Module code and name: Developing Digital Enterprise 6COSC013C

Assessment: CW 1 - Report

Student ID: 00012251

Submission deadline: 23.10 2023

Wordcount 2760

Results date and type of feedback 07.11.2023

Result (Pass or Fail)

Feedback

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Table of Contents
Executive summary:....................................................................................................................................3

Industrial Market Analysis.........................................................................................................................5

Internal Business Process Analysis............................................................................................................7

Digital Business Information System Proposal.......................................................................................10

Evaluation of Implementation Impact.....................................................................................................16

Reference list..............................................................................................................................................19

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Executive summary:

In this executive summary, I distil the key findings and recommendations from my

comprehensive market analysis report.

Virtual fitting rooms (VFR) are technologies that allow customers to try new clothing styles in a

virtual world without visiting the shop. The global market is divided into hardware, software,

and services, with applications including apparel, eyewear, jewellery, watches, beauty, and

cosmetics. The market is bifurcated into physical stores and virtual stores. The growth of the

virtual fitting room industry is driven by increasing IT spending in retail, the use of smartphones,

and the adoption of virtual fitting to improve customer service. The market is expected to grow

across multiple physical stores and independent stores worldwide. (EMR, 2021).

Integrating virtual fitting rooms into a LC WAIKIKI store's value chain can have a substantial

influence on marketing and sales, increasing consumer experiences, decreasing operational

inefficiencies, and providing competitive advantages. This may be accomplished by employing

Michael Porter's Five Forces methodology, which evaluates competitive dynamics within the

market. The use of digital technology can result in new entrants, increased negotiating power for

suppliers, and replacement threats. To remain competitive, firms must modify their strategy by

investing in technology, engaging with suppliers, prioritising customer experience, and focusing

on differences. Virtual fitting rooms may also improve product design and development, increase

cooperation, optimise logistics management, and boost sales and marketing.

Several key players in the virtual fitting room software space include PITCOFiT (Shopify App),

Style.me, AstraFit, 3DLOOK, and Klarna Virtual Shopping. Pricing for these services ranges

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from $129 to $549 per month. Shopify POS unifies online and in-store sales, making checkout

seamless. (Dopson (2023)).

This proposal also provides a Digital Business Information System (BIS) solution for a virtual

fitting room that makes use of innovative technologies such as IoT, edge computing, AI, and

blockchain. The system attempts to improve the online shopping experience, inventory

management, and consumer interaction. The plan also emphasises the advantages of moving to

the cloud, such as scalability, accessibility, cost effectiveness, and disaster recovery. It does,

however, highlight issues such as data security, integration difficulty, and early expenditure. The

suggested solution intends to create a distinctive and engaging shopping experience while

addressing industry-specific requirements, therefore establishing the organisation for success in

the fashion retail sector.

This report provides an overview of the completed construction project, detailing the key

purposes and lessons learned during its execution.

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Industrial Market Analysis

For studying the competitive forces that shape the structure of a business, Michael Porter

produced Porter's Five Forces. This framework helps companies figure out how appealing and

profitable an industry is. Applying Porter's Five Forces to the concept of a virtual fitting room

could provide useful information:

1. New Entrant Threat (Low to Moderate):

Developing a virtual fitting room calls for significant technological and financial expenses, both

of which can act as barriers to entry.

However, as technology advances and becomes more accessible, new entrants may represent a

greater challenge.

2. Suppliers' Bargaining Power (Low):

In this context, the term "suppliers" can refer to technology providers as well as organisations

that specialise in 3D modelling.

The bargaining power of suppliers is often low due to the abundance of technology providers and

3D modelling services available.

3. Buyers' Bargaining Power (Moderate to High):

Users of virtual fitting rooms usually have access to a wide range of products and brands.

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Customers will have more options to choose from, which may give them greater leverage in

negotiations if many different businesses start offering a virtual fitting room service.

4. Substitute Danger (Moderate):

One alternative to using a virtual fitting room is to make the purchase in person at the retailer's

location.

The ease and accuracy offered by virtual fitting rooms may help to lessen the impact of this risk,

although it is not eliminated entirely.

5.Existing Competitor Rivalry (Moderate to High):

There is a lot of competition in the market for virtual changing rooms, with several businesses

and stores offering their own products.

