Strategic Business Analysis of an E-commerce Business - Live-Life - Case Study Example

E-Business Plan Name: Course: Tutor: Institution: Date: Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Business Model 3 2.1 Target Customer Base 3 2.2 Value proposition 4 2.3 Revenue Model 5 2.4 Distribution and Delivery 5 3.0 Competitors Analysis 6 4.0 SWOT Analysis 6 5.0 Recommendations 7 6.0 Conclusion 8 References 9 1.0 Introduction This report offers a strategic business plan analysis of an e-commerce business. The venture, proposed for the business name, Live-Life venture will venture in the lifestyle and apparel industry. In this case, customers will access cosmetic and apparel products through its portal. This business plan analysis evaluates the target population, the business value proposition, and revenue model, as well as a competitor’s analysis. Finally, it conducts a business model SWOT analysis to establish competitive areas for the proposed venture, validating its establishment. 2.0 Business Model 2.1 Target Customer Base A business target consumer base is the market segment that is expected to consume its proposed products. In this case, in the development of a relevant consumer base, it is imperative to align the customer needs with the offered venture products. As already discussed, the proposed venture will offer apparel and cosmetic products online. On one hand, the targeted consumer base is a majority of the Y generation, which is mainly between 20-35 years of age. This is because; this is the most tech survey age group. Unlike the elderly baby boomers and Y generations who prefer physical shopping, the Y younger generation is poised towards virtual shopping as a means of creating and enhancing convenience (Ruzzier, Ruzzier and Hisrich, 2013, p.16). Therefore, the market segmented targeted by the venture is the 20-35 years age bracket. In addition, the venture will target the middle income earners. In this case, the proposed venture will stock varied apparel and cosmetic products at affordable prices. Thus, rather than stocking the most expensive or cheapest products, it will offer the average price brands. Therefore, it target consumer base, is narrowed down to middle level income earners between 20-35 years. Finally, a key trait for the venture is its focus on the entire family. In this case, the supplied apparel products will consist of the male, female, and children products respectively. 2.2 Value proposition A business value proposition represents the overall gain and benefit a business offers to deliver over its customers (Barnes, Blake and Pinder, 2009. P.19). On one hand, the value proposition in an e-commerce business is the key defining competitive edge for any business enterprise. This is because, although two ventures could offer the same products, their varied value propositions create the preference and market competitiveness differences (Osterwalder and Papadakos, 2014, p.23). For the proposed e-commerce venture, it has a value proposition on its compatibility. Unlike other e-commerce platforms that are only compatible with a few platforms, the venture will develop mobile application platforms that will be compatible with windows, Android, and Chrome operating systems. Through these wide application platforms, it will ensure that the customers can easily access the platform irrespective of the device used operating platform. An additional value proposition offered by the proposed venture will be a personalized cart button. In this case, one a customer registers on the platform, they can always request for products even not in stock. As such, the venture will source the products on the customers’ behalf, and work to deliver them on their personalized unstoked request carts within 14 working days. This will serve as a milestone for ensuring that the customers are not limited to only the available products. Instead, the platform will allow for the sourcing and supply of unique customer preferences in the market. 2.3 Revenue Model The proposed venture is a profit oriented organsiational. This implies that besides delivering value and gains for its customers, it seeks to make profits. Profit generation is aimed at providing a high value for returns on the shareholder investments (Carroll, 2012, p.119). In order to achieve this strategic goal, it is imperative to balance between the stakeholders and shareholders interest in a business venture (Daidj, 2015, p.165). The proposed venture will adopt two revenue generation models, namely subscriptions and product commissions. On one hand, in order to register and acquire the platform applications, it will charge a subscription fee. In this case, the subscription durations will range from monthly, semi-annual to annual subscription packages. The adoption of this approach is meant to ensure that the organsiational successfully meets the delivery and logistical costs for purchased products. On the other hand, the venture will agree with the products suppliers on a working commission for the offered products, which will be charged on the suppliers and not the buyers. 