From PPG to VANCL: Business Model Evolution of online apparel retailing

Team # 9

Team member- Amritpal Singh Bedi & Kunal

Case Synopsis• PPG headquartered in Shanghai with 3 small buildings holding all its assets Less than 500

employees-300 staff in call centre• Sold low-end men’s apparel through Internet and Call centre- strong IT based NO PHYSICAL

STORES• Outsourced its logistics and has 7 day inventory turnover period-->depend on market

forecasting• But poor customer retention leads to its decreasing sales.

Customer

IT system via website or call centre

Inventory Management

System

Problem Definition

1. Poor quality control- Case against two garment suppliers for shrinkage of fabric,quality was ignored when demand was high2. Poor brand recognition and product satisfaction as customer like to touch and feel fabric, resolve exchange issue and others.3. More advertising expenditure – ads in newspapers, magazines, TV, websites and OOH (RMB 10 mn in 2007 vs RMB 3mn previous year)- became default of RMB 930000 to 2 ad agencies4. Old Fabrics & Techniques- the used old fabric techniques which damages their customer experience.5. More complaints then demands6. Self logistics didn’t work7.New competitor VANCL came into being8.Uncomfortable with risk of payment

VANCL emerged as tough competitor to PPG

• Tie-ups with world class suppliers- better quality control• Better customer retention- “68,168,268 yuan try-on”

• Customers prefer more personalized experience (like try on) for purchasing apparels online

• Warehousing in the customer vicinity (like by Rufengda in Beijing, Shanghai & Guangzhou) enhances speedy deliveries

• Customers most preferred mode of payment- CASH ON DELIVERY

• Online marketing requires strong business model for making payments (cost per sale)

• More customer engagement results into better sales

Situational Analysis

Recommendations/ Conclusions

Online comments and try-on activities

Strong self built logistics Like VANCL must contact some 3PL

agency Rufengda Speed delivery Strong online capturing Effective advertising in limited

budget SEO model and various social

platforms