argos.co.uk, logon to the website, next if you know the catalogue number you may type it in if not type in what you are looking for.  I want a 32 Sony High Definition TV.

 

 

 

Using the search facility (internal search engine) at the top of www.argos.co.uk  , I have typed in ‘Sony 32 HD tv’ then clicked enter/return.

 

I entered in my postcode to check the availability of my chosen item at my closest Argos store.  The item was in stock and my screenshot can be found below.

 

 

Although my item is not currently in stock at Newtownabbey I have been able to order it for collection.

The above screenshot shows that my reservation has been successful, give me a reservation number appropriate for my order and my store (Newtownabbey) and tells me when exactly my reservation will be held to.  Also shown is the price.  If I had opted for this item to be delivered to my house there was a standard £5.95 delivery charge, regardless of how many items was being delivered.

 

New channels to market e-business are becoming increasing popular and is needed more so now with the latest credit crisis in my opinion.

 

Argos currently has many channels, which they offer to, their customers these include: Internet (online), Shop (Retail), By Phone, SMS (reserve).

 

Strategic choices often carry varying levels of risk, social impact and profitability.  Growth is based on customer satisfaction and reliable products.  Argos has many strategic choices, marketing, merchandising and selling products/services, sourcing and purchasing resources.

I feel perhaps Argos could create their very own personal television programme and this could possible be their most successful channel in the future and to date.  One of the best well known satellite channels to have done this is QVC (Quality Value Convenience).  QVC has been extremely successful marketing their products using this channel method and have reaped the rewards in doing so.  Perhaps they could even take QVC idea of having a Today’s Special Value (TSV) everyday as well as promotional offers offering the customer great saving, generating more profit and growth within their business sector on a major scale.  I think this has great potential and if implemented would be a great success.

 

Bibliography

 

http://www.alexa.com/data/details/traffic_details/argos.co.uk

http://www.alexa.com/site/help/traffic_learn_more

www.trafficdirect.org

http://www.alexa.com/data/details/traffic_details/amazon.co.uk

http://www.alexa.com/data/details/traffic_details/currys.co.uk

http://www.argos.co.uk/static/StaticDisplay/includeName/Security.html

Week 2 – www.argos.co.uk

 What is Argos?

http://www.argos.co.uk/static/Home.htm?sRefURL=http%3A//www.google.co.uk/search%3Fhl%3Den%26q%3Dargos%26meta%3D

Argos basically offers an online shopping facility to the general public and was first found in 1973, now supplying over 18,000 products.  The general idea behind Argos came from a company catalogue, which they produced for promoting all the products they offer to others.  Argos is massive giants and offer value and convenience on general merchandise and products for the home.  Argos is not only an online business model as it has many stores throughout the UK and Republic of Ireland. 

 

Argos has 707 stores nationwide.  Throughout the financial year Argos sales is now sitting at over 4.3 billion pounds (annual report 2008), this is an annual grow of 3.8%.  The Company is also known as Home Retail Group (HRG) and now is a solo company (2008) after splitting with GUS in 2006.

 

 Argos has a famous slogan, which is widely known as, ‘Don’t shop for it! Argos it!’

 

The company employs over 34, 000 people across their business. 

 

http://www.argos.co.uk/static/StaticDisplay/includeName/AboutArgos.htm

‘Argos’ Internet site is the second most popular Internet retail site in the UK’.

 

Argos serves over 130 million customers a year and a further 4 million through orders over the phone and online website.

 

http://www.argosb2b.co.uk/about_us

 

 

 

The above shows a bar graph (appropriate 2008)

 

http://www.homeretailgroupar.com/hrg/arr07/review/argos/?tab=kpis

 

 

Acquisition of Argos by GUS plc was in 1998, they then decided to launch an online website in the same year.

 

http://www.homeretailgroupar.com/hrg/arr07/_downloads/HRG_Annual_Report_2008.pdf

 

Between 2007 and 2008 a further 27 stores have been established.  Argos now has a grand total of 707 stores throughout the UK & ROI. 

 

 

Argos financial highlights 2008

 

• Gross margin approximately ahead by 50 basis points
• Expenses for operating are currently up 4%, of which underlying inflation is approximately 3%
• Benchmark/target operating profit £398m (2008), that’s up 11% on 2007 (pro forma £359m), this is a growth of 16%
• Benchmark/target profit before tax was £433m, this is up 15% and Argos reported profit before tax was £426m
• Basic Benchmark/target earning per share in 2008 currently up 16% (33.9p as apposed to 2007 pro forma of 29.3p) shares are 34.0p (basic earning)
• Net cash was increased to £114m in 2008 and closing at 174m
• Benchmark/target pre-tax return invested capital is 12.7%, that’s up 70 basis points
• Final dividend of 10.0p recommended, a full year divided up to 14.7p as apposed to 2007 (13.0p) that’s an increase of 13%

http://www.homeretailgroupar.com/hrg/arr07/_downloads/HRG_Annual_Report_2008.pdf

 

Argos profits increased by over £50m, resulting in a strong financial operational performance.

 

 

Financial Summary

 

Throughout 2007 and 2008 Argos was very successful financially.

 

• +13% Growth in dividend per share (2008: 14.7p – 2007: 13.0p)
• +114m Increase in closing net cash (2008: £174m-2007: £60m)
• £900 Million sales Argos makes via the Internet
• +50% Growth in Internet check & reserve sales

 

Argos, statutory 52 weeks to 1^st March 2008 £m = 4,320.9, pro forma 52 weeks to 3^rd March 2007 £m = 4,164.0 and statutory period to 3^rd March 2007 (short period) £m = 3,912.8

Gross profit, statutory 52 weeks to 1^st March 2008 £m = 376.2, pro forma 52 weeks to 3^rd March 2007 £m =325.0 and statutory period to 3^rd March 2007 (short period) £m = 300.9

 

 

http://www.homeretailgroupar.com/hrg/arr07/_downloads/HRG_Annual_Report_2008.pdf

 

Argos currently is the leader in multi-channel retailing and offer many ways to meet the needs of the customers through three retail brands, in store, shopping at home using catalogues, over the phone and using the Internet.  By using multi-channel such as online and retail premises this increases sales in every direction. 

 

Competitors to Argos are B&Q, Curry’s, MFI, IKEA, Tesco, Sainsbury’s, ASDA, Amazon, Woolworths, H.Samuel, etc.

 

Argos is opening on average 30 stores a year.

Global Internet users who visited argos.co.uk, yesterday in terms of percent was 0.061%, 1 week average 0.0574%, 3 months average 0.0599% and 3 months change is up 16%.

Traffic rank for argos.co.uk yesterday 1,198, 1 week average 1,271, 3 month average 1,223 and 3 month change is up 291.

 

Page view for users for argos.co.uk yesterday was 8.4, 1 week average 8.44, 3 month average 9.03 and 3 month change is down 10%.

 

Argos.co.uk has many users from various countries, most popular being UK 94.1%, India 0.7%, US 0.7%, Ireland 0.5% & Pakistan 0.3%.

 

Argos.co.uk traffic rank in Various countries, UK 39, Ireland 844, Pakistan 3,857, India 11,063 and US 66,966.

 

http://www.alexa.com/data/details/traffic_details/argos.co.uk

 

I discovered that Argos sales across more than one channel grew to 37%.

 

 

Bibliography  

 

http://www.argos.co.uk/static/Home.htm?sRefURL=http%3A//www.google.co.uk/search%3Fhl%3Den%26q%3Dargos%26meta%3D

http://www.argos.co.uk/static/StaticDisplay/includeName/AboutArgos.htm

http://www.homeretailgroup.com/

http://www.argosb2b.co.uk/about_us

http://www.homeretailgroupar.com/hrg/arr07/

http://www.homeretailgroupar.com/hrg/arr07/review/argos/?tab=kpis

http://www.homeretailgroupar.com/hrg/arr07/_downloads/HRG_Annual_Report_2008.pdf

http://www.alexa.com/data/details/traffic_details/argos.co.uk