Key take aways from E-Business Week 3 sessions 5 & 6

From the failure of Webvan which was an online credit and delivery grocery business that went bankrupt in just 2 years after it was founded in 1999, we learn that even if E-business has its own advantages associated with it, not everytime can it be successful. There are strategies that have to be formulated. Money, brand name and expertise are mostly essential for the online model to succeed.

 

1.       Be Relevant to the consumer, value delivery: To acquire the mind-space of the target consumer, the offering has to be relevant by identifying his exact need and not just added perceived benefits that may not address the basic needs and habits the consumer has.

 

2.       Positioning, targeting and sustaining value in online business: Through the core benefits offered like variety and great deals and augmented benefits of fun and connection, Webvan initially started on the right path. But it should have also focused more on the targeting and not serve just everyone. Optimizing and then building a definite image is more important which is why Webvan went into a loss as it tried to serve even customers who were unlikely to stay loyal and this only added to the costs.

 

3.       Scale of operation: The size of the company also sometimes forms the basis of whether there is any feasibility in the strategy it is following. A company with deep pockets can survive initial losses to acquire market share, but not so for smaller companies. Example, ITC e-choupal's model has not been copied so far.

 

4.       Value capture/Differentiation: In E-Business, opportunities are there but they have to be tapped strategically. Example, an online selling portal can tie-up with ICICI bank to offer discounts or privileges to consumers holding an ICICI credit/debit card. So such consumers on other websites would be attracted to this portal and also the usage for that card would increase. The portal can get the database from the bank to send personalized emails with certain terms & conditions.

 

Sonam Gupta

12IT-026

Sec B

Regards,

Sonam Gupta

PGDM (IT), IMT Ghaziabad