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Idea Applications

By: Jeff Falk
Posted: March 8, 2011, from the March 2011 issue of GCI Magazine.

page 5 of 6

The value proposition enticing customers is based on an efficient ordering process and the availability of products offered at competitive market prices. The Xiameter business model strips costly services traditionally bundled into the price of the product and posts transparent tiered pricing visible to all customers. This allows customers the ability to balance their inventory costs with product costs based on the different purchasing options offered online.

One advantage of an e-commerce model is that you can build efficiencies directly into the website. Important is the fact that customers can find information at their fingertips creating ease of use, but the element directly effecting profitability is the efficiencies built into the order entry process. For instance, the Xiameter brand has implemented "business rules" that create a discipline for maintaining efficiency. These rules provides standard options to customers, but doesn't allow for customization which adds costs to doing business. So to purchase directly from the brand site, minimum orders are required, standard credit terms is the norm, and lead times for order are required. However, the business model recognizes there are exceptions to these rules. In this case, the value is captured by charging service fees for non-standard terms and rush orders.

These business rules aren't used to discourage business, it's quite the opposite. In fact, the business rules are implemented to ensure that products can continue to be offered at market-based prices.

GCI: How are innovative supply chain models in emerging geographies changing the face of the beauty industry, and what are the changes you foresee over the next five years?

Bausch: Consumer demand and stricter regulation in emerging and developing countries are leading to a growing emphasis on maintaining a "green" supply chain.