Case Study 1

Argos uses e-supply chain management to improve customer convenience

Retailer Argos is a leading proponent of using supply chain management to improve multichannel sales. The transactional Argos website was launched in 2000 when the company was a pioneer in implementing a reservation  service.  Sales  have  grown  significantly  since  the launch over 17 years ago. According  to  ‘Econsultancy’  (2010),  multichannel sales for Argos reached £1.9 billion in 2009.

Its ‘Check & Reserve’ feature, which enables visitors to check store availability and then order from a specific store for later pick-up, was responsible for 22% of the retailer’s total sales in 2009, growing by 36%. Internet sales account for 32% of all sales. Some features of the system that rely on integration of the website with different logistics systems are superior to competitors’.

For example, real-time stock availability information is shown and, while some retailers make customers wait several days for in-store collection, items reserved on the Argos website can be collected straightaway. David  Tarbuck  is  head  of  multichannel  retail  at Argos. He explains the approach Argos has used for its fulfilment: The way Argos is built is unique in the UK market, and this has made it easier for us to implement Check & Reserve. Since customers are in the front of the store, and  the  stock  is  held  in  the  back,  we  have  a  clear picture of stock levels in our stores.

This means we can be confident that, if we ask our systems about stock levels at any store, this information will be accurate. Check & Reserve gained immediate adoption with customers, and this has accelerated over the last two or three years, with this channel growing by 36% for a second year in a row. People have caught on to it, and appreciate the convenience of being able to check before they leave the house and save themselves a wasted journey.

While our model has been improved over the last ten years, other retailers have a more difficult and costly process for implementing this kind of service. Since  then,  the  multichannel  retailer  has  also  opened ‘small  format’  concessions  in  Homebase,  Sainsbury’s and some London tube stations.

According to Mark Steel, digital operations director at Argos, ‘Stores are a really important part of our multichannel offer. Customers really value having that physical touchpoint. Some customers still prefer to come in to pick something up’ (Spary, 2015). Mobile commerce offers more order choice for Argos customers. In 2010, Argos launched its first iPhone app, in response to a 600% increase in traffic to Argos.co.uk from mobile devices.

In December 2014, sales via mobile increased by 28% and, in 2015, 45% of Argos’ sales came through digital channels. The company’s iPhone app initially asks you to set your home store to make subsequent reservations smoother. The app can also find the local store via GPS, or by entering the town name or postcode. Results of local stores are shown via Google Maps, and details are provided on opening hours, as well as driving directions, and the option to set this as your store.

You can then use the search icon to search for stock held at that store. The stock checker works just like the machines in the Argos stores. Each product page comes with some detailed review information, which makes the app very useful for people wishing to do some extra product research while in the store. Once a product is selected, the reservation process is straightforward. Argos has also developed a ‘kids’ wish list’ app, aimed at  five  to  seven  year  olds,  which  was  one  of  the  ideas generated from a 2014 hackathon .

The idea behind the app was to re-create some of the experiences that children historically loved about Argos – e.g. circling their Christmas catalogue to let mum and dad know what presents they wanted for Christmas. Engagement metrics for the app have been good – the average dwell time was 13 minutes in 2014. Argos is well known for catalogues, which are also part of retail multichannel strategy since products featured can encourage purchase both in-store and on the web. Argos releases two catalogues every year, each with a print run of 18 million.

David Tarbuck explains how the catalogue fits into the multichannel strategy: We  have  large  numbers  of  people  who  have  our catalogue in their lounges, on their coffee tables, and this gives us a presence in people’s homes. Catalogues are often the starting point for customers shopping with Argos, they will flick through the catalogue, or browse the website at the same time. We have over 11,000 products online that aren’t in the catalogue, so people will come online to check this and for latest offers, so catalogues are used in conjunction with other channels.

With catalogues or any other channel, it’s all about talking to customers and working with them in whichever way they want to interact with us. Tarbuck believes that the structure and focus of the team has also been important to success. He says: We  have  a  multichannel  team,  and  I  head  up  the development team and the operation of the website, overseeing online strategy.

We have e-commerce, marketing and commercial teams who respond to the trading side of the business, and make sure the various promotional campaigns are joined up, and there is consistency across channels. We’ve had a self-contained Internet-focused team in place for the last ten years, and this dedicated team has been very closely related to marketing and other areas of the business. Source:  www.campaignlive.co.uk/article/argos-we-want-digital- retail-leader/1350380

Case study 2

The evolution of easyJet’s online revenue contribution

This  historical  case  shows  how  the  easyJet  website (Figure7.11) became the main sales channel for easyJet from its launch in the 1990s. How the Internet was used for service delivery and marketing communications is also described. This case study has been retained since it is a popular case illustrating the benefits of management commitment  to  a  planned,  well-resourced  strategy  to help grow digital channels and to trial new online products.