Differentiation, the quality of the virtual fitting experience, and the reputation of the brand will

each play a key role in deciding the level of intensity of the competition.

The virtual fitting room concept can be an innovative method to improve the purchasing

experience for customers, but its success will depend on its implementation, technology, and

differentiation. As technology becomes more accessible, the prospect of new entrants may

increase over time, and competition among competitors is likely to be intense. To be successful,

businesses in this industry must prioritise technology, user experience, and the value they can

deliver to both consumers and retailers.

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Business opportunities from the integration of current digital technology at LC Waikiki:

Virtual clothing rental platforms:

Launching virtual clothing rental services that allow customers to virtually try on and rent

clothes, reducing the need for in-person fitting rooms.

Customization and tailoring services:

Integrating virtual fitting room technology with made-to-measure and customization services

Customers can visualise how tailored garments will fit them before ordering.

Virtual personal shoppers:

Offering virtual personal shopping services, where AI-driven assistants help customers find the

right clothes based on their preferences, body shape, and style.

Internal Business Process Analysis

Porter's Value Chain Analysis is a framework that investigates the activities within a company

and how they generate value. When employing this framework in a LC WAIKIKI that

incorporates a virtual fitting room, we can identify key activities and their contributions to the

overall value chain:

Inbound Logistics: The virtual fitting room improves this process by enabling consumers to

virtually try on clothes, thereby reducing the need for physical inventory and minimising the risk

of overstocking or understocking. According to the customer's inclinations, data from the virtual

dressing room can inform purchasing decisions.

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Operations: The development, integration, and maintenance of the virtual fitting room

technology are crucial to this task. It is essential for the success of the technology that it remains

current and user-friendly.

Marketing and Sales: The virtual dressing room can be an effective marketing tool. It contributes

to the development of sales by providing customers with a convenient and distinctive shopping

experience. Additionally, the data collected from the virtual fitting room can be used for targeted

marketing and promotions.

Customer Service: The virtual fitting room improves customer service by allowing customers to

visualise how clothing will fit and appear, thereby decreasing the likelihood of post-purchase

dissatisfaction. Additionally, it facilitates remote customer support via live chat or video

consultations to assist with virtual try-ons.

Outbound Logistics: Using a virtual fitting room can improve order accuracy and customer

satisfaction, as consumers will have a better understanding of the products they are purchasing.

This may result in fewer exchanges and returns.

The presence of a virtual fitting room necessitates an investment in technology for LC Waikiki,

which is essential for sustaining a competitive advantage. This technology must be developed

and continuously enhanced, so businesses must allocate resources to this end.

The integration of a virtual fitting room into the value chain of a LC WAIKIKI has a

considerable influence on a variety of activities, including marketing and sales. It improves

consumer experiences, decreases operational inefficiencies, and can generate competitive

advantages in the clothing retail industry.

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Benefit from digitalization.

Product Design and Development:

Digital Prototyping: Using 3D modelling and virtual fitting room technology throughout the

product design process can help streamline clothing item development.

Collaborative Design: Through digital platforms, teams can work remotely on apparel design and

customization.

Logistics Management:

Inventory management refers to the use of digital tools to better estimate demand, optimise

inventory levels, and reduce overstock and understock issues.

Supplier Collaboration: Using digital tools to streamline contact with suppliers for faster and

more effective procurement.

Sales and marketing:

E-commerce and Online Sales: To reach a larger customer base, create an online shopping

platform with integrated virtual fitting rooms.

Data-Driven Marketing: Personalising marketing efforts and improving customer targeting by

utilising customer data and insights from virtual fitting rooms.

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Impact and benefits

Product creation and design:

Impact: more rapid and efficient design iterations, reducing time to market.

Benefits include lower product development costs, more design correctness, and the possibility

to create customizable apparel items depending on consumer preferences.

Supply Chain Management:

Impact: better inventory management and demand forecasts.

Benefits include lower carrying costs, fewer stockouts, and better supplier collaboration, all of

which lead to more effective procurement procedures.

Sales and marketing

Impact: enhanced customer involvement and expanded online sales channels.

Benefits: increased sales, improved client targeting, and personalised marketing efforts based on

data from virtual fitting rooms.

