Electronic Commerce and Stakeholders - Victorias Secret - Case Study Example

LЕСTRОNIС СОMMЕRСЕ АND THЕ STАKЕHОLDЕRS АND THЕIR САРАBILITIЕS АND LIMITАTIОNS IN THЕ STRАTЕGIС СОNVЕRGЕNСЕ ОF TЕСHNОLОGY АND BUSINЕSS Customer inserts His/Her Name Customer inserts Name of Institution Date of Submission Victoria’s Secret Victoria’s secret deals with the supply of lingerie. It began its operations in 1977 June. Roy Raymond, an alumnus of Tufts University and a graduate in the Stanford University, is the founder of the company. Raymond once faced a challenge when he tried to purchase lingerie for his wife in the early 1980’s and this contributed to the idea of starting a company of lingerie. The treatment he went through in lingerie stores dissatisfied Raymond and made him have zeal to operate a lingerie business that could satisfy the customers fully (Satterlee, 2001). The company initially started its transactions manually but over the years, it has developed and improved its operations to the use of ecommerce, which is more convenient. Now, the company is the leading supply of linger in America. In the period between 1970 and 1980, many American women purchased lingerie and women wear in packs on special occasions such as on honeymoons. The types of lingerie and the wears that the women bought varied in their designs basing on the occasions. For example, during honeymoons, many women preferred using incendiary underwear (Blythe, 2011). There were very few stores that traded in lingerie and many of them could not meet the needs of their customers in most occasions. Raymond took enough time to study the lingerie market, that is, approximately eight years after which he looked for capital to start his lingerie business. In total, Raymond collected 80000 dollars to start the Victoria Secrets store. His family contributed 50% of this capital while the rest 50% he borrowed from the bank. Raymond was determined to make this store a very comfortable place where men could purchase lingerie (Daniels, 2010). Raymond located the first store in California, precisely Stanford Shopping Center in Palo Alto. In its first year, the store got a gross income of a half a million dollars. Raymond used the gross income to come up with four other stores and to expand the business. The company also created a new warehouse. As part of expanding its operations, the company introduced the mail-order catalogue. The customers used catalogues to order goods and this further led to the growth of the company. By 1982, the company’s annual sales had grown to 7 million dollars and the catalogue was responsible for over 50% of this growth. Victoria soon became popular in the market and the number of customers increased. As Raymond had earlier planned, Victoria’s Secret mainly concentrated in the sale of their products to the men. In all their stores, the company concentrated on men forgetting that the women were also potential customers for these products. The company soon started becoming bankrupt. The company soon incorporated the women in their business. The women had a taste for the products that the company produced; this forced the company to keep up with the needs of the women in order to increase its sells. The growth in the number of customers contributed greatly to the growth of the company’s revenue and the company was able to further expand its operations. The company restructured its stalls and improved its operations focusing on style and service to ensure it produced products that were very attractive and that it satisfied the needs of its customers (Schniederjans, 2002). The business of lingerie started improving at a faster rate compared to the previous periods. By 1990, the company had transformed from a three-store boutique to three hundred and forty six retailing stores. In 1985, the market shares of the company increased so much, the company grew so rapidly, and soon it became the best company that used catalogues in its transactions. By 1990, the use of catalogues was the best in the mail order business. Increase in the revenue of the company and other ideas from the shareholders of the company made the company to extend its operations to the sale of cosmetics. Cosmetics contributed to 3.5 million dollars of the revenue of the company. The company soon concentrated in ensuring that they produced their goods early and on time. In the period, 1990 to 2006 was challenging to Victoria’s Secret. They concentrated more on the producing of lingerie to meet the high demand of the customers and forgot to maintain the quality of the lingerie. The products that the company produced were substandard and it started to lose its customers to its competitors. Also catalogue use was no longer attractive as before. The company therefore started experiencing low returns as compared to the previous years. The company soon improved its production and quality of goods. It also kept pace with the needs of the customers (Smith, 2001). By 2006, the company had grown and had over 1000 stores to supply its products. The company also introduced ecommerce in its operations. Online transactions further increased its revenue and soon the business went online to date. Victoria also started holding yearly shows that it used as a way of advertising its products to attract more customers and to get their views about its products. Currently, financial reports of the company indicate that in the financial year 2012 the company made sales of approximately 6.12 billion dollars. The sale of beauty products, women wear and linger contributes to the revenue of the company. Victoria’s secret uses