Case Study on Babycentre E-Business Related Case Study

Excerpt from Case Study :

BabyCenter was facing several strategic issues and choices it had to sort out. The first referred to its presence on the American e-market and to the many online competitors that had appeared lately. The second strategic issues regarded an international expansion. Finally, the third issues that BabyCenter needed to refer to was the opportunity of joining forces with eToys and the offer that this company had made. Let's have a brief look at each one of these strategic issues.

BabyCenter had been presented on the American online market for two years and a half at the time of eToys's offer. Originally started as a community and resource site, providing online information for new parents, it had slowly moved into the retail market, commercializing baby products and maternity items. Let's have a brief look at each of these pillars of BabyCenter's trade. BabyCenter's initial goal was that of providing "guidance to new and expectant parents," hence its initial direction towards content. Content was created by professional writers, doctors and pediatricians who addressed a targeted market that was continuously growing over the years. The market share I am referring to here does not necessarily include only new parents (or would be parents), but parents who had access to the Internet, who were using the Internet more and more and especially to women, who were "hungry" for information regarding their newly born.

The target market BabyCenter was addressing was continuously rising, not only because of a rise in the number of new or expecting parents, but also because the present day society had produced a serious increase in the way tings happened: less time to spend at home for the mothers, who returned quickly to work, less time for busy parents. All these produced the right premises for online information: it would be preferred for the parents to access rapid information online from informed writers rather than extensive research at the library for example. As such, in term of content, BabyCenter had become the largest information source for new or expectant parents on the Internet, with 15 million page views. This brought revenues from different sponsors that advertised on the increasingly used and known website. If we are to refer here to one of the key components of BabyCenter's e-business strategy, we should mention that personalization represent an important pillar of this strategy. Indeed, not only did BabyCenter address segmented areas of its targeted market (I am referring here to the fact that a parent would seek different information, depending on the child's age), but also to some of its personalized tools, such as the baby name finder or the calculator to work out how much to save for a child's college education.

The second pillar on which BabyCenter based its activity was the community factor. This meant exploiting the fact that parents not only wanted to research and find information for themselves and their babies, but also to discover similar experiences from other parents.

This meant that the website provided not only a large amount of content and information, but also a part where parents from all over the country could come together and discuss some of the issues that parenting raised.

Thirdly, and perhaps most important from a revenue point-of-view, in October 1998, BabyCenter had added the online store component to its activity. This also speculated the lack of time that was predominant for the new parents and who could often find themselves in a situation where they would prefer buying from home rather than having to go out and buy from the store. Personalisation was a key component here as well: there were detailed guides and reviews for each product and, additionally, the interactive personal shopper was used to increase interactivity between the company and its customers, not to mention the product buying guides and the comments from other parents who had previously bought the product that were available on the website. I am insisting here on one of the key strategies or characteristics of BabyCenter's strategy: personalisation. In my opinion, BabyCenter had best understood that, in an environment where the Dotcoms were at their boom, it was most important to offer something extra. How could you be closer to your customer? E-business and E-commerce provided an useful alternative to traditional commerce in this sense: you could use the website or the community forum to receive a feedback from the customers, to ensure that the people you were addressing were receiving the exact thing they had in mind or they wanted to buy. Additionally, BabyCenter had another top strategic priority in mind: customer service. This referred not only to the personalisation issue I have addressed above, but to providing the best services for the customer in terms of answering orders, processing them and delivering the products at home.

Continuing to refer to BabyCenter's presence on the American online market, we should mention that e-business also called for a different marketing strategy than generally used.

In this sense, the two main components of BabyCenter's marketing strategy were public relations and online advertising. To these one could add newspaper, magazine and TV coverage, as well as content to different portals such as Excite and Infoseek. Even if it is not mentioned as such in the case study, I am also considering another particular tool of BabyCenter's marketing strategy, that is advertising through the very people that were using the site. I am referring here to the word passed out by the new or expectant parents that were already using BabyCenter. However, I was surprised to discover that BabyCenter was rather poorly represented on some of the most important search engines, such as Yahoo!, having no banner ads for key words for example. I would however mention that, even if it had no sponsored results on these search engines, the BabyCenter website is the top web result for the keyword "baby" (it is at the present time, I am not sure how things were in 1999).

From a technological perspective, BabyCenter believed it was best to "build the tools that were core to its business advantage and to buy or outsource the rest." This meant that several standard components, such as the we server or the chat software were bought, while several personalised components, like the content presentation system or the email system that supported targeting were built by the BabyCenter development team.

The market that BabyCenter was playing in involved several serious competitors that were divided according to the online/offline criteria or the content/retail one. Besides the large competitors, BabyCenter was also dealing with the small, online companies that had popped up and were usually a family business. As such, one of the characteristics of the market BabyCenter was operating in was its fragmentation: a very large number of companies of all sizes, operating in the marketing and generally offering similar products. Another characteristic of this market was the relative absence of any mergers or acquisitions, only some noticeable alliances between content and commerce.

We have discussed the first strategic issue that BabyCenter was facing at the time, referring to the e-business strategy that BabyCenter was using. Let us analyse the second issue that refers to the internationalisation opportunity that had appeared. The three principles on which this expansion was based were a powerful global brand, a balance between near-risk and long-time value and a minimised impact on BabyCenter USA resources.

We need to have a closer look at what this international expansion would assume in BabyCenter's case, in terms of implantation, competitors or resources. First, we should consider that the process of international expansion is somewhat different in the case of an online company than for the usual company. The process for the brick and mortar company is rather straightforward: expansion can be done either through a direct implantation on the local market, by acquiring an already existing local company, by opening a branch, etc. In this case, the potential targeted market refers strictly to the company's activity.

In BabyCenter's case, however, there are two components to be considered in an international expansion. The first one is the company's activity (in this case, baby products and content) and the second one (as important as the first) is the means of communication or how you get the first activity into the homes and minds of the people. In the case of a 'normal' company, this is done through classical advertising means. However, we should always keep in mind that BabyCenter is an e-commerce company. This means that ALL its activity is dissolutely related to the Internet not only as a means of communication, but indeed as the fundamental part of its commerce.

I have made this analysis in order to emphasize the fact that an international expansion means for BabyCenter not only reaching those areas of the world where there is a potential market for baby products (for example, those with an increased rate of population growth), but also those with a significant rate of Internet penetration within the population.…

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