Digital Business Information System Proposal

The fashion industry is rapidly evolving, with consumers increasingly seeking personalised and

immersive experiences when shopping online. The virtual fitting room concept has gained

significant attention as it allows customers to try on clothing virtually, enhancing their online

shopping experience. This proposal outlines a bespoke Digital Business Information System

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(BIS) solution for a virtual fitting room, integrating advanced technologies to revolutionise the

way fashion retailers engage with their customers.

Leveraging Innovative Technologies: To create a competitive advantage and meet customer

expectations, our BIS solution will leverage innovative technologies:

1. Internet of Things (IoT):

 Use IoT devices for real-time inventory tracking.

 Collect data on customer preferences, such as clothing size and style, through smart

mirrors and RFID tags.

1. Edge Computing:

 Deploy edge computing to process data at the edge of the network, reducing latency for

virtual try-ons.

 Enable faster, seamless interactions with the virtual fitting room.

1. Artificial Intelligence (AI):

 Implement AI algorithms for body scanning and measurements.

 Create personalised outfit suggestions based on individual customer profiles.

 Use AI for quality control in the manufacturing process.

1. Blockchain:

 Use blockchain technology to secure customer data and transactions.

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  Ensure transparency and traceability in the supply chain, reducing the risk of counterfeit

products.

1. Cloud Migration: Migrating certain business tasks and IT frameworks to the cloud can

offer several advantages, but it is crucial to evaluate the pros and cons.

Pros:

 Scalability: Easily scale resources up or down based on demand.

 Accessibility: remote access to data and applications for employees and customers.

 Cost Efficiency: Reduce upfront infrastructure costs and pay for what you use.

 Disaster Recovery: Cloud providers offer robust backup and recovery options.

Cons:

 Security: Ensure robust security measures to protect customer data.

 Compliance: Adhere to data privacy regulations and industry standards.

 Connectivity: Reliance on internet connectivity for operations.

 Cost Management: Monitor cloud expenses to avoid overspending.

1. Advantages and Hurdles:

Advantages:

 Enhanced Customer Experience: Virtual fitting rooms provide a unique and engaging

shopping experience, increasing customer satisfaction and loyalty.

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  Improved Inventory Management: IoT and AI-driven data analytics ensure better

inventory control, reducing overstock and understock issues.

 Competitive Edge: Adoption of innovative technologies and cloud infrastructure makes

the business more agile and innovative.

Hurdles:

 Data Security: Protecting customer data and ensuring compliance with data privacy

regulations is critical.

 Integration Complexity: Integrating various technologies and cloud services may present

integration challenges.

 Initial Investment: While cloud migration can reduce infrastructure costs, initial setup and

integration may require a significant investment.

This digital business information system proposal outlines a comprehensive solution for a virtual

fitting room business. By embracing IoT, edge computing, AI, and blockchain and carefully

considering the advantages and challenges of cloud migration, the business can offer an

innovative and personalised shopping experience while addressing industry-specific needs. This

approach will position the company for success in the dynamic fashion retail landscape.

E-Business Models E-business models comprise a variety of online business strategies. The

proposed BIS for the virtual fitting room has the capacity to incorporate or expand the following

e-business models:

The virtual fitting room is a prominent example of a business-to-consumer (B2C) model in

which the corporation serves the final consumer directly.

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Using IoT and peripheral computing, the BIS can improve this model by providing personalised

suggestions based on AI analysis and by augmenting the virtual try-on experience.

1. Enterprise-to-enterprise (B2E):

Collaboration is conceivable between fashion retailers, manufacturers, and wholesalers. The BIS

facilitates efficient transactions between businesses and real-time inventory management.

Blockchain technology can be used to ensure supply chain transparency and traceability, thereby

nurturing business partner confidence.

C2C: Consumer-to-consumer.

Consider allowing consumers to share their virtual fitting room experiences on social media,

thereby fostering community.

AI can analyse user-generated fashion content for preferences and trends.

1. Hybrid Structures:

Implement a hybrid model by offering online and offline services. The BIS can integrate with in-

store technologies, such as smart displays and kiosks, to deliver a unified experience across all

channels.

Use cloud infrastructure for centralised data storage and access, ensuring consistency across

online and offline touchpoints.

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E-Business Models: E-business models involve the internal operations and administration of an

organisation. In several ways, the proposed BIS can expand and enhance e-business models:

ERP: Enterprise Resource Planning

By integrating a BIS with an ERP, inventory management, order processing, and financial

monitoring can be streamlined.