its thousand stores located in US, its website, and its catalogues to transactions. Business model Key partners Swarovski elements FCB/ Leber Katz Partners Key activities Production and distribution of underwear clothing, lingerie, swimwear, fragrance beauty products Value Propositions Aims at providing customers with healthy and safe building and construction material of high quality at affordable prices. Customer relationship Identifies the needs of the customers and seeks to satisfy these needs Customer segments United kingdom Canada Key resources Bras Panties Beauty products Swim Vsx sport Shoes Clothing Pinks Channels Brand channel STAR world Victoria’s secret spring Victoria’s secret fashion show TV Channel stores Catalogue E-shop Cost structure Revenue streams It earns about 6.12 billion $ annually Marketing The company uses its stores, catalogue, and electronic shops to market its goods. This enables the company to reach its customers efficiently. Victoria’s use of ecommerce plays a key role in attracting potential customers to the company. For instance, in the site of the company, the company has indicated all information about its products and has included pictures of its fancy products to attract the attention of the viewers. The website for Victoria’s products is easily accessible especially that of ordering (Smith, 2001). The website is so attractive with attractive pictures that make it easy to identify the products that the company deals with. The website also allows customers to make comments on their products. The catalogues are also easy to access and use. The company also uses fashion shows as a way of advertising their products. Payments The customers use catalogues, cash, and credit notes to pay for the products. This keeps the business going later after purchase. Legal issues In March this year, the company organized a campaign to market one of its products "Bright Young Things" directed to attract the attention of girls between the age of 6 and 19. The public thought the words written on the underwear such as “call me”, were provocative and thus sexualizing the girls. The concerned parties accused the company. The company changed this advertisement. Over the years, the company has achieved a good name and the public congratulates it for making lingerie business accessible to all. It has grown and now operates internationally. Innovate of Victoria’s Secret Company Empathize To empathize, we asked the following questions randomly to about six consumers of Victoria’s Secret Company’s products. The respondents gave us answers that were more or less the same in the following manner. 1. Have you ever bought Victoria’s Secret products? (Yes) (No, they are too expensive.) 2. Why did you buy the products? (They are of high quality, attractive, and durable. Some of the products are also affordable) 3. How did you get to know about the existence of Victoria’s Secret products? (A friend advised me to use them. I also found out about their services on the internet. Third, the marketers of the company interact with us frequently through the media thus it helped me learn about the products) 4. Have you been a consistent user of the company’s products recently and why? (Yes, because I find their products of a very high quality compared to the other products in the industry. They also deliver their products and their services well and on time. These and other factors such as their friendly staff makes me to stick to the company whenever I think of lingerie and underwear) (no, I only use Victoria’s Secret products when I have enough money, their products are relatively expensive to me and therefore, during tough times I opt for other cheaper suppliers of the same products.) 5. Have you ever conducted a transaction with Victoria’s Secret online? If yes what are your views about it? If no, what is the reason? (Yes, I transact with the company online. This is because I consider it cheaper to make my specifications online and wait for delivery of the same goods at my place. It helps reduce transactions cost and there is a variety of information about various products in the company that helps me to choose the best products that I would require at that moment. I however experience problems in accessing the sites of the Company, the procedures of accessing information about Victoria’s products are too long and inconsistent and sometimes I opt for manual transactions. I once used the internet to transact with the Company, they let me down, as they did not deliver the products I wanted on time, seemingly they had too many orders to attend to, I therefore opted to be carrying out my transactions manually. ) (No, I find it hard to access the internet from the place I stay. I am not aware of the steps that I can use to access Victoria’s Secret sites in the internet. I once tried to such for marketers of underwear online. I was given a list of companies and I chose the top most company on the list. Unfortunately, it was not Victoria’s Secret.) Many consumers think the process of accessing Victoria’s Secret’s site is too complicated, this contributes to their lack of use if ecommerce in their transactions with the company. To correct this, the company should make the procedure of accessing their sites easier. It should also create a multiple of ecommerce sites, for instance allocate each groups of lingerie and underwear its own sites of marketing its products. Victoria’s Secret mainly uses ecommerce to market its products. There are many potential users of ecommerce in the Company. For instance, the company can use ecommerce to attract more