From PPG to VANCL: Business Model Evolution of Online Apparel Retailing

  • Reference: IVEY-9B11M012-E

  • Year: 2005-2009

  • Number of pages: 14

  • Geographic Setting: China

  • Publication Date: Aug 18, 2011

  • Source: Ivey Business School (Canada)

  • Type of Document: Case

  • Industry Setting: Retail Trade;

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Description

In October 2005, PPG pioneered a new business model for online apparel retailing in China. Targeting men’s low-end apparel, PPG’s new model met with great initial success due to its responsive supply chain, lighter distribution channel (i.e. no physical stores), and costly advertising. However, underlying limitations of PPG’s business model led to its eventual failure. Followers learned from both PPG’s successes and failures. VANCL, another online apparel retailer, provided a good example of the evolution of a business model that created a leader in the online retail industry. To show the evolving characteristics of the apparel retailing business model, this case describes a successive two-stage story, in which each company made improvements based on other forerunners.

Learning Objective

The objective of this case is to help students understand methods of analysis based on value chains and value networks, the difference between various value chain links in a specific industry, and a firm’s choice between virtual and physical operation when constructing a business model. This case is intended for use in strategic management courses for MBA/EMBA students. The case may be used in a course segment that deals with the internal environment to help students better understand value chain analysis and relevant theories. This case can be taught to discuss value chains, outsourcing, and business models.

Keywords

Business Model China CMCC Men's Apparel online retailing Supply chain management