Harvard Case - Mi Tiendecita de Moda: Selling Fashion Through Facebook in Peru
"Mi Tiendecita de Moda: Selling Fashion Through Facebook in Peru" Harvard business case study is written by Matthias Tietz, Susan Calderon Urbina. It deals with the challenges in the field of General Management. The case study is 11 page(s) long and it was first published on : Jul 21, 2015
At Fern Fort University, we recommend Mi Tiendecita de Moda (MTM) adopt a multi-pronged growth strategy that leverages its existing strengths in online fashion retail, expands its reach through strategic partnerships, and addresses key operational and marketing challenges. This strategy will focus on digital transformation, brand building, and sustainable growth while ensuring MTM remains true to its core values of affordability, accessibility, and customer service.
2. Background
Mi Tiendecita de Moda is a Peruvian online fashion retailer founded by two young entrepreneurs, Claudia and Mariella, who saw an opportunity to cater to the growing demand for affordable and trendy clothing in Peru. They started by selling clothes through Facebook, quickly gaining popularity through their engaging content, personalized customer service, and competitive pricing.
The case study focuses on MTM's rapid growth and the challenges they face in scaling their business. These challenges include:
- Limited resources: MTM operates with a small team and limited capital, making it difficult to expand operations and invest in new technologies.
- Competition: The online fashion market in Peru is becoming increasingly competitive, with larger retailers and international brands entering the market.
- Operational inefficiencies: MTM's current processes are manual and inefficient, leading to delays in order fulfillment and customer service.
- Marketing and brand awareness: While MTM has a strong presence on Facebook, it needs to diversify its marketing channels and build a stronger brand identity.
3. Analysis of the Case Study
To analyze MTM's situation and develop recommendations, we can utilize the following frameworks:
1. SWOT Analysis:
- Strengths: Strong online presence, loyal customer base, affordable pricing, personalized customer service, entrepreneurial spirit, agile and responsive to market trends.
- Weaknesses: Limited resources, operational inefficiencies, lack of a comprehensive marketing strategy, limited brand awareness beyond Facebook.
- Opportunities: Expanding to new markets, diversifying product offerings, partnering with influencers and other businesses, leveraging technology for efficiency and customer engagement.
- Threats: Increasing competition, economic instability, changing consumer preferences, potential regulatory changes.
2. Porter's Five Forces:
- Threat of new entrants: High, due to the low barriers to entry in the online retail sector.
- Bargaining power of buyers: Moderate, as consumers have access to a wide range of options online.
- Bargaining power of suppliers: Low, as MTM sources its products from a variety of suppliers.
- Threat of substitute products: High, due to the availability of similar products from other retailers.
- Rivalry among existing competitors: High, as the online fashion market in Peru is becoming increasingly crowded.
3. Digital Transformation:
MTM's success hinges on its ability to leverage technology to enhance its operations, marketing, and customer experience. This includes:
- E-commerce platform: Investing in a more robust and scalable e-commerce platform to improve website performance, payment processing, and order management.
- Data analytics: Utilizing data analytics to understand customer behavior, optimize marketing campaigns, and personalize product recommendations.
- Social media marketing: Expanding beyond Facebook to explore other platforms like Instagram, TikTok, and YouTube to reach a wider audience.
- Customer relationship management (CRM): Implementing a CRM system to manage customer interactions, track purchase history, and provide personalized service.
4. Recommendations
1. Strategic Partnerships:
- Collaborate with influencers: Partner with popular fashion bloggers and social media influencers in Peru to promote MTM's products and reach a wider audience.
- Strategic alliances with complementary businesses: Explore partnerships with logistics providers, payment gateways, and other businesses in the fashion industry to streamline operations and offer value-added services.
- Joint ventures with local designers: Collaborate with local designers to create exclusive collections and expand MTM's product offerings.
2. Operational Efficiency:
- Implement an ERP system: Invest in an Enterprise Resource Planning (ERP) system to automate key processes like inventory management, order fulfillment, and accounting.
- Optimize logistics: Partner with a reliable logistics provider to ensure timely and efficient delivery of orders.
- Invest in technology: Utilize tools like AI-powered chatbots for customer service and automation to improve efficiency and reduce costs.
3. Brand Building and Marketing:
- Develop a comprehensive marketing strategy: Create a multi-channel marketing plan that includes social media, email marketing, content marketing, and influencer partnerships.
- Build a strong brand identity: Develop a consistent brand message and visual identity that resonates with MTM's target audience.
- Invest in professional photography and videography: Produce high-quality visual content to showcase MTM's products and create a compelling brand experience.
- Run targeted advertising campaigns: Utilize data analytics to target specific demographics and interests on social media and other platforms.
4. Financial Management:
- Secure funding: Explore options for securing funding through venture capital, angel investors, or crowdfunding to support growth initiatives.
- Develop a sound financial plan: Create a detailed financial plan that outlines revenue projections, expenses, and profitability targets.
- Implement robust financial controls: Establish strong internal controls to ensure financial transparency and accountability.
5. Corporate Social Responsibility:
- Sustainable sourcing: Partner with suppliers who prioritize ethical and sustainable practices.
- Employee welfare: Create a positive and supportive work environment that values employee well-being.
- Community engagement: Support local charities and initiatives that align with MTM's values.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: MTM's core competencies lie in its online presence, customer service, and understanding of the Peruvian market. The recommendations build upon these strengths and align with the company's mission to provide affordable and trendy fashion to Peruvian consumers.
- External customers and internal clients: The recommendations focus on improving the customer experience, building brand loyalty, and creating a more efficient and rewarding work environment for employees.
- Competitors: The recommendations aim to differentiate MTM from competitors by leveraging technology, building strategic partnerships, and focusing on a strong brand identity.
- Attractiveness: The recommendations are expected to increase revenue, improve profitability, and enhance MTM's competitive advantage in the long term.
6. Conclusion
By implementing these recommendations, Mi Tiendecita de Moda can successfully navigate the challenges of growth while staying true to its core values. This multi-pronged strategy will enable MTM to become a leading online fashion retailer in Peru, expanding its reach, building a strong brand, and creating a sustainable and profitable business.
7. Discussion
Alternatives not selected:
- Focus solely on organic growth: While organic growth can be effective, it may not be sufficient to compete with larger retailers and international brands.
- Merging with another company: While a merger could provide access to resources and expertise, it could also lead to cultural clashes and loss of control.
- Expanding internationally: While international expansion could be attractive, it requires significant resources and expertise, and may not be feasible in the short term.
Risks and key assumptions:
- Competition: The online fashion market is highly competitive, and MTM needs to constantly adapt to stay ahead of the curve.
- Technology: Investing in new technologies comes with risks, including implementation challenges and potential obsolescence.
- Economic instability: Economic fluctuations in Peru could impact consumer spending and MTM's profitability.
8. Next Steps
Timeline with key milestones:
- Year 1: Implement an ERP system, develop a comprehensive marketing strategy, and build strategic partnerships.
- Year 2: Launch a new e-commerce platform, expand product offerings, and invest in data analytics.
- Year 3: Diversify marketing channels, expand to new markets, and establish a strong brand identity.
By taking these steps, Mi Tiendecita de Moda can position itself for continued success and become a leading force in the Peruvian online fashion market.
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Case Description
A young Peruvian MBA graduate, who previously had worked in international marketing firms, founded an online fashion store and has been selling North American fashion products through Facebook, personal sales events and pop-up stores. The business has been growing profitably with an increasing customer base, overcoming initial supply side issues. Three years after the launch, however, the personal approach to satisfy each customer, a stronghold of the founder's business philosophy, is making expansion difficult. The business has grown to a point where it is barely manageable personally. Is expansion the right decision and if so, which type? Can the fashion store founder scale the business and still enjoy the lifestyle benefits of independence and flexible working hours?
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