suppliers for its raw materials through ecommerce the company can choose the best suppliers with quality raw materials at lower prices. This will help to reduce the costs that the company incurs, increase the revenues of the company, and thus increase the company’s revenues. The company can also use ecommerce to make orders for its raw materials. The suppliers on the other hand can use ecommerce to identify the needs of the company and supply them on time. The consumers are also potential users of ecommerce. They can make their needs known to Victoria’s Secret through the ecommerce sites (Daniels, 2010). They can comment on the products of the Company in order to address on the areas that the company needs to put into consideration to ensure consumer needs are satisfied. Consumers can also use ecommerce sites of the company to make orders of Victoria’s company products, this will be cheaper on the side of consumers, and they can therefore reduce transaction costs. Victoria’s Secret’s company can also use its ecommerce sites together with the sites of its competitors to identify the competitive forces of their competitors. This will help the company to improve its products and be able to compete with its competitors effectively (Schniederjans, 2002). The company can then move towards achieving the top position in the market. In dealing with its competitors, through ecommerce sites, Victoria Company can identify the opportunities in the market and threats in their market and thus counter them thus improving its position in the market. If the company is able to access sites of its competitor, it can use that opportunity to identify the weaknesses of these same competitors and specialize in becoming strong in these areas. Victoria’s Secret company executives can use ecommerce as a forum to advertise its company and its products. This way they can attract more partners for the business and encourage merges. These partners, the company should mainly identify them from the countries that it has not yet developed its roots fully. It can use ecommerce as a chance to extend its operations into other countries and this will improve its operations and thus increase revenue and profits for the company. Victoria’s Secret can also use ecommerce to address consumer issues in the market. Another potential user of ecommerce in Victoria’s Secret is the human resource department. Through the ecommerce sites, the department can advertise the available job positions in the company (Poole, 2008). Victoria’s Secret is a large multinational company and for this reason, it should have the best mangers. Therefore the human resource need to advertise the job positions using ecommerce consistently to attract many interested parties and conduct tests through which they can choose the best employees for the company. The human resource can also use ecommerce site to compare employee remuneration structure between Victoria’s Secret and its competitors. Through this, they can find out how best they should treat their employees to motivate them to improve their performance. The company can use ecommerce sites to monitor the activities of their partners. The company expects all their partners to carry out activities channeled towards the achievement of the company (Lovelock & Wirtz, 2010). The ecommerce sites will thus be essential in identifying any form of activities by partners that either promote the company or deteriorate the company’s performance. This way the company will be able to identify which partners are ideal to carry out transactions with. Auditors of the company’s activities, especially the independent auditors, can use ecommerce sites to identify new trends that emerge that are a threat to the company. They can then advice the company objectively to counter such challenges. Technological changes in the market are also a core factor that affects the performance of any given company. The ecommerce sites produce such information about changes in technology (Danziger, 2004). Victoria’s Secret should therefore be keen to identify these changes in technology in order to keep up with the changing needs of their consumers. Define From the interviews we carried out, we found out that many consumers may be willing to transact online with Victoria’s Secret Company but they do not. This is because some of them find it expensive. Others cannot access the transaction sites of the company. Others had a bad first experience and would not wish to repeat the same experience and thus opt to transact manually.) The company has the duty to make their ecommerce transactions attractive in order to encourage the consumers of their products to transact online with them when necessary. We interacted with a young man aged 25 years in one of our interviews. He is an IT expert and spends most of his time online. He has a passion for ecommerce and carries out many of his transactions online (Khosrowpour, 2004). As a consumer who is conversant with internet, he spends his time comparing substitutes of different products and chooses the best out of them. This is a challenge to Victoria’s Secret company, for such a person, they have to make sure they get the first position in the mind of the consumer in that when the consumer wants underwear or lingerie, in his comparisons, he should find Victoria’s Secret products to be the best. We also interacted with a woman aged 26. As a family woman, she is very busy and spends little of her time on internet sites but occasionally she goes to the internet. For such a person, Victoria’s Secret should ensure that information about its products on the