Major Reasons for Staples.com Success
Staples.com being the e-commerce arms of Staples.Inc had strong backing in term of availability of fund required to build the “Portal” that would support its e-commerce effort. Furthermore, unlike other “dot com” which spent massive amount of money on advertising campaigns, Staples.com inherited the brand name from Staples Inc.
- Customer Relationship Management
- Understand Customer shopping pattern.
Data relating each customer’s shopping patterns are gathered and stored in a central database that links information from all channels of Staples, Inc., including their telephone catalog services, Staples.com, and their brick-and-mortar stores. This aggregation of data across channels allows key managers to see customers as they change channels, and have a complete picture of each customer.
- Usability
determined that the key to online success and increased market share was to make its e-commerce site as usable as possible. Staples wanted the site to be “customer-driven" to support customer needs in an easy-to-use, intuitive way. In order to achieve the goal, Staples spent hundreds of hours evaluating users' work environments, decision-support needs, and tendencies when browsing and buying office products and small business services through the Web. Methods included data gathering, heuristic evaluations, and usability testing.
The Outcome - The new Staples.com site has increased usability, reduced clicks, time-saving navigational tools, and personalized time-saving features for quick access.
- Portal - Customer driven strategy
Staples.com's "customer-driven" approach seems to have worked impressively, even in the face of well-entrenched competition from office superstore competitors such as OfficeDepot.com. Among other successes, Staples.com was able to boost repeat customers by 67 percent from second to third quarter of last year. After Staples.com instituted this “customer driven” approach to their website Staples.com saw an 80 % increase in traffic after re-launch, pushing it to the top spot among office supply sites in unique daily visitors, according to site ratings firm Jupiter Media Metrix.
Increased revenue: It's hard to pinpoint cause and effect with certainty, but third-quarter 2000 sales were up 491% over the previous year and also increased over the second quarter. Metrics aren't the only encouraging signs. The Staples site also recently won a prestigious award for best business-to-business site from MIMC, the Massachusetts Interactive Media Council (www.boston.internet.com/news/article.php/494001).
D. What could Staples.com have done differently that might made it a failure?
- Technology First Solutions
The first thing wrong with some e-Business strategies is that that they are usually focused around a specific software product or tool. Many vendors do not understand or consider the implications surrounding the other business or technical components of an e-Business solution. In many cases the technology takes over before the proper resources (people, processes and technology) are in place or stabilized.
Staples.com spent hundreds of hours evaluating users' work environments, decision-support needs, and tendencies when browsing and buying office products and small business services through the Web. These details analysis has assisted Staples.com to escape this trap.
- Lack of Vision or Strategy
Many failed E-business companies have a common factor, a lack of strategic vision for e-Business. Without engaging a customer driven strategy on its portal, Staples.com might have already been left behind by its competitor or will fall.
II. Boo.com – Failure Case Study
The venture was backed by a small group of investors, including some major business names and two merchant banks. In total, this small group of backers provided about £125 million in start-up funds for the company.
There were several reasons for these problems but the key one is few people are happy to buy clothes without first trying them on, which represented a fundamental problem for Boo. This difficulty was exacerbated by the fact that the web site could be slow to respond and rather difficult to use.
B. Business model & Strategy
Boo.com was a business-to-consumer (B2C) pure-play Internet company. The concept was relatively simple. It was to create a website selling fashion and sports clothing to the hip, young Internet audience. Brands would include DKNY, Timberland and Paul Smith. The site would use state-of-the-art technology.
But that wasn't all. The plan also called for establishing the first truly global Web retailer offering service in seven languages and 18 different currencies. The Boo Web site enabled shoppers to view every product in full-color, three-dimensional images. Visitors could zoom in on individual products, rotating them 360 degrees to view them from any angle. The site’s advanced search engine allowed customers to search for items by color, brand, price, style, and even sport.
Visitors were able to question Miss Boo, an animated figure offering fashion advice based on locale or on a specific activity (such as trekking in Nepal). Boo.com also made available a telephone customer service advice line. In addition Boo was to feature an independently run fashion magazine to report on global fashion trends.
Customers could view each product from every angle, zoom in and out and even use a virtual mannequin to try on outfits so they could see how the latest retro Puma sneaker or Fred Perry garment really looked. And unlike almost every other e-commerce business, Boo.com would flaunt its e-snobbery by charging full price for everything.
C. Major Reasons for Failure
Many Internet companies have problems controlling the rate at which they spend their available funds, sometimes called their “cash burn” rate. Boo.com suffered from this problem throughout its life. Boo.com spent very large amounts setting up their systems and, funded generously by individual investors. They were able to pay for massive advertising campaigns before they began trading to publicise their web sites.
- Poor Service (Lack of Customer Relationship Management)
- Launched non-complete version of their website.
Consumers get very annoyed when the e-commerce website they are trying to shop does not work. In software related commerce, one of the biggest complaints from users is insufficient testing for bugs before marketing to the public.
- Annoying pop-up windows and Cumbersome Interface
The multiple pop-ups further slowed down user download times and took away the sense of user control. When making a purchase most consumers prefer to make their own decision without pressure from pushy salesmen. From personal experience, most consumers prefer to seek out information as needed instead of having it pop up in another window.
- Miss Boo, Shopping Assistant
This virtual shopping assistant seemed crazy. Why did Miss Boo say “Tie me up, tie me down in a shoe that looks like it’s been attacked? This irrational verbiage symbolized the dementia in design that was systemic in the website. When the company icon/mascot says irrational things it reduces consumer confidence in the products and services provided in the website.
