Susan Shanlever Phillip Dickson

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Looks.com Ethics

• Group 1
• Susan Shanlever Phillip Dickson
• Erin Bader Charl Welman

MIS 6453 E-Commerce Dr. Kelly Fish Fall
2003 Presented on November 4, 2003
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What is Ethics?

• Body of principles/standards that governs
  behavior of individuals and groups
• Natural body of laws, normative science
• Three authorities revelation, observation,
  thought
• Philosophy metaethics, normative ethics, applied
  ethics

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Real/Business Ethics

• Process of rational thinking establishing what
  values to hold and when to hold them
• Requires continuous realignment of values and
  reasoning patterns in accordance to ethical
  principles
• Demands willingness to change as ethical
  principles change or re-adjust

4
Looks.coms Predicament

• Should it establish itself in the grey market
  first before using the traditional channels or
  should it use the traditional channels from the
  start?

5
Looks.com Question 1

• How does Ian Smith plan to make Looks.com
  profitable?
• By sourcing products on the Grey Market
• Secure site
• Most popular brands of cosmetics
• Aggressive pricing strategy
• Extensive brand loyalty
• Trendies
• New Women
• Mothers
• Sophisticates
• Limited direct competition

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Value Chain Supply Chain

• Assumptions
• There are many options available to import
  cosmetics products into Hong Kong from authorized
  distributors.
• The grey market value chain for Sa Sas is the
  same for all other cosmetic companies in Hong
  Kong.

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Value Chain Supply Chain
Authorized Distribution
Manufacturer
Distributor
Retailer
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Value Chain Supply Chain
Grey Market Channels
Manufacturer - Products close to expiration
Authorized Distributor - Sells at discount
Retailer - Bulk Discount
Manufacturer - Too much inventory
Retailer - Liquidation
Retailer Looks.com
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Factors Driving the Grey Market for Cosmetics

• Loosened Government Restrictions
• Minimal Leasing, Leasehold Improvement, and lower
  overhead costs
• Centralized and highly efficient order processing
• Easier Inventory Control / Less Inventory
• Repeat Sales and Highly Brand Loyal Customers

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Factors Driving the Grey Market for Cosmetics

• Little Advertising
• Highly Recognizable Brands
• Easily Shipped and Received
• High value to weight ratio
• Do not have to obtain a license from each
  manufacturer
• Extensive line of products
• Control over presentation and positioning of
  products on website

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Appeal to the Target Markets

• Trendies
• Availability of new products
• Extensive choice and value
• The New Women
• Convenience
• Quality
• Value
• Mothers and Sophisticates
• Quality
• Convenience

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Evidence for Using Grey Markets

• It is accepted in Asia
• Offer products at up to a 70 discount
• It is legal in most countries
• More channels to obtain products
• Consumers love discount prices

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Evidence against Using Grey Markets

• Manufacturers disapprove
• No quality control for products
• Viewed as an unethical or immoral practice.
• Most importantly in this case, an influential
  buyer will not work with looks.com if it uses the
  grey market.

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What should Looks.com do?

• Establish an e-commerce business using
  traditional distribution channels
• Why?
• Smith wants to establish Looks.com as a
  legitimate business.
• Profit margins are much higher
• Immediate exposure with excellent support

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Discussion