Types of Innovation
Fetchr represents a disruptive innovation for both merchants and consumers in the transport and logistics industry. The company’s objective is to serve the demands of last-mile delivery services in the United Arab Emirates market while enhancing the growth of e-commerce through the improvement of service delivery. Fetchr is a disruptive technology since it has moved steadily to deliver performance that satisfies the needs of both low- and high-end customers, hence threatning the existence of established firms. Gemici and Alpkan (2015) hold that disruptive technology focuses on neglected markets and strives to create, deliver, and offer value for marginalized consumer segments. Fetchr is a disruptive business because it exploits the market neglected by traditional industry merchants by effectively addressing the errand needs of the low-end consumers. The company disrupted the established traditional forms of logistic processes, which utilized physical addresses in serving high-end consumers by focusing indoor and customized location package-delivery services. Christenson (2015) describes the characteristics of disruptive innovations that support Fetchr performance metrics, which include a venture into non-attractive market areas, adoption of technological advancement, and exploitation of lower margin business opportunities to destabilize incumbents.
Fetchr focused on exploiting non-attractive markets to satisfy the needs of the low-end consumers with a focus on low pricing policy. This market penetration strategy considers consumer problems as a key success factor in developing a market-fit product. The low-end consumers face a significant challenge in transporting or delivering products from point of sale to their premises. By identifying this challenge, Fetchr developed last-mile delivery services to cater for the needs of this population. As competitors experience challenges in expanding their service lines to cater for low-end customers, they provide opportunity and allow Fetchr to provide valuable services to the target customers. However, Fetchr has developed a strong market brand that appeals to all consumers including incumbents’ high-end customers.
Incorporation of technology in product development determines the pace of growth defined through the uptake of the product by customers in all economic levels. This element signifies the rate of development of new attributes on the company’s products. Fetchr has consistently modified the features of the logistic services by incorporating the use of web services and phone apps in transactions. In global market, the millennial generation has techno-attached demands for service provision. Fetchr’s adoption of online and mobile-based apps facilitates door delivery services, which creates value for this market whose loyalty depends on the service experience.
Lower tiers of the market offer lesser gross margins, thus making established firms to move upward to ventures that are more profitable. This business concept creates an entry opportunity at low levels of the market that new competitors can explore. According to Tutar, Nart, and Bingol (2015), exploiting technology allows new firms to offer services in radically different ways. In line with this concept, Fetchr adopted a lower gross margin and targeted low-end consumers while offering simple and efficient services through innovative platforms, such as GPS, web-based services, and mobile apps. Therefore, Fetchr is destabilizing the market of leading Courier Companies in the UAE such as Amarex and Parzel Express.
Competitor Analysis
Aramex, the major competitor of Fetchr, is an international courier and logistics company, which has curved its niche in both inland and shipping services through continuous improvement and exploitation of opportunities. An analysis of Aramex indicates that the company has adopted a competitive position through relatively cheaper prices, strong local brand, improved features of mobile apps, and diversification of service. These competitive strengths facilitate efficient service delivery that promotes both local and global expansion. However, the company lags in establishing its global brand due to its collaboration with weaker companies such as Fastway couriers and Berco Express.
Continental courier is another competitor that offers a door-to-door delivery courier committed to providing one-stop-shop logistics solutions. The company has expanded its service in the domestic market through cost-focus approach portrayed in its core competency of enhanced customer experience. The firm’s key success factors involve flexible deliveries, high standard of service, tailored solutions, and enhanced relationship management. The commitment to high customer service experience through tailored services and personalized management of customers has significantly enhanced the company’s commitment to quality and customer-centered business model. Nevertheless, the high cost of personalized services increases overall expenses, which negatively influence the organization’s profitability.
As a competitor, Parzel Express has strategic mergers with other strong market brands such as Zip Express and Logistics, which has established its businesses activities in the international market. The alliance creates a huge network that pools resources and creates economies of scale significant in enhancing the company’s competitive position in the market. Parzel Express has a strong technological platform, high level of expertise, robust network, and strong financial position. Fundamentally, Parzel Express has exploited these core competencies in creating competitive pricing rates and automated delivery system, enabling it to compete with global players such as FedEx. However, despite technological achievements, Parzel Express has fallen short in enhancing customer satisfaction and brand loyalty.
To compete its major rivals, company success requires a strong funding mechanism, high level of performance expectation, and growth process. Pervan, Curak and Kramaric (2017) argue that developing core competencies and effectively implementing these capabilities are important strategic actions for any enterprise to pursue high long-term profits. Funding mechanism involves collaborative ventures with strong market brands, which facilitate the exploitation of economies of scale and brand loyalty. Given that Fetchr enjoys strong technological capabilities, the company must strive for continuous improvement of core competencies that include cost-effective and customized services. Harnessing these core capabilities through the focus on customized services helps to improve performance level and deliver value to its customers, leading to brand loyalty.
In the aspect of the growth process, consumer demands on sustainable business initiatives play a great role in shaping the future of organizations lives. Thus, the company must exploit its technological strength and pursue a quality relationship with consumers. Therefore, to enhance its market position and compete with the three strong market rivals, Fecthr must source strong financial support and focus on improving customer experiences to create trust and brand loyalty in the global market.
Fetchr Business Model
Fetchr utilizes a low-end customer-centered business model by providing door delivery of services to this market segment. The company utilizes advanced technology platform and flexible transport services to deliver services to these consumers. Technological innovation has positively influenced the development of online and app-based services that allow consumers to enjoy flexible and convenient businesses (Gemici & Alpkan 2015). The GPS system allows the company to deliver goods to the customer’s location of choice with a high level of accuracy. The existence of low-end consumers, who are individual clients with small package orders, and utilization of flexible transport means, has significantly promoted customized and tailored product development essential in creating customer loyalty.
SWOT analysis of Fetchr shows that the company’s strength includes a reliable technological innovation, cost-efficient deliveries, great customer service, and last-mile delivery. However, the company weaknesses include low financial position and expansion strategies. A great opportunity in the industry involves diversification in the global market. Threats include unpredictable nature of customers and competitors, the digital revolution, and barriers to entry. The net effect of weaknesses, opportunities, and threats determines strengths, which provides the capabilities and competitiveness of a company and its market position (Pervan, Curak, & Kramaric 2018). In this view, it is indisputable that the firm has deployed sufficient technological resources to enhance its competitive position. The GPS and customer relationship web-based system is essential in promoting flexible deliveries, enhancing customer experience, and convenient services.
To enhance its competitiveness, Fetchr needs to undertake strategic actions. As the company employs technology, it should create more disruptive innovations in addition to GPS and web-based innovations and use them strategically in penetrating and dominating competitive markets. Essentially, disruptive innovations are market forces that exploit technologies in creating and delivering value to the market using innovative products or service features (Christensen, Raynor & McDonald 2015). From the analysis, it is apparent that the company faces financial challenges in its expansion. Therefore, Fetchr needs to adopt collaborative ventures with other service and service-sourcing firms to expand its network and enjoy economies of scale. In addition, alliances with global firms whose business model focuses on meeting the needs of high-end consumers will facilitate the establishment of sustainable competitive expansion into new market segments in the international markets.
Reference List
Christensen, CM, Raynor, ME & McDonald, R 2015, ‘What is disruptive innovation?’, Harvard Business Review, Web.
Gemici, E & Alpkan, L 2015, ‘An application of disruptive innovation theory to create a competitive strategy in Turkish air transportation industry’, Procedia-Social and Behavioral Sciences, vol. 207, pp.797-806.
Pervan, M, Curak, M & Kramaric, T 2018, ‘The influence of industry characteristics and dynamic capabilities on firms’ profitability’, International Journal of Financial Studies, vol. 6, no. 4, pp. 1-19.
Tutar, H, Nart, S & Bingol, D 2015, ‘The effects of strategic orientations on innovation capabilities and market performance: the case of ASEM’, Procedia-Social and Behavioral Sciences, vol. 207, pp. 709-719.