The client is a Fortune 500 retailer with about 3,000 stores throughout the United States, offering more than 15,000 products in store and more than 200,000 products through its electronic supply chain. Its 2006 revenues were nearly $6 billion dollars.
The client planned to extend its existing retail business by developing an e-commerce sales channel, but required a strategic analysis to guide its Internet venture and ensure an effective approach. Since most Web traffic related to the client's business consisted of consumers seeking information and not purchasing products, the client would be exploring a new niche with uncertain potential. Therefore, what would be the appropriate segments to target? What benefits would the Internet provide? What would the potential pitfalls be?
Kannon utilized its Outside-In strategy to evaluate external perceptions of the Internet, as well as the client itself to develop market-based recommendations regarding the viability of an e-commerce effort.
Kannon’s analysis contained several important caution flags for the client. Careful research determined that its product mix is one of the least attractive products to sell over the Internet due to delay factors in obtaining items. Kannon questioned whether the client, based on its existing strategy, would be able to duplicate its store-based services profitably over the Web. Therefore, alternative Internet strategies would be required and have since been developed. The client is currently focused on bringing those strategies to fruition.
“Kannon helped lay the foundation for thinking beyond our competitors’ current offerings and concentrating on tomorrow’s platforms,” said the client’s Vice President of Systems Technology & Support. “Kannon’s staff is extremely professional, and I was very impressed by their structured methodology and the candid nature of their recommendations. Instead of simply telling us what we wanted to hear, they identified a number of major obstacles to our initial plans and developed sensible alternatives. As a result, we’re positioning ourselves more effectively to create and sustain strong Internet-based relationships with our customers. As retailers, we must create service offerings that blend physical and virtual offerings. We need to bridge both worlds to deliver maximum convenience to the consumer.”