The enterprise resource planning system can get a real-time data from the virtual fitting room to

optimise the supply chain and resource allocation.

1. Supply Chain Administration (SCA):

IoT and blockchain technologies can significantly enhance supply chain visibility and

administration.

Implement an SCM system utilising blockchain technology to monitor the passage of products

from manufacturers to customers while minimising errors and delays.

Management of customer relationships (CRM):

The BIS should be firmly integrated with CRM systems for a comprehensive view of consumer

interactions and preferences.

AI-generated consumer profiles and recommendations can be incorporated into the CRM to

facilitate personalised communication.

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Management of Information:

Use AI for knowledge management by collecting and analysing customer feedback, data from

virtual fittings, and trend insights.

Create a repository of knowledge to guide product development, marketing, and customer

service.

1. Online Shopping:

Enhance e-procurement processes by employing AI-driven demand forecasting and real-time

inventory monitoring from a virtual fitting room.

This integration may lead to more cost-effective and productive procurement decisions.

The proposed BIS for the virtual fitting room can establish a cohesive and efficient digital

ecosystem by integrating and expanding within various e-business and e-enterprise models. This

strategy ensures that the business optimally leverages technology to provide an exceptional

customer experience, accelerate operations, and maintain a competitive position in the dynamic

fashion retail industry.

Evaluation of Implementation Impact

Certainly, let us revisit the value chain analysis for a clothing shop with virtual fitting rooms and

forecast how the suggested digital advancements could transform or augment every aspect of the

value chain, as well as anticipate shifts in the industry landscape and market dynamics:

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1. Inbound Logistics:

o Transformation: With enhanced demand forecasting and inventory optimisation

through digital tools, inbound logistics can become more efficient, leading to cost

savings.

o Shifts: The need for large storage spaces may decrease as the clothing shop can

maintain optimised inventory levels, affecting the warehousing industry. Greater

efficiency in inbound logistics may also put pressure on suppliers to adapt to just-

in-time inventory practices.

2. Product Development and Design:

o Transformation: Digital prototyping and virtual fitting room technologies can

accelerate design processes and enable more customer-driven design.

Collaboration becomes easier and can involve customers in co-creation.

o Shifts: Faster product development may require quicker adaptation to changing

fashion trends, and customers may become more involved in the design process,

potentially leading to unique customer-designed products.

3. Supply Chain Management:

o Transformation: Real-time data and analytics can optimise the supply chain by

reducing lead times, improving supplier collaboration, and ensuring on-time

deliveries.

o Shifts: The supply chain may become more transparent, putting pressure on

suppliers to meet exacting standards of delivery and product quality.

4. Marketing and Sales:

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 o Transformation: E-commerce platforms with virtual fitting rooms can expand

the customer base, personalise marketing, and enhance the overall online

shopping experience.

o Shifts: The importance of physical retail spaces may decrease, leading to changes

in store layouts and decreased foot traffic. Increased competition in the e-

commerce space may require more creative marketing strategies.

5. Customer Relationship Management (CRM):

o Transformation: Enhanced customer data management allows for more

personalised customer experiences and improved customer support.

o Shifts: Customer expectations may rise, and businesses will need to continually

invest in CRM technology to meet these expectations.

6. Logistics and Distribution:

o Transformation: Digital tools can optimise order fulfilment, delivery routes, and

return processes, leading to cost savings and improved customer satisfaction.

o Shifts: More efficient logistics may challenge traditional logistics providers to

adapt and offer advanced services.

The digital propositions, such as virtual fitting rooms, can transform and augment various

aspects of the value chain, including driving efficiency, personalisation, and customer

satisfaction. It may also lead to shifts in the industry landscape, market dynamics, and the overall

structure of the clothing shop's value chain, with a greater emphasis on technology and data-

driven decision-making.

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Oct. 2023].

Dopson, E. (2023). What Are Virtual Fitting Rooms and Why Should Retailers Use Them?
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MĂTĂȘEL, A., AVĂDANEI, M., TALPĂ, A. and LOGHIN , C. (2023). VIRTUAL FITTING
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Scott, G. (2023). Porter’s 5 Forces Explained and How to Use the Model. [online] Investopedia.
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