The Internet has been compared to the California Gold Rush of 1849 in which Levi Strauss built a Fortune 500 company by supplying miners with clothing (White Paper, Building an E-commerce Network). Levi's managed to reap from the opportunities of the California Gold Rush. However, in an attempt to achieve the same success with the Internet and ecommerce, Levi's failed to succeed. This paper investigates key reasons for such failure and identifies generic critical success factors as a guide for other business who wishes to follow in the path of ecommerce. ü
In the 1990s Levi's Strauss was well regarded as a clothing brand by fashion minded young consumers. However since then, market share has dropped 16.9% and sales have decreased $1.1 billion from 1996 to 1998. The reason for such poor performance was blamed on missed opportunities on changes in fashion and not meeting new tastes.
The 'cool' image of the brand was also slipping. The company was criticised for focusing too much on re-engineering the company, which took focus off the product. In order to reconnect to young people, the company set up a community orientated web site that would enable feedback from consumers that would lead to marketing decisions (Oz, 2002 p141). Levi's expected that the site would help set them apart from competitors (Olsen and Wolverton, 1999). ü
In 1998, the web site offered the consumers the ability to purchase products exclusively on the Levi's web site. This upset key retailers who were prohibited from selling Levi's and Dockers from their own web sites (Caylor, 1999).
Just under a year later, Levi's announced that they were closing the web site after poor sales and cost of running. The online sales were taken over by retailers Macy's and J.C. Penney's.