Fashion Nova Company, Coursework Example
Company’s Background and E-Business Model
Fashion Nova Company is based in Los Angeles and operates under five retail stores within South California. With digitalization, almost all services are rapidly becoming digitalized, which is a rise of new opportunities, however a disruption to traditional business models. Fashion Nova company has made maximum use technology especially social media to make its business successful. Use of social media for instance Instagram has facilitated the branding of Fashion Nova a strategy which has currently disrupted the traditional fashion institution. Li and Zhang (201) argue that due to the rapid development of technology and digitalization, by 2025, 40%, approximately 500 companies existing today will be wiped out from the market due to technological changes and their inability to cope with it the changes. Fashion Nova company is a fast-growing and currently the leading online store majoring in lifestyle brands. Due to the changes, Fashion Nova is highly moving with technology the move which has made it the highly googled company in google.
Figure 1: Canvas Model
|Social media, search engine marketing and search engine optimization.
|Internet connection, computers, hosting, staff and electricity.
Since the establishment of Fashion Nova Company in 2006, the Company has been dealing with men, kids, women and curves collections. In 2018, the Company was the most searched fashion brand on Google due to its massive following and its pop-culture nature, enabling it to reach a staggering social media with over 25 million followers, including celebrities, collaborators, and their fans (Camargo, 2020). The Company is privately owned and operated under the leadership of the CEO Richard Saghian (Fashion Nova). The Company aimed to revolutionize fashion by making the women’s apparel market by introducing jeans and modern club wear for ladies with the most affordable fashion. The Company’s success story is based on staying in front of its competitors and fashion curve through engaging the entire community it serves each day to ensure it delivers the needed requirements in the fastest time possible. Saghian pioneered the business’s success by using Instagram as the primary connection platform and relating media with the company customers, the modern strategy no company had ever done before (Fashion Nova). Due to development in technology, Fashion Nova Company, its first brand online store, made its identity a presence and the fundamental source for global shoppers due to development in technology (Bruno, 2020). The brand has the easiest shipment option for its clients, increasing its accessibility globally.
Target market and pricing strategy
Fashion Nova’s target market is majorly the millennial customer’s segment. The Company tries to capture the taste and preferences of the millennial generation through social media influence, and lucky it has been ranked 6th favourite website for young people (Fashion Nova). The significant sales for Fashion Nova are youths since the millennials in internet savvy and entitled to shop online (Lang3ley, 2021, p12018).
A company should consider and lay strategies on the most effective digital platform to invest for tremendous success for tremendous success. However, most organizations are more concerned about making their investment based on applications of modern technology and the existing products, practices, and processes (Alter, 2002). Through these ways, digital strategies turn futile and take the course of IT strategy, which is closely associated with the organization’s overall performance (Drnevich & Croson, 2013, p512). Digital strategy is the technological ability to enhance and propel human performance; thus, human performance is the primary attribute of digital transformation (Li & Zahang, 2017, p 1130). Leischnig and Ivens (2016) argue that a digital strategy is a form of strategic management and business answers for digital questions. Still, all companies should take into consideration of their digital capabilities before confirming their digital strategies.
Fashion Nova E-supply Chain
The e-supply chain for Fashion Nova Company encompasses all activities incorporating various e-businesses. Supply chain management has significantly gained huge benefits, especially since Information Technology became an enabler for improving various business processes (Lee & Whang, 2017). Since the last decades, the supply chain has dramatically improved in agility, efficiency and accuracy; the improvement transferred to Fashion Nova company.
Fashion Nova has integrated its business activities electronically in its value-adding processes throughout its supply chain process, making its e-supply chain management easy. The entire system has integrated its e-business by using internet technology facilitating the exchange of information, giving rise to business communication networks as the practical, innovative approach to exploring value-adding gaps within the supply chain (Nayak, 2019 p 23). The use of e-supply chain management by Fashion Nova has made the application of e-business technology easy to use, helping in the optimization of value-adding activities in the supply chain.
Due to the nature of Business to Business that Fashion Nova operates in, the e-supply chain serves to be effective in the entire process by improving real-time control, agility, speed and long-run customer satisfaction. However, the e-supply chain for Fashion Nova is based not only on technology but also on culture and change of management policy, business processes, performance metrics, and the entire organizational structure in the entire supply chain (Fashion Nova). The Company’s e-supply chain is network-centric; thus, its focus is on cooperation, connectivity, transparency of information and coordination. Sharing of information with networked supply chain partners within the five stores help in real-time information sharing and resources, changing traditional supply chain information flow from the linear transmission to end-to-end connection (Fashion Nova). The E-supply chain has dramatically helped the Company quickly transfer information directly from one partner to another in a different branch without delay and distortion.
E-supply chain integration
Integration of supply chain within the Company ensures that the supply chain operates seamlessly as an extended enterprise to facilitate reduced operation costs, agility and shortened lead-time (Brach & Webb, 200, p, 14). Processes like material ordering, stock control, packaging, delivery, supply of the brand, customer support are all controlled virtually within the Company since it operates online. The Company e-supply chain ensures the legacy of the supply chain and operational system are seamlessly incorporated into a networked business environment connected through the internet and other communication and information facilities. The Company uses two primary e-supply chain integration methods;
Co-operation Oriented integration
With this type of integration, the Company ensures that information transparency is used to increase agility, reduce costs, and improve coordination and joint decision support in the supply chain. The system allows partners to share real-time information and easy conversion into knowledge, which helps in joint decision-making, such as promotional planning, demand forecasting, and product pricing. The Company uses its retail information and suppliers like American Bazi and Heart and Hips in the retail supply chain. They are their core wholesale suppliers by use of IBM information system to enhance the provision of real-time information of sales and stock to its suppliers.
This system helps the company connect with its partners fully in the business network (Coupey, 2001). For faster delivery according to customer needs, all partners involved in the entire supply chain are virtually connected for easy and faster information transactions, for instance, retailer sales, the stock level at its stores and available stock. The system allows the transfer of real-time information to partners without distortion or lateness and avoids distortion of demand, reducing lead-time while increasing responsiveness. The entire process focuses on agility and efficiency through improved transparency and connectivity.
The supply chain process for Fashion nova is simple customers have access to its website where they order items and delivered them globally (Fashion Nova).
E-Business Strategy for Fashion Nova
E-business uses the internet to empower and network business processes, Company’s communication, e-commerce and collaboration between the Company, its customers, stakeholders and suppliers (Brach & Webb, 200, p16). E-business uses the internet, extranet, intranet, social media and various networks to enhance their processes. Through e-business, companies use social media and online websites for advertising, buying and selling their products and services online. The hypermarket industry has become too competitive, forcing firms to adopt e-business to gain a competitive advantage over their peers in more significant market access, reduced costs, higher customer satisfaction, and increased revenue stream.
Fashion Nova Corporate e-business strategies
The primary aim of the digital strategy adopted by the Company in 2013 is to reshape the entire business operation to gain a competitive advantage over its peers. Digital transformation is fueled by the presence of the internet, social media, mobiles, intelligent technologies and the cloud and the ever-growing demand for integration and automation. Digital transformation has brought about new opportunities for innovation of products and services but caused a threat for the traditional business. However, Fashion Nova uses this opportunity to outcompete its peer by developing a robust online presence. While the majority of companies strive to diffuse a clear understanding about the nature and impacts of digital transformation strategies, for Fashion Nova, it was an easy journey due to its Instagram established presence before establishing online stores. Fashion Nova’s strategy is built upon vertical forward integration since it controls its business wholly. However, in its initial stages, it employed intensive market penetration strategies based on establishing the brand on Instagram before establishing online stores.
Fashion Nova Business Level strategies
Fashion Nova target customer is the millennial generation. This generation comprises unemployed but fashionable youths; thus, the Company use its pricing strategy by selling fashionable and affordable wear to its target customers, making it more feasible in the market. The Company make use of celebrities, for instance, Kim Kardashian, to make its brand popular and attract more youths as their customers but at affordable prices. The majority of the Company’s products price range from $20 to $50, but there are also highly-priced products. The marketing and sale strategy has made the Company more popular and faster growth due to customer satisfaction.
Due to technological advancement, the demand for the internet has gone high, facilitating the development of social media like Facebook, Instagram, TikTok and Twitter. The majority of e-business make use of social media to make their brands popular and increase sales. The primary secret behind the success of Fashion Nova Company is the maximum use of social media (Instagram) for market penetration. The Company invests heavily on social media through posting almost after 30 minutes on their Instagram profile. The Company also team up with celebrities and influencers, for instance, Cardi B, to make the brand feasible and appealing. Like procurement and supply chain, the Company’s process is conducted virtually, reducing costs at a high level, thus enabling it to sell products at a lower price compared to its peers.
Figure 1: Ashridge Mission Model for Fashion Nova e-business strategy
|Cost leadership and competitive advantage (Fashion Nova)
Challenges Facing Fashion Nova Company
While developing its e-business strategies, Fashion Nova Company faces several challenges. The Company has been accused by who are believed to be competitors as unethical Company. For instance, the Company has been accused by the federal labour department to underpay its workers in factories in Los Angeles as they strive to outcompete their oversee peers. Another major challenge for the Company is the current trend with unpredictable fashion, which changes each day as competitors also develop new designs. Other challenges include globalization associated with international laws, politics and policies, as analyzed below.
Fashion Nova Situation Analysis
Table 2: SWOT Analysis
|Established Social media presence
New fashion styles each week.
|New entry of firms and competition
|The number of online users is increasing each day, opening new opportunities daily.
Size inclusivity (Fashion Nova)
|An increasing number of competitors offering a similar product
The Company has an ultrafast fashion that is shipped directly to consumers; thus, no intermediaries offering cheap newness to its customers. The company products are relatively cheap, mostly less than 50 us dollars, making it more popular and searched on google. The Company offers more than 700 new styles each week forms another strength and competitive advantage.
Table 3: Fashion Nova TOWS Analysis
|Pricing strategy, investment in social media and size inclusivity (Fashion Nova)
|Over relying on one platform (Instagram) (Fashion Nova)
|The new entrant of other firms and increased competition
|Inaccessibility of internet and state law regulations
Table 4: Fashion Nova STEEPLE Analysis
|Population, demography, distribution of income, social mobility working attitude and leisure.
|Population increases the market for products while demography increases shipping costs.
Social mobility impacts the development and use of electronic business, e.g. internet usage and patterns
|Access to the internet,
|The emergence of new market opportunity
|Exchange rates difference
Stock market evolution
Economic growth rate
|Price disparities in each country
Poor demand forecast
Better terms of operation
|Laws and regulations
|Restriction of entry into other markets
Government subsidies, environmental law
|Increased product price
Reduced product price
Material use restrictions/penalties
Violation of dominant position
Table 5: Fashion Nova Porters Five Forces Analysis
|Threats of new entry
|e-business has no barriers for entry, thus free entry and exit, meaning as technology developed, more entry is expected.
|Threats of substitution
|There is intense rising pressure from competitors for substitute products, causing a threat shortly.
|Bargaining power of suppliers
|The Company has a strong fragmentation of suppliers, making it hard to establish a joint pricing approach (Fashion Nova)
The market has a high degree of transparency, allowing suppliers to compare offers.
|Buyers bargaining powers
|There are several e-business firms like Amazon and Alibaba, which allows customers to compare prices favourably.
|There are several competitors in the same industry: Vince Holding Corp, Rue La La, and J.Jill and Boot Barn.
The forces are the major factors determining the firm’s profitability (Poter, 2001, p73). Like any industry, e-business faces significant challenges in the new entry of other firms since there are no effective regulations. In Fashion Nova, the Company faces many competitors like Vince Holding Corp, which is also taking roots at a higher rate due to expansion to new locations. The products for the competitors are also slightly differentiated, making it hard to penetrate to other markets.
The report outlines for Fashion Nova Company together with the general operation of e-business. Fashion Nova company has strived in the current competitive market to establish its band by maximum use of social media and other strategies like pricing to attract its millennial target customers. With technology, the company was able to establish online stores the strategy most businesses are using currently for competitive advantage. Social media tend to grow on a higher rate with increase number of internet users thus the company exploits the opportunity by use of Instagram to make its brand feasible. Influencers are also the current brand ambassadors for products due to a massive number of followers they have. Fashion Nova has used the strategy to enhance their success meaning they move with technology and market trend. This can be achieved through continuous innovation and abiding by critical laws. However, the Company is faced with innovative disruptors and a scarcity supply of critical laws hindering its future expansion plans.
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