Case Study Description of Dot.com: Online Pet Retailing
From 1995 to 1999, the U.S. experienced a period of tremendous growth in its information technology (IT) sector. The IT industry, although it accounted for less than 10% of the U.S. economy's total output, contributed disproportionately to economic growth. One market that was particularly contentious was online pet supply retailing. Pet supply retailing had an estimated worth of $31 billion in 1997, and in the late 1990s, several startups and brick-and-mortar-based companies launched online retail stores, hoping to become the premiere (and perhaps the only) online pet supplies retailer. Two companies emerged as pure play frontrunners: Oakland-based Petstore.com and San Francisco-based Pets.com. In the years that followed, online pet supply retailers were widely regarded by the media as epitomizing the excesses and the follies of dot-com speculative mania in the late 1990s that culminated in the 2000 stock market crash. In 2008, CNet pronounced Pets.com as one of the greatest dot-com disasters in history. But what led to the failure, and subsequent crucifixion, of these one-time media darlings? Were Petstore.com and Pets.com the victim of poor strategic decisions, a prohibitive and crowded market, investor attitudes that destroyed their chances of success, or perhaps just bad luck or bad timing?
Swot Analysis of "Dot.com: Online Pet Retailing" written by Tom Nicholas, David Chen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pet Pets.com facing as an external strategic factors. Some of the topics covered in Dot.com: Online Pet Retailing case study are - Strategic Management Strategies, Entrepreneurial finance, Financial management, Financial markets, Growth strategy, Market research and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Dot.com: Online Pet Retailing casestudy better are - – increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, geopolitical disruptions, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion,
digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Dot.com: Online Pet Retailing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dot.com: Online Pet Retailing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pet Pets.com, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pet Pets.com 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 Dot.com: Online Pet Retailing can be done for the following purposes –
1. Strategic planning using facts provided in Dot.com: Online Pet Retailing case study
2. Improving business portfolio management of Pet Pets.com
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pet Pets.com
Strengths Dot.com: Online Pet Retailing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pet Pets.com in Dot.com: Online Pet Retailing Harvard Business Review case study are -
Successful track record of launching new products
– Pet Pets.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pet Pets.com 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.
Innovation driven organization
– Pet Pets.com is one of the most innovative firm in sector. Manager in Dot.com: Online Pet Retailing Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Innovation & Entrepreneurship field
– Pet Pets.com 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 Pet Pets.com in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Pet Pets.com is present in almost all the verticals within the industry. This has provided firm in Dot.com: Online Pet Retailing 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.
Operational resilience
– The operational resilience strategy in the Dot.com: Online Pet Retailing 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 Pet Pets.com in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Pet Pets.com 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 Dot.com: Online Pet Retailing - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Pet Pets.com has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Dot.com: Online Pet Retailing 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.
Low bargaining power of suppliers
– Suppliers of Pet Pets.com in the sector have low bargaining power. Dot.com: Online Pet Retailing has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pet Pets.com to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Pet Pets.com is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Pet Pets.com 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 Pet Pets.com is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Dot.com: Online Pet Retailing Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Pet Pets.com 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 Dot.com: Online Pet Retailing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dot.com: Online Pet Retailing are -
Need for greater diversity
– Pet Pets.com has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
No frontier risks strategy
– After analyzing the HBR case study Dot.com: Online Pet Retailing, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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.
Products dominated business model
– Even though Pet Pets.com 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 - Dot.com: Online Pet Retailing should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Pet Pets.com has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Pet Pets.com is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Pet Pets.com needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pet Pets.com to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Dot.com: Online Pet Retailing, it seems that the employees of Pet Pets.com 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 operating costs
– Compare to the competitors, firm in the HBR case study Dot.com: Online Pet Retailing 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 Pet Pets.com 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Pet Pets.com 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.
Slow decision making process
– As mentioned earlier in the report, Pet Pets.com 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. Pet Pets.com 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Dot.com: Online Pet Retailing, in the dynamic environment Pet Pets.com has struggled to respond to the nimble upstart competition. Pet Pets.com has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Pet Pets.com products
– To increase the profitability and margins on the products, Pet Pets.com needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Dot.com: Online Pet Retailing | 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 Dot.com: Online Pet Retailing are -
Better consumer reach
– The expansion of the 5G network will help Pet Pets.com to increase its market reach. Pet Pets.com will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Pet Pets.com can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pet Pets.com 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. Pet Pets.com 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pet Pets.com can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Pet Pets.com in the consumer business. Now Pet Pets.com can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pet Pets.com is facing challenges because of the dominance of functional experts in the organization. Dot.com: Online Pet Retailing 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.
Buying journey improvements
– Pet Pets.com can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dot.com: Online Pet Retailing 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
– Pet Pets.com can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Creating value in data economy
– The success of analytics program of Pet Pets.com has opened avenues for new revenue streams for the organization in the industry. This can help Pet Pets.com to build a more holistic ecosystem as suggested in the Dot.com: Online Pet Retailing case study. Pet Pets.com can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Pet Pets.com can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pet Pets.com 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.
Leveraging digital technologies
– Pet Pets.com 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 Pet Pets.com 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 Pet Pets.com to hire the very best people irrespective of their geographical location.
Threats Dot.com: Online Pet Retailing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dot.com: Online Pet Retailing are -
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. Pet Pets.com 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.
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. Pet Pets.com needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dot.com: Online Pet Retailing, Pet Pets.com may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Environmental challenges
– Pet Pets.com 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. Pet Pets.com can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
High dependence on third party suppliers
– Pet Pets.com 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.
Consumer confidence and its impact on Pet Pets.com 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.
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 Pet Pets.com in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Pet Pets.com has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Pet Pets.com needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pet Pets.com with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pet Pets.com 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 Dot.com: Online Pet Retailing .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Pet Pets.com is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Weighted SWOT Analysis of Dot.com: Online Pet Retailing 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 Dot.com: Online Pet Retailing 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 Dot.com: Online Pet Retailing 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 Dot.com: Online Pet Retailing 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 Dot.com: Online Pet Retailing 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 Pet Pets.com needs to make to build a sustainable competitive advantage.
