Case Study

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COLUMBIA SOUTHERN UNIVERSITY
MBA 5581 - E-COMMERCE DESIGN & DEVELOPMENT

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Research paper:
Rite Aid Case study

Professor: Dr. Andy Saucedo
Student: Nguyen Thi Hong Van
Student ID: 186151

Submission date: December 5, 2010
Abstract
Rite Aid Corporation is the third largest drugstore chain in the United States based on revenues and number of stores. Besides more than 4,000 of retail drugstore in 31 states of the US, online store contributed to 32.1% of revenue of Rite Aid in fiscal year 2010. E-commerce application in purchasing and processing transaction also boost Rite Aid business. This research paper will discuss about the e-commerce application at Rite Aid and its result based on Case W11.3: Eliminating letters of credit - Rite Aid deploys the TradeCard solution (Turban, 2010), and contains four parts as followed: 1. Introduction of Rite Aid

2. Rite Aid Vendor Supply Chain Guide
3. Rite Aid TradeCard Workflow
4. Electronic letters of credit

1. Introduction of Rite Aid
Rite Aid Corporation is a drugstore chains in the United States founded in 1962 in Scranton, Pennsylvania. As of 2010, Rite Aid has widen its distribution channel with nearly 4,800 stores in 31 states and the District of Columbia, strong presence on both the East and West coasts, and 97,000 associates (About Us, 2010). In fiscal year ended February 27, 2010, Rite Aid got $25,669 million in revenue. Rite Aid is publicly traded on the New York Stock Exchange (NYSE) under the symbol RAD with $837.93 million of market capital (Google Finance, NYSE:RAD, 2010). Rite Aid is the third big player in pharmaceutical in the US, but in comparison with CVS Caremark Corporation (CVS) and Walgreen Company (WAG) with market capital of $44.05 billion and $34.27 billion respectively, Rite Aid is much smaller than these two giants. Figure 1: Rite Aid stock performance (December 4, 2010) [pic]

Source: (Google Finance, NYSE:RAD, 2010)
Due to the recent global economic downturn, RAD stock of Rite Aid at Google Finance does not show good performance of in short term. However, with business in 31 states, thousands of retail stores, and online retail website, Rite Aid are strengthening its position in retail drugstore industry in the US. Rite Aid Portal at http://www.riteaid.com offers abundant of information from pharmacy news to online shopping for customers with approximately of 3,300 Rite Aid private brand products offers. Rite Aid front end products include medications, health and beauty aids, personal care items, cosmetics, household items, beverages, and other everyday and convenience products, as well as photo processing. It offers approximately 3,300 products under the Rite Aid private brand (Google Finance, NYSE:RAD, 2010). Figure 2: Rite Aid Homepage

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Source: (Rite Aid Home Page, 2010)
Online sales on Riteaid.com containing 25,000 front end products accounts for 32.1% of its total sales during fiscal 2010 (Rite Aid Annual Report, 2010). Besides, e-commerce systems also contribute to the development of Rite Aid. In 2002, Rite Aid established a set of supply chain guidelines and policies for its warehouse vendors which cover merchandise information and technology that EDI collaboration also required (Turban, 2010). Then, in 2004, Rite Aid implemented a Web-based financial platform for processing payments transaction to import vendors in order to eliminate nonproductive state and cash-flow issues. This platform was built based on TradeCard solution which processes purchasing order, settlement, and receipment of goods from its vendors. In 2005, Rite Aid started using the system for online transactions that now handles virtually all global payments (Turban, 2010).

2. Rite Aid Vendor Supply Chain Guide
As mentioned above, Rite Aid has developed Import policies for its...
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