A successful differentiation strategy is inseparable from a precise positioning of market.

Since its establishment, Jumei Youpin has positioned itself as a cosmetics group-buying
website. For the purpose of “to gather beauty, for the benefit of women”, it commits to
provide users with a much more professional service to help them enjoy beauty more easily.
Within the core of Jumei’s self -positioning concept, it repeatedly stresses the importance of
three aspects: cosmetics, group-buying and female consumers. As the saying goes like this,
“the desire to look attractive is universal”, and it is especially true for female consumers.
With the popularity of the concept of skin care and makeup, more and more women pay more
attention on products benefiting to skin. Thence, the increased demand provides Jumei a
broader market. Meanwhile, based on the characteristics of cosmetics, that is high prices and
high profits, Jumei adopts the group-buying method to lower the price of cosmetics to benefit
customers, therefore enhances its attractiveness to female consumers. As we can see, Jumei’s
three core concepts of positioning: cosmetics, group-buying and female consumers, are
inseparable and complementary to each other. On the basis of this positioning, Jumei Youpin
adopts a unique differentiation strategy, which can be reflected in the following aspects.

SWOT ANALYSIS OF JUMEI

The Jumei International Holding Limited is one of the leading firms in its industry. Jumei
International Holding Limited maintains its prominent position in market by critically
analyzing and reviewing the SWOT analysis. SWOT
analysis an immensely interactive process and requires
effective coordination among various departments
within the company such as – marketing, finance,
operations, management information systems and
strategic planning.

SWOT analysis is a strategic planning tool that can be

used by Jumei International Holding Limited managers
to do a situational analysis of the organization. It is an important technique to analyze the
present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Jumei International
Holding Limited is facing in its current business environment.

Strengths of Jumei International Holding Limited – Internal Strategic Factors

 Strong distribution network – Over the years Jumei International Holding Limited has
built a reliable distribution network that can reach majority of its potential market.
 Strong Brand Portfolio – Over the years Jumei International Holding Limited has
invested in building a strong brand portfolio. The SWOT analysis of Jumei International
Holding Limited just underlines this fact. This brand portfolio can be extremely useful if the
organization wants to expand into new product categories.

Weakness of Jumei International Holding Limited – Internal Strategic Factors

 Not highly successful at integrating firms with different work culture. As mentioned
earlier even though Jumei International Holding Limited is successful at integrating small
companies it has its share of failure to merge firms that have different work culture.
 High attrition rate in work force – compare to other organizations in the industry
Jumei International Holding Limited has a higher attrition rate and have to spend a lot more
compare to its competitors on training and development of its employees.

Opportunities for Jumei International Holding Limited – External Strategic Factors

 New trends in the consumer behavior can open up new market for the Jumei
International Holding Limited. It provides a great opportunity for the organization to build
new revenue streams and diversify into new product categories too.
 Stable free cash flow provides opportunities to invest in adjacent product segments.
With more cash in bank the company can invest in new technologies as well as in new
products segments. This should open a window of opportunity for Jumei International
Holding Limited in other product categories.
 Lower inflation rate – The low inflation rate bring more stability in the market, enable
credit at lower interest rate to the customers of Jumei International Holding Limited.

Threats Jumei International Holding Limited Facing - External Strategic Factors

 Rising pay level especially movements such as $15 an hour and increasing prices in
the China can lead to serious pressure on profitability of Jumei International Holding Limited
 As the company is operating in numerous countries it is exposed to currency
fluctuations especially given the volatile political climate in number of markets across the
world.

PORTER FIVE FORCES ANALYSIS

Jumei International Holding Limited is one of the leading firms in the Specialty Retail, Other.
Over the years Jumei International Holding Limited has redefined the ways of doing business
in Services. Jumei International Holding Limited is listed at New York Stock Exchange
(NYSE) and have a market cap 371.90M USD.

1. Threats of New Entrants

New entrants in Specialty Retail, Other brings innovation, new ways of doing things and put
pressure on Jumei International Holding Limited through lower pricing strategy, reducing
costs, and providing new value propositions to the customers.

How Jumei can tackle the Threats of New Entrants

 By innovating new products and services. New products not only brings new
customers to the fold but also give old customer a reason to buy Jumei International Holding
Limited ‘s products.
 By building economies of scale so that it can lower the fixed cost per unit.
 Building capacities and spending money on research and development. New entrants
are less likely to enter a dynamic industry where the established players such as Jumei
International Holding Limited keep defining the standards regularly. It significantly reduces
the window of extraordinary profits for the new firms thus discourage new players in the
industry.
 2. Bargaining Power of Suppliers

All most all the companies in the Specialty Retail, Other industry buy their raw material from
numerous suppliers. Suppliers in dominant position can decrease the margins Jumei
International Holding Limited can earn in the market. Powerful suppliers in Services sector
use their negotiating power to extract higher prices from the firms in Specialty Retail, Other
field. The overall impact of higher supplier bargaining power is that it lowers the overall
profitability of Specialty Retail, Other.

How Jumei can tackle Bargaining Power of the Suppliers

 By building efficient supply chain with multiple suppliers.

 By experimenting with product designs using different materials so that if the prices
go up of one raw material then company can shift to another.
 Developing dedicated suppliers whose business depends upon the firm.

3. Bargaining Power of Buyers

Buyers are often a demanding lot. They want to buy the best offerings available by paying the
minimum price as possible. This put pressure on Jumei International Holding Limited
profitability in the long run. The smaller and more powerful the customer base is of Jumei
International Holding Limited the higher the bargaining power of the customers and higher
their ability to seek increasing discounts and offers.

How Jumei can tackle the Bargaining Power of Buyers

 By building a large base of customers.

 By rapidly innovating new products. Customers often seek discounts and offerings on
established products.
 New products will also reduce the defection of existing customers of Jumei
International Holding Limited to its competitors.
 4. Threats of Substitute Products or Services

When a new product or service meets a similar customer needs in different ways, industry
profitability suffers. For example services like Dropbox and Google Drive are substitute to
storage hardware drives. The threat of a substitute product or service is high if it offers a
value proposition that is uniquely different from present offerings of the industry.

How Jumei International Holding Limited can tackle the Treat of Substitute Products /
Services

 By being service oriented rather than just product oriented.

 By understanding the core need of the customer rather than what the customer is
buying.
 By increasing the switching cost for the customers.

5. Rivalry among the Existing Competitors

If the rivalry among the existing players in an industry is intense then it will drive down
prices and decrease the overall profitability of the industry. Jumei International Holding
Limited operates in a very competitive Specialty Retail, Other industry. This competition
does take toll on the overall long term profitability of the organization.

How Jumei International Holding Limited can tackle Intense Rivalry among the
Existing Competitors in Specialty Retail, Other industry

 By building a sustainable differentiation

 By building scale so that it can compete better
 Collaborating with competitors to increase the market size rather than just competing
for small market.