1 Becoming the second Amazon.com – a Case Study of kalahari.net Shaun Pather, Faculty of Business...
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Transcript of 1 Becoming the second Amazon.com – a Case Study of kalahari.net Shaun Pather, Faculty of Business...
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Becoming the second Amazon.com
– a Case Study ofkalahari.net
Shaun Pather, Faculty of Business Informatics, Cape Peninsula University of Technology
Cape TownSouth Africa
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E-Business in South Africa
• South Africa was not immune to the e-Commerce hype.
• Some examples of failures:– Broadcast Interactive Group – backed by
radio stations– Woza: independent online content– Shoppingmatrix.com, music retail – Banking ventures Blue Bean & Twenty20
• Monitoring of dot co.za registry indicates a larger number of discontinued sites.
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E-Business in South Africa
• Failure rate 35% (2000-2002) • Predicted to grow to 40%. • Online retail in South Africa is “at a
very early stage of its market penetration, and remains deeply immature in its implementation.”
(Goldstuck, 2002)
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Failure factors?
• Many factors contributed to the demise of the online retail market during this period
• Technological and IS management?• General business incompetence?• Cash flow problems or lack of
understanding of electronic business?
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Background -Research Problem
• Hype over speculation of E.C. benefits has passed - Vast expenditures on E.C. & a large number of failures
• Managers require more concrete evidence of benefits. • Lack of measures “one of top five” barriers to e-
business development.• Instruments developed for brick & mortar
environments not applicable in E.C. environment.• A lack of instruments for use by managers for ISE
measurement of e-business.• Business managers are not able to comprehend the
impact of IS i.r.o. achieving business objectives.
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Research Problem
• Many studies focus on how to achieve quality e-service, web-site design.
• Focus on customer perceptions mainly.• However, how is the IS function
managed to achieve quality service?• Evaluation of IS success must begin
deeper in the organisation.• A framework for IS and business
managers - multi-disciplinary approach.
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Research Question
• What are the dimensions of Information Systems Success of e-Businesses?
• What are the relationships between these dimensions of success?
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Data Collection
• Qualitative data through– Interviews (business & IT
stakeholders); +– Public documents; +– Observation through “customer”
registration, and making a purchase, complaint etc.
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Overview of Kalahari.net
• Regarded as an e-Tailer• Product range: Books, CDs, DVDs,
Video, Wine, Health + online partners.
• Regarded as South African equivalent of Amazon.
Kalahari
Amazon
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Business Startup
• Holding company Naspers – launched in ’98.• Period of “internet hype” e.g. get rich quick.• Very little planning:
– No business case– No risk analysis– No marketing plan– No fulfillment processes– Launched within one month.– IT team of 10 new inexperienced graduates.
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A recipe for success??
• What are your views?• Would you have done it any
differently?
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Rethinking the business… a year later
• A more knowledgeable and experienced team was put in place + GM with direct marketing experience .
• Reorganization of back office systems • Redesigned fulfilment processes.• Overhaul of web-site.• Improved supplier relationship -
accurate product data.• Diversification of product base.
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Insider’s views of success
• Positive year on year growth;• Regarded as biggest B2C e-Commerce
business;• It has 200,000 registered customers;• Accolades in the press;• No equivalent domestic competition;• First e-Business to be fully compliant with the
Electronic Communications and Transactions (ECT) Act;
• Is close to breakeven.• Success though no break – even??
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kalahari.net turnover
0
10
20
30
40
50
1999 2000 2001 2002 2003
YEAR
ZAR (million)
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4 major IS identified
Business Operations
Product loading to site +++Product loading to site +++
Ordering & FulfillmentOrdering & Fulfillment
Strategic & Operational Strategic & Operational PlanningPlanning
IT maintenanceIT maintenance
Information System
Data base systemData base system
kalahari.net Management kalahari.net Management SystemSystem
Business Intelligence Business Intelligence SystemSystem
IT Management SystemIT Management System
kalahari.net operating environment
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Meeting the IS management challenge
• The following were found to be important:– Alignment of IT & Business stakeholders.– Maintenance of the partnership.– Database management.– Ordering & fulfillment.– Efficient delivery systems.– The web-site.– Business Intelligence– Trust & Privacy
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Alignment of IT & Business stakeholders.
• Very poor relationship during startup.• Outsourcing of IS function – improved
“business” management.• Weekly meetings – all inclusive
task team.• Friendly systems development
methodologies.• Involvement of IT in ALL decision making.
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Database is key.
• 400 + suppliers.• Product database is crucial.• Accuracy of update processes.
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CustomerCustomerServiceService
Su
pp
liers
Su
pp
liers
Supply Chain Manager• Stock Planner• Local Books• International Books• Catalogue• KN Music• Club Music• DVD/Video & other• Admin Clerk
One-on-One Relationship
A Customer Focused Approach
Telephone callsEmail
Delivery tracking
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Business Intelligence
Operational PlanningBusiness
Intelligence System
Business Intelligence
System
Per hour sales reports
Turnover Analysis
Strategic Planning
Monitoring Gross profit
Monitoring Buying patterns
Marketing campaign
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Key elements of the Business Model
• Traditional business rules apply.• Major difference in e-Tailing is
delivery.• Direct marketing strategies.• Demand on speed.• Product availability.• Relationship with suppliers.
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Critical Success Factors
VirtualVirtualDistributionDistribution
SpaceSpace
VirtualVirtualDistributionDistribution
SpaceSpace
VirtualVirtualTransactionTransaction
SpaceSpace
VirtualVirtualTransactionTransaction
SpaceSpace
Virtual Virtual CommunicationCommunication
SpaceSpace
Virtual Virtual CommunicationCommunication
SpaceSpace
VirtualVirtualInformationInformation
SpaceSpace
VirtualVirtualInformationInformation
SpaceSpace
TraditionalMarket Space
TraditionalMarket Space
ICDT Model adapted from Angehrn, 1997
•Search facility•Download time•Customer feedback•Database accuracy•Trust & Privacy
Electronic & traditional Channels for•Customers •Suppliers •Payment agencies
•Database•CRM•Payment gateway•Trust & privacy•Fulfillment
•CRM•Delivery Logistics•Packaging•Supplier relationship
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Success Dimensions
Website
Database
Trust & Security
Agility of IS
Open 24/7/365
Supplier Relationship
Business/ITRelationship
Kalahari Success
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Some lessons from the Case Study…
• Relationship between IS & Business.• Use of a modern IT management
tool.• Profit watch - Use IS to monitor T/O
& GP.• Spend on the database.• Think “Business” not “IT”.
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• Tracking how much you sell isn’t the issue- you do that as a matter of course. The question is: What should you measure in order to sell more ?”
Sterne: 2002
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The Business Task Team
D atabase M anager
P ro jec t M anager 1
P ro jec t M anager 2
B us iness A na lys t 1
B us iness A na lys t 2
IT M anager C om m erc ia l M anager
F inanc ia l m anager
M arke t ing M anager
W eb-s ite m anager
C O O /C IOC h ief O pera tional M anager & C h ie f Info rm ation O ff icer
Key IT team members also report directly to CIO
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Database Update
ProductProductDatabaseDatabase2m items2m items
UKUK&&
USUS
SouthSouthAfricaAfrica
Weekly/Weekly/MonthlyMonthly
Daily
Daily
StockFiles
StockFiles
WebWebCatalogueCatalogue
PhysicalPhysicalCatalogueCatalogue
Customer DB
KMS
Customers
Customers