By 2013, over 98% of seats were sold online and easyJet still incentivises people to book their cheap flights online through a £7.50 discount for each leg of a journey. easyJet  was  founded  by  Stelios  Haji-Ioannou,  the son of a Greek shipping tycoon who reputedly used to ‘hate the Internet’.

In the mid-1990s Haji-Ioannou reportedly  denounced  the  Internet  as  something  ‘for  nerds’, and swore that it wouldn’t do anything for his business. This is no longer the case, since by August 1999 the site accounted for 38% of ticket sales or over 135,000 seats. This was past the company’s original Internet contribution target at launch of 30% of sales, by 2000. In the period from launch, the site had taken more than 800,000 bookings since it was set up in April 1998 after a shaky start of two sales in the first week and one thousand within the first month.

In March 2000 easyJet increased its online discount to £2.50 for a single trip – a higher level of permanent discount than any other airline. By September 2000, Internet sales reached 85% of total sales. Since this  time,  the  growth  in  proportion  of  online  sales  has decreased. By 2003, over 90% of all sales were online.

The company was originally set up in 1994. As a lowcost airline, looking to undercut traditional carriers such as  British  Airways,  it  needed  to  create  a  lean  operation. To achieve this, Haji-Ioannou decided on a single sales channel in order to survive. He chose the phone. At the time this was ground-breaking, but the owner was encouraged by companies such as Direct Line insurance, and the savings that direct selling would bring.

Although Haji-Ioannou thought at the time that there was no time to worry about the Internet and that one risk was enough, he was adaptable enough to change. When a basic trial site was launched, he kept a close eye on how popular the dedicated information and booking phone line was (having a web-specific phone number advertised on the site can be used to trace the volume of users on the site). A steady rise in the number of calls occurred every week.

This early success coincided with the company running out of space at its call centre due to easyJet’s growth. Haji-Ioannou related, ‘We either had to start selling over the Internet or build a new call centre. So our transactional site became a £10 million decision.’ Although the success of easyJet could be put down solely to the founder’s adaptability and vision, the company was helped by the market it operated in and its chosen business model – it was already a 100% direct phone sales operation.

This meant it was relatively easy to integrate the web into the central booking system. There were also no potential channel conflicts with intermediaries such as travel agents. The web also fitted in with the low-cost easyJet proposition of no tickets, no travel agents, no network tie-ups and no in-flight meals.

Customers are given a PIN number for each order on the website, which they give when they get to the airport. Sales  over  the  Internet  began  in  April  1998,  and although  easyJet’s  new-media  operations  were  then handled by Tableau, a few months later easyJet took them in-house.

The  Internet  is  important  to  easyJet  since  it  helps it  to  reduce  running  costs,  important  for  a  company where each passenger generates a profit of only £1.50. Savings to easyJet made through customers booking online enable it to offer at least £1 off to passengers who book online – this is part of the online proposition.

The owner says that ‘the savings on the Internet might seem small compared to not serving a meal on a plane, which saves between £5 and £10, but when you think how much it would cost to build a new call centre, pay every easyJet reservation agent 80 pence for each seat sold – not to mention all the middlemen – you’re talking much more than the £1 off we give online buyers’.

What  about  the  risks  of  alienating  customers  who don’t  want  to  book  online?  This  doesn’t  worry  the owner. He says ‘I’m sure there are people who live in the middle of nowhere who say they can’t use the Internet and will fly Ryanair instead. But I’m more worried about keeping my cost base down, and finding enough people to fill my aeroplanes. I only need 6 million people a year, not all 56 million.’ 

Promotion 

The Internet marketing gurus say ‘put the company URL everywhere’; easyJet has taken this literally with its web address along the side of its Boeing 737s. easyJet frequently varies the mix by running Internetonly  promotions  in  newspapers.  easyJet  ran  its  first Internet-only promotion in a newspaper in The Times  in February 1999, with impressive results. Some 50,000 seats  were  offered  to  readers  and  20,000  of  them were sold on the first day, rising to 40,000 within three days.

And, according to the marketing director, Tony Anderson,  most  of  these  were  seats  that  otherwise would  have  been  flying  along  at  600  mph  –  empty. Thescalability of the Internet helped deal with demand since everyone was directed to the website rather than the company needing to employ an extra 250 telephone operators.