- Usability
In Boo.com case, there was a big disconnection between the bandwidth required to run the website multimedia and actual bandwidth of average consumers. Consumers simply did not have the bandwidth to shop at Boo.com, or the right program (Macromedia Flash) to load the images. People were not ready for the excessive graphics, movies, audio, and video.
- Unable to alter customer buying behavior
Boo.com was unable to attract customers in large numbers, nor was it able to generate a sufficient level of repeat customer from the small number of clients that did use its services. Few people are happy to buy clothes without first trying them on, which represented a fundamental problem for Boo.
D. What could Boo.com have done differently that might made it a success?
- Technology First Solutions
The technology that was supposed to power Boo.com did not work. As with everything else, the concept for its Web site was extraordinarily ambitious, with complex global distribution and multiple currencies and dazzling interactive features. And it was to have been built from scratch, something the technology team came to realize was difficult, if not impossible.
- Poor Management cost control
Management spending was unprecedented for a dot.com. By the time the site was supposed to go live in May 1999, Boo.com had run up a $600,000 bill from Hill & Knowlton, the company's public relations firm, mostly for setting up lunches with fashion editors for the founders. Hill & Knowlton threatened to stop working for Boo.com because the firm was not paid on time.
Ms. Leander, a former Elite model who was also Boo.com's marketing chief, hired Roman Coppola, Francis Ford Coppola's son, to direct the company's TV ads, featuring nerdy young people in urban chic clothing, which were part of a $42 million campaign for the big introduction. That included $25 million worth of advertising in magazines, newspapers, and billboards. Many employees said they received a mobile phone, a Palm hand-held device and an American Express card. Salaries were high for a dot-com on the make.
III. Compare and discuss contrast between Staples.com & Boo.com
It has been obvious from day one on the Web that what people want is fast downloading, information rich websites. Speed is a critical factor that drives Web usage. When people come to a website they are invariably looking for information. They don’t want to hang around. They don’t want to be left waiting. The best website is the one that gets them the right content fastest.
In general, usability was a big issue for Boo. Consumers did not have the bandwidth to shop at Boo.com, or the right program (Macromedia Flash) to load the images. During then, the common folk were not ready for the excessive graphics, movies, audio, and video. Also, the annoyance of Miss Boo, their online helper, also detracted people from shopping at Boo.com. As more problems arose, Boo forgot about their customers.
Staples.com has not committed the same mistake. It has built a portal based on what customer wants, content rich and fast downloading. This was clearly indicated by Staples.com portal recent won of a prestigious award for best business-to-business site from MIMC, the Massachusetts Interactive Media Council. (www.boston.internet.com/news/article.php/494001).
Feedback from customer commented that Boo web site was very complicated to navigate through, which meant that it was very difficult to make comparisons between the different brands that were stocked. According to Mori (2000) the ability to find product information and to compare prices is a very attractive feature for Internet shoppers.
The Staples.com web site on the other hand has been designed for usability, reduced clicks, time-saving navigational tools, and personalized time-saving features for quick access.
Interaction is the means of relationship-building with individual customers by providing timely pre-sales information and excellent after-sales support.
Boo.com has no strategy of building up customer relationship. The company suffered from very low rates of customer retention.
Staples.com offers tremendous online resources that provide personalized, right time customer information. When you place an order, Staples encourages you to sign up for e-mail 'reminders', which will be sent to you BEFORE you run out. Once you receive the e-mail you can access Staples.com directly, buy what you need and your new supplies will be on their way. “Product matchmaker”- products are listed specific to the customer personal equipment. Plus, order history and a favorite shopping basket will keep track of items that are continuously purchased for fast checkout! This strategy clearly scored a big plus in term of building good relationship with their customer.
For any new start up, making itself known is a big challenge. In Boo.com case, it spent relentlessly to create it brand image. The management committed $25 million to an advertising budget, a huge sum for a start-up. The company chose to advertise in expensive but trendy fashion magazines such as Vanity Fair as well as on cable television and the Internet. Staples.com has an easier path for it inherited the brand name from its parent company Staples Inc.
The creators Boo.com had a great vision, but failed to support that with a good strategy. First, the company had failed to consider potential competition from its main competitors who have strong brand name such as Land’s End, and Nordstrom. Second, it is evident that little market research was done as Boo.com strived to sell a good (clothing) that was hard to sell on the Internet. As for most shoppers, they prefer to touch, feel, and try on clothes before buying it. Third, they failed to consider their resources as they launched their websites simultaneously in several countries.
has both a vision and good strategy. It has established a vision of creating outstanding customer service through a great Web experience. With this vision, it laid the strategy foundation that the key to online success and increased market share was to make its e-commerce site as usable as possible. Staples wanted the site to be "customer-driven": to support customer needs in an easy-to-use, intuitive way.
IV. Conclusion
There would be various reasons for failure in EC such as lack of funding, incorrect revenue model, and so much more, but typically, no business model should ever ignore the golden rule - customer satisfaction. Strategic planning clarifies what an EC project should do or focus on with respect to the company's mission and the given business environment. To start or to survive companies must learn from the lesson of others’ failure and successful stories.
Appendix A: Critical Success factors
(Extract from: http://www.e-bc.ca/)
Reference:
- e-business infrastructure: Lessons from failure, Computer Finance, Dec 2000, p11
- Mack, Ann M., Stayin' Alive, Adweek Eastern Edition, 06/12/2000, Vol. 41 Issue 24, p68
- Turban, Efraim, King, David., Lee., Warkentin, Merill., Chung, H.Michael. (2002) “Electronic Commerce 2002: A Mangerial Perspective”, Prentice Hall.
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- Mori / National Consumer Council. August 2000. “E-commerce and Consumer Protection; A Report by the National Consumer Council”
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(www.boston.internet.com/news/article.php/494001) (Search within this site)