Iuiga’s Conundrum: ‘Clicks’’ only or ‘Bricks’ too?

• Main Authors: TULI, Kapil R., CHANDUKALA, Sandeep R., BHARDWAJ, Sheetal
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: E-Commerce entrepreneurialism; Retail; Pricing strategy; Value proposition; Marketing; Brand building; E-Commerce
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/267; https://smu-my.sharepoint.com/personal/chiweichan_smu_edu_sg/_layouts/15/onedrive.aspx?listurl=https://smu.sharepoint.com/sites/admin/CMP&id=/sites/admin/CMP/cases/SMU-19-BATCH [PDF-Pic]/SMU-19-0011 [Iuiga]/SMU-19-0011 [Iuiga].pdf&parent=/sites/admin/CMP/cases/SMU-19-BATCH [PDF-Pic]/SMU-19-0011 [Iuiga]
• Institution: Singapore Management University

Set in 2018, the case describes how Zang Hao, the CEO and co-founder of Iuiga, a Singapore based e-commerce start-up, eschewed the conventional e-retailing model by acquiring complete control over its value chain including ownership of the items retailed through the adoption of original design manufacturer (ODM) business model and marketing of its brand in addition to storage, logistics, and distribution. Under the ODM model, Iuiga contracts the manufacturers of large global brands known for their superior quality to manufacture the same products for Iuiga, and then proceeds to retail it directly under its own brand name at much lower, and transparent, prices on its online platform. By targeting quality-conscious customers with a range of products in the home and living category, Iuiga’s sales grew fivefold within the first eight months of its launch. However, soon after, the sales growth began to plateau. One of the key reasons identified for the slowdown was the limited market reach of the brand due to its presence only on the online medium. With e-commerce penetration in Singapore at only 5 percent, the majority of the consumer market lacked awareness of the Iuiga brand and the value it offered. This led the company to consider creating an omni-channel presence by opening a pop-up store to drive face-to-face customer engagement and boost Iuiga’s brand building efforts. However, this raised many concerns. Would Iuiga’s current team be able to manage both the online portal and the pop-up store? With the omni-channel platform entailing unavoidable additional expenses such as rental, people, services and integration costs, would it undermine the strength of Iuiga’s core business model? Also, the brick & mortar space was an unchartered territory for its management team, with no prior experience to bank upon. Most importantly, would Iuiga be able to convert the offline footfall to online traffic?