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The End of an eCommerce Retailer: Analyzing Market Position over Time

Retailers are still scrambling to develop new strategies that will help them win as the stakes continue to rise in eCommerce. At the beginning of last month, Target quietly shut down two kitchen and cooking websites: chefscatalog.com and cooking.com. Both sites were acquired in the spring of 2013 with the goal to help the company expand into both of those home-related markets. So why did Target shut down both sites in such a relatively short time period?

While we don’t have the inside story, in this post we’ll compare the prices and assortments of Chef’s Catalog and Target to try understanding why Target closed the 36-year-old specialty kitchen merchant. Cooking.com was primarily a recipe site and therefore was not included in this analysis.

A Tale of Two Kitchen Retailers

We compared Target’s and Chef’s Catalog’s overall market position in the kitchen marketplace using product SKU (stock keeping units) counts and average SKU price. In a data snapshot from September 2015, one month before the announcement that Chef’s Catalog was going out of business, you can see from the chart below that the two retailers were not aligned on any front—not on SKU count, average price, or product assortment.

Market Position (Average SKU Price, Product SKU Count)

Target has almost 200 percent more inventory than Chef’s Catalog, and the average price of Target’s kitchen goods is 60 percent less. It appears that the two were geared toward very different sets of customers. Target is aimed at a much larger market with its broad assortment and lower-priced products. In comparison, Chef’s Catalog was narrow, more specialized, and had more expensive products. However, there may have been enough customer overlap in Target’s higher-end and more specialized kitchen inventory to make Chef’s Catalog a definite competitor. But that’s not the only interesting piece of information we found.

Could the Closure Have Been Anticipated?

Our historical data allows you to see how retailers’ market positions change over time. The chart below shows that throughout 2015, Chef’s Catalog’s product assortment remained fairly stable, while Target’s SKU count steadily grew. Furthermore, there was very little movement in either company’s pricing