Supply chain network considerations for e-retail of luxury goods in Canada

Abstract

The Internet has changed the way people purchase goods in the 21st century: many types of goods and services have become available online. Luxury goods followed this trend after an initial delay, primarily due to the nature of these goods. At the time of the preparation of this document, there were no proven guidelines for building the most successful e-retail website for luxury goods from the brand management and profitability perspectives. Ralph Lauren (RL) is an established American brand, well known for quality and consistent style in the following categories: clothing for women, men, and children; home goods, accessories; and fragrances. RL Corporation houses many labels that constitute premium and luxury offerings. RL currently sells through the Internet in many countries, in addition to countless company owned stores, 9 flagship stores, department stores and boutiques distributed around the world. To continue growth, RL wants to launch an e-retail website for Canada. This thesis aims to provide supply chain network considerations for the successful operation of the Canadian e-retail website for RL. These considerations stem from a careful look into potential luxury website characteristics that would meet the company objective of elevating the brand towards the luxury category. It is recommended that RL secure expansion capacity that will likely be necessary for B2C operation at its Toronto distribution center (DC). In addition, material handling equipment that will process a high volume of small orders should be placed in this DC. The Vancouver cross-docking facility could be expanded in the future as prompted by sales volume and coupled with a DC to cater to the West Coast of Canada. Also, it is recommended that advanced customer tracking systems and databases be employed, especially to determine high value customers for tailored offerings in the luxury segment.