However, risk management did occur, with a micro-site built for Times  readers (www.times.easyjet. com) to avoid putting a strain on easyJet’s main site. Anderson says, ‘The airline promotions are basically designed to get rid of empty seats.’ He adds, ‘If we have a flight going to Nice that’s leaving in 20 minutes’ time, it costs us very little to put some extra people on board, and we can get, say, £15 a head for it.’ Flight promotions are intended to avoid attracting people who would fly  with  easyJet,  so  advanced  booking  schemes  are intended to achieve that.

A  later  five-week  promotion  within The  Times   and The  Sunday  Times   newspapers  offered  cheap  flights to a choice of all easyJet destinations when 18 tokens were collected. In total, 100,000 seats were sold during the promotion, which was worth more than £2 million to the airline. Thirty per cent of the seats were sold online, with  the  rest  of  the  transactions  being  completed  by phone; 13,000 orders were taken over the Internet in the first day alone, with over 15,000 people on the site at one point. The  website  also  acts  as  a  PR  tool.  

Haji-Ioannou uses its immediacy to keep newspapers informed about new promotions and offers. The  website  is  also  used  as  an  aggressive  tool  in what  is  a  very  competitive  marketplace.  Haji-Ioannou says,  ‘Once  we  had  all  these  people  coming  to  our site, I asked myself: Why pay a PR company to publicise what we think when we have a captive audience on the site?’ For example, easyJet ran a competition in which people had to guess what BA’s losses would be on ‘Go’, its budget rival to easyJet (the figure turned out to be £20 million).

Within minutes of the BA results being announced on 7September, the easyJet site had the 50 flight-ticket winners from an incredible 65,000 people who had entered. In a similar vein, a section of the site was entitled ‘Battle with Swissair’, giving easyJet’s view  that  Swissair’s  head  had  persuaded  the  Swiss government to stop easyJet being granted a commercial scheduled licence on the Geneva–Barcelona route. easyJet also called itself ‘The web’s favourite airline’ in 1999, a direct counterpoint to British Airways’ slogan of ‘The world’s favourite airline’, for which it enjoyed a court battle.

The creation of a mobile site In an interview with Peter Duffy, the easyJet marketing director, the potential of mobile marketing was emphasised ( Marketer,  2013): Mobile  was  clearly  a  huge  growth  area.  In  some Mediterranean  countries  mobile  is  often  leapfrogging  broadband  as  a  way  to  get  online.  So  we  set about making a mobile website where you could do all the things you can do on easyJet.com: buy from a website, cancel a flight, shift a flight, and do all those things in six languages. We have seen tremendous demand for it. The app has been downloaded 4.3m times. Today 5 per cent of revenue comes through mobile – that’s not insignificant for a £4bn company.

Peter  Duffy  has  also  introduced  a  conversion  rate optimisation program. He says: When I arrived, my first observation was that we had 400 million people going to the website; 90 per cent of sales come through it. If we could improve conversion by just a small amount it was probably the most effective thing we could do commercially.

At any point in time a dozen to 20 tests can be running based on a series of ideas for how the company can do things better, inspired either by watching our customers or looking at where customers are dropping out of the process, or where there is a new feature like allocated seating. easyEverything easyJet has used the ‘easy’ prefix to trial additional services as part of the easyGroup. Trials include: easyHotel – budget hotels from just £9.99 per night; easyCar –  a network of global rental companies that use economies of scale to keep prices low.

Today, most non-flight services such as holidays, car rental and insurance are directly related to travel, often provided by partners. The articles report that Russell Sheffield, head of newmedia agency Tableau, which initially worked with easyJet, had an initial problem with colour! ‘He says there was a battle to stop him putting his favourite colour all over the site.’ The site was intended to be highly functional, simply designed and without any excess baggage. He says, ‘The home page (orange) only had four options – buy online, news, info, and a topic of the moment such as BA “GO” losses – and the site’s booking system is simpler to use than some of its competitors’.

He adds: ‘Great effort was put  into  making  the  navigation  intuitive  –  for  example, users can move directly from the timetables to the booking area, without having to go via the home page.’ The  site  was  designed  to  be  well  integrated  into easyJet’s existing business processes and systems. For example, press releases are fed through an electronic feed into the site, and new destinations appear automatically once they are fed into the company’s information system.

Measurement of the effectiveness of the site occurred through the dedicated phone number on the site, which showed exactly how many calls the site generated, and the six-month target was met within six weeks. Website log file analysis showed that people were spending an average of eight minutes a time on the site and, better  still,  almost  everyone  who  called  bought  a  ticket, whereas with the normal phone line, only about one in six callers buys.

Instead of having to answer questions, phone operators were doing nothing but sell tickets. Source : Based on Revolution  articles: EasyJet site a success in first month,  1 August 1998; EasyJet promotion sells 30,000 seats, 1 November 1998; Say hello to Mr e-Everything, 13 October 1999. Marketer  (2013).

