Expert answer:Tommy Hilfiger—discussion question
Answer & Explanation:Please reread the opening case, “Tommy Hilfiger Right-Sizes Its Web Store” on page 197, and describe the various factors that drive even seasoned retailing veterans to rebuild their websites periodically. What are the factors you should take into account when sizing a website’s infrastructure?(Please provide good quality and original response. Thank you!)Tommy Hilfiger Reading.docx
tommy_hilfiger_reading.docx
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Tommy Hilfiger Right-Sizes Its Web Store
Tommy Hilfiger is one of the world’s best known premium lifestyle brands in the
United States for the 18–35 age demographic. Founded in 1985 by Tommy Hilfiger, a
young designer in New York City, the brand expanded its line of casual clothing for
men, women, and children through specialty retailers, department stores, and over
1,000 apparel stores and outlets throughout the world. In 2010, the company was
purchased by Phillips-Van Heusen, owner of the Calvin Klein brand, for $3 billion.
The resulting company is the world’s largest clothing company, with $4.6 billion in
revenues.
A significant part of the company’s growth since 2007 has occurred through its online
stores. The company had developed a Web store in 2000 as a simple catalog of
products available at retailers and then expanded into online sales by 2004. By 2006,
it was clear that effective online retailing required more than just a storefront with a
catalog, and more than a database responding to customer requests for products. The
existing Web site did not fit the contemporary needs and expectations of customers or
company merchandisers. For instance, it was difficult to change prices, move
products around the online catalog depending on demand, measure results, build
promotions, or personalize the offerings based on customer histories and online
behavior. There was no recommender system that could suggest clothing to online
customers based on their prior behavior. Instead, products were promoted based on
what marketing managers wanted or needed to sell regardless of what the customer
wanted. If you’re buying a pair of jeans, chances are good, based on prior customer
behavior, that you will want to consider a new belt or shoes.
Hilfiger did not want to hire an entire new IT staff to rebuild its Web site, and it did
not want to make the investment in hardware and telecommunications that would be
required for a new Web site. Instead it turned to Art Technology Group (ATG), a firm
specializing in e-commerce software and hardware solutions. The ATG e-commerce
platform software provides Hilfiger managers with a state-of-the-art e-commerce
platform with automated recommendations that can deliver a personalized experience
to each customer, and easy marketing and promotional campaign support to Hilfiger
managers through a cutting-edge Business Control Center. Best of all, the ATG
platform solution is an on-demand, online software platform. Hilfiger did not have to
buy any hardware or software infrastructure, or hire IT staff, to build the new Web
site. One way to “right-size” a Web site’s infrastructure is to shift the risks and costs
of infrastructure to external, specialized firms that can operate the infrastructure for
you. As Jared Blank, Vice President of E-commerce noted, “As a philosophy, it’s
about getting the basics right. It’s about getting a Web site that everyone can be proud
of, and then building cool stuff on top of that.” From a “look and feel” standpoint, the
Web site distinctly captures the Tommy Hilfiger “vibe,” also an important
consideration. Advancing the brand experience through the Web site was a major
driver in its redesign. The result has been a smashing success: online sales for
Hilfiger increased 30% in the first year of operation.
In 2010–2011, Hilfiger continued to build on its e-commerce success. Its Facebook
page has over 1.7 million “likes.” It has a Twitter feed and an iPhone app that allows
customers to try on digital versions of select pieces in virtual fitting rooms. In June
2011, it added an iPad-specific application, the iPad Fit Guide. The iPad Fit Guide
uses video imaging to capture a 360-degree view of the clothing. Customers can
compare the fit of different products, view alternative styling suggestions, and read
about the specifics of the cut and rise of each pant. A mobile version of the
Tommy.com site that will enable customers to make purchases directly from their
smartphones is also in the works.
Most start-up firms do not outsource the design and infrastructure of their Web sites.
Instead they use DIY—do it yourself. It’s much less expensive and just the right size
for small firms. Let’s say you’ve decided to create a Web site for your successful
garden equipment company. You’ve been in business for five years, have established
a regional brand for high-quality gardening tools, and have about 12,000 retail
customers and 21 wholesale dealers who purchase from you. Based on a marketing
report you commissioned, you expect that in the first year your Web site will have
about 1,400 visitors a day. The average visitor will look at eight pages, producing
about 4 million page views a year. About 10% will purchase something, and the rest
will browse to explore prices and products. However, in peak times (during the
months of April, May, June, and December), you expect peak loads of 3,000
customers a day, concentrated during the hours of 9 a.m. to 5 p.m. local time,
producing about 375 visitors per hour or 6 per second. During this time, your Web
site will have to serve up about 40 screens per second, with most of the content being
read from a database of product and price information. Pages must be served up
within 2 seconds of a customer click during peak times or customers may lose
patience and go elsewhere. You’ve decided to operate your own onsite Web
infrastructure, including hardware and software. You have contracted out the Web
site design to a design firm, and have made arrangements with the local phone
company to provide an Internet connection.