internet is as attractive as possible at any given time (Deans, 2005). This way, whenever such a consumer accesses information about Victoria’s Secret at any given time, the consumer will get a good first impression and will stick to the company. The information provided to such consumers should therefore be understandable and direct to the point. The company has the role to ensure it incorporates the various needs of their consumers when it makes a decision on what products to advertise online and how to advertise these products. Ideas There is competition in the internet. Victoria’s Secret Company should make their products very attractive. For example, the company can use pictures to compare their products and other products. For example, the company can create two photo clips that will express the difference between their products and those of their competitor (Jennings, 2012). For instance, that the company’s products do not wear and tear easily. This will encourage potential consumers to use their products. The company can also use incentives like offering bonuses for those who frequently use their products or even those who buy their products in large quantities. Such incentives such as coupons and discounts can attract more customers for the company (Jennings, 2012). The company can make access to their sites free of charge. This will help to reduce the cost of accessing these sites and make them cheaper and attractive to its customers. The company can also come up with various ecommerce agents in the areas where they sell their products or in areas where they have potential customers. These ecommerce agents can help people in these locations to access ecommerce sites for the business freely and make transactions. The company can offer points for anyone who accesses their sites. For example if a person accesses the company’s site once, the person can earn ten points. After some time the company can compute the total of these points and the winner is given a reward. Rewards in this case should not be in the form of money but in the form of the products, they produce. The company can also conduct seminars and workshops where they teach the people on the use of their products after which they pay those who attend the workshop. This will aid in developing the interest of consumers in their products (American Law Institute-American Bar Association Committee on Continuing Professional Education, 2004). The company can make an offer online that for any customer who sends 50 new referees for ecommerce transactions with the company to the company gets a 10% discount on products they buy (Daniel, 2011). The company can also pay for some time in the media; the media such as the television s can give them a 15 minutes session daily where they talk about their products and how to trade online. This will educate the public about the use of ecommerce. The company can also create an online account for each of its customers where they post information weekly about their products and allow customers to comment on their products. The company can also decide that areas beyond a particular jurisdiction access them only through ecommerce and no other way. This will increase the use of ecommerce by the company. The company can create as many sites as possible for its products and working staff. This will increase accessibility to the company’s sites. For example, each employee can have their own sites; the company can also create for each product its site. This will make the number of sites with information about the company very many that the company will be easily accessible. The company can make products sold online cheaper so that customers will opt to only use ecommerce transactions. Most information regarding the direction of use of the company’s product should be put online. For example, the company should not write directions of use of their products on the products but encourage customers to access such information online. The company should also transact with suppliers who are willing to transact online with them. This will promote ecommerce for the company (American Law Institute-American Bar Association Committee on Continuing Professional Education, 2004). Those customers who carry out very many transactions with the company online can secure marketing positions in the company for a period of one month after which the other competitors are allowed to replace them. Therefore, to continue holding the marketing position the consumer should continuously engage in ecommerce. The company can employ IT specialists who can check on the ecommerce sites of other firms to ensure they emulate what is beneficial or make better what they think is not at its best in the company. This way they will ensure that, they are the best in the ecommerce transactions. The ecommerce transactions online can be in the form of direct oral interaction with the staff in the company. This way the ecommerce transaction will appear real and thus attract more online customers. The company can also ensure that it is online 24 hours daily to ensure that any tie the consumers need online services, the company staff attends to them. This will create a good image for the company and make it reliable in ecommerce. The workers in the company can work in shifts to ensure continuous online transactions (Bajaj & Nag, 2005). The company should not put passwords in their sites to ensure that anyone can access their sites. However, to avoid corrupting of information in their sites the IT experts in the company should constantly check information in the sites to ensure it is correct. In addition, written information should be in read only mode to hinder modifications by hackers. The company can incorporate ecommerce in its name to show that it is an ecommerce company. For instance, the company can change its name to Victoria’s Secret Ecommerce Company. The company should ensure that ecommerce customers for the first time are the best as possible in order to make such a customer to stick to ecommerce transactions. The company should allow online credit transaction with its customers as an incentive to encourage online transactions. For example, the business can encourage the use of credit cards for the transactions. Prototype The company here should change the packaging of its products to make them attractive as possible (Blythe, 2011). The working personnel of the company should post their information online to ensure that customers access them easily. The information about the company online should be as attractive as possible to capture the attention of the users of the internet. The word structure of information in the internet should also be attractive as possible. An example is shown below: Victoria’s Secret E-Commerce Limited The BEST Company In the WORLD! SUPPLY OF Underwears AND Lingeries AND BEAUTY PRODUCTS. STRONG AND DURABLE!!! Test After making some modifications on the site of Victoria’s Secret Company for example, as shown above the site became more attractive to customers. The words used in the site attracted the customer’s attention easily (Khosrowpour, 2004). The color coordination also contributed in attracting customers. The simplicity of the words makes the customers to easily know that Victoria’s Secret Company trades in lingerie and underwear that are long lasting. We also found out that the customers were so much interested in the use of audiovisuals. New business model Key partners Swarovski elements FCB/ Leber Katz Partners E-shops Key activities Production and distribution of underwear clothing, lingerie, swimwear, fragrance beauty products Value Propositions Aims at providing customers with healthy and safe products at affordable prices Customer relationship Identifies the needs of the customers and seeks to satisfy these needs Customer segments United kingdom Canada Key resources Bras Panties Beauty products Swim Vsx sport Shoes Clothing Pinks Channels Brand channel STAR world Victoria’s secret spring Victoria’s secret fashion show TV Channel stores Catalogue E-shop Cost structure Revenue streams It earns about 7.27 billion $ annually Sales pitch for Victoria’s Secret Basing on the research above Victoria’s Secret should make an effort to increase its online transaction. That is, the company should consider reducing manual transactions with its customers as much as possible. In order to achieve this, the company should ensure that it increases the number of sites for transactions that it has online. It should ensure that the sites are easily accessible at any given time and that information about their products is precise and simple to understand. The company should also ensure that transactions with its customers is at affordable prices, however, the cost of the transactions should not compromise with the profits of the company. To increase online transactions is a good idea for the business because the company will be able to extend the sale of its products to other geographical segments (Daniels, K., 2010). The company will be able to interact frequently with its customers and keep pace with their changing needs. Online transaction will be a competitive strategy for the company as it will be ahead of its competitors. If the company adopts this idea, it will increase the number of customers. This means an increase in revenue and therefore an increase in profits due to economies of scale. The company will also improve the quality of its products as it strives to meet the needs of its customers. Ecommerce will save on transaction and marketing costs as these will be online. It will also save on time. Initially, when the company implements this idea, the profit margin in the short run will be low. The company will carter for costs of establishing more websites and some customers may adapt slowly to online transactions causing low returns. The company will have to employ more IT experts. In the long run, however, the company will experience more profits, thus beneficial. Recommendations Victoria’s Secret Company should therefore try to channel its efforts more on ecommerce transactions as they are cheaper and attract more customers easily from all the potential market. The ecommerce sites, though expensive will promote effective communication between Victoria’s Secret and its customers. Victoria’s Secret Company should however not forget totally forget manual transactions between the company and its experts as manual interaction is also a form of sales promotion. Bibliography American Law Institute-American Bar Association Committee on Continuing Professional Education, 2004. Trademark dilution after Victoria's Secret, Washington, D.C.: ALI-ABA course of study materials. Bajaj, K. & Nag, D., 2005. E-commerce: the cutting edge of business. New Delhi: Tata McGraw-Hill Pub. Blythe, S., 2011. E-commerce law around the world. New York: Xlibris Corp. Daniel, I., 2011. E-commerce: get it right!. Chicago: NeuroDigital. Daniels, K., 2010. A Walk in Victoria's Secret Poems. Baton Rouge: Louisiana State University Press. Danziger, P., 2004. Why People Buy Things They Don't Need: understanding and predicting consumer behavior. Chicago: Dearborn Trade Pub. 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