Braun's Ciclying
Essay by review • December 2, 2010 • Case Study • 328 Words (2 Pages) • 885 Views
Key Issue: Braun's main concern is to determine in which extend it is beneficial for the company to extend its online presence, and how aggressive the expansion should be.
Recommendation: It is recommended that Braun increase gradually its online presence in order to maintain a broader customer base. However, an aggressive increment of its online presence is not recommended since it would be too risky for them.
Rationale: Nowadays, online presence is a "must" for many businesses. Moreover, being a Canadian sports retailer, it is an asset to have access to other markets that guarantee sales throughout all the year, and not just in the summer season. Additionally, it can't be argued that Braun's online incursion was very successful, and that being online represents another way of interacting with customers, which have been Braun's base of success. The fact that they've translated their customer service orientation into its online portal, have provided them with a competitive advantage.
However, online sales makes just 10% of Braun's annual revenue, and it can not be forgot that, being a respected small business focused in long term relationships with their retail customers, the main way of business for them is in-store business, which differentiate themselves from Bikeshop.com and its recent failure against all odds.
Therefore, even though entering the online sector in an aggressive way is not recommended, it can not be denied that to increase gradually an online presence will be good for Braun's business.
Financial Implications: Last 4 months actual online sales were around 47,000$, so 120,000$/year will be a conservative estimate (taking into account that majority of the sales are done in summer). Gross margin is 50,760$ (42.3%), which can be use to cover a gradual increase in Braun's online presence, being the rest just fixed costs.
Next Steps: A less aggressive way of increasing Braun's online presence should be negotiated. This initiative will count with 50,000$ budget. Afterwards, Braun's online efforts should increase gradually with the increase of online revenues.
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