Very interesting post Oba! Dangote Cement’s story reminded me quite a bit of the BYD case we read in TOM earlier this semester. Like BYD much of Dangote Cement’s operational prowess appears to stem from geographic peculiarities (e.g., strength of relationship with leading upstream player, Julius Berger, strategic connections with distributors, advantageous energy costs, and proximity of its factories to lime deposits). Do you think that Dangote will be able to sustain such high margins as it expands outside of Nigeria? Also, does the company have any plans for vertical integration, perhaps entering the construction industry as BYD entered the automobile industry?
Great post Alula! I completely agree with your assessment that Radio Shack failed to identify a value proposition that would allow it to compete effectively in an industry severely disrupted by the entrance of Amazon. It appears that Radio Shack attempted to serve everyone while simultaneously consolidating its product portfolio. I wonder what would happen if it chose an opposite strategy (ie., hone in on a specific target market while offering it a wide selection). I think Radio Shack had a very clear target market from its genesis: the tinkerer/fiddler who liked to “nerd out” with electronics (I remember spending hours at Radio Shack with my geeky godbrother when he was sourcing parts for the computer he wanted to build). I think the growth strategy that Radio Shack ultimately chose to adopt inefficiently served this consumer. The company should have focused its e-commerce strategy around this target market who was perhaps the earliest adopter of e-commerce. I can imagine that the DIY consumer would have been interested in using the internet for its capacity to educate, inform, and compare products. Would have been interesting to see what would have happened if Radio Shack developed an e-commerce strategy that offered a wide offering of components and parts to a target DIY consumer. Would be curious to get your thoughts!
Thanks for your reply wombat!
I find your comparison with Target interesting. I would argue that Target’s apparel line caters to a completely different customer base than that of Everlane’s. While Everlane does offer affordable luxury with its $15 dollar t-shirts, a solid portion of its product portfolio is priced significantly higher than Target’s (e.g., the Petra backpack Jean references below is $330). Everlane acknowledges that its prices are certainly not the lowest in the market and it is not attempting to offer anything near Target’s “every day low prices” (you can see that Everlane is still capturing upwards of 50% margin on many of its products when one scrolls through its “transparency infographics.” I think Everlane caters more to a customer who wants a product with a compelling story and that is ethically and responsibly sourced. I believe that this consumer profile has little to no overlap with the Target consumer profile.
Jean – thanks for your comment! Do keep me updated on how email@example.com handles the snap clip ring on your backpack.
I believe Everlane Now is an attempt to compete with other luxury platforms and brands (e.g., net-a-porter) who are introducing similar on-demand delivery models. Everlane wants to make it as easy as possible to shop with them, and I suspect that the speedy-delivery offering is informed by this strategy. I am curious about its ability to pull off this service operationally as delivery is not a core-competency, and is perhaps why Everlane is piloting in New York as opposed to launching nationwide.
I would argue that the Petra backpack is still “affordable luxury” when one compares it to the brands that Everlane perceives as its competition (e.g., Prada, Louis Vuitton, Botegga Veneta). These brands market backpacks that are 2-3X the price of the Petra backpack. I think that Everlane is also capitalizing on a movement of “inconspicuous consumption” (perhaps you will find the HBR article I am including on this movement interesting). Everlane caters to a growing consumer base of those who want luxury quality goods but without the obvious flashy branding of the aforementioned brands.
Great post Pooja! I was certainly nostalgic reading it; I remember spending hours as a seven-year-old, attempting to convince my father to purchase me the $80 Samantha doll to no avail given the steep price tag. I did however convince him to purchase me the books which I pitched as an “investment in my education.”
I too am disappointed in American Girl doll’s shift from the historical doll strategy to the customized doll strategy. Before its acquisition by MatteI, the stories that accompanied the historical dolls were used to educate young girls of issues of poverty, racism, and inequality (e.g., the Samantha story related to her battle against child labor in the 1920s). While the customizable dolls do serve a social mission in allowing girls to choose dolls that reflect themselves (as opposed to propagating a classic notion of beauty), the dolls’ narratives are no longer driven by historical lessons. Although American Girl says the phasing out of the historical doll line is a matter of inventory management (claim they need the warehouse space for new dolls), I suspect the decision was driven by a desire to shy away from controversy and informed by marketing’s agenda as opposed to supply chain’s needs.
Does the introduction of a customizable product line erode the communities that evolve around a particular doll (I see community as the key point of diffentiation between American Girl and other doll manufacturers)? As the business model pivots in focus to a celebration of individuality and self-reflection, I fear that the organic communities that developed around each iconic, historical doll are in jeopardy). Perhaps the introduction of the online portal mitigates this risk. How does store design change with the introduction of a more complicated, customizable product portfolio? (I remember the stores used to have a “corner” for each doll where accessories and stories particular to her were sold)? I suspect inventory management and order fulfillment policies had to be elevated with the introduction of increasingly differentiated products. Would be curious to learn about this transition in supply chain and how the Mattel acquisition affected SC as I imagine the production synergies were substantial).