It is undeniable that a core reasoning for their continued success is due to their unique equines and e-commerce model and solid core values, which will be discussed further In this report. Kike’s E-business Model Kike’s Target Audience Kike’s vision is to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. ‘ Because of their cost focus, they have a very broad target audience of anybody with a price preference, appealing to both business-to-consumer and business-to-business categories.
KEA itself has described its target market as “young people of all ages” (Martens 1987,p. 5) including students who may not be able to travel to the more rural locations of the typical KEA retail store, low to middle income families who may not be able to visit due to household commitments In the day time, and young urban professionals who may not be able to visit the store during standard store opening hours.
In the business-to-business context, Kike’s e-commerce website targets mainly small to medium businesses from restaurants to hotels looking for multiple cheap and chic furnishing products, where it Is more convenient to get the products delivered straight to the business, than to self-transport the goods. Value Proposition It is clear that Kike’s value proposition is based around selling quality, stylish, Innovative but low cost furnishing products.
Ethel unbeatable low price Is their strongest competitive advantage and is achieved through a robust strategy of keeping cost to the minimum by being cost conscious and ensuring cost Is the cornerstone of every decision they make. Indeed, Kike’s enormous scale of operations worldwide has also enabled the furniture giant to achieve huge economies of scale including technical, marketing and purchasing economies, which also plays a crucial ole in keeping their costs low.
On top of transport economies of scale achieved, KEA also save costs from the flat pack, self-assembly design of their products, increasing the efficiency of transportation and minimizing costs also. There are In total about 12,000 products In the KEA product range with over 6000 different products available online.
KEA not only sell large furnishing pieces such as sofa and beds but 1 OFF which provide the customer a convenient one stop shop for purchasing everything needed for the home. Another key part of Kike’s value proposition is providing a unique shopping experience that brings ideas, inspiration, knowledge, new products and solutions to customers that they can relate to. This is achieved by the room gallery style layout of the store.
Unlike the traditional layout of competing furniture retailers, where the same furniture of different styles are shown in one room, and customers would have to used imagination to visualize what it would look like in a room setting, KEA separate the store into departments of different room functions, and build model rooms with room settings of various themes using different reduces in the KEA range, giving customers a visual inspiration for their own homes.
Main Functionality The KEA e-commerce website uses an online catalogue to display their products available for sale. The catalogue is categorized into 9 main departments each representing a room or a living space in a home, which is also sub-categorized into several product ranges in that particular room and then further categorized in different types of that product, before displaying the actual catalogue of individual items.
KEA currently offer 5 different intelligent planning tools on their e-commerce website which assists customers in the planning of their purchase, including storage and wardrobe planners, and kitchen and office planner tools. The three different storage and wardrobe planning tools allow customers to customize and put together their own set of storage system to match their own taste and circumstances, such as the size of their room or available budget as well choosing and testing out different color combinations and adding different interior storage parts (Appendix 1).
The tool allow the user to easily create a customized storage system, and also to easily arches it, as it will automatically generate a list of parts and products required in the design and the list of products will be conveniently transferred as the customer click the ‘add to shopping list’ button (Appendix 2). The kitchen and office-planning tool allows customers to design the entire room from scratch. It is a similar but more advanced version of the storage planning tools, with a AD, multi-angle view of the design as well as more flexibility in terms of the room size and therefore a more realistic viewing of the product (Appendix 3).
However, the room planning tools are to very user friendly and the range of products available for room design in the tool is very limited. Nonetheless, such online planning tools are very effective in driving sales as consumers can have some visual idea in what the chosen furniture will look like in their home, and thus increases consumer confidence in making the purchase. Revenue Model The revenue model for Kike’s e-commerce is relatively simple. KEA has one single but very strong and growing e-commerce revenue stream of online sales.
In 2012, total e-commerce sales in the UK rose by 25% as Kike’s online range increased by a NY advertisement revenues on their web page and this is unlikely to change in the near future, as KEA only sells its own brand products, both in store and online and therefore is unlikely to associate with another brand on their web site. Moreover, KEA already has a solid and consistent revenue stream from selling their products; thus, they do not need to expand their revenue streams and seek paid advertising on their website, which is likely to be a very small percentage compared to their main revenue stream anyway.
E-marketing Aspects Kike’s e-commerce website places strong emphasis on creating inspirations and the haring of KEA furnishing knowledge with its consumers, while other furniture retailers tend to only deliver basic information on products and promotions on their web pages. “Research shows that KEA customers have very high expectations for the KEA website ? they expect an experience that is about much more than Just the presentation of basic product information.
They want to learn how to improve their lives at home, and they want everything integrated into a single, usable workflow, organized by the rooms of their house. ” Perhaps the best-known marketing and communications channel of KEA is their catalogue. It is estimated that the KEA catalogue is twice as widely distributed as the Bible, with over 212 million copies printed and distributed each year. Therefore, it is significant that the success of the catalogue is transferred online.
Undoubtedly, KEA has achieved this successful transfer. In fact, KEA has exploit new digital technologies and made the online version of the catalogue even more inspiring than the printed version. The online catalogue is designed with the value of inspiration in mind and its pages gives the impression that you are walking through the KEA stores. Room images on the new tie are fully interactive- users can engage with the images and see tips and ideas for a variety of products and everyday situations.
There are also videos and links named ‘Discover More’ that shows more information on the advertised product in the catalogue. These will direct the customer straight to the product information page and therefore increasing the convenience of sales. Similarly, the KEA home page also shows promotion images of room settings and different KEA products with links that direct the customer straight to the product page. Such e-marketing techniques will dead to increase sales in particular to impulse purchases in particular for Kike’s smaller and cheaper home furnishing products.
Criticism of Kike’s e-commerce model It is undeniable that KEA is a highly successful company with a winning strategy and business model. However, there are several downsides of Kike’s e-commerce model that could cause a problem in the long run. Currently only about 13% of sales are made online , as shoppers often wary of making expensive purchases without seeing them in person and could also be put off by the cost of delivering bulky goods, as well s the trouble of handling returns.
Further, although the website has won the title fastest e-commerce of 2013′ this July, the home page of the website is quite crowded that the planning tools online are still in the process of developing, as there are several noticeable bugs and unrealistic designs, KEA should better market such useful tools as it is reducing consumer uncertainty and the concern that is resulting in the relatively slow growth of online sales in the furniture market and ‘KEA.
Conclusion KEA has created a compelling value proposition for its target customers which is Leary superior to any competitive offer, and has with single-minded determination resourced, structured and managed its organization to perform the activities required to consistently and profitably deliver it. Moreover, Kike’s value proposition and strong economies of scale creates a very strong barrier for competitors.