Free Case Study On Gazelle Corporate Analysis
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Gazelle is an online re-commerce company that is involved in receiving used products from the customers and gives them an appropriate price. After buying the used products they are then sold to the appropriate buyers by means of eBay. So, the company is more focused on providing innovation on the buying end rather than the selling end. The selling of used products is performed by eBay and the inventory life is estimated to be 11 days. Buyers of products from Gazelle have the opportunity to return in 30 days with money back guarantee and almost free shipping. The company has earned the confidence of business customers as well as individual customers and therefore significant growth can be seen. The number of visits to the website of Gazelle in year 2012 was considerably higher (849,694) than any of its competing firms such as NextWorth (9870), CEXChange (58,526), Ecosquid (12,555) etc.
Analysis of Company Strategy
With the advent of its business since 2006, the company is offering facilitation to the customers in regard of their want to sell their used products and not to waste them. The company has succeeded to provide a unique business model where the customer can access the website of company online and get a price for their devices. Devices may include cell-phones, iPods, tablets or computers and most distinguishing feature is that these products may not be in working condition but can be sold conveniently. After that, the company pays the price to customer and sells the collected products to individual buyer or may be to wholesalers depending upon the quantity collected and demanded in the market.
The company has brighter prospects with a revenue reaching USD 100 million in 2013 as compared to USD 58 million in the year 2012. Although the company is doing well but the market has increased competition. The competition is twofold that is there are other online companies as well which are providing similar services and bigger icons such as Apple Inc for example, has provided the facility to their customers to trade their old devices to the company itself at the time of software up gradation.
The particular business had two fundamental thoughts at the time of its initiation that were, individuals should be encouraged of recycling their used products instead of disposing them in the waste bins, secondly there was an opportunity to make use of the value held by the devices at that time of their life-cycle when they are ready to be dis-regarded. On the basis of these facts, the company named Gazelle started with a business model based on “re-commerce” and by the year 2012 it had purchases of USD 1 billion and this figure is expected to rise to USD 5 billion by the end of year 2015.
The business model of the company is intelligent by means of which they buy the products from mostly developed countries at much lesser prices and sell it to the buyer in emerging market, let’s say in India, where these products have not been yet launched and hence a much higher price can be charged. Apart of that customers enjoy free shipping, free packaging of the products, better communication with the company and better customer service as well. The company also ensures that whatever products customers are sending will be safely kept and if buyer demands them back within stipulated period of time, they will be handed over without any trust issues because it is known that each conflict will put a negative mark on company’s brand worth.
Huge customer base at selling end
Strategic alliances with other companies at selling end
Trusted by customers
Lack of awareness about brand
Dependence upon outside firms for selling purposes
Smaller retail base
Less advanced technology
Expanding operations by forming alliances with other big names
Capturing more market through mass media advertising
Partnering with firms to increase its capital investment
New entering companies with similar business model
Switching of customers to other online business setup.
Five Forces Analysis
Business of the company is heavily controlled by the customers who agree to use the service and sell their devices here. It depends upon the customer’s choice and their agreement to provide devices on the price offered by the company.
At the other end of the business model, there are buyers who agree to buy the products from the company at prices offered or they may influence to change the prices. So, there exists strong bargaining power at buyer end as well.
There are many other companies which are operating at a similar business model such as nextworth, glyde, usell, depstar etc. each one of the competitors has its own strengths in specific field. The need to retain competitive advantage becomes crucial in such situations.
Threat of Substitution
Gazelle faces the threat of being replaced by the substitutes. Although a big name and registered brand but if the competing firms which are not registered, put in some extra capital to get the legal certification then competition will become more fierce. The company tries to reduce the customer’s intention to switch through better customer services.
Threat of New Entrant
For any operating company there is always a threat of entry of certain firm that can easily capture existing business due to better services provided and better market knowledge. Gazelle is also faced with this threat and hence it tries to sustain its competitive advantage on priority.
Value added analysis
It is necessary to make forecasts after removing those factors that do not add to the value rather accumulate waste and for this purpose value-added analysis is used that has following steps:
The activities involved in delivering services starting from receiving product, offering price and shifting products to selling end to a number of affiliated wholesalers, corporate and even individual customers. All these activities add value to the firm’s operations.
It includes the process by which value can be increased for the customers such as, providing facility of lodging complaints and record feedback will be analyzed at this step.
Evaluation and planning
Finding out whether system is going according to the plan and what further steps are required. The activities like taking notice of customer’s issue and resolving them timely are included in this step.
Issues in Strategies
If the company’s strategies are not been able to faster the growth and increase sales, then there are said to be strategic issues that need to be sorted out. Such strategic issues faced by Gazelle are as follows:
The company is dependent upon other firm for its selling functions. Risks are associated for this inter-firm dependence such that if the other firm collapses due to any reason, the average inventory time of products will increase and thus the problem of over-stocking may occur. The increased stock not only increases the cost of warehousing but also it will be difficult for the firm to find out a large number of suitable buyers to dispose of these products.
Lack of awareness about the particular brand due to lesser marketing schemes adopted.
It is a smaller company currently and must take steps for international expansion.
The retailer base is smaller and there are lesser retail partners to ensure wider spread of the products.
Lesser high-tech methods to carry out operations.
Less number of investors available to invest in the business of selling recycled/ used products.
The company has to enter intermediation network by extending its product lines and not only confining to smart phones etc. This strategy will help the company to have more contacts with a number of retailers, manufacturers or vendors. Increasing the contacts in market will help the company to gain leverage and strengthen its roots as a recognized brand.
Gazelle can try to independently handle its selling-side as well instead of being dependant on others. It will save company’s cost (product cost and transaction cost) that is being invested on dealing with an outside firm. Moreover, it will minimize risks associated with the failure of another related firm.
The company can enter in corporate contact with any of the big giants already existing in the market such as Apple Inc. on its buying-side to take its scale to a larger level. Hence buy-side of Gazelle can grow well.
The company can get a competitive advantage as compared to its competitors by incorporating the social responsiveness in their functions such as they can mention this to customers that if they will buy/sell from Gazelle then a portion of their transaction will be donated for a charitable cause. This technique will bring in more customers and will eventually enhance its brand reputation in the market.
Taking feedback from the customers and evaluating business on the basis of these real feedbacks will be added on for the company.
Positive feedbacks must be made visible for potential customers.
The ease-of-use of company’s website will be a plus point to navigate easily without any hurdles.
The company should focus on sheer growth by means of crating brand awareness by making use of mass media such as TV and radio advertisement.
Keeping a database of customers’ previous record, for example, if previously a customer has sold iPhone 4 then he may be provided some discount on the purchase of iPhone 5 assuming him to be a loyal Apple customer.
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