Analysis of Libras Limited's E-commerce Strategy - BUS303 Case Study

This case study examines Libras Limited, a textile retailer, and its e-commerce strategy within the context of the global business environment. The study analyzes Libras Limited's evolution from a traditional retail model to an online platform, exploring its e-commerce presence, value propositions, revenue models (including B2B, B2C, and C2C), and market strategies. The analysis includes an examination of the business's context, including industry competitiveness and key stakeholders. Furthermore, the study applies Porter's Five Forces model to evaluate the external environment, identifying threats from buyers, suppliers, new entrants, substitutes, and industry rivalry. The case study also addresses the challenges faced by Libras Limited, such as inventory management and competition, and concludes with recommendations based on the observations. The study provides valuable insights into the complexities of e-commerce adoption and strategic adaptation in the retail sector.

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Abstract
This case study is an attempt to introduce the participants to the detailed analysis involving
the examination of a business case and its related contextual condition for which the e-
commerce is to be considered as a reasonably intricate component. Hence this study
examined the application of an effective e-commerce strategy of Libras Limited currently
engaged in the retails sales of textile garment and the significant portion of such sales is being
done through the internet as has been revealed from past few years sales record revaluation. It
further focuses on the Various approaches adopted by the company towards E-commerce
along with the problems those came in the way while adopting such approaches. It starts the
process by analysing the very initial strategy that was in existence and then gradually moves
towards newly adopting or modifying the old strategies in this regard.
Table of Contents
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Abstract...........................................................................................................................................2
Introduction....................................................................................................................................3
Problem of the study.......................................................................................................................4
Description of the business studied.................................................................................................5
Problems with the initial e-commerce approach............................................................................6
Current e-commerce Strategy.........................................................................................................6
Current business models of e-commerce used................................................................................6
The revenue models of the Libras Limited.....................................................................................7
Context to which the business operates..........................................................................................7
Environmental analysis (Porter’s Five Forces Model)...................................................................8
Description of the issues identified................................................................................................10
Recommendation and Observations.............................................................................................11
References.....................................................................................................................................12
Introduction
In this modern era of business, the challenge of incorporating the e-commerce strategy into
the business model along with the way of such incorporation is a key question for any type of
business while drafting their business along with its operating infrastructure. The effect of the
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e-commerce in the retail sales of the textile products can easily be perceived from the various
facts that now the consumers have got a great variety of products available with them through
internet without visiting the Retail shop physically. This category of consumers is much more
educated and informed who conduct a detailed research of the variety of textile products
available and prefer to make a comparative shopping. Hence this business is directly facing
the competition of online purchasing(Abdullah & Said, 2017).
Further day by day the number of businesses which are adopting the e-commerce strategy as
their business model are also significantly increasing and resulting in to the facing of
competition. Hence, they feel the need to identify those techniques which can stand by this
competition(Johan, 2018). In other words, the key motive is to achieve the customer
satisfaction for which it is in the continuous process in search for those effective e-commerce
strategies using which it can better place its products in the market with a much more unique
way.
It is because the e-commerce has provided a unique way of making sales to the customer by
providing them the platform to make the easy and quick purchase.
Problem of the study
This study examines the retail business of textile products to determine its most appropriate
or suitable e-commerce strategy. Further such study also focuses on the aspects such as
handling of the strategic business functions of inventory management, overhead costs
associated with the e-commerce, in sore operations etc.
This case study is being conducted to examine the following aspects:
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i. Initial e-commerce strategy with the problems associated along with the current
strategy and how such change has been made(Kaufmann, 2017).
ii. Description of the context in which the business operates
iii. Environmental analysis with the help of Porter’s Five forces model
iv. A brief description of the issues identified during this research and study in
relation to the e-commerce aspects of business
v. Making recommendations with the help of the observations made during our
study.
Description of the business studied
This paper shall describe the textile business of theLibras Limited and the corresponding e-
commerce models used by it. It is being carried out with a view to provide information to the
intended reader of this study to gain an in depth understanding of the various complexities
associated with the development of an online business(Kusnadi & Wei, 2017).
The business of the Libras Limited was started long back in the year 1975 with its specialised
focus on selling of Women and kids wear clothing. Until 2000 when they moved to an online
strategy, they were primarily operated through their 456 stores spread in the various cities of
India. This primary customer base was existed in and around an area within an average of100
miles from these stores.
The basic reason behind the shift towards online operation was to attract a broader customer
base with vast geographic region.
Initially they used to sell mostly the expensive products of world renowned brand through
this online platform, but slowly and gradually when their online platform got a very positive
response along with the popularity of the site then they make a shift to add more of the
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inexpensive clothing items to cater to the needs of a much broader customer
group(Kusolpalalert, 2018).
Problems with the initial e-commerce approach
When they initially started selling their products, the demand from the online platform was
not much, but when it started making a strong base in the minds of consumers then only it
was decided to continue the regular operation through this online platform. But the major
problem occurred in relation to the inventory management because of several additions to the
types of the products. This was evident from the fact of increasing lead time in fulfilment of
the orders because of lack of inventory in hand(Norberg, 2018).
Current e-commerce Strategy
Currently it is focussing on expanding the online business platform. As it is being perceived
that it shall significantly contribute to the growth of its sales, as old customers who earlier
preferred to visit the physical stores of Libras Limited are now well acquainted with its
website along with those who are located much close to the store can also now go online to
see the products offered and purchase it either visiting the sore physically or even online.
Current business models of e-commerce used
The current business model of e-commerce for the Libras limited with a view to increase its
revenue are mainly as B2B (i.e., Business to Business), B2C (i.e., Business to consumers)
and C2C (i.e., Customer to customer). These business models are very prevalent in today’s
time and high use of internet as helped in making it very accessible for the people around the
world(Truong, et al., 2008).
As per Business to Business model, the Libras Limited sells its products to other business
groups engaged in the business of providing these products to final consumers.
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As per the Business to consumers model it is directly making the sales to the Customers who
are finally going to use the product.
The last model, i.e., Customer to Customer, it has opened its online platform for its customers
so that they not only can purchase the clothing items online, but also can make sales through
the same platform(Webster, 2017).
The revenue models of the Libras Limited
Presently it is engaged in the private label branding and wholesale and warehousing models
of the e-commerce.
As per the private label branding, it manufactures the clothing items and directly send them to
the customers of those big online giants like Amazon, Flipchart etc(Wendt, 2018).
As per the Wholesale and warehousing model it has made significant investment in the
construction of the warehouses wherein it can store the huge quantity of the stocks
manufactured to deliver them to the wholesalers.
Context to which the business operates
The e-commerce business of the textile industry is somewhere going to see a quite saturated
state. It is because it is facing stiff competition as there is no digital barrier to enter the
industry, hence the number of competitors is significantly increasing day by day(Vieira, et
al., 2017). At the same time the expectation of the customers from the online platform is also
increasing that is the reason that they are expecting the best quality product with the least
price. Hence combatting the cost of production along with the other costs associates with the
e-commerce business has become a challenge for its business.
This is the reason why it is primarily focussing its attention to add such valuable features to
its website so that it may become more friendly and accessible(Romney, 2012). The second
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important thing on which it is focussing its attention is taking care of bringing improvement
into the process of its manufacture rather than on the manufactured product. It is because the
fault in the process of manufacture can significantly increase its cost of production. The
increasing cost of raw materials is also a key factor to be focussed upon in this industry along
with the increased demand for wage increase by the labourers working in the same industry.
Environmental analysis (Porter’s Five Forces Model)
The five major forces as prescribed in the case of e-commerce business of textile business of
the Libras Limited are as follows:
1. The threats from buyers
2. The threats from suppliers
3. Threat to new entrants
4. Threats from substitutes
5. Rivalry in the industry
A brief description of each of the above is explained hereunder:
1. Threats from Buyers
This is the biggest threat as faced by this industry is the threats imposed by its
consumers, who have now become much more informed, hence they prefer to
make a comparative shopping online. Again, their expectation in terms of having
quality products at the cheapest price is also increasing day by day.
For which the Libras limited is primarily focussing the quality of the process
through which its manufacturing operation is being carried out to ensure that the
best quality products can be manufactured at the least possible cost.
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2. The threats from suppliers
At times it must bear the significant pressure from the suppliers to pay higher
prices for the raw materials supplied to it. At the same time if it directly procures
the manufactured clothing from some suppliers they also demand the higher
prices.
To face this problem, it has planned to procure the manufactured products on
wholesale basis form its suppliers. Again, it is planning to outsource the
manufacture of few of the selected garment items in which it finds that the cost of
outsourcing is providing significant cost advantage to it.it is also putting its best
effort to ensure a healthy supply chain management by improving its relationship
with the customers(YUAN, 2018).
3. Threats to new entrants
Due to the low barrier associated with the digital entry in this market it is
considered as one of the major threats associated with the business of the Libras
Limited. As new entrants are putting their best efforts to snatch out its market
shares.
To handle this issue, it is using its long-term brand value and the customer loyalty
that is mainly contributing in the effort so that it does not have to lose its
customers.
4. Threats from substitutes
The number of substitutes to its product are also growing day by day with the use
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of the latest technology because of which they are being one of the biggest theat.
The Libras limited is putting significant effort to bring or introduce much
innovation in its production process, to introduce the innovation in its existing
manufactured product which can strongly be able to compete with these newly
substituted products offered by the competitors(Johan, 2018).
5. Rivalry in the industry
The rivalry in the industry amongst the exiting players is significantly high,
especially because of the existence of the large-scale players like amazon and
flipchart. At the same time due to the significant resource limitation it is becoming
quite difficult for it day by day to bear with this pressure.
Hence it is primarily focussing on its local customers with whom they have the
direct and easy communication established so that they may better serve their need
and acquire the greatest advantage of the customer retention.
Description of the issues identified
Thefirstmajor issue that was identified in the context of adoption of an e-commerce strategy
was the problems encountered with during the process of changing its business model or
putting an effort to adopt such revenue model of business for which it was not at all ready for
it. It becomes critical issue just because each of this model has its own limitations and
advantages associated with it. Hence the selection of an appropriate model became
significant.
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Again, gaining the acceptance by the customer group also played a significant role in this
behalf as those customers who were accustomed to the brick and mortal model cannot be
expected to provide their consent to this online platform. This is the reason that the various
models of e-commerce gained the various perceptions amongst its customer group.
The IT infrastructure of the Libras limited also demanded a huge transformation and the
introduction of a highly sophisticated system with adequately trained staff to ensure the
effective implementation of this strategy. Because without proper training and guidance these
staffs cannot ensure the success of this online platform, especially it demanded huge
investment in the IT infrastructure.
Recommendation and Observations
Based on the above case study the major points to be recommended are given hereunder:
1. The Libras limited should upgrade its IT infrastructure immediately along with
the sufficient training of its staff or personnel who are primarily going to
handle this online platform along with the adequate land for disaster
management in the event the system fails to run.
2. Before adoption of any of the business or the revenue model plan for the e-
commerce business man in depth study is required to be conducted so that its
real use and effectiveness can be studied. For this a sufficient back ground
study and the work is being suggested so as get ready to accept the challenges
imposed but the new business model.
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3. Before adoption of any of the models of the e-commerce it becomes
significantly important to analyse its final impact on the final consumers. It is
because without getting their acceptance it is quite difficult to think about the
success of this e-commerce strategy. Hence all the strategies are to be
carefully analysed with their pros and cons being associated with them. This
way we can hope that this study can provide valuable feedback in future in this
regard.
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