Details

Students are expected to give a brief introduction to the topic and the cases selected and state the objectives of the
presentation followed by addressing the following questions and conclusions.

Case Study 1

– What are the most valuable things in relation to digital business innovation you have learned from the cases selected?

It was even mentioned in the case study that through this innovation of “Check Reserve”, the consumers of the company were also able to save a lot of time as well (Spary, 2015).

Implementing proper digital business innovations are essential tools to attract new consumers and retain the existing ones as well.

– How can you apply those lessons learned from the selected cases to your own experience at work if relevant or to a practical business situation when your work experience is not closely related to the selected cases?

Within the case study of Argos, the company did not collect any feedback, but the digital business innovation was an effective solution for the consumers of the company

This brings to the other practical application of the lesson that I have learnt, which is to improve the experience of the consumers

This lesson could be practically implemented within a business through self-improvement and taking initiatives within the organisation

– How have the cases selected enhanced your understanding of entrepreneurial opportunities in digital economy?

Through analysing the case study of Argos, the company had delivered a solution to its consumers for a problem they were not even aware of

This approach that was undertaken by the company had provided me a much-needed insight to the perspective of an entrepreneur

Entrepreneurs are required to stay up to date regarding their consumer’s requirements (Panel, 2020).

Doing so would ensure the longevity of a business and ensure a healthy tenure in the market as well

Another understanding that I was able to gain through analysing this case study was the importance of social skills for entrepreneurs
The social skills of David Tarbuck played an essential role in the implementation of the “Check and Reserve” innovation

– How might what you have learned from the cases affect your future career development?

The insights I have gained has helped me to identify the skills I need to work on

The skill of social listening is something I have to work on to improve my future career development

Social listening is essential for improving consumer engagement and discovering consumer insights as well (Hayes et al., 2021).

The lesson I have learnt about digital business innovation has forced me to improve my problem-solving skills

Without proper problem-solving skills and analytical perspective, the solution of “Check and Reserve” could not have been implemented

Case Study 2 

1 What are the most valuable things in relation to digital business innovation you have learned from the cases selected?
The importance of flexibility and the vision of a business are the most valuable things that I have learnt through the case study of EasyJet’s success

The internet was considered as a source of “hate” by Haji-Ioannou, since he denounced the internet
It was also stated that the application of the internet would have no contribution of the company’s success

However, it was the it was the flexibility and adaptivity of Haji-Ioannou, that led to the integration of the internet within the business operations of the company

The company was also true to its businesses which was to provide affordable flight options to its consumers
This had played an essential role in helping the company to fully utilise the internet’s potential

2 How can you apply those lessons learned from the selected cases to your own experience at work if relevant or to a practical business situation when your work experience is not closely related to the selected cases?

The lessons that I have learnt through the case study of EasyJet is the importance of affordability to influence the purchase decisions of consumers
The pricing strategy developed by an organisation plays an essential role in influencing the perspective of consumers (Darmawan and Grenier, 2021).
I could practically apply this lesson within a business through comparing the pricing strategy of competitors 
Only through comparing the pricing strategy of other businesses can a more efficient and affordable pricing strategy can be developed for a business

3 How have the cases selected enhanced your understanding of entrepreneurial opportunities in digital economy?

This case study has helped me in getting a better of understanding of adaptability needed within entrepreneurs 

Without this particular skill entrepreneurs would not be able to identify the potential opportunities within a market (Fath, 2021).

EasyJet was able to keep the prices of their tickets low as compared to their competitors because of the internet
Since the internet was made the sole point of sales for tickets by the company the price for the tickets were kept affordable

This case study has helped me in getting a better of understanding of adaptability needed within entrepreneurs 
Without this particular skill entrepreneurs would not be able to identify the potential opportunities within a market (Fath, 2021).

EasyJet was able to keep the prices of their tickets low as compared to their competitors because of the internet

Since the internet was made the sole point of sales for tickets by the company the price for the tickets were kept affordable

Other than that implementing proper marketing strategies is another essential skill for entrepreneurs to grasp various opportunities

Since EasyJet had implemented innovative marketing strategies such as using their Boeings as placards for their website address

These strategies played an essential role in attracting new consumers to the business 

4 How might what you have learned from the cases affect your future career development?

The lessons and understanding I gained through this case study was a push for me to cultivate analytical skills within myself
Primarily, this act shows us how the adoption of technology and a digital ecosystem is fundamental to gain success of the business (Yablonsky, 2020). 

Therefore, cultivating this skill within myself and further polishing it is necessary for my future career development
This skill would allow me to develop innovative solutions 

 

Top Management Samples