Proposal:
Sage hardware is a small local retail Hardware store located in California that has been selling hardware supplies to the local market for the past thirty years. It derives most of its revenue from electrical supplies and tools. Sales have been consistent for the store, and Sage Hardware would like to expand its current customer base by targeting a specific niche of customers. Sage Hardware will like to target the DIY home maintenance market. These are individuals who are doing a DIY project for the first time.
After careful consideration it was proposed that an online store can open another distribution channel by catering to the Home Maintenance Industry especially to the DIY customers not just locally but internationally. Current trends show that the DIY customer is no longer just the male but more and more females are trying their hands at home improvement projects. Another trend points to, that more customers are looking at products made in the USA. Sage Hardware wants to focus mainly on a strategy that can control the cost of expanding at the current location, and at the same time provides a new source of income. The online presence will create awareness of the retail store amongst the local Home Maintenance industry which will eventually increase foot traffic to the retail store as well. The online store will also allow Sage Hardware expand its global presence by allowing international customers to purchase American made products
The Benefits of having an online store as a growth strategy for the current retail store are numerous. Some of the few of the benefits associated with an E-commerce site are shown below * The online store will allow Sage Hardware to target various customers not just locally but also internationally which will eventually increase revenue for Sage Hardware. * Since the online store will be open for business 24/7 with automated order and payment processing, sales can be made at any time, and potential customers can purchase items when it suits them * The online store will provide the opportunity for customization in order to target products and services to specific groups based on buying history and preference * The E-commerce site will increase the visibility of the retail store after a careful investment in search engine optimisation and online promotion; the online store can become more reachable to customers searching for a particular DIY product. * The online store will allow Analytics; Sage Hardware will be able to measure results of the marketing effort, which will eventually improve the conversion rate.
Although the benefits associated with the presence of an E-commerce site for Sage Hardware are numerous, they are many risk factors that cannot be over looked. The Traditional Marketing Mix concepts such as segmentation, targeting, and positioning still apply along with the 4 Ps, but additional skills will be required in order to have a robust e-commerce site. For the e-commerce site to be successful, careful planning will be required to 1. Mitigate the risk of online fraud and security. 2. Communication of organizational policies to customers such as shipping & billing policies, Refund policies and Information security policies. 3. Trained staff will be required that can provide online customer support via automated online assistants and email 4. Search Engine Optimization (SEO) and professional website design will also be required.

Some of these skills can be acquired by using a third party firm who are a Subject Matter Expert in this area. A due diligence process will be required in selecting the right firm for the job.
In deciding to open an online store, Sage Hardware performed the SWOT Analysis technique to look at the Strengths, Weakness, Opportunities and Threats that the current competitive market presents.
In order to have a flawless transition to an online store, Sage Hardware identified and researched its current competitors. After analysis it was discovered that Home Depot (www.homedepot.com), Walmart (www.walmart.com), and Lowe’s (www.lowes.com) are currently the largest online competitors for Sage hardware.
Home Depot is the world's largest home improvement specialty retailer, with more than 2,200 retail stores operating in the United States Canada, and Mexico. Lowe’s operates more than 1,830 stores in the United States, Canada and Mexico. It serves approximately 15 million customers each week and employs more than 250,000 people. Lowe’s stocks 12 product categories ranging from appliances, tools, and paint. It also carries lumber, and nursery products. Walmart on the other hand operates more than 11,000 retail units under 69 banners in 27 countries and e-commerce websites in 10 countries. It employs 2.2 million associates around the world — 1.3 million in the U.S. alone.
Customer Service was one area that both Lowe’s and Home Depot showed weakness in, both companies were rated highly in friendliness but the consensus was that Home Depot had a more knowledgeable staff compared to Lowe but was still not up to the standard that customers demanded. Walmart provides great customer service to its customers but the fact that its main strategy is to provide the lowest price to its customers, doesn’t have a knowledgeable staff that can help individuals from the DIY industry. This presents a great opportunity for Sage Hardware as they possess 30 years of experience and knowledge in the Do-it-yourself and construction industry, if Sage Hardware focuses on this area it can be a leader in providing exceptional customer service and source of knowledge amongst its competitors by providing DIY articles and a live chat feature to its e-commerce site that will allow customers to ask question about a specific product before purchase.
Product Selection and Prices: Lowe’s focuses on a differentiation strategy and carries its own private brands that are found only at Lowe’s. An article by Lee Wallender (Which Home Improvement Warehouse is better? www.about.com) points out that the private brands that Lowe’s carries are decent but not amazing. On the other hand Home Depot carries BEHR and RIGID tools which are not an especially high quality brands and are typically cheaper than high quality brands. As for pricing both competitors are comparable to one another and engage in competitive pricing Walmart provides rock bottom prices but their inventory is limited and doesn’t provide much room for selection. The opportunity that is present for Sage Hardware is to provide high end tools designed for carpenters that can do a lot of heavy lifting for the professional in the construction industry but at the same time provide the DIY customer with best tools to get the job done. Sage’s e-commerce site will carry a range of high end tools such as Dewalt’s Black & Decker power tools. Sage Hardware wants to focus on a specific niche of DIY customers that need high end made in the USA supplies. Sage’s prices are comparable to Lowe’s and Home Depot but wants to differentiate by providing same day on site delivery for our preferred customer located within a thirty mile radius. Sage currently provides this service to its preferred customers and hopes to extend this service to its online customers. Sage believes that strategy will increase revenue as many of the first time DIY customer to do not possess large vehicles to haul DIY materials.
Social Media: Home Depot does have a social media presence it also has a Mobile App that can be downloaded to a phone. The key features that the app presents are following: it allows a customer to Read and write reviews on products. Check pricing and inventory at various locations. It also allows customers to Pick-up in Store or Ship to Store. The app provides directions, contact information and hours of operations, and the ability to scan a product barcode and read product reviews and see if it is available locally. Lowe also has a social media presence such as Facebook, Instagram and a twitter account it also has an app that you can download to your phone. The key features of Lowe’s app are that it provides the opportunity to find any in-stock item on a map of a Lowe's store. You can view your purchase history, access the full complete Lowe’s catalog and scan barcodes for product information. Lowe’s is also targeting potential customers by providing DIY videos on its website for customers to view. Walmart social media presence is much greater than Home Depot and Lowe’. Walmart’s presence can be found on Facebook, google+, and pintrest. Walmart also has a Walmart app that can be downloaded to a mobile phone. The app lets customers check price, create store list, and scan barcodes to get product review. Sage Hardware plans to use lean marketing tactics, by having a presence on twitter which will send out updates on current promotions and information on new DIY articles which are added to the website. In order to target women DIY customers, Sage will focus on having presence on Internet Forums and social blogs especially designed for the female audience. Another strategy that Sage Hardware will apply is that it will place ads on Podcasts that target the first time DIY customer. In the future Sage hardware will like to develop a mobile app for its customers that can give them the same functionality as the online website will.
Ecommerce: Currently all three customers Home Depot, Lowe’s and Walmart have a shopping cart software for their customers. Due to their sheer size all three can extend a line of credit to its customers. This is a huge threat and a disadvantage to Sage Hardware as it can limit the budget that potential customers have to spend at Sage Hardware’s e-commerce site. In order to mitigate this threat, Sage Hardware will focus on the fact their products are reliable and dependable and are made in the USA. Sage Hardware currently offers a two year warranty on most of its power tools. This can be an advantage when a potential customer is deciding to buy a product. It will also highlight the fact that a trained professional is ready to help them make a purchase decision.
Sage Hardware currently has a small global presence mainly in Egypt and the United Kingdom. In order to be able to cater to these customers and eventually to customers outside these two countries, Sage Hardware is considering using Planet Payment which is a leading provider of Internet payment solutions for e-businesses in nearly any currency. Planet Payment has the capability to accept multi-currency credit cards (www.planetpayment.com) which will be meet Sage Hardware’s current and future requirement of catering to global customers. Sage Hardware will select a Shopping Cart Software look at three areas; the first area that Sage Hardware will look at is the ease and functionality of the administrative tools. The basic requirement of importing and exporting product list from the Shopping cart needs to be met. The second area that Sage Hardware must make sure is how customer centric the shopping cart software is. They key features that Sage Hardware wants included in the software is the ability to store data and view order. The benefit of storing data is that it prevents returning customers to reenter account information again. The view order allows customers to view their order before checkout, having to click on series of pages before you see the total can be frustrating. The last area which is important to Sage Hardware is the ability to promote and market it e-commerce business. The shopping cart software must have the function to bundle product and services, suggest similar products based on current buying pattern and the ability to enter discount codes. Another key feature Sage Hardware is looking at is the ability to search within the online store. Sage Hardware has decided that it will retain the services of a consultant in order to help them navigate in selecting the right shopping cart software.
Customer Relationship Management: Over the last twenty years internet technology has drastically changed the way we do business. It has removed geographical boundaries that are associated with a brick and mortar stores and allowed isolated markets to enter the global market. The readily available internet access has allowed customers to be well informed about current products which have led to an increase in customer expectation. Due to these changes more companies are focused on customer relationship. In today’s environment customer relationship management is the key to the success of e-commerce business. Establishing a long term relationship with customers is fundamental in this competitive environment.
All three competitors have similar strengths and weakness in their Customer Relationship Management approach. All three have a frequently asked questions page, and feature the ability to post, review and rate products. This gives customers control and guidance when making purchase decisions. This also lets the company know which products customers’ value and which products customers are not satisfied with. Walmart responds to customer dissatisfaction reviews or comments by customers on Facebook or twitter fairly quickly. This clearly indicates that Walmart has a dedicated team of professional that maintain the company brand and image on social media. Home Depot and Lowes both offer a line of credit to their customers. This provides an ongoing enticement for repeat customer. Returns and exchanges of products can be made within a ninety day window either through shipping, or returning product at any of their retail locations. Customer service is available via email and telephone for all three competitors. One of the weaknesses that were discovered for Lowe’s and Home Depot customer relationship management was the fact that their telephone and email address were difficult to find.
International Growth: Home Depot and Lowes have a market presence in Canada and Mexico. On the other hand Walmart has much larger International presence; it operates in twenty seven countries. Both competitors Home Depot and Lowes have retail stores in order to meet their customer demand. Walmart operates under different brands in various countries for example in India; Wal-Mart operates under the name of Bharti Walmart. All three competitors do not provide international shipping or payment options for purchases from abroad. In order be competitive in this electronic market it is essential that Sage hardware have customer relationship management strategy which can be achieved by having a strong social media presence. It is imperative for Sage hardware to maintain a strong company brand image in order to compete with its competition. Some of the social media tools that are recommended are
Facebook has a number of features that allows users to interact. This includes the Wall, a space on every user's profile page that allows customers to post messages for other users to see. This will allow Sage hardware to create a company image for potential customers to view. Facebook also has a feature called like, which allows users to send a virtual "like" to each other, this is a great way for customers to promote the Sage Hardware and also provides an opportunity for online ad campaigns using email where the “like” feature is embedded in the email using the constant contact service. Sage Hardware’s e-commerce site must provide a plugin which can add clickable social media icon such as Facebook. It is imperative that company information is posted Facebook at regular intervals in order to keep customers engaged. Facebook account must be monitored to make sure that that any queries or negative comments are handled in timely matter, this will help improve customer relationship and enhance the company image and brand. It recommended that a dedicated team or a staff member be assigned to this task which will help increase revenue.
“Twitter is an online social networking and microblogging service that enables users to send and read "tweets", which are text messages limited to 140 characters.” (www.wikipedia.org). this will permit Sage Hardware to promote special discounts or giveaways or send instant “tweets” of hot new products that are about to launch. Another way that twitter can help customer relationship management is by informing if product representatives or demonstration are being held at the store.
A Company blog is another great way to promote Sage Hardware. The blog will be a place where DIY articles, product reviews written by Staff can be posted. Another great feature that blogs allow is that small DIY videos can be posted explaining on how to perform DIY projects.
The blog is simple to create, which can be created via Content Management System. Content Management Systems are mostly used to run websites containing blogs, and news information. Many corporate and marketing websites use Content Management system, in order to avoid the need for hand coding the data. An example of a Content Management System is WordPress; it contains themes that have this feature built in. The focus of the blog is different from Twitter and Facebook, the blogs main purpose is to generate traffic to the e-commerce site and have customers spend time on the site, which can eventually lead to a sale. The blog will not contain any promotions or special discount announcements
The blog will be promoted on all company literature, and a link will be present on the company website. Facebook and twitter accounts will be integrated with the blog so that any articles or DIY videos posted will be promoted amongst the customers. Comments made by blog readers also need to be monitored closely and a timely response will be required in accordance with the company’s social media policy.

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