Xian(Freya) Lyu's Blog

Walmart is planning to invest up to $1 billion in Flipkart, one of the biggest Indian e-commerce firms. Though it failed to enter the Indian market in 2013 due to the way-too-strict government regulations on Foreign Direct Investment (FDI), Walmart is now re-entering India because of the rapid growth of the market and Amazon’s domination threat.

If the cooperation is finalized, Walmart’s business model canvas may alter and thus generates more advantages and profits. Flipkart is now becoming Walmart’s Key Partner and the customer base will potentially increase 1.3 billion since Walmart faces to all Indian residents and offers good price. In the Customer Relationship part, with the help of the Flipkart, it can learn how local Indians shop in such a developing market and create trust using Flipkart’s reputation. The Channels focus mainly on online shopping: having ambition in global e-commerce field, Walmart has purchased the US Jet and collaborated with the China JD, and this onward e-expansion with Flipkart would influence the current domination of Amazon in India.

The India Entry is a win-win action for both Walmart and Flipkart. Since Walmart doesn’t have much development in e-commerce, the investment in Flipkart can find a firm footing in India online market. The trust that Flipkart has created can be used to attract more locals and Walmart can build new distribution channel by selling products through Flipkart. Nevertheless, by enlarging the influence on Indian market, Walmart can have competiveness challenging Amazon. On the other side, Flipkart is suffering from the weak financing environment in India. Through selling stocks to Walmart, Flipkart could get massive amount of money for self-developing.

Accompanied by the expanding market, maturing consumption habits and upgrading infrastructures, Indian government has stimulated the inflow velocity of foreign enterprises by introducing a series of encouraging policies such as allowing 100% investment from overseas in e-commerce platform. The biggest competitor Amazon had launched a program on signing up small owners as online firms and investing $5 billions in India market. Up till now, the negotiation is at early stages, however, Walmart does need Indian market with the consideration both in overall retail and e-commerce channel performance.

Source: CNN

Sunshine, surfing boards, and sexy models are things immediately pop up when we mention the American apparel brand Abercrombie& Fitch. Its marketing strategy is using hot models to attract hot customers, which has made huge profit. While at the same time, discriminations on body and appearance take place, which violate business ethics and trigger criticism.

The CEO Mike Jeffries once commented that people who weren’t good-looking should not wear A&F. He refused to manufacture women clothes larger than size 10 and L. This exclusive marketing strategy does attract many teenagers who are hot or want to be popular, however, it also loses lots of consumers who are in relatively bigger size. This marketing encourages division between people, and things like bullying and bias are likely to occur, especially deal with immature kids. People may argue that it’s only an apparel brand, but it creates disconnection and affects values and unison of the society.

In 2013, A&F fired an employee who refused to take off hijab during work time, and this scandal made the sales dropped by 10% comparing with the last quarter. This shows that discrimination also exists on employees. A&F invests money in hiring good-looking models standing in the stores more than needed instead of advertising its clothing. As a former brand representative in A&F, I notice that most sales are inexperienced and some even have bad attitudes towards customers, thus hurt the reputation and working effectiveness.

Overall, under economist Milton Friedman’s opinion, A&F is a successful company because it maximizes profit. However, as Jeffries’ mean comments were reported, consumers began to lose interest in this brand. The sales/revenue has decreased from 4.16b to 3.52b since 2012 and is experiencing a declining trend. In a microeconomic perspective, demand decreases and A&F has to increase discount to solve the surplus. This phenomenon reveals that the public does care about morals rather than just being ignorantly fashionable. A&F should apologize for its discrimination and change marketing plans in exchange of long-term profit. More importantly, the society should gain conscious on embracing each other rather than emphasizing the gap.

Source: CNN