E-Retailing Plan for Made-to-Order Athletic Shoes

Overview and Strategic Foundation

The growth of mass customization as a strategy for more closely aligning product strategies with the specific needs of consumers has been shown to increase the potential for greater profits and to create higher levels of customer loyalty over time. The propensity of mass customization strategies to alleviate the inhibitors to consumer loyalty is accentuated and strengthened by e-retailing and online product customization selling strategies (Salvador, de Holan, & Piller, 2009). The connection between customer loyalty generated from well-executed mass customization strategies and the long-term relevance of e-retailing strategies is the basis of the analysis presented as the foundation of this e-retailing plan for a line of build-to-order athletic shoes.

For e-retailing strategies to succeed in mass customization market arenas, there must be support for multiple channels — often called multi-channel management — integration of e-retailing applications flexible enough for customers to personalize yet robust enough to scale globally, and tight integration of e-retailing systems with supply chains (Leonard & Cronan, 2003). On this last point, the critical need for e-retailing systems to be supported by catalogs containing the specific product attributes of those products being customized, and tight integration with pricing systems, has proven essential (Ba, Stallaert, & Zhang, 2007). What emerges from this plan for a line of build-to-order athletic shoes is a highly synchronized series of systems that include web-based front-end e-retailing systems, catalogs and product data management (PDM) systems that serve as the foundation of the product configurator, and integration with pricing systems to ensure profitability is achieved.

All of these systems working in conjunction with each other — and the real-time integration they require — represent one of the most difficult constraints for e-retailing strategies to overcome (Hofacker, 2008). Yet if this level of inter-process system, strategy, and role-based integration can be achieved, e-retailing strategies have been shown to generate significantly higher levels of trust and revenue over time (Jin, Park, & Kim, 2008). Creating a line of build-to-order athletic shoes that customers can order 24/7 over the Web is entirely dependent on how well an e-retailing strategy is executed and maintained over time.

Brand, Product, and Service Offering

Athletic shoes is an industry that continues to face significant consolidation, as industry leaders Nike and Adidas continually dominate the global market. The global recession and the resulting drop in discretionary income forced further consolidation and led to fragmentation among competitors globally. As shown in Figure 1 below, 74.5% of total sales come from manufacturers smaller than Timberland, which holds a 1.5% market share and generates approximately $1.3 billion in revenue (IBIS Research, 2009).

Figure 1: 2008 Global Market Share by Athletic Shoe Manufacturer

Nike, Incorporated: 12.0% | Adidas AG: 9.0% | Jones Apparel Group, Inc.: 3.0% | The Timberland Company: 1.5% | Other: 74.5%

Source: IBIS Research, 2009

As this industry is characterized by heavy price competition and intensely competitive distribution channel strategies, the use of e-retailing as a differentiated selling strategy is critical. Due to aggressive price cutting and a lack of innovation among the majority of manufacturers — with the notable exception of Nike — the industry has continually contracted. This contraction is leaving many strategically important areas wide open for innovation and growth. Paradoxically, the majority of manufacturers are not addressing mass customization through e-retailing, choosing instead to sell large-quantity, make-to-stock inventory (Leonard & Cronan, 2003). This commoditization of product features, with pricing used as the primary differentiator, leads to an increasingly fragmented market that uses e-retailing not to deliver an exceptional online shopping experience, but merely to push discounted end-of-life products. E-retailing has effectively become a strategy for clearing out aging inventory at low prices. This industry-wide approach leaves significant room for a line of athletic shoes sold entirely over the Internet and fully customizable.

This dichotomy between the full potential of e-retailing and its current use in the athletic shoe industry is the basis of Eleftria Athletic Shoes. Eleftria will capitalize on the disconnect between what a mass customization strategy combined with an effective, globally based e-retailing strategy can accomplish. By concentrating on this paradox, Eleftria can move beyond competing on price and availability alone, and instead create a unique online purchasing experience — one in which each customer can customize their shoes and receive them within seven working days. Mass customization thought leaders have observed that the e-retailing process as it applies to consumer durable products can be readily transitioned from a transaction to a purchasing experience (Pine & Gilmore, 2000). That is the essence of Eleftria's unique value proposition: to transform the online athletic shoe purchase through e-retailing into a shopping experience rather than merely a transaction.