Task
Include all details of the task, including:
• Individual task
• Read the case below. Discuss it while answering the first two bullet points, then answer the third bullet point:
o What advantages and disadvantages does the direct-to-consumer business model offer?
o How can companies such as Ace and Tate compete against brands with a consolidated offline presence?
o Describe the range of online marketing options that a company such as Ace and Tate has at its disposal
• The task should be submitted in word format
Formalities:
• Wordcount: 1000 to 1500 words
• Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
• Font: Arial 12,5 pts.
• Text alignment: Justified.
• The in-text References and the Bibliography have to be in Harvard’s citation style.
Submission: TBA
Weight: N/A
It assesses the following learning outcomes:
• Outcome 1: Understand the rise and evolution of the concept and models of digital business
• Outcome 2: Analyze the development of competitive advantage through digital technology
• Outcome 3: Describe the digital business and compare it with non-digital businesses.
Ace & Tate – Disrupting the European Eyewear Industry (Excerpt taken from E-commerce (2018) Laudon, K.C. & Traver, C.G.)
• The rise of e-commerce has disrupted countless traditional retail market segments, but even today there remain areas where e-commerce innovation has yet to fully take place. Until recently, one of those areas was the optical industry. The supply chain for selling glasses typically includes a host of different players, including frame manufacturers, lens manufacturers, opticians, franchises, and very few individual direct retailers. Several companies have emerged looking to change that paradigm, including Amsterdam-based Ace & Tate. Ace & Tate sells eyewear in the United Kingdom, Netherlands, and Germany, and is planning expansion into other areas. Named after acetate, the flexible, durable, lightweight material used in all of its glasses, Ace & Tate has used the cost savings made possible by disrupting the traditional eyewear supply chain to offer quality glasses at a low price point of €98. The company has a full-time staff of 25 employees in Amsterdam, including its eyewear designers. Key processes like manufacturing and shipping are performed by external vendors. Ace & Tate’s lean business model allows it to keep costs low and focus on its core goal: creating a strong, stylish product at a fraction of the usual price.
• Ace & Tate’s CEO Mark de Lange was motivated by the premise that changing eyewear should be as simple as changing a pair of sneakers. To de Lange, the fact that many of us have several pairs of sneakers but only one pair of glasses is indicative of inefficiency in the marketplace. Opticians are a good option for people with complicated prescriptions, extremely bad eyesight, or a need for a multi-focal prescription. For the majority of people who wear glasses without such specific requirements, the high prices of glasses are difficult to justify, and the middlemen that come between the glasses and the customer are simply unnecessary. By selling directly to consumers, Ace & Tate can avoid the markups introduced by third-party, bricks-and-mortar retailers, as well as opticians and other entities along the supply chain. Ace & Tate represents a cost-effective option for simpler prescriptions, as well as for non-prescription eyewear worn purely for style.
• Ace & Tate sells almost exclusively online, using a flat fee payment system for each pair of glasses. Many extra services are bundled into the base price, including free shipping and returns, a flexible return policy, and the ability to try on up to four pairs of glasses, also delivered for free, over the span of five days. Any more than four glasses per delivery would compromise Ace & Tate’s ability to maintain sufficient inventory and increase the size of the box beyond normal mailboxes. Ace & Tate relies on a family-owned eyewear manufacturer in Northern Italy for most of its glasses, a well-regarded Dutch laboratory for its synthetic lenses, and a third-party logistics company based in the Netherlands for most of its shipping. The company also selects the correct synthetic glasses and lens coatings for users at no extra charge, and includes ultraviolet protection, also at no extra charge.
• Technologically, as a company that sells its products almost exclusively online, a robust e-commerce infrastructure is a must. Ace & Tate uses Bootstrap CSS, an open source front-end framework, for its Web site home page. Bootstrap allows Ace & Tate customers to shop on mobile devices just as effectively as on desktops, quickly and efficiently scaling Web sites and applications in accordance with the device each customer is using to access the site. The full site uses responsive Web design with Magento, an e-commerce software and platform provider. The Magento Web store and custom Magento extensions further enrich the customer experience on the site. For Ace & Tate, using responsive design features on its site is critical to allowing consumers to shop on any device of their choosing.
• Ace & Tate’s typical demographic are younger, style-conscious consumers who are open to the idea of buying glasses in a new way. The cost savings compared to the traditional optical industry supply chains are also appealing to the typical Ace & Tate consumer. CEO de Lange and other top executives personally oversee every area of the business, including design, where their goal is to blend classic frame designs with modern Dutch style. Ace & Tate also places great importance on conservation and philanthropy; its “Black is the New Green” collection is fully biodegradable and made mostly from natural sources, and the company also donates to Sightsavers, a charity with a focus on eliminating blindness in developing and impoverished countries, with every pair of glasses it sells. While Ace & Tate is likely to remain an e-commerce retailer first and foremost, the company has experimented with various forms of physical presence. The company opened a full-time physical store in Amsterdam using a local design studio to create a space that complements Ace & Tate’s sleek, fashionable style and modern feel. In 2015, it added a second location in Berlin to bolster its presence in Germany, its most recent area of expansion. Ace & Tate also has agreements with individual outlets like Hutspot in Amsterdam, where customers can view and try on different styles of glasses—but even in these individual outlets, ordering is still done online. In 2015, Ace & Tate only ships to addresses in the Netherlands, the United Kingdom, and Germany, but the company is likely to offer shipping to other countries in the near future.
• The U.S. equivalent to Ace & Tate is Warby Parker, also an online retailer of eyeglasses and sunglasses. Warby Parker was founded in 2010, and provided many entrepreneurs, including the founders of Ace & Tate, with inspiration that the business direct-to-consumer model could work. Billing itself as “the Netflix of eyewear,” Warby Parker has had little trouble raising venture capital and growing quickly. Warby Parker charges $95 for all of its glasses and sells direct to consumers online, just like Ace & Tate. However, Warby Parker has nine stores across the United States, and is taking steps to expand beyond just eyewear.
• Warby Parker is renowned for its hip, trendy brand, carefully cultivated by its founders, Neil Blumenthal and David Gilboa, and for its obsessive attention to customer service. With revenue over $100 million and over a million pairs of glasses sold, Warby Parker is a thriving business, and has blazed the trail not only for Ace & Tate, but also for a variety of other companies, including GlassesDirect in the United Kingdom and Quattrocento in Italy, both of whom represent competition for Ace & Tate in Europe. Other industries have taken note of the direct-to-consumer e-commerce business model, such as razor blades and other shaving implements (Harry’s), mattresses (Casper and Novosbed), and backpacks (Just Porter). By bypassing traditional retailers and selling directly to consumers, these companies can all offer savings and improvements in quality and customer service. These companies are commanding respect from investors and venture capitalists because of their profitability and potential for growth. Ace & Tate should be able to ride this wave to sustained success.
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Task
Include all of the task’s details, such as:
• Task for each person
• Take a look at the case below. Discuss it while responding to the first two bullet points, then respond to the third:
o What are the benefits and drawbacks of a direct-to-consumer business model?
o How can companies like Ace and Tate compete with brands that have a strong offline presence?
o Describe the various online marketing choices available to a company like Ace and Tate.
• The task must be submitted in Microsoft Word format.
Formalities:
• Word count ranges from 1000 to 1500 words.
• The overall wordcount excludes the cover, table of contents, references, and appendix.
• Arial 12,5 pts font
• Justified text alignment
• The in-text References and the Bibliography have to be in Harvard’s citation style.
Submission
