In recent years there has been shift in the fuels and lubricant marketplace that has resulted in more price-sensitive customers and a growing downward pressure on Shell Canada’s margins. Due to the financial pressure to reduce costs, Shell Canada launched an online, self-serve “eStore” to their agricultural customers in hopes of streamlining their business, cutting costs and salvaging their shrinking profit margins. The purpose of this case report is to address and analyze the issues surrounding eStore, identify the best alternative to solve the key issues and determine the most appropriate method of implementation. It is anticipated that these findings will illustrate the strengths and weaknesses of potential solutions, which will in turn lead to actual implementation of the best solution. Key issues encompassing Shell’s shrinking profit margins, communication and delivery and technology were identified and discussed. Using a SWOT analysis and the Porter’s Five Forces model, internal and external factors affecting the eStore business plan were analyzed. In accordance with the analysis, three alternatives were generated including the redesign of eStore website, abandonment of the online project and the generation of alternative self-serve strategies. After considering which solution would best serve the eStore initiative at Shell Canada, it was determined that continuing with the project and redesigning eStore would be most effective and a plan of implementation was established. It is recommended that Shell Canada follow the implementation plan in order to attain maximum success for eStore. Despite some reluctance of agricultural customers to adopt an online ordering system, there are clear opportunities for Shell’s eStore initiative to succeed in this market.
As a leading manufacturer, distributer and marketer of refined petroleum products, Shell Canada limited is one of the largest integrated petroleum companies in Canada. With consolidated earnings of $810 million and $9.5 billion in assets in 2003, Shell Canada was ranked the 14th largest company in the country. In recent years there has been a shift in the fuels and lubricant marketplace that has resulted in more price-sensitive customers and a growing downward pressure on Shell’s margins. The agricultural segment is specifically underperforming and because of this, Shell hoped to effectively implement an online ordering system that would decrease the need for costly rural sales representatives. After the initial launch in September of 2002, it was noted that eStore was not as successful in attracting and retaining customers as initially planned. This report will outline key issues, conduct internal and external analysis and prepare an action plan to implement the best solution to achieve success in Shell’s eBusiness initiative. Key Issues
Shell has three key issues that need to be addressed before deciding how to best proceed with the implementation of eStore. Shrinking Profit Margins in the Agricultural Segment
With the shift in the agricultural segment towards price-sensitive customers, Shell Canada is currently experiencing a growing downward pressure on margins and is thus faced with the need to minimize costs. The remoteness of Shell Canada’s agricultural customers provides unique challenges in managing communication, delivery and sales settlement, therefore there is a need for a more streamlined process in managing these customers. Using local sales representatives in the agricultural segment is costly, and thus Shell is faced with the need to move towards a more efficient, self-serve strategy for these customers. In order to effectively decide on an implementation strategy for eStore, Shell Canada needs to determine an optimal self-serve strategy to satisfy these customers. Communication and Delivery
The second key issue is centered upon the lack of sufficient marketing of eStore. After the initial implementation...