Before you can proceed, there are some questions you will need answered. How
many Web servers will your site require? How many CPUs should each server have?
How powerful does the site’s database server need to be? What kind of connection
speed do you need to the Internet? How about power? Is the local utility reliable, and
do you need backup diesel-powered generators?
Very large online firms answer these questions using simulation software sold by
hardware and software vendors such as IBM, Microsoft, and Hewlett-Packard (HP).
IBM’s simulator is called the On Demand Performance Advisor (OPERA) (formerly
known as the High Volume Web Sites Simulator). OPERA enables users to estimate
the performance and capacity of a Web server based on workload patterns,
performance objectives, and specific hardware and software. OPERA has a very easyto-use interface that includes pre-built workload patterns for various e-commerce
applications, such as shopping, banking, brokerage, auction, portal, B2B, and
reservation systems, that can be modified as necessary based on the user’s own data
or assumptions. It can provide what-if analyses for various performance parameters
such as throughput, response time, resource utilization, number of concurrent users,
and page view rate. It also provides special algorithms to address increases in Web
traffic during peak usage periods. The simulator includes built-in performance
characteristics for various types of hardware (such IBM, Sun, and HP servers),
software, and infrastructure models. OPERA uses an analytic model to generate
reports that allow users to assess the adequacy of proposed hardware and software
configurations, forecast performance, and graphically identify bottlenecks that might
develop. IBM also offers Sonoma, a Web service based on OPERA, that can be used
to estimate the performance and capacity of service-oriented architecture (SOA)
workloads.
But let’s say you’re not eBay or Fidelity, and are just creating the proverbial “oneperson-in-a-garage-just-getting-started” kind of Web site. For instance, Dave Novak
created Steamshowers4Less.com using a MacBook Pro computer in a spare bedroom.
Its Web site offers products for luxury bathrooms on a budget, and focuses on the
DIY market. The company specializes in walk-in and whirlpool computerized steam
showers and claims to be the first company to manufacture its own iPod-compatible
unit. Luxe bath? Its models have FM stereo, speakers, computer control, LED
lighting, foot massagers and much more. Novak now sells over $1 million a year in
bath fixtures.
For really small sites, micro-businesses with just one person (the founder) or a few
employees or friends, there are many less-costly alternatives to using a sophisticated
tool like IBM’s OPERA or ATG’s sophisticated e-commerce platform. Nevertheless,
you still face the same problems as the big Web sites: how many computers, what
size, how large a pipe to the Internet, and what kind of database? For a really small
company, it generally does not make sense to spend the time and money to DIY.
Instead, it makes more sense to let the professionals worry about these problems. For
instance, one solution is to build a Web site using pre-built templates offered by
Yahoo! Merchant Solutions, Amazon, eBay, Network Solutions, or hundreds of other
online sites. Fees range from a few hundred dollars to several thousand. These firms
host your Web site and they worry about capacity and scale issues as your firm
grows. For instance, Yahoo Merchant
Solutions offers three different packages: Starter, Standard, and Professional. As the
business grows, you can move up to a more comprehensive package. Amazon will
even handle the fulfillment of orders for you and probably do a much better job than
you or your limited staff can do.
Another solution is to hire a local professional designer (for about $1,000 to $5,000)
and have them build you an e-commerce installation that runs off a single computer
and broadband connection to your office. You can grow by trial and error. If your site
becomes popular, and you need more computing power, buy a newer PC with
multicore processors, greater speed, and a much larger hard drive or hard drive array.
You can always upgrade your Web connection to a faster speed if users experience a
slowdown on your Web site. Still another solution is to do everything yourself
(design the Web site, procure and build the Web servers, and connect to the Internet)
at first until you start attracting customers.
The cost of building Web sites has fallen drastically, not just because of the fall in
hardware costs, but also because the cost of software needed to build and operate
Web sites has fallen, sometimes to zero. There are thousands of open source software
tools available to develop Web sites and associated databases that will cost you
nothing. Many of these tools can be used by amateurs, some are as simple to use as
blog software tools, while others require a technical background and training.
Analysts believe that a Web site costing over $1 million in 2000 could be built for
less than $50,000 in 2011. For instance, you can obtain the Linux operating system to
run your Web site for next to nothing, along with osCommerce, an open source
shopping cart order system. In the past, building your own custom shopping cart
could easily cost $250,000 and up to several million dollars. Google provides more
than 20 Web site management and operations tools for free. However, in both of these
DIY solutions, you will have to worry about how to keep up with growth, about the
stability of local power supplies, the ability of your computers to meet peak demands,
and the ability of your local Internet connection provider to supply your needs for
continuous Internet connectivity. Even if you decide to let an outside vendor host
your new Web site, you will still need to address these questions. Remember, the “e”
in e-commerce does not stand for easy.
(Traver 197-200)
Traver, Kenneth Laudon and Carol G. E-Commerce 2012, 8/e for DeVry University.
Pearson Learning Solutions, 10/2012. VitalBook file.
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