For one rapidly growing digital commerce retailer, questions of risk took on global proportions. As its U.S.-based store grew, it sought to expand its online retail business into emerging markets. The question of entering new markets and how to do it best yielded several possible business models, each of which presented unique risks. Which was the best way forward? At the same time, the company’s rapidly growing domestic business was increasingly exposed to new operational, financial, and regulatory risks, the kinds of issues that bedevil online retailers. Standardization of its operating model might help alleviate risk, but what was the best way to design and implement them?
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Case Study.How to conquer digital risk both at home and abroad
1. How to conquer digital risk both at
home and abroad
A large online retailer developed a strategy for tackling risks
inherent in its global expansion while simultaneously buttoning
down its business processes at home.
Executive Summary
Client challenge:
Plan its global online retail
expansion and bolster its
domestic online store:
Entering into foreign markets
introduces risk and requires new
operating models.
Online stores face tough issues
around security, compliance,
fraud and theft.
Siloed business practices lead to
inconsistent and costly operations.
PwC’s solution:
Determine the right business
strategy and streamline
business processes:
Weigh the risks and advantages of
several business models to find
the best path forward.
Develop effective and efficient
standard operating procedures for
the online store.
Develop 15 new process flows and
introduce 20 necessary controls to
improve security.
Impact on client’s business:
The company chose an expansion
strategy resulting in revenues that
have exceeded the plan by $1
million per month since inception.
New standard operating procedures
and process controls are cutting
costs, protecting online store
content and reducing risks
Expansion plans for future global
markets will be able to leverage
the new business model.
Technology
October 2015
Navigating risk and regulatory complexity
2. 2 Technology October 2015
Client’s challenge: Plan
its global online retail
expansion and bolster its
domestic online store
How do you build a resilient
organization? By anticipating and
reacting to risk and change not only
to survive but to thrive. It’s actually
possible to turn risk into a business
advantage and use it to enhance your
overall business strategy. Balance risk
with rewards, and you can proceed
with confidence in the face of constant
change and complex marketplaces.
For one rapidly growing digital
commerce retailer, questions of risk,
rewards, and business strategy
took on global proportions. As its
U.S.-based online store grew, it
sought to expand its online retail
business into emerging markets to
reach new consumers and grow
revenue.
The question of entering new markets
and how to do it best yielded several
possible business models, each of
which presented unique risks.
Geopolitics, regulations, ownership
rules, supply chain issues, customer
experience concerns, trade questions
and privacy regulations…each one
could cause problems.
Which was the best way forward, the
path that would help the company
find new customers and reduce
redundancies and costs as it
attempted to grow?
At the same time, the company’s
rapidly growing domestic business
was increasingly exposed to new
operational, financial, and regulatory
risks, the kinds of issues that bedevil
online retailers. Standardization of its
operating model that reached across
IT, sales, marketing, and more might
help alleviate risk. A single set of
standard operating procedures might
be the key, but what was the best way
to design and implement them?
PwC’s solution: Determine
the right business
strategy and streamline
business processes
Management of the company’s online
retail operations was familiar with
PwC and with work we had previously
done for the company’s retail division.
Management engaged PwC to help
address its two biggest strategic
business challenges: to open new
global markets safely and successfully
and to create standard operating
procedures that would improve
process controls and enable new
efficient process flows in the domestic
online retail operation.
For the global effort, multidisciplinary
teams of PwC strategy, business, and
risk professionals along with global
PwC professionals and our advisory
Commerce Next team worked with the
client to consider and select an
approach to help them achieve their
Asian market expansion.
Working with PwC, the company built
a decision model that evaluated three
scenarios for selling online in a large
emerging country, stratifying each one
based on key business factors such as
the ability to control the brand,
manage the customer experience,
generate revenue, and protect
customer data. After weighing
relative risks and opportunities, the
company elected to enter the market
via a third-party marketplace with its
own leading e-commerce website
already in place.
Next, the company turned its
attention to assessing the risks
inherent in its domestic market. A
multidisciplinary team helped
management perform a thorough risk
assessment across the client’s key
business functions and critical
processes, from demand generation
and promotion to category
management, fulfillment, support, IT,
payment, and potential fraud. Sixteen
distinct stakeholder groups provided
input as the company shifted their
focus from simply growing – to
growing safely.
Several workshops and validation
sessions, along with interviews with
over 30 people helped the company
better understand its current state,
spot risks, and find potential areas for
improvement. Working systematically
process by process, operating model
enhancements were identified, roles
and responsibilities defined and
operating controls were designed
and implemented.