Crocs Inc. Executive Summary
Crocs, Inc. was founded in 2002 when the three friends, Lyndon Hanson, Scott Seamans, and George Boedecker, decided to sell the comfortable Canadian non-slipping shoes to the local sailing enthusiasts in Florida. It turned out, however, that these shoes are useful and convenient not only for sailing but for a range of other activities involving standing for a long time as well. The business enjoyed a speed growth of customer base. In October 2003 Ronald Snyder, the former executive of Flextronics, was invited to provide the consultancy to Crocs. He joined the company in June 2004 as a president and became a CEO in January 2005. His service at the company resulted in a chain of important business decisions and correct management of the explosive growth stage.
Crocs enjoyed the unexpected success and astonishing financial results during their active growth period. In 2006, the Net Profit Margin already reached 18.2% and Net Income of the company rose by 389% just in one year between the first quarters of 2006 and 2007.
What made Crocs successful were primarily their one-time worldwide expansion (conducted in order to establish a strong brand) as well as the revolutionary supply chain model, which puts off the risks both from the retailer and the customer. Unlike the businesses producing and providing goods according to the traditional supply chain model with the pre-order system, Crocs concentrated on the ability to quickly react to the changes in demand and provide retailers with additional quantities of goods, if needed. Thus, the retailers did not have to estimate the quantity of goods that potentially will be demanded in the future and take the risk of either foregoing the potential sales because of not ordering enough goods, or having an unsold stock at the end of the season because of ordering too much. This consequently led to the establishing of the good relationships between Crocs and the retailers with Crocs getting additional benefits as, for example, offers to increase their brand presence. Customers in their turn did not have to make predictions on which product is going to be popular in the next season and rush with the purchase.
The responsiveness and adaptability of the production were the result of the artfully conducted optimization of production process and relocation of the factory sites.
Active promotion and versatility also made a great contribution to the company’s success. What concerns the promotion, from the very beginning Crocs were participating in many trade shows and other events, such as festivals, concerts and sport events, in order to attract new retailers and get the feedback on their production directly from the customers. As the result of such customer-oriented activity, Crocs soon were able to develop the extra models of the shoes, which were corresponding directly to the needs of different target audience groups, for example, people with medical conditions (diabetes), people of certain professions (gardeners, doctors), school pupils and students (shoes with the logo of the school/university), sport teams.
Nowadays the company widened the range …