BUSINESS PROBLEM-SOLVING CASE
CAN J&R ELECTRONICS GROW WITH E-COMMERCE?
J&R Electronics is a mom-and-pop shop for the modern age. Joe and Rachelle Friedman started the business as audio equipment store in 1971.They funded the original business, a 500-square-foot storefront near New York’s City Hall, with the money the received for their wedding. Over 35 years, the Friedman expanded the business, adding records, equipment , cameras, computers, movies, and games. Today, J&R Electronics encompasses a lucrative catalog business and 10 specialty electronics stores covering 300,000 square feet of retail space on that same city block in Manhattan. Among the stores are the famed J 8R Music World and J&R Computer World. The J&R empire sells nearly every type of electronic device imaginable. However, the Friedmans have resisted the advice of suppliers, such as record companies, who have told them the only way to survive and compete with big box stores was to become a chain. Rachelle Friedman explained that “by staying on the block...we maintain control, which the chain stores lose.” How does J&R continue to survive with only one location in an industry dominated by Wal-Marts, Best Buy, and Circuit City? Quite appropriately. The Friedmans have their son to thank for that. Jason Friedmans is the vice president of e-commerce for J&R Electronics. In 1998, Jason, who started out as the company’s database manager, lobbied his parents to invest in the Web as an outlet for the company. J&R went online using e-commerce software developed by InterWorld Corp.. a highly regarded product of the first dot-com boom. InterWorld’s Commerce Exchange served J&R well enough to satisfy the notion that e-commerce would play a major role in the company’s future. In 20000, J&R was ready to upgrade to a new version of the InterWorld software, which was touted as being much more robust than the previous version that J&R had installed. Within a year, the upgrade process at J&R was thrown off track as the dot-com bust brought about the demise of InterWorld. Jason Friedmans was forced to continue development of J&R’s online presence without support from the software vendor. He and his staff managed to piece together a costommized e-commerce application that could handle the 400,000 products that J8R sold. However, the solution did not support some of the features that online retail competitors offered, such as the ability to collect and display customer reviews and provide information on inventory statistics, and shipping time. By that time, 30 percent of J8R’s $400 million in revenue being generated by JRcom. Friedmans was looking to inject new life into the Web site. With a staff of 50 IT workers backing him up. He explored ways to ensure that the JR.com would remain as popular a destination online as the bricks-and-mortar store was in the real world. For the new site, he chose an e-commerce platform from Blue Martini and a CRM package made by Loyalty Lab. In addition, Friedmans planned to bring JR.com in line with Web 2.0 concepts by populating the site with videos and introducing customer reviews. Those features were valuable tools that customers could use to educate themselves about products and comparison-shop before they committed to buying. In May 2006, J&R unveiled an online loyalty program to encourage shoppers to visit JR.com directly rather than connect from a link on another site, such as a price comparison search engine. The strategy intends to raise the number of unique visitors to the site and, as Jason Friedman put it, relieve J&R from “ﬁghting over pennies with our competitors." For participating in the program, customers receive gift cards equaling 2 percent of their purchases. If successful, the loyalty program will keep past customers from giving their business to other stores, as well as entice new customers to join the J&R community. Catalog shoppers are also eligible for loyalty rewards. Mark H. Goldstein, CEO of...
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