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Ad Mart

Admart was an online retail company in Hong Kong that launched in 1999 to challenge the retail duopoly. While it initially saw success with promotional strategies that drove many orders, it struggled with operational issues like delivery problems. As internet usage and e-commerce was still developing, most customers preferred physically shopping and haggling over prices. Additionally, the major retailers were able to quickly copy Admart's model. With rising expenses and plummeting order sizes, Admart ceased operations after accumulating $100 million in losses over two years. Key lessons included properly aligning core competencies before expanding, having contingency public relations plans, diversifying marketing risks, and not blindly imitating competitors.

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1K views

Ad Mart

Admart was an online retail company in Hong Kong that launched in 1999 to challenge the retail duopoly. While it initially saw success with promotional strategies that drove many orders, it struggled with operational issues like delivery problems. As internet usage and e-commerce was still developing, most customers preferred physically shopping and haggling over prices. Additionally, the major retailers were able to quickly copy Admart's model. With rising expenses and plummeting order sizes, Admart ceased operations after accumulating $100 million in losses over two years. Key lessons included properly aligning core competencies before expanding, having contingency public relations plans, diversifying marketing risks, and not blindly imitating competitors.

Uploaded by

avik_bang
Copyright
© Attribution Non-Commercial (BY-NC)
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Download as PPT, PDF, TXT or read online on Scribd
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Admart : What went

wrong ?

Presented By Group 12
Avik Roy PGP/12/12
Vipul Vinod Jain
PGP/12/31
Nikhil Upadhyay
PGP/12/47
Early Days
Admart
◦ Business of online retail shopping
◦ Launched in June 1999
◦ Direct Marketing company
Sold Groceries
Electronic Goods
◦ Challenged retail duopoly
Welcome Supermarket ( Leader)
Park’N Shop
Model
Aimed at online retail customers
Order placed through telephone,
fax and email
Excellent Marketing Strategy
◦ Promotion in Apple Daily
Problems :
◦ 25% internet based
◦ 65% telephone
◦ 10% fax
Internet Market Size
As of June1999 potential
customer 340,000 ( 17% of 2
million)
Products in demand
◦ Books , CDs, Audio and Videotapes
◦ Grocery
Demand for grocery rising to 800
million$.
Average purchase value 680$.
Major Deterrent
Consumer need to feel and touch
goods
Haggle over prices
Fear of online fraud
Delivery problems
Lost goods
Misrepresentation of goods
Overcharging
Porters 5 force Model
1. High rental and infrastructure
costs in Hong Kong
1. Cut throat price competition
2. Increased expenditure on sales, 2. Two supermarket giants could
advertising and promotions quickly replicate new idea and
3. Aggressive expansion outdo the company which
introduces it
• Wellcome’s plan to open 20
new stores ◦ Carrefour
• Exit of players like Carrefour Big two had a firm grip over the
and Guangnan market
• Small retail business dropped
by 20%
1. Cost based leadership,
differentiation reduced to
minimum; Customers
1. Resale price maintenance attracted to store with lower
(RPM) system in place costs
• Refusal to sell to retailers 2. No switching costs involved
who undercut prices–Yakult in switching from one
International vs. Park’Nshop vendor to another
• 70% stake captured by big 3. Service quality a prime
two; Local wholesaler concern for buyers
complete refusal to deal with
companies
• Manipulation of suppliers
leading to exit of Carrefour

1. No substitute products available


Competitive Advantage
Financial Data
 Start
◦ Sales monthly :- 45.5 mn$
◦ Expenses :- 50.7mn$
◦ Average Order Size :- 3791.6$
◦ Number of order :- 12000
 Cease
◦ Sales monthly :- 18 mn$
◦ Average Order Size :- 700$
◦ Number of order :- 25,714
◦ Losses :- 100 mn $
( June 99-200) 62.4mn + 19.5mn+16.3mn
 Eventhough orders increased, size of
orders plummeted
Recommendations/Learni
ngs
Strategy
◦ To remove duopoly of the major players
◦ Capture market share through internet
marketing
Company failed to align core
competency with logistics & operational
problems
Back up your plans with a sound public
relations campaign – contingency
measure
Diversify your risk – do not put all your
eggs in one basket! – case of Apple
Magazine
Imitating competition may not work –
case of reducing minimum order size
Thank You

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