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Intelirel’s Transition to E-Business
ness channels and not be viewed as a means of cannibalizing them.
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Intelirel has been able to gain as much from it as other successful e-business adopters in this LQGXVWU\7KHFRPSDQ\¶V³GRLWULJKWRUGRQ¶WGRLW at all” (Rifkin & Kurtzman, 2002, p. 93) approach entailed a number of strategic measures such as regular testing of its Web sites for security, us-ability, and performance; devising a performance metrics system for its Web site; development of a strategic partnership with major providers of media, technology and services, and digital colors. 7KHEHQH¿WVRIWKHVHPHDVXUHVWR,QWHOLUHOKDYH been both internal and external.
$VDQLQGLFDWRURIH[WHUQDOEHQH¿WVWKHFRP-pany gained 10 to 15% of market share in 1999 because of its successful full blown assimilation RIHEXVLQHVVWHFKQRORJLHV%HQH¿WVDQG,QFHQWLYHV provided by Intelirel attracted a large number of its customers to transact with the company on the Internet. According to an e-business manager at Intelirel, the increase in market share could be at-tributed to the increase in visibility of the products for the distributors and retailers as well as other incentives provided by the company.
As we noted in the previous section, the company’s e-business implementation can be GHVFULEHGDV³EXVLQHVVPRYHV´DQGQRWVLPSO\ ³WHFKQRORJ\SOD\V´5LINLQ .XUW]PDQ p. 96). According to an e-business manager at Intelirel, e-business assimilation of the company HYROYHGIURPD³UHYHUVHLPSDFWFKDLQ´WKDWLVWKH company went to its customers with the e-business ideas and implemented it only after it got a positive response from them. This is unlike strategies in OHVVVXFFHVVIXOFRPSDQLHVWKDWDUHPHUHO\³WHFK-nology plays” and customer response is often the last step in the implementation process.
Many companies face problems in disposing of their slow moving items or an inevitable product
cannibalization. In this regard, Intelirel has been DEOHWROHYHUDJHPD[LPXPEHQH¿WE\SXEOLVKLQJ its closeout prices on the e-business domains. This makes the retailers and distributors to bid for the highest price, as the information is available to all the buyers. Before the e-business revolution at Intelirel, closeout prices were only offered to Intelirel’s distributors who then sold them to WKHUHWDLOHUVIRUDSUR¿W7KHSULFHRIIHUHGE\WKH distributors couldn’t be negotiated because of the lack of customer response.
,QWHOLUHOKDVLGHQWL¿HGRYHUWKH\HDUVWKDW:HE has a 70% more reach11 than the usual in-store marketing making this a very vital part of its business. As 90% of the company’s order process is automated, Intelirel is able to leverage internal EHQH¿WVE\UHGXFLQJPDQXDOHQWU\HUURUVDQG allocate its excess human resources in the order processing areas to other operations in the com-pany. The company has already converted 50% of its non-EDI customers to use the e-business medium. The cut in its order processing staff has allowed the company to pass on the savings to its customers in the form of promotions and discounts. This is especially important given the fact that the company’s products are priced higher than most of its competitors (see Table 1).
CURRENT CHALLENGES/ PROBLEMS FACING THE ORGANIZATION
/LNHDOO¿UPVLQWKLVEXVLQHVV,QWHOLUHOLVIDFLQJWKH special demands made on information technology by the rapidly globalizing apparel industry. The current e-business model is disintegrated making it inconvenient for customers to make bundled orders. Each division of Intelirel maintains its own e-business site to process the orders and provide support. The customer needs to log into the appropriate division to make purchases rather than order all products under one business. Also,
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the existing e-business model makes it very com-plicated to organize all their business processes under one banner.
Intelirel also suffers from a lack of product awareness among its target segments. Many of its business customers are not aware of the vari-ous products offered by Intelirel, which is very crucial to Intelirel’s growth in the long run. Many customers complained to the company that they did not know about a sale on a brand of apparel or did not have any marketing information related to Intelirel’s new lines of products.
