Where Admart Went Wrong
ASIAN CASE RESEARCH JOURNAL, VOL. 6, ISSUE 1, 1–13 (2002)
ACRJ
This case was prepared by Assistant Professor Susan H. C. Tai of The Hong Kong Polytechnic University as a basis for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative or business situation. Please address all correspondence to Dr Susan Tai, Department of Business Studies, The Hong Kong Polytechnic University, Kowloon, Hong Kong, E-mail: bustai@polyu.edu.hk.
Supermarket Cyber Storm: Where adMart Went Wrong
INTRODUCTION A revolution was taking place in the grocery store industry, and was creating the potential for drastically lower food bills for Hong Kong consumers. This was the result of Mr. Jimmy Lai Chee-yings latest business venture, adMart, a directmarketing company that sold groceries and electronic products through the Internet and phone-in orders, and offered free delivery service. At stake was a slice of the market worth more than HK$55 billion (US$7 billion) a year (HK Standard, 22 August 1999). Mr. Jimmy Lai had broken into other markets in the last ten years with Giordano (a casual wear chain-store), Next Magazine (a weekly magazine), and Apple Daily (a daily newspaper). But this time, he was taking on Hong Kongs retail powerhouses, a duopoly of billionaire Mr. Li Ka-shings Hutchison Whampoa (ParkN Shop) and the colonial British conglomerate Jardine Matheson Holdings (Wellcome Supermarket). Other retailers had not been able to challenge the entrenched giants, largely because setting up brick and mortar stores was simply too expensive given Hong Kongs skyrocketing real-estate costs. Mr. Jimmy Lai figured that a virtual store would solve the problem and boasted that adMart would smash the status quo and bring price relief to local customers (Business Week, 23 October 2000). Both ParkN Shop and Wellcome took adMart seriously because of Lais proven success, and moved quickly to stifle his chances of a new business success.
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ACRJ
This case was prepared by Assistant Professor Susan H. C. Tai of The Hong Kong Polytechnic University as a basis for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative or business situation. Please address all correspondence to Dr Susan Tai, Department of Business Studies, The Hong Kong Polytechnic University, Kowloon, Hong Kong, E-mail: bustai@polyu.edu.hk.
Supermarket Cyber Storm: Where adMart Went Wrong
INTRODUCTION A revolution was taking place in the grocery store industry, and was creating the potential for drastically lower food bills for Hong Kong consumers. This was the result of Mr. Jimmy Lai Chee-yings latest business venture, adMart, a directmarketing company that sold groceries and electronic products through the Internet and phone-in orders, and offered free delivery service. At stake was a slice of the market worth more than HK$55 billion (US$7 billion) a year (HK Standard, 22 August 1999). Mr. Jimmy Lai had broken into other markets in the last ten years with Giordano (a casual wear chain-store), Next Magazine (a weekly magazine), and Apple Daily (a daily newspaper). But this time, he was taking on Hong Kongs retail powerhouses, a duopoly of billionaire Mr. Li Ka-shings Hutchison Whampoa (ParkN Shop) and the colonial British conglomerate Jardine Matheson Holdings (Wellcome Supermarket). Other retailers had not been able to challenge the entrenched giants, largely because setting up brick and mortar stores was simply too expensive given Hong Kongs skyrocketing real-estate costs. Mr. Jimmy Lai figured that a virtual store would solve the problem and boasted that adMart would smash the status quo and bring price relief to local customers (Business Week, 23 October 2000). Both ParkN Shop and Wellcome took adMart seriously because of Lais proven success, and moved quickly to stifle his chances of a new business success.
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