Electronic Commerce and Mary Kay

Categories: Communication Electronics Internet

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Founded in 1962, Mary Kay (marykay. com) has about 1. 8 million consultants selling its cosmetics and fragrances in 34 countries. In 2008, the company had about $2. 4 billion in wholesale sales. As a company that has based its reputation on personal contacts through door-to-door visits and home gatherings, one might think that Mary Kay would not benefit from EC. Actually, the opposite is true. Currently, more than 95 percent of Mary Kay’s independent salespeople place orders via the Internet.

The Problem The cosmetics market is very competitive, but it is growing rapidly, especially in developing countries.

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Mary Kay is trying to capitalize on this trend. The Mary Kay business model enables rapid growth into new markets. By the early 2000s, consultants found that more and more customers wanted to shop online. With a long and global supply chain and the need to manage almost 2 million consultants, it was clear that automation was needed, but Mary Kay’s existing computer system was old and lacked Web or e-commerce applications.

Therefore, a major overhaul of the information systems was needed.

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Finally, it became clear that the emergence of social computing might provide a golden opportunity for Internet marketing by the company. The Solution Mary Kay’s IT department is now split into three divisions: e-commerce, supply chain, and back-office support. Because of pressure from the consultants, the restructuring focused on e-commerce. The company’s goals and objectives were set based on industry best practices.

Goals and objectives determine what, how, and when the company is operated, and these also apply to EC initiatives.

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Mary Kay’s EC solution included the creation of an electronic service desk that supports consultants in 30 countries in a standardized way. Mary Kay also introduced a global electronic ordering system, called Atlas, that allows the consultants to communicate with company warehouses. An intelligent data repository that dynamically maintains a logical model of the EC environment can be accessed by Mary Kay IT staff.

Mary Kay and its consultants are also making extensive use of social computing. The following are some representative examples of how Mary Kay uses social computing: The company posts job opening announcements on several sites, including MySpace Jobs ( classifieds. myspace. com/job). Movies and videotapes are available on YouTube (youtube. com) and on movies. go. com. Several blogs are available, both for and against the company (e. g. , marykayandrews. com/blog). Auctions and fixed-price items are available for sale on eBay. Mary Kay provides a consultant locator on the Internet.

All of these developments are supported by an extensive hardware and software infrastructure, including a wireless remote management system at the 760,000 square-foot corporate headquarters, an extensive wide area network (WAN, see Chapter 8), and a large data center. Some of the EC systems are used enterprise wide (e. g. , service desk, ticketing system for consultants attending events, and service requests made by consultants). Others are functional (e. g. , accounting, finance, marketing, and inventory control).

The company uses an intranet for internal communications as well as dozens of other EC applications. In addition to providing better support to consultants, the EC initiatives produced other benefits, such as greater efficiency, reduced costs and downtime, and improved service. In terms of human resources, it enabled the company to handle its rapid growth without a substantial increase in staffing. The changes also have allowed EC personnel to focus on strategic tasks. Mary Kay found that its engineers and technical people now have time to spend on new innovations.

References:

Bowman, Mary Kay, et al. "Intelligent and firm currency conversion." U.S. Patent No. 7,747,475. 29 Jun. 2010.
Meuter, Matthew L., et al. "The influence of technology anxiety on consumer use and experiences with self-service technologies." Journal of Business Research 56.11 (2003): 899-906.
Dholakia, Ruby Roy, and Nikhilesh Dholakia. "Mobility and markets: emerging outlines of m-commerce." Journal of Business research 57.12 (2004): 1391-1396.
Kay, Jeffrey, et al. "Information objects system, method, and computer program organization." U.S. Patent No. 6,473,893. 29 Oct. 2002.
Finn, Mary Kay, Karen Lahey, and David Redle. "Policies Underlying Congressional Approval of Criminal and Civil Immunity for Interactive Computer Service Providers Under Provisions of the Communications Decency Act of 1996-Should E-Buyers Beware." U. Tol. L. Rev. 31 (1999): 347.