Being a leader in the middle-income group of the population, the company can focus in attracting the high-end customers. E-business plays a very important role in developing the opportunities DQGUHGH¿QLQJFXVWRPHUH[SHFWDWLRQV7KHPDU-ket is dominated by upscale brands, thus making it convenient for Intelirel to penetrate into this segment of few players. As the upscale brands enter the low-end segments, Intelirel’s business territories might be encroached. E-business chal-lenges are areas of focus at Intelirel, as the busi-ness customers are pushing these manufacturers to provide them with complete order and product information. Intelirel will have a much tougher job on their hands with their e-business portals being decentralized.
The growth of technology has also added to Intelirel’s problems. Having already set the stage for being the leader of providing e-solutions to their customers, Intelirel has increased its cus-tomer expectations. Maintaining that stronghold ZLOOGH¿QLWHO\EHDWRXJKWDVNWRDFFRPSOLVKDV technology develops by leaps and bounds.
Some retailers have begun their transition LQWRWKHUDGLRIUHTXHQF\LGHQWL¿FDWLRQ5),` world. This phenomenon is likely to trigger a drastic change in the way suppliers/manufactur-ers would interact with their customers. RFID implementation has already started off in a rapid pace at Intelirel complicating things even more as the companies tried to improve its services in all dimensions of its e-business methodologies.
How can the company accomplish the tasks mentioned previously and maintain its position in its market? Would it succumb to the pressures of its customer expectations? Would its competi-tors take advantage of the fact that Intelirel might WDNHDZKLOHLQ¿[LQJLWVGHFHQWUDOL]DWLRQLVVXHV" These are a few questions that cross one’s mind while analyzing the challenges ahead for the company.
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ENDNOTES
is used for incoming sales orders, advanced shipment notices (ASN), electronic funds transfer (EFT), transmission of point of sale (POS) data, and so on (Power & Sohal, 2002).
2 6HH³,QGXVWU\3HUVSHFWLYH(`,LQWKH$S-parel Industry” at http://www.ebridgesoft. com/downloads/apparel.pdf (Accessed March 24, 2005).
3 This is based on online retail ranking from business2.0.
4 7KH,QWHUQHW¶VJHQHUDOEHQH¿WVKDYHEHHQ examined widely in the literature. We focus RQDSSDUHOVSHFL¿FEHQH¿WVLQWKLVVHFWLRQ
5 For instance, Lands’ End introduced the concept of a virtual model in October 2000. The simulation of a dressing room experi-HQFHVLJQL¿FDQWO\LQFUHDVHGWKHFRPSDQ\¶V rates of converting an online visitor into a buyer (see Vigoroso 2001).
6 The non-EDI customers transact through phone or fax. Intelirel’s customer service representatives (CSR) take those orders and process them. Intelirel plans to reduce the number of CSRs and pass on that savings to the customers. The company already has an established e-business portal. Increasing e-business customers will help the company standardize their modes of advertising and marketing since there would be fewer chan-
* This case, prepared by Nir Kshetri and Satya Jayadev of the University of North Carolina at Greensboro, is based on a real company. Company and Web site names as well as some data used in the case have been disguised. The authors wish to thank an IJCEC associate editor and three reviewers for insightful comments on an earlier version of this case.
1 (`,LVGH¿QHGDVWKHLQWHURUJDQL]DWLRQDO exchange of business documentation in a form that is structured and can be processed by a machine (Emmelhainz, 1990, p. 4). EDI
nels to focus their efforts.
7 For instance, according to 1992 census of retail sectors, women’s, juniors’ and misses’ wear ranked Number 6 and men’s wear ranked Number 8.
8 For an illustration of similar uses in another company, see Green, Garrity, Gumbus, and Lyons (2002).
9 ,Q90,WKH³UHSOHQLVKPHQWGHFLVLRQIRU all retailers is centralized at the upstream distributor or manufacturer” (Attaran, 2004, p. 18).
10 See Foster (2000).
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11 The company found that there were 70% more customers visiting their online show-room than the brick and mortar stores.
This work was previously published in the International Journal of Cases on Electronic Commerce, edited by M. Khosrow-Pour, Volume 2, Issue 1, pp. 46-60, copyright 2006 by IGI Publishing (an imprint of IGI Global).
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