2.4 Distribution and Delivery Once a purchase has been made, the venture will have two alternatives. On one hand, the customers can select their preferred delivery company for the goods, a process through which the customers will have to cover any additional costs above the average charged costs borne by the company. Alternatively, the venture selects a delivery company, and deliveries are made within 14 working days depending on the customers’ location. The use of the third parties is a relative approach by the venture to reduce on its distribution costs (Plunkett, 2008, p.617). On one hand, the distribution process, especially transportation requires huge investments to procure and maintain the carriers. This would in turn raise the overall costs, crating reduced profit margins for the venture. On the other hand, through contracting the distribution functions, the venture focuses on its core business of selling products online. In this case, through focusing on the core business, the venture ensures that its maximizes its product value for the customers. 3.0 Competitors Analysis Although the proposed venture offers a unique value proposition for customers in the lifestyle industry, it has a number of market competitors. As such, in order to develop an efficient operational business model, it is imperative to analyze the competition models and establish key strengths and weaknesses. The key market competitor is the Amazon.Com. The organization had a market capitalization of $315.15 Billion in 2014. Moreover, it had a sales total volume of $74.45 Billion in 2013 (DBW, 2013). This is an illustration of the competitors’ large market share in the global e-commerce apparel industry. However, unlike the proposed venture that specializes in apparel, Amazon offers a wide range of products including books and electronic products as well as apparel and cosmetic goods. Due to its historical performances, the venture has developed a strong market reputation and positive brand image. Its revenue model is based on a subscription basis, and it uses third parties to deliver the purchased goods to its customers. 4.0 SWOT Analysis Based on the above analysis on the organsiational business model and its competition, this business plan develops a SWOT analysis. It is based on the SWOT analysis outcomes that the proposed venture scale, and marketing strategies will be adopted. Strengths Specialization in the apparel industry Reduced cost of doing business Supply of non-stocked items upon request Weakness Lack of established partners Limited apparel products suppliers Lack of an established corporate culture and image Opportunities Rising middle income earners globally Increasing internet and online shopping globally Reduced costs of doing business Threats Established competitors such as Amazon Commission on suppliers could increase product prices 5.0 Recommendations Based on the above SWOT analysis, it is apparent that the proposed venture has both merits and challenges. On one hand, it faces the challenges of the lack of a brand image and culture, as well as potentially high prices. On one hand, in order to develop a strong brand image, the venture will roll out its operations through the adoption of a marketing campaign. Because it is an online platform targeting online customers, it will use online advertisement platforms. Such include the use of display and pop up advertisements by the different search engines in the market. Key among its targeted search engines will be Google and Bing among others. In addition, in order to create a market relationship and value to customers, it will start up with a low pricing strategy (Stokes and Lomax, 2008, p.270). As such, it will use a penetration pricing strategy. The penetration pricing strategy is a critical approach that ensures that organizations charge minimal prices upon entry into a market. However, they eventually raise and increase the prices as the brand equity and image grows in the market. Although charging the suppliers the same uniform commission, the venture will reduce its profitability margins to offer discounts on the products on its platform, a virtual that will effectively reduce the overall prices as compared to the market prices on other platforms. 6.0 Conclusion In summary, the above report offers a business plan for the Live-Life e-commerce venture. On one hand, the report offers an analysis of the proposed venture business model. On one hand, an evaluation of the target customer base illustrates that it targets the middle level income earners aged between 20=35 years. Moreover, it will raise funds through a commission and subscription process. Finally, the analysis established that it will distribute the goods through a third pry logistics partner. Finally, based on competition analysis and SWOT analysis, it concludes that at entry, the venture will use pop up search engine advertisements as well as through penetration pricing approach. References Barnes, C., Blake, H., & Pinder, D. 2009, Creating & delivering your value proposition: Managing customer experience for profit, Kogan Page, London. Carroll, D. 2012, Managing value in organisations: New learning, management, and business models, Gower, Farnham, Surrey, England. Daidj, N. 2015, Developing strategic business models and competitive advantage in the digital sector, Business Science Reference, Hershey. DBW, 2013, Amazon Booms in 2013, With $74.45 Billion in Revenue. [Online] Available at: [Accessed: 12 November 2015]. Osterwalder, A., & Papadakos, T. 2014, Get started with ... Value proposition design: How to create products and services customers want, Wiley Hoboken, NJ Plunkett, Jack W. 2008, Plunkett's Outsourcing and Offshoring Industry Almanac 2009, Plunkett Research Ltd, London. Ruzzier, M. K., Ruzzier, M., & Hisrich, R. D., 2013, Marketing for entrepreneurs and SMEs: A global perspective, Edward Elgar Pub. Ltd Cheltenham Stokes, D., & Lomax, W. 2008, Marketing: A brief introduction, Thomson S.l. Read More