Case Study Description of Reinventing Retail: ShopRunner's Network Bet
ShopRunner considers adjustments to improve its online shopping service which offers no-charge two-day shipping as well as easy returns and other conveniences. Competitors' diverse pricing models and ancillary benefits raise questions about how to structure and price ShopRunner's offering. Meanwhile, an investment from Alibaba presents new opportunities in China but risks distraction from the core business.
Swot Analysis of "Reinventing Retail: ShopRunner's Network Bet" written by Benjamin Edelman, Karen L. Webster includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shoprunner's Shoprunner facing as an external strategic factors. Some of the topics covered in Reinventing Retail: ShopRunner's Network Bet case study are - Strategic Management Strategies, IT, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Reinventing Retail: ShopRunner's Network Bet casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, increasing commodity prices, increasing government debt because of Covid-19 spendings, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs,
increasing transportation and logistics costs, there is backlash against globalization, etc
Introduction to SWOT Analysis of Reinventing Retail: ShopRunner's Network Bet
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Reinventing Retail: ShopRunner's Network Bet case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shoprunner's Shoprunner, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shoprunner's Shoprunner operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Reinventing Retail: ShopRunner's Network Bet can be done for the following purposes –
1. Strategic planning using facts provided in Reinventing Retail: ShopRunner's Network Bet case study
2. Improving business portfolio management of Shoprunner's Shoprunner
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shoprunner's Shoprunner
Strengths Reinventing Retail: ShopRunner's Network Bet | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shoprunner's Shoprunner in Reinventing Retail: ShopRunner's Network Bet Harvard Business Review case study are -
Successful track record of launching new products
– Shoprunner's Shoprunner has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shoprunner's Shoprunner has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Learning organization
- Shoprunner's Shoprunner is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Shoprunner's Shoprunner is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Reinventing Retail: ShopRunner's Network Bet Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Sales & Marketing field
– Shoprunner's Shoprunner is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Shoprunner's Shoprunner in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Shoprunner's Shoprunner is present in almost all the verticals within the industry. This has provided firm in Reinventing Retail: ShopRunner's Network Bet case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Low bargaining power of suppliers
– Suppliers of Shoprunner's Shoprunner in the sector have low bargaining power. Reinventing Retail: ShopRunner's Network Bet has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shoprunner's Shoprunner to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Shoprunner's Shoprunner has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Reinventing Retail: ShopRunner's Network Bet Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Shoprunner's Shoprunner has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Sales & Marketing industry
– Reinventing Retail: ShopRunner's Network Bet firm has clearly differentiated products in the market place. This has enabled Shoprunner's Shoprunner to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Shoprunner's Shoprunner to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Reinventing Retail: ShopRunner's Network Bet Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Shoprunner's Shoprunner digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shoprunner's Shoprunner has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Shoprunner's Shoprunner has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Reinventing Retail: ShopRunner's Network Bet - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Shoprunner's Shoprunner are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Reinventing Retail: ShopRunner's Network Bet | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Reinventing Retail: ShopRunner's Network Bet are -
Aligning sales with marketing
– It come across in the case study Reinventing Retail: ShopRunner's Network Bet that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Reinventing Retail: ShopRunner's Network Bet can leverage the sales team experience to cultivate customer relationships as Shoprunner's Shoprunner is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Reinventing Retail: ShopRunner's Network Bet, it seems that the employees of Shoprunner's Shoprunner don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Benjamin Edelman, Karen L. Webster suggests that, Shoprunner's Shoprunner is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Shoprunner's Shoprunner products
– To increase the profitability and margins on the products, Shoprunner's Shoprunner needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Reinventing Retail: ShopRunner's Network Bet, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow decision making process
– As mentioned earlier in the report, Shoprunner's Shoprunner has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Shoprunner's Shoprunner even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Reinventing Retail: ShopRunner's Network Bet HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Shoprunner's Shoprunner has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Reinventing Retail: ShopRunner's Network Bet has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shoprunner's Shoprunner 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shoprunner's Shoprunner is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Reinventing Retail: ShopRunner's Network Bet can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Shoprunner's Shoprunner is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Shoprunner's Shoprunner needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shoprunner's Shoprunner to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Shoprunner's Shoprunner has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities Reinventing Retail: ShopRunner's Network Bet | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Reinventing Retail: ShopRunner's Network Bet are -
Buying journey improvements
– Shoprunner's Shoprunner can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Reinventing Retail: ShopRunner's Network Bet suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Shoprunner's Shoprunner can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Shoprunner's Shoprunner can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shoprunner's Shoprunner in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Shoprunner's Shoprunner to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shoprunner's Shoprunner can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Shoprunner's Shoprunner can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shoprunner's Shoprunner can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Shoprunner's Shoprunner can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shoprunner's Shoprunner in the consumer business. Now Shoprunner's Shoprunner can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Shoprunner's Shoprunner can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shoprunner's Shoprunner to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Shoprunner's Shoprunner to hire the very best people irrespective of their geographical location.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Shoprunner's Shoprunner to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Shoprunner's Shoprunner has opened avenues for new revenue streams for the organization in the industry. This can help Shoprunner's Shoprunner to build a more holistic ecosystem as suggested in the Reinventing Retail: ShopRunner's Network Bet case study. Shoprunner's Shoprunner can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Reinventing Retail: ShopRunner's Network Bet External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Reinventing Retail: ShopRunner's Network Bet are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shoprunner's Shoprunner can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Reinventing Retail: ShopRunner's Network Bet .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shoprunner's Shoprunner in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Shoprunner's Shoprunner needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Shoprunner's Shoprunner can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Shoprunner's Shoprunner
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Shoprunner's Shoprunner.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Shoprunner's Shoprunner business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Shoprunner's Shoprunner.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Shoprunner's Shoprunner with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Shoprunner's Shoprunner needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Consumer confidence and its impact on Shoprunner's Shoprunner demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Reinventing Retail: ShopRunner's Network Bet, Shoprunner's Shoprunner may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Environmental challenges
– Shoprunner's Shoprunner needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Shoprunner's Shoprunner can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Shoprunner's Shoprunner in the Sales & Marketing sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Reinventing Retail: ShopRunner's Network Bet Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Reinventing Retail: ShopRunner's Network Bet needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Reinventing Retail: ShopRunner's Network Bet is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Reinventing Retail: ShopRunner's Network Bet is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Reinventing Retail: ShopRunner's Network Bet is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Shoprunner's Shoprunner needs to make to build a sustainable competitive advantage.
