Li & Fung

In 2000, Li & Fung, almost one century old company, believed that in that fast changing competitive environment, dominated by the progress of the information technology and the rise of the Internet, one of the most important lever that could drive its growth in the future and at the same time defend its competitive advantage could be to enter in the E-commerce. In 1995 and 1997, the company had already successfully implemented intranet and extranet sites, in order to optimize both internal communication and customer satisfaction. After this experience, the next step was to design an e-commerce strategy, in which the milestones should have been:

• Develop the e-commerce business internally, not through outsourcing, in order to not be dependent on outside companies and maintain in house the know-how.

• Balance new economy opportunities with old economy mindset, to be consistent with the company philosophy but at the same time look at the future.

• Perform traditional market research to identify customers’ need and potential.

The reasons why and the main objectives of this on-line strategy could be identified in:

• facing the competitive threats from the pure Internet players, not just in terms of market, but also in terms of human talents attraction and retention;

• offering its customers a streamlined and value added supply chain service, to further increase its operational effectiveness and strategic positioning;

• targeting a new highly potential market represented by small/med sized enterprises that was previously not cost effective to serve.

In order to perceive its goals and be successful also in the on-line market, the company could leverage on its strengths and competitive advantages, which could be identified in:

• its established brand and broad customer base in the b2b sector;

• strong control of its suppliers and effective management of the supply chain all over the world to always provide the best quality at the best price;

• solid IT infrastructure and competences;

• capable, flexible and decentralized managerial structure.

On the other side, the weakness of this project was just tied to the lack of experience and knowledge in the b2b e-commerce, being a first mover and not having other examples of best practice in this kind of business model, very different and much more complex in comparison to websites such as alibaba.com, that just offer a marketplace to match buyers and suppliers.

Said that, the opportunities of e-commerce were very clear to the management, giving the company the chance to enter in a new market and acquire new customers. In fact, thanks to the b2b portal, Li&Fung