Background and challenge

Faced with growing online competition, a leading boating & marine manufacturer required a new strategy to improve its dealers’ e-commerce sales, while at the same time enhancing the digital customer experience. In response, L.E.K. set about creating a sustainable point-by-point playbook that incorporated elements of a successful electronic-retailing model, and also worked with the client to sharpen its brand positioning on behalf of dealers and their clientele.

Approach and recommendations

We began with a thorough assessment of the client’s business segment, including web-traffic analysis, consumer purchasing trends in marine-specialty parts and accessories (P&A), as well as the client’s existing online sales methodology. As part of its findings, we determined that ongoing reliance on dealer and third-party web retailers made the firm more vulnerable to market-share erosion from competitors with a solidified e-commerce presence. Without altering its business model, the company risked ceding some 15% of value within its most profitable business line.

To drive home the point, we demonstrated how easy it is for retailing behemoth Amazon to monopolize any market lacking a specialist online purveyor. By contrast, e-retailers such as Wayfair and pet-product purveyor Chewy.com have been able to build a successful presence by using product differentiation as well as value-add service offerings.

From there, a fact-base, multi-point strategic model was designed for the client that underscored the benefits of adopting a focused digital-marketing strategy (including, among other things, a likely increase in free cash flow). As part of this effort, we helped the firm align all integral business functions including product management (product collateral and pricing), operations (fulfillment and logistics), and marketing (brand and customer engagement), and also served as advisor to the senior leadership team.

Results

With DIY marine customers in particular increasingly using e-commerce for P&A purchases, it is imperative that businesses lagging in online capabilities quickly get up to speed. To that end, we worked with the client to begin adopting new sales approaches (with specific attention to the challenges/opportunities posed by Amazon), as well as ensure adequate staffing to achieve timely implementation. This guidance allowed the client to overcome initial e-commerce challenges and leverage its unique assets to build a stronger web presence, with the ultimate goal of creating a “category killer” site for marine-specialty needs. By realigning its brand portfolio, management is now poised to grow valuation by some 25-30% above prior long-range planning, easily offsetting departures from traditional OPEX and IT capex.

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