FreshFold is an online clothing business that makes shirts only after customers place orders. A competitor has begun offering next-day delivery from a large...
Question 1 Report
FreshFold is an online clothing business that makes shirts only after customers place orders. A competitor has begun offering next-day delivery from a large warehouse. FreshFold cannot match this delivery speed without holding stock, which could increase costs and the risk of unsold items. The owner is considering a new competitive strategy.
(a) Identify one disadvantage to FreshFold of holding large amounts of stock. [1]
(b) Which one of the following is a suitable way to differentiate FreshFold: made-to-measure shirts, remove all product images, reduce website security or stop responding to customers? [1]
(c) Explain why made-to-measure shirts could be a stronger strategy than attempting to copy the competitor's delivery service. [2]
Answer Details
(a) Holding large amounts of stock can create a risk of unsold stock. [1] It can also increase storage costs or tie up cash that could be used elsewhere.
(b) Made-to-measure shirts are a suitable way for FreshFold to differentiate. [1]
(c) Made-to-measure shirts provide a distinctive benefit that the warehouse competitor may not offer. [1] FreshFold can target customers who value a good fit rather than competing only on next-day delivery, which would require costly stock holding. [1]
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