Pets.com Inc.: Rise and Decline of a Pet Supply Retailer SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer
The case follows the rise and decline of Pets.com from its inception in 1994 until 2000. It starts with a look at the birth of Pets.com, followed by a discussion of the market, consumer behaviour and key competitors. It then focuses on Pets.com's business strategy and marketing mix. The case study provides the basis for class discussion of a number of key issues, including but not limited to a) the decision whether to enter a strategic partnership, b) the pursuit of an aggressive growth strategy, c) the design and management of the marketing mix, d) the use of aggressive communication and pricing strategies, and e) brand-building decisions. Pets.com is often cited alongside the Edsel, New Coke, Betamax and others as one of the biggest marketing blunders of all times. As such, students find it a fascinating story. The case study also asks students to reflect on some common challenges faced by organizations, such as entry and survival in a highly competitive market, how to deal with a dominant player, venture capital and entrepreneurial issues, business model design, brand management, marketing mix decisions, and the benefits and perils of a growth strategy. The case has been used successfully in the following courses: a) an MBA elective course dealing with popular marketing mistakes and failures, b) a postgraduate strategic marketing course dealing with growth strategies, c) a marketing management course at the undergraduate level focused on the design and management of the marketing mix, and d) a services marketing module at the undergraduate level on the topic of online marketing.
Swot Analysis of "Pets.com Inc.: Rise and Decline of a Pet Supply Retailer" written by Omar Merlo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pets.com Marketing facing as an external strategic factors. Some of the topics covered in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study are - Strategic Management Strategies, Growth strategy, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Pets.com Inc.: Rise and Decline of a Pet Supply Retailer casestudy better are - – increasing household debt because of falling income levels, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, there is backlash against globalization,
wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pets.com Marketing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pets.com Marketing 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer can be done for the following purposes –
1. Strategic planning using facts provided in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study
2. Improving business portfolio management of Pets.com Marketing
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 Pets.com Marketing
Strengths Pets.com Inc.: Rise and Decline of a Pet Supply Retailer | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pets.com Marketing in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer Harvard Business Review case study are -
Ability to lead change in Innovation & Entrepreneurship field
– Pets.com Marketing 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 Pets.com Marketing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Pets.com Marketing is one of the leading recruiters in the industry. Managers in the Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Pets.com Marketing 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Pets.com Marketing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pets.com Marketing does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Pets.com Marketing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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.
Successful track record of launching new products
– Pets.com Marketing has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pets.com Marketing 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.
Effective Research and Development (R&D)
– Pets.com Marketing 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Pets.com Marketing 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.
Strong track record of project management
– Pets.com Marketing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Pets.com Marketing is present in almost all the verticals within the industry. This has provided firm in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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.
Analytics focus
– Pets.com Marketing 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 Omar Merlo 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Pets.com Inc.: Rise and Decline of a Pet Supply Retailer firm has clearly differentiated products in the market place. This has enabled Pets.com Marketing to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Pets.com Marketing to invest into research and development (R&D) and innovation.
Weaknesses Pets.com Inc.: Rise and Decline of a Pet Supply Retailer | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are -
Slow decision making process
– As mentioned earlier in the report, Pets.com Marketing 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. Pets.com Marketing 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 bargaining power of channel partners
– Because of the regulatory requirements, Omar Merlo suggests that, Pets.com Marketing 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.
Slow to strategic competitive environment developments
– As Pets.com Inc.: Rise and Decline of a Pet Supply Retailer HBR case study mentions - Pets.com Marketing takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Pets.com Marketing 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.
Increasing silos among functional specialists
– The organizational structure of Pets.com Marketing is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Pets.com Marketing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pets.com Marketing to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pets.com Marketing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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 Pets.com Marketing has relatively successful track record of launching new products.
Products dominated business model
– Even though Pets.com Marketing 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 - Pets.com Inc.: Rise and Decline of a Pet Supply Retailer should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer, 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.
Interest costs
– Compare to the competition, Pets.com Marketing 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer, it seems that the employees of Pets.com Marketing 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.
Opportunities Pets.com Inc.: Rise and Decline of a Pet Supply Retailer | 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pets.com Marketing 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 Pets.com Marketing to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Pets.com Marketing 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 Innovation & Entrepreneurship segment.
Leveraging digital technologies
– Pets.com Marketing 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pets.com Marketing can use these opportunities to build new business models that can help the communities that Pets.com Marketing operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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. Pets.com Marketing can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Pets.com Marketing has opened avenues for new revenue streams for the organization in the industry. This can help Pets.com Marketing to build a more holistic ecosystem as suggested in the Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study. Pets.com Marketing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Pets.com Marketing in the consumer business. Now Pets.com Marketing can target international markets with far fewer capital restrictions requirements than the existing system.
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. Pets.com Marketing can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Pets.com Marketing 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.
Buying journey improvements
– Pets.com Marketing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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.
Better consumer reach
– The expansion of the 5G network will help Pets.com Marketing to increase its market reach. Pets.com Marketing 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.
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. Pets.com Marketing 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. Pets.com Marketing 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.
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 Pets.com Marketing 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.
Threats Pets.com Inc.: Rise and Decline of a Pet Supply Retailer External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pets.com Marketing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Pets.com Marketing 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.
Technology acceleration in Forth Industrial Revolution
– Pets.com Marketing has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Pets.com Marketing 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.
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 Pets.com Marketing.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pets.com Marketing in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pets.com Marketing 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer .
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.
Environmental challenges
– Pets.com Marketing 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. Pets.com Marketing can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Consumer confidence and its impact on Pets.com Marketing 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.
High dependence on third party suppliers
– Pets.com Marketing 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.
Regulatory challenges
– Pets.com Marketing 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 Innovation & Entrepreneurship industry regulations.
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. Pets.com Marketing needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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.
Weighted SWOT Analysis of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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 Pets.com Inc.: Rise and Decline of a Pet Supply Retailer 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 Pets.com Marketing needs to make to build a sustainable competitive advantage.
