Where Admart went wrong: supermarket cyberstrom
• Revolution in grocery store industry took place in hongkong
• In admart, they offer free delivery of electronics device and
grocery through internet or phone in
• Established in 1999, used the next marketing next media
group to sell products and revolutionize the market
• Marketing strategy: apple daily newspaper(one of the most
readable ) advertisement
• Cyber shopping was not smooth:
1. online trasactions did not live upto expectation(25%- Internet,
65% telephone, 10% fax)
2. Product and service problem
3. Internet shopping had risen, and most were due to delivery
problems, lost goods, misrepre sentation of the goods, and
overcharging
• Minimal profit on goods could not able to cover delivery cost
• The innovative marking had changed the way that grocery
and household goods sold in hongkong
• In 2000 there were 2mn users of internet: online shopping
was now common and convenient- 17% internet users
interested in online shopping
• The average purchase value of each Internet shopper
was around HK$680.00
• The benefit of shopping online was that one had more
choice of goods, and could more easily compare prices
between shops, a substantial amount of information,
which was an area where the traditional shopping
experience was rather inefficient-80% were satisfied
with service
• Online shopping advanced by:2000 by the launch of
Hong Kong’s first virtual credit card that attracted
thousands of new consumers to the Internet.
• Few grocery stores:Wellcome, Park’N Shop, Guangnan
(KK), and the China Resources Corporation (CRC)
• The barriers to entry in the retail business were
substantial, particularly with the high rental and
infrastructure costs in Hong Kong
• Jim offer direct marketing: combine Chinese
newspaper, net, website
• Park n shop which was the sale of fresh produce
supplied by its mainland parent companyThis was a
sales feature on which adMart could not compete
•
Where admart went wrong • Financial Performance
• The Price-fixing System in the Grocery Market: 1. It was bogged down(not able to make any progress) by
1. Only two local agents for brand-name corporations had excess commitments in warehouses, and by
agreed to supply adMart: IBM, and Procter and Gamble operational and logistical problems
2. Foreign companies and pricing difficulties(French, Japan)
• Product Assortment
• Product Quality
1. Many customers lost confidence in such products and the
low price strategy used, as safety was their most important
consideration
• Distribution and Delivery System
1. the level of orders increased suddenly in mid-December
1999, with a maximum of 9,000 orders in one particular day,
which was 2.5 times the usual amount of orders. This caused
a shortage of labor, and an overload of machinery, such as
missing order records and incorrect stock inventory levels
2. to justify delivery costs — the need to increase sales volume
remained the biggest challenge
• Service Quality
1. Many customers complained that they unable to connect the
phone hotline service