CASE STUDY REPORTE CHANNEL INTEGRATION @FNAC.COM

SUBMITTED TO

MR. PRASHANTH NAIR

SUBMITTED BY

PETHE SARANG S. BLR0907033052SUBBA REDDY M.V BLR0907033186

RUPESH KUMAR SHUKLA BLR0907033099KUMARI KHUSHBOO BLR0907033155

CASE STUDY- E CHANNEL INTERGRATION @ FNAC.COM

GIST OF THE CASE

Fnac.com was launched as a part of e commerce business by Fnac direct in 1999. It entered

this business with hesitation but within few year Fnac.com became the highest revenue

generator and was ranked 8th in first quarter of 2004. Fnac was a subsidiary of Prinault-

Prtintemps-Redoute (PPR). PPR was a specialist distributor in timber industry and it grew

over the years through series of acquisitions. The present case describes the PPR business and

its various subsidiaries and also Fnac. The case is about channel management. The case

describes the e commerce business of Fnac and the diversification of core retail format of

Fnac. The PPR business faces competition from various companies like French hypermarket,

Alpage.com and amazon.com, online discounters and music giants like Sony, Virgin, Apple.

The case describes the diversified business of PPR and how these subsidiaries are managed.

The main strength of Fnac retail business (offline) is that it offers a wide range of products

and the sales person are real expert, record collector or bookworms which helps customer to

chose the best product. Fnac outlets are present in major cities in France. The average store

space is 2200 sq.m and there are 64 such stores. Fnac has highest market share in most of the

categories. Fnac has diversified its business into Fnac junior, Fnac services and Surcouf. Fnac

got 25% of its revenue from abroad and so it launched aggressive international store opening

program. As a result the international store reached 41 stores in 2003 from just 5 stores in

1195.

KEY ISSUES

The key which are in the mind of Jan Loning, CEO of Fnac Direct and which is needed to be

discussed is as follows,

Is it possible for Fnac to integrate their online and offline business further?

Should the company further move rapidly into new areas such as digital music

download?

How to improve customer service?

How to fight internal and external competition?

How the channels should be managed?

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CASE STUDY- E CHANNEL INTERGRATION @ FNAC.COM

POSSIBLE OUTCOMES

The major business of PPR is mail order service, departmental stores, household

appliances and furniture, cultural and leisure product, electrical parts, automobile and

pharmaceutical. Presently there is integration of Fnac.com and mail order service in

which the products are delivered to customers free of cost. There can be a further

integration by showcasing products from other business on the E business. Presently

Fnac.com has same products as in offline business.

Fnac is involved in selling cultural and leisure products. Out of this music, books and

ticketing service forms a major part. The music sales face stiff competition from

Sony, Virgin, etc. Also online music download has gained momentum. There is

growth seen in the number of internet users so Fnac can enter in digital music

download segment.

The customer service can be improved by having more call centres, less waiting time,

experienced and customer oriented sales force.

The PPR retail sector consist of subsidiaries like Fnac, La Redoute and Conforma.

Thus it has internal competition between its subsidiaries. This competition can be

avoided by using different positioning strategy by each subsidiary. It faces external

competition from online retail major like Amazon. However it has less reasons to

worry as Amazon has not performed well in France. However as major sales of Fnac

comes from outside the country Amazon is a major threat to it. It can tackle by

improving the website and having better customer service.

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CASE STUDY- E CHANNEL INTERGRATION @ FNAC.COM

OUR RECOMMENDATION

The following are our recommendation which covers all the important case questions.

We think that Fnac should keep their offline and online business distinct. The

products offered in stores are cultural and technological products whereas a variety of

products are offered online. The positioning of both the business is different so the

online business should give information and reviews about the products present in

store. The online website should target the youth and metropolitan customers.

The website should focus more on pre release booking of books, CD and DVD. It

should provide customization so that customers see only those product categories in

which they are interested. They should make tie ups with payment gateways and

should see that there is hassle free credit card payment.

Fnac should make technological investment, involve in customer acquisition and

marketing. Warehousing, packaging and shipping should be coordinated to ensure fast

delivery.

We propose that Fnac should provide online music download and charge it in range of

0.3 to 0.5 Franck per song. It can give loyalty points to those who download songs

through its website.

PPR should ensure that the products available in Fnac store should not be available in

its flagship stores. It should ensure that there is no channel conflict.

PPR has inorganic growth and it has grown through series of acquisitions. Fnac on

other hand has organic growth and has grown through diversification. PPR has

specialization in distribution. So it should use a unified distribution system and its

business group should have individual control.

To fight back online discounters it should make the website attractive, give discounts

like 20% discount which it initially had offered, offer loyalty points and use

innovative marketing strategy.

We finally would like to propose that PPR should acquire more business and Fnac

should diversify its business. Fnac should enter in new business like Internet service

provider, telecom sector, online ticketing, etc.

PETHE SARANG S SUBBA REDDY M VRUPESH SHUKLAKUMARI KHUSHBOO Page 4