Zalora: Dressing Up the Mobile App to Engage Customers SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zalora: Dressing Up the Mobile App to Engage Customers
In March 2013, Zalora, a leading online fashion retailer in Asia-Pacific, had diversified it sales channels by launching the Zalora mobile app. Almost three years on, Tito Costa, the Managing Director of Zalora, is faced with some hard-hitting questions, specifically in relation to where he should focus the company's future investments. Although the mobile app was an important channel to draw in customers, conversion rates and retention needed improvement. Tito knew that the question was not whether to have a mobile app or not, it was about getting the best value from it. What investments and incentives were needed to create a large and growing set of loyal customers who would see the Zalora as their go-to app for all their fashion needs? Did Zalora have the resources to execute these plans? And, importantly, would these investments be worthwhile?
Authors :: Srinivas K. Reddy, Sandeep R. Chandukala, Sarita Mathur
Swot Analysis of "Zalora: Dressing Up the Mobile App to Engage Customers" written by Srinivas K. Reddy, Sandeep R. Chandukala, Sarita Mathur includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zalora App facing as an external strategic factors. Some of the topics covered in Zalora: Dressing Up the Mobile App to Engage Customers case study are - Strategic Management Strategies, Technology and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Zalora: Dressing Up the Mobile App to Engage Customers casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, 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 increasing trade war between United States & China, increasing energy prices,
competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Zalora: Dressing Up the Mobile App to Engage Customers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zalora: Dressing Up the Mobile App to Engage Customers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zalora App, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zalora App 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 Zalora: Dressing Up the Mobile App to Engage Customers can be done for the following purposes –
1. Strategic planning using facts provided in Zalora: Dressing Up the Mobile App to Engage Customers case study
2. Improving business portfolio management of Zalora App
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 Zalora App
Strengths Zalora: Dressing Up the Mobile App to Engage Customers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zalora App in Zalora: Dressing Up the Mobile App to Engage Customers Harvard Business Review case study are -
Learning organization
- Zalora App 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 Zalora App is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zalora: Dressing Up the Mobile App to Engage Customers Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Zalora App is one of the leading recruiters in the industry. Managers in the Zalora: Dressing Up the Mobile App to Engage Customers are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Zalora App 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.
Highly skilled collaborators
– Zalora App has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Zalora: Dressing Up the Mobile App to Engage Customers HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Zalora App is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Srinivas K. Reddy, Sandeep R. Chandukala, Sarita Mathur can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Zalora App
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zalora App does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Zalora: Dressing Up the Mobile App to Engage Customers 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.
Superior customer experience
– The customer experience strategy of Zalora App in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Zalora App digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Zalora App 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.
High brand equity
– Zalora App has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zalora App to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Sales & Marketing industry
– Zalora: Dressing Up the Mobile App to Engage Customers firm has clearly differentiated products in the market place. This has enabled Zalora App to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Zalora App to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Zalora App has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zalora App 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.
Weaknesses Zalora: Dressing Up the Mobile App to Engage Customers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zalora: Dressing Up the Mobile App to Engage Customers are -
Slow decision making process
– As mentioned earlier in the report, Zalora App 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. Zalora App 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.
Aligning sales with marketing
– It come across in the case study Zalora: Dressing Up the Mobile App to Engage Customers 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 Zalora: Dressing Up the Mobile App to Engage Customers can leverage the sales team experience to cultivate customer relationships as Zalora App is planning to shift buying processes online.
Products dominated business model
– Even though Zalora App has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Zalora: Dressing Up the Mobile App to Engage Customers should strive to include more intangible value offerings along with its core products and services.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Zalora App supply chain. Even after few cautionary changes mentioned in the HBR case study - Zalora: Dressing Up the Mobile App to Engage Customers, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Zalora App vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Zalora App needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Zalora App is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Zalora: Dressing Up the Mobile App to Engage Customers can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Zalora App, firm in the HBR case study Zalora: Dressing Up the Mobile App to Engage Customers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zalora: Dressing Up the Mobile App to Engage Customers, is just above the industry average. Zalora App needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Srinivas K. Reddy, Sandeep R. Chandukala, Sarita Mathur suggests that, Zalora App 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.
Interest costs
– Compare to the competition, Zalora App has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Capital Spending Reduction
– Even during the low interest decade, Zalora App has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Zalora: Dressing Up the Mobile App to Engage Customers | 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 Zalora: Dressing Up the Mobile App to Engage Customers are -
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 Zalora App 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.
Buying journey improvements
– Zalora App can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Zalora: Dressing Up the Mobile App to Engage Customers 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.
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 Zalora App in the consumer business. Now Zalora App can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Zalora App 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Zalora App can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Zalora App 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 Zalora App to hire the very best people irrespective of their geographical location.
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. Zalora App 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. Zalora App 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.
Creating value in data economy
– The success of analytics program of Zalora App has opened avenues for new revenue streams for the organization in the industry. This can help Zalora App to build a more holistic ecosystem as suggested in the Zalora: Dressing Up the Mobile App to Engage Customers case study. Zalora App can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Zalora App is facing challenges because of the dominance of functional experts in the organization. Zalora: Dressing Up the Mobile App to Engage Customers case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Zalora App 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Zalora App can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Zalora: Dressing Up the Mobile App to Engage Customers, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zalora App 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Zalora App can use these opportunities to build new business models that can help the communities that Zalora App operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Threats Zalora: Dressing Up the Mobile App to Engage Customers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zalora: Dressing Up the Mobile App to Engage Customers are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Zalora App 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 Zalora: Dressing Up the Mobile App to Engage Customers .
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Zalora App can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Zalora App.
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 Zalora App in the Sales & Marketing sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Zalora App high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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. Zalora App needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Consumer confidence and its impact on Zalora App 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.
Shortening product life cycle
– it is one of the major threat that Zalora App is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zalora App 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.
Regulatory challenges
– Zalora App 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 Zalora App business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Zalora App will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Zalora: Dressing Up the Mobile App to Engage Customers 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 Zalora: Dressing Up the Mobile App to Engage Customers 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 Zalora: Dressing Up the Mobile App to Engage Customers 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 Zalora: Dressing Up the Mobile App to Engage Customers 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 Zalora: Dressing Up the Mobile App to Engage Customers 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 Zalora App needs to make to build a sustainable competitive advantage.
