The Cliptomania web store was created to cater to the demand for clip-on earrings. Various demographic populations such as women of varying age and cross-dressers demanded the product. The company was created in 1999. It experienced a steady growth in 2000 and 2001 (Brown, DeHayes, Hoffer, Martin, & Perkins, 2012). In 2002, the owners of the company moved their operations from New Jersey to Indiana (Brown et al., 2012).
The issues that the company faced since 2002 were as follows. First, the company faced problems with the services of Paymentech that verified the credit cards. The services were too expensive for Cliptomania. The other problem with the web-based store was the online ordering process and the ineptness of some customers to use online transactions (Brown et al., 2012).
The third problem that the company faced was the difference in duty of different countries they delivered their products. For instance, the Canadian import duties made their products almost 60 percent costlier than in America, while most of the foreign sales that the company had was from Canada, or United Kingdom. (Brown et al., 2012) Fifthly, adapting with different cultural differences was difficult for the company, as they failed to globalize their website by adapting it with the Japanese language.
Another problem was website listing. Earlier, website was listed based on relevance, however, this norm has changed, and websites now are linked as sponsored links (Brown et al., 2012). As Cliptomania advertised through sponsored links, hence, its advertisement costs had also increased. However, relevancy rankings were still an important part of their marketing process.
Further, in 2006 the company faced problems with their web service provider, Yahoo! and decided to change it. When the company changed its URL from cliptomania.com to cliptomania.net, there were no transaction issues as they operated both the websites simultaneously for some time. However, there were serious consequences with their relevancy rating. Due to change in their web address, their relevancy ranking reduced from top five to below top 100. This was a serious problem for the company.
One challenge that the company faced was lack of growth of their revenue despite successful business. The reason might be that they have financed all their expansions with their revenue and the other might be the issue they have faced from search engine ratings. Cliptomania’s trademark is used by other competing websites, and Google has refused to deal with the other advertisements appearing under Cliptomania’s trademark (Brown et al., 2012).
A SWOT analysis of the company would show that the strength of the company is its product offerings. Clip-on earrings are a niche offering and the company being the first operators in the area, had captured a considerable portion of the market demanding this. The sale was strong and the company had attracted customers from foreign markets too. However, the web-based marketing was an initial problem for many as people were unable to adapt to the online marketing process.
The weakness of the company was in its inability to understand the changing dynamics of online business. The changes in the plans and procedures of the search engine providers as well as the website providers has adversely affected the business of the company. The opportunities that the company holds is the rise in Internet business opportunity and its increasing demand in other countries like Japan and Mexico. The threat the company faces is with safety of the financial transaction process and credit card verification process.
The recommendations for the company is to concentrate on their financial transaction process – especially credit card verification process, and pricing for international customers. The other recommendation is to increase their relevance rating with search engines. One strong point of the company is its strong customer relations, which can be harnessed further as customer relation is an important aspect for success of online business (Teece, 2010).
References
Brown, C. V., DeHayes, D. W., Hoffer, J. A., Martin, W. E., & Perkins, W. C. (2012). Managing Information Technology (7th Edition). New Jersey: Prentice Hall.
Teece, D. J. (2010). Business models, business strategy and innovation. Long Range Planning 43(2) , 172-194.