JEWELLWORLD.COMA CASE STUDY

By: Group 6

Nidhi 2010151 Niraj 2010152

Pankaj 2010153 Pankhuri 2010154 Paul 2010155

Praveen 2010156

Overview

China – Biggest jewellery markets, projected global jewelry center by 2010.

Hong Kong is the leading processing center for jewelry in Asia,

Jewellworld.com founded in May 2000.

distribution hub globally. $ 0.94 billion in retail sales; 3rd largest exporter- 2.95 billion $ exports.Brisk sales of Hong Kong jewelry because of its design and quality.

subsidiary of Luk Fook Holdings – low priced jewellery targeting young people.

Established as B2B online portal and then expended to B2C model in Hongkong.

Overview - Market Scenario

Huge market potential in mainland China as spending power on the rise.

Consumption pattern of young generation is becoming more internationalized – increase internet usage.

CEPA- zero tariff; possibility of price reduction attracts customer leading to both buyer and consumer profit.

Contemplative Decisions to be taken:

Whether expand to mainland China through online B2C model.Target Market segment.

External environmental factors • Hong Kong

supported by Chinese government

• CEPA , independent

• English is the dominant language

• Hong Kong jewellers, consumers are by no means IT savvy

• technology was mature enough for JW to develop B2B

• security and privacy over the internet

• china’s GDP rapid growth.

• Hong Kong - 3rd largest exporter;

Political Social

technologicaleconomical

Other environmental factors

Different age group have different preferences, internet skills and income

• Demographic

Few big players and a large number of smaller players

• Fragmented Industry

Swot Analysis

StrengthsExperience gained by providing services to its parent companyBest-known brand in mainland China

OpportunityHigh Market potentialGrowing internet usageFirst mover advantage.

SWOT

Porter’s 5 forces ModelBargaining power of customers

Bargaining power of supplier

Threats of potential entrants

Threats of substitute products

Competitive Rivalry

Medium

• Local retail alternatives available.

• Low purchasing power of target group.

Low

•International prices of precious metals and gems

•Cost of shipping

High

• Attractive market for other Hong Kong jewelry houses owing to CEPA.

• Increasing International brands.

High

• Retail showrooms, since high footfalls

Medium

• High no. of local competitors

• Different target group.

Decisions for entering China market

business environment  

• Currently 77 million broadband users, rising at 20% rate annually.

• High Regard for Hong Kong jewellers in china.• Much larger, unexploited customer base.• Rising GDP growth, especially of coastal cities.

Industry trend • No fierce competition in the target age group.• Jewellery market in mainland China lacks

brands and designs

Competitive Advantage

• first mover advantage.• Knowledge and experience from LF about width

and depth of the industry• Experience in IT services.• Expert in security surveillance systems

Target SegmentExperienced in

catering to relatively young age group

(18 – 30 yrs)

Consumption pattern among young generation -

Internationalized (brands),Increase in spending power

Highest share in internet users.

priced lower; target market- low to mid end

market and mid to high.

USP’s- Innovative, Attractive, High quality,

Competitive price

18-30 years ; low to Mid and mid

to high segment

Internet Access – Age and Income

39.1%

17.2%10.3%

7.4%

6.0%

2.1% 0.8%

UNDER18 18-24 25-30 31-35

Challenges while entering China

Low average salary of 18-24 years age group customers.

Should it focus on other age groups? Should it adopt a mass-market strategy?

Payment through credit card poses a cyber threat issues.

Delivery system is unreliable and EMS is costly.

People sceptical about Quality of goods, after sale service, company reputation, etc.

Overcoming Challenges

Jewellworld should offer cheap products in which they already have core competency. They can introduce EMI schemes to interested buyers specially during occasions like Chinese new year, Labor day, National day.

Initially, they should not focus on other age segments because companies like laofengxiang, laomiao, chow tai fook, luk fook are already serving them efficiently. Also internet usage is maximum in age group of 18 to 24.

They have good IT experience (in security surveillance too) by providing services to parent company Luk Fook. 37.9% of internet users are using credit card. Still there is an option of cash on delivery system.

Low average salary

Focus Group

Credit card

usage

Overcoming Challenges Contd..

Contract (outsource) to a single major shipping company.Order in bulk to reduce cost

Jewellworld is known for its quality and service, this is the reason they used to target mid to high end customer by offering products at a relatively high price than local producers.

Delivery system

Quality &

service

Suggestions Provide multilingual version of website.

Expansion of product range, can include products like watches, belts, cutlery etc..

Customer awareness through advertisements. E.g. information on IT/jewellery industry

Re-packaging and improving existing service offerings. E.g. Providing a higher level of customisation in its service

Thank you