Founded in 1998, Chats Du Mal specializes in food, clothing and accessories for

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Founded in 1998, Chats Du Mal specializes in food, clothing and accessories for pet cats. One of the very first specialty “e-tailers” in existence, they were a pioneer in selling their products online, surviving the “.com bubble” and the recession of the early 2000s.

Their business model has been simple: they offer a selection of Chats Du Mal-branded merchandise, everything from cat sweaters to cat treats. Sourcing from a single factory in Seychelles off the coast of Africa, they were able to provide unique gifts at a time when every other pet store sold the same things. Beyond ecommerce, technology was an important early on to Chats Du Mal. They were the first company to provide email coupons and offers for customers; and among the first to advertise on other cat-related websites through pop-up ads -- all strategies that continued into 2013. But all was not well on the morning of October 14th when Elaine Aquitaine, the company CEO and founder, sat alone in a conference room covered in charts, product images, new website design ideas… and emails from unhappy customers. The company was in trouble and Elaine was not sure what the right path was for the company she started in her basement. . . . .

After hitting all-time high revenues of $120 million at the close of 2011, Chats Du Mal has fallen on hard times. In 2012 revenues declined to $90 million and 2013 continued the trend with the company on pace for only $72 million. Competition from well-known companies like Bertha Stuart who would discuss her line of pet products in her magazine and television show; and PetBright which recently went online to compliment their 500 stores across North America. In January of 2013, Elaine and her team – Steven Loki, head of Marketing, Kumar Andhra, head of Operations, and Bea Chaise, project manager – met to review the state of the company. “Alright, everyone,” Elaine began. “We need to have a candid conversation about the business. We dropped to $90 million in revenues last year and lost money for the first time. Why can’t we sell more?” Steven looked agitated. “It’s that Berta Stuart on TV every week. There’s no way my marketing team can compete with that. We need more banner ads or maybe advertise on TV ourselves!” Elaine shook her head. “But we spend $10 million a year on banner ads and they have a low click-through rate these days. There has to be a more effective way to reach new customers. We guess that our core customers are women, in our target 25-55 age range, and like cats. What other way to get to that audience?”

“None,” Steven crossed his arms. “Banner ads are the way we’ve always done it. We just need to spend more to overcome the competition. They’re everywhere on TV online.” Elaine paused and looked across at her head of operations, “Kumar, how are things with our supplier?” Kumar walked to the whiteboard. “Well, Elaine, the Seychelles factory is having trouble getting raw materials from South Africa due to all the piracy off the coast.” He drew a red circle between the islands of the country and the Indian Ocean. It’s delaying our latest shipment of monogrammed cat sweaters.” Bea leafed through her status report as she chimed in, “Kumar, how are we doing with WorldEx getting the finished product to our warehouse in the UK?” “Ok. You know their rates went up again this year – 4%. Seems to be the way of the world with fuel prices what they are.” “Didn’t PHL contact you a few months ago?” Bea asked, still staring at her report. “They did. But no time to talk to them – gotta figure out our sales problem.” . . . .

Two months later the team gathered again in the conference room, a gray sleet pounding at the windows. The first quarter was almost over but there was no change the fortunes of Chat Du Mal. Sales continued to decline and Steven was again advocating for more ad spend. Elaine, called to a meeting with her Board of Directors was unavailable but encouraged them to come up with solutions. “I told you guys and I told Elaine. No one can find us with all the Bertha Stuart ads. But we’re in luck. My friend who runs the online ad agency WWWGenius says he has a sure-fire way to get more people to the site.” Kumar went to the whiteboard and mindlessly drew circles. “I don’t know, Steven.” Bea, who had brought along her new intern, D.W. pushed back on the process, “Steven, what’s our goal for WWWGenius? What do they charge?” “Nominal. They charge a mere 20% of the campaign spend. They look for people that come to our site but don’t buy and then serve up ads on other sites to get them to come back. It’s ‘remarketing’.’ A kind of persistent banner ad. All we have to do is get our IT guys to integrate with WWWGenius’ software which is free.”

Bea tapped at her iPhone’s calculator app; “Your proposal is to spend $5 million more this year?” “Yep.” Steven was clearly annoyed. “This is what they do. This is what I do.” Bea tapped away, “Ok. And how many new sales do we expect to get for that money?” “I don’t know. More but we have to try it to find out.” Bea pressed, “And is there anyone else we could look at that has this remarketing software? What about Boracle?” “I know these guys and that’s my recommendation to Elaine.’ The intern D.W. had listened intently. A student from a prestigious local university, he had a great passion for data and analysis. One week on the job he had more questions than answers but felt he could help with the sales problem. “Hi everyone,” he began somewhat nervously. “I’ve been looking at some of the data from the site and I noticed that new account sign ups have increased 11% over last year. I’m working on cross referencing that to our existing customer file but do we know why more new people are ordering but sales are declining?” Kumar loved data and he stopped his doodling. “That’s a good question. Do we know if old customers are opening the emails we send them every week?” D.W. had looked at that. “Yes!” Here are two charts I did on email open rate and what device they were opened on:” Page - 5 Bea studied them closely but Steven wasn’t impressed. “So? People read email on mobile phones. What help is that? I have to go.” And with that the meeting broke up. . . . .

The next week, while the decision about using WWWGenius’s software was still pending, Steven approached Elaine with another idea. A year prior, another intern had built a simple database to collect all the emails from customers and save it along with their browsing history. He returned to school but the database kept collecting data and now Steven knew what he could use it for.

“Elaine, good news. I struck a deal with QuadClick.” “QuadClick? The online marketing analytics company? Are they going to help us overcome the Bertha Stuart ads?” “No, that’s what WWWGenius will do. QuadClick is going to give us money just for some of our old data. Can you believe it?” “What data?” “That email address slash browsing data our old intern built. They’ll pay us $100,000 every quarter for it.” Elaine tapped her fingers, “I don’t know, Steven. What would our customers think?”

“Point them to our privacy policy which says, I quote, ‘We respect your privacy. The privacy policy is subject to change at anytime without notice.’ So, are we in? “Yes. We need the cash.” . . . . In April, after brutal results from the first quarter were known, a kind of panic began to set in at Chats Du Mal. It was time to make some tough choices about spending. Elaine looked at Steven first. “How much do you need again for WWWGenius?” “$5 million.” “Elaine,” Bea interrupted, “before we go to far into discussing the cost of WWWGenius I wanted to point out that Lony Systems needs $1 million to finish that mobile site we had them start last year. The project on hold until we commit.” “I know, Bea.” But we can’t do everything. We have a total of $5 million to spend right now on the business. It has to be on things that provide growth.” Bea tapped at her calculator again. “Steven, what if we spent $4 million on the ad campaign and used the rest for the mobile site?” Steven snapped his chair forward in anger. “Are you kidding? $5 million is the minimum of what we need. Mobile site is my definition of ‘nice to have.’” Elaine didn’t want the argument – not today. “Fine. We’ll sign the deal with WWWGenius.” . . . .

A month later the WWWGenius integration was finishing. Bea felt pressured to finish it quickly – more quickly than she wanted. She expressed concerns to the team about the number of defects in the software and the integration but was always told “we’ll fix it later.” With the expected new sales from the WWWGenius ads not in yet, Steven had implemented a number of other “monetize the site” deals. One was a competition where customers where encouraged to submit pictures of their cats which he then sold the best ones to advertisers who wanted cute or funny cat pictures. As a stopgap measure, they also began to buy search engine ads on Google. Every time someone searched for Berta Stuart or PetBright, a Chats Du Mal ad would pop up. Both

companies had sent letters complaining, along with suggesting they could do the same thing if Chats Du Mal didn’t stop. In the midst of all this D.W. was finishing his internship and stopped by Kumar’s desk to share some of his recent analysis. “Hey Kumar, how’s operations?” “A little tough. Aside from the piracy, I just found out that the factory in Seychelles can’t get the yarn they need for our fall line of cat sweaters because of the unrest in Egypt.” “Can’t they get it somewhere else?” “We’ve never needed to before. Not sure we can start now. But you’re email said you had new data? I love data, let’s have it!” “Well, I’ve been compiling stats on all kinds of things: most popular pages on the site, most popular products and where they are on the site. I think there’s some opportunity here.” Kumar looked at the charts and spreadsheets. “Great analysis, D.W. But you should focus on the merchandise. Elaine likes to do that on instinct.” . . . .

As summer arrived and with it another disappointing quarter end, the WWWGenius ads were rolling out. Results were better but nowhere close to what they need to get back to being on par with even the previous year. Elaine and Steven discussed ideas. “Elaine, I think it’s time to look at some price increases to get some short term revenue hits. Let’s start with our new catnip biscuits. We can sell those for $11.99 a box.” “But Steven, that’s 25% higher than some of other sites out there even though PetBright and Bertha Stuart don’t carry them.” “That’s ok. They’ll never know. If the big two don’t carry them we’ll be able sell at a higher price.” “Are we sure the catnip biscuits are the right ones to raise? What about the clothing or toys? “Nah. My gut tells me that the catnip biscuits are a big seller.”

Later that same day, Bea was talking with Kumar about some of the product lines. She noticed that the shag carpet cat trees – hand-crafted in Seychelles – was sold out. Searching through a pile of D.W.’s work she noted that it had been their most profitable product. “Kumar, what happened to the cat trees? “Oh, that. We’ll you remember Elaine’s friend Bill who designed them and taught Rene in Seychelles how to build them?” “Of course.” “Well Bill had this great multi-step process but now Rene is gone and so is Bill. Guess he should have taught two people. I mean, what else could we do?” . . . . The third quarter was rapidly shaping up to be just like the first two: sales declining, ad spend up but without much more traffic. The team gathered again in the conference where Bea had begun to tack up status reports, some of D.W.’s research and wireframes for new site ideas that Elaine had asked for from the team. Ok, “ Elaine began, “crazy idea time. How do we make more money?” Kumar suggested they look at other markets besides the US. “Where do we expand internationally? How about Angola? We’re already in Africa with the factory in Sychelles and it’s just on the other coast.” Bea went to Wikipedia on her iPhone. “They speak Portuguese there.” “So,” Kumar shrugged, “everyone speaks English. Even in India where I was born people spoke English.” Elaine made a note. “Ok, what else?” “How about cost savings ideas, Elaine?” “Sure, Kumar. What do you have in mind?” “Well, we spend a lot of money getting audits from our distributor in the UK about inventory levels. But we also get reports from Seychelles every time a shipment is put on a boat. How about if we just cut out the audits and save money? It’s $200,000 a year.” “Makes sense,” said Elaine. “Anyone else?”

The room fell silent but Bea continued to stare at D.W.’s analysis that was tacked on the wall. . . . . Now sitting in that conference room on October 14th Elaine considered her options. The Board of Directors had given her one more chance but after that the company she built and nurtured would be taken away.

The sales numbers were bad enough but customers were unhappy when their orders were delayed due to item count discrepancies between the UK distributor and the factory in Seychelles. Emails were turning into posts on Twitter and Facebook – two sites that Elaine usuall ignored. She figured it would go away if they solved the inventory problem.

Elaine did recognize that she needed an outside perspective. A business acquaintance had given her the name of a top-notch consultant with an MBA from Lewis University. As she picked up her iPhone to call the consultant she hoped she would remember this day it as the turning point and not the end. . . . .

Congratulations! You are the consultant Elaine Aquitaine has hired to help her reinvent Chats Du Mal. Review the questions below and provide complete answers with supporting information from the case.

1. What is the supply chain for Chats Du Mal? What are the areas where you think they can improve that supply chain?

2. What are the technology ethical and / or legal issues in this case?

3. What are the key technology and project management decisions you think they made incorrectly and why?

4. What would you advise that Elaine do to turn the company around by leveraging technology?

Explanation / Answer

1. He introduced the steps like WWWGenius to attract customers towards the shop.With the weired and exceptional incidents his approach attratcts view from every one. But lack of focus results in not acheiving the decided result.

Areas like analysisng the demand in the market and customers responsiveness.

2. What are the technology ethical and / or legal issues in this case?

Lackof innovation and inability to understan cutomers requirements are the major flaws. Apart from that techologies were obsoleted and they never realised the importance of retaining the customers.

3. What are the key technology and project management decisions you think they made incorrectly and why

Database intergration where they seek helped from so many personalities. There ws no proper project management such that nobody as sure about the project steps. All were having high level of ambiguity regarding responsibility.

4. What would you advise that Elaine do to turn the company around by leveraging technology

Elaine must leverage the legacy of the company through he brand it has created so far. The company was leading once like a monopoly in the market. So it had a good customer reach. Thus while revamping it the focus must be on that side. Be more responsive to customers changing requireemnt and available respurces at the company. Have a good project management team while planning to implement something. Make a proper stategic supply chain plan for entire year, like where to focus and which product has to be focuses in which area.?

Supply chain value must yield or match with the customers demand and responsivness of the market. Plans for contingency and competitors analysis is very critical.

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