 Hello Global Supply and Designers and welcome to our second live event. Today we have Dr. Eba Pons. Welcome, Eba. Thank you. As you might know, Eba Pons is the Executive Director of the MITx MicroMaster Program in Supply Chain Management. She's also a Research Associate at MIT Center for Transportation and Logistics. Her current research focus is the design of urban distribution models with a special focus on omni-channel distribution. She also leads research initiatives on reversal logistics and closed supply chains. Welcome again, Eba. Thank you. Okay, so the idea for this live event is going to be the follow-up. This is going to be the structure of this event. So, Eba will start with the presentation about the topic that we'll cover today, about omni-channel. And she also will refer to the article that you were supposed to read. After Eba's presentation, it will open the floor to any question that you might have about this general topic. After that, we'll have the breakout session, and you will have the chance to interact with your piece and also discuss about the two questions that we already posted. After the breakout session, we'll resume the session and we'll start a discussion based on the responses that you provide. And at the end, we'll wrap up with a couple of reminders. But before we start, let me tell you a couple of things. The first one is related to the meter exam. As you might know, the meter exam opens tomorrow, October 18th at 15th at 100 UTC. Remember that this is a time exam, so it will be available only for one week, but you will have only a limited time to solve the exam. So, we will have four hours once you start the exam. So, then let's say that they have one week, when is the deadline? It's October 25th. Okay. So, they will have one day open the exam versus two complete. Exactly. So, the exam will be open for one week from October 18th to October 25th, but they will have only four hours when they start the exam. Okay. The second thing that I would like to mention is about the discussion forum. So, the discussion forum is a great place to learn, such a place where you can seek help and also a place where you can help to others. So, we encourage you to actively participate in the discussion forum. Just keep in mind that all the questions are about, not about the great assignment, but about the exams. If you have those kind of questions, please send an email to SC2xhelp at MIT. Okay. And the last thing is that we will have a last live event, the wrap up live event that is taking place on week 11. And with that, Eva, please the floor is yours. Excellent. Thank you, Sergio. And thank you. Welcome global supply designers. I'm happy today to discuss with you about on each channel how these new strategies in different retailers, mainly retailers are impacting the way that company need to redesign the distribution strategies and need to rethink about this relevant process in the supply chain. So, I will start with the concept of on each channel. I want you to go through how this concept has evolved from pure players to the current paradigm that we have when we are talking about on each channel. Then I want to focus a little bit in the article, the article from Bell, that I think is a good starting point for you to approach this topic. We will discuss the the metric, the information and fulfillment metrics that Bell proposed. Fine. I will provide some examples just to bring you some reality to this topic. And after that, we want you to discuss with your peers the questions that we propose about this topic. And after your discussion, we will go into the lobby again and discuss all together about this about this case study. So, first of all, what do we understand from on each channel? I want to go to the first review the traditional retail buying process. So, in this buying process, we have different stage. First, discovery. This is the stage when we discover that we need to buy a new product. Once we discover that, we start to search. Just look for the best retailer that can offer us this product that we want to buy. After that, we are going to purchase, to go to the purchase transaction and buy the product. And once we buy the product, we need to deliver the product. So, deliver and sometimes if we are not satisfied with the product or we change our mind once we arrive home, then we might need also the return, the way to return the product that we already bought. So, in the traditional scenario here, what we have is that every single stage happened in the store, in the traditional brick and mortar. So, we go to the store, we search for the product in the different ale, we look for in the shelf, for the different options that this store offered to us, we would buy the product and we grab the product with us and take the product home. So, and if we want to return, we come back to the store and return the product. So, this is a traditional retail buying process. In 1995, the first pure play e-commerce started. I'm talking about Amazon. I'm talking about eBay. So, these are pure players. What does this mean? This means that all of these stages that they mentioned in this buying process happened in the store, sorry, happened online in the website. So, the discovery part, the search, the buy happened online. So, we will do the website, we look for the product, we look for different retailers. Finally, we decide to buy from one specific website and we buy the product. However, if we are talking about product, we still need to deliver this product to the customer and the retailer, the pure player, the online retailer need to figure out how to reach the customer in this scenario. So, traditionally, in the traditional e-commerce, the retailers send this product directly to the home. So, we are talking about home delivery. So, this is what happened when the first pure player started. In 2000, companies as Dell, as Mark and Spencer seeers, started to, in addition to offer their products through the traditional brick and mortar, they also started to offer their products online through the website, their own website. But I need to highlight here that these are two different channels. In this environment, we are talking about multi-channel. So, companies are offering the traditional brick and mortar, the traditional retailers channel. In addition to that, they are also offering the online channel as two different separate supply chains. No interaction, no integration between the two supply chains. Yeah. So, if we have a look to the evolution of e-commerce, we can observe that since the year 2000, e-commerce in almost all of the different industry has been growing. But I want to highlight that after 2007, the growth in e-commerce increased exponentially. One of the main reasons behind that is the introduction of what we call now mobile commerce. The introduction of the mobile devices, the introduction of the iPhone, the smartphones changed completely the way that the customer can buy their products. Because now the customer can buy from almost anywhere. They can buy when they are waiting for the bus, waiting for the metro, from the park, from the work, from home, from almost everywhere. So, this, and this happened, started this trend after 2007 and after the introduction of the smartphones and the mobile devices. So, retailers need to adapt their distribution strategies and the strategy to reach their customer base on these changes. So, when we are talking about e-commerce, what does this mean? So, this means basically that every single stage of this buying process can happen anywhere. We can search from anywhere, we can buy from anywhere and delivery, if we are in a city, maybe can happen or we can reach with many different options. Let's say that to the customer. So, and this is the mess that the company is now, the retailers need to handle, need to tackle in this new environment. Because, as I mentioned, the question is that every single stage can happen anywhere and the combination of these different options is something that the company need to manage and need to manage in terms of information and in terms also of fulfillment, how they are going to deliver their products, how they are going to reach their customer, which different options they are going to offer and as always trade-offs between the service level they want to offer, how fast, which window delivery they are going to offer to their customers and a trade-off also about the cost. Also, retailers need to minimize these costs and do these as efficient as they can. So, this is currently a challenge that the company has and more specifically retailers in this environment. So, coming now back to the Bell article and the reading that was required for this life event, I want to discuss with you this matrix. In this matrix, in the X axis, we have the delivery options. So, there are two delivery options here. Go to the store and pick up the product, buy the product, grab the product and pick up it or the traditional e-commerce option that is home delivery. In the Y axis, we have two dimensions for the information. It can be everything delivered and provided online or all of the information is offered by the retailer in a store. So, the traditional retailers, if we want to position the traditional retailers like, let's say Walmart, Target, Sears, Mark and Spencer, if we want to position them in this matrix, we will say that the buying process happened in the store, the delivery process happened in the store and all of the information about the product in the store. If we are talking about the pure players, those that started in 1995, Amazon started as a pure player, eBay started as a pure player. Then, we are talking about those companies that in terms of fulfillment, the option is home delivery, is to send the product directly to your address and the way that they provide all of the information about the product happened through the website. Everything happened online. Currently, what is happening is that we are encountering funding different strategies, hybrid strategies. So, some retailers, what they are doing is a combination of these two pure strategies. So, we have, for instance, here Kretan Barrel. Kretan Barrel is a company that offers home goods, home products. The model they are offering is they offer a good description of the product online. However, most of these customers go to the store in order to buy in the store or just to go and pick up the online order in the store. So, they are combining and offering the stores as a way to make the buy decision or as a way to pick up and collect their online orders. Here, we have also Home Depot. Home Depot has also moved to this model and they provide very good information and description about all of their products through their website, but still they are offering their stores as a way to pick up the product. So, these are some examples. A new business model that we can mention here are the showrooms. Showrooms are those stores that they are offering just a way to the customer to go there and try the product. The inventory that they have is not for sales, it's just for going and try the product. So, I have here the example of Bonobos and this is a company that you can go, you can try the product, see how it fits and if you like it, then you can go through the website and buy online and then you can choose the home delivery options. They are offering home deliveries. Let's have a look also to the traditional retailers. For instance, Walmart, a traditional brick and mortar. So, Walmart is also now moving and investing a lot in e-commerce and they are offering to their e-commerce customers the option to go to the stores and use these lockers that you can see in the slide as a pickup point. So, you receive a code, you need a mobile device, you need to have the app and application and go there and with your code and your app, you can scan it and then pick up your online order. So, again, a hybrid model, a combination of a brick and mortar, how they are moving to the online or e-commerce environment and how they are taking advantage of the network of retailers that they have. Amazon, a pure player, they started as a pure player in 1995. However, and recently, in June 2017, they bought the grocery chain Whole Foods, more than 400 Whole Foods stores in three countries, US, Canada and UK. So, Amazon is also trying to have these physical stores in order to offer this as a pickup point in order to consider if they are going to prepare the online orders in the physical store or in the fulfillment center or whatever, much better for the specific situation. But in any case, it's a way to offer also these retailers to their consumers. Here is an example that I invite you to go is Amazon Go. This is the new store that Amazon is offering. It's a pilot so far. It's in Seattle. So far, Amazon is offering these only for their employees. And the innovation part here is that you can go to the store, you can grab your products and you don't need to go through the cashier, the traditional cashier. You just can grab your product and based on the sensors that they have and visual computing analytics that they have implemented, you don't need to go through the cashier. They just recognize that you grab the product and they add this to your in the mobile app. So, it's another example of how they are moving to that. And also the program from Amazon to pick up fresh products. So I'm going to stop here and I want you to discuss now. So we have prepared for you two questions. First, we want you to go to the breakout room in order to discuss with your peers about, first, why retailers need to examine their strategies for delivery information and delivery products in this new environment, in this omnichannel environment. This is the first question. How they need to think about their strategies in terms of information, how to deliver this information to their customer and in terms of fulfillment, how to deliver the product to the customer. The second question we want you to discuss is about the key challenges that retailers need to face in an omnichannel retail environment. So let's go to the breakout session. Discuss with your peers about these two questions and then after 20 minutes, we want you to come back to the lobby and share with us your questions and your thoughts about these two relevant topics and we will continue with the discussion. Excellent. So good luck with the discussion and we'll see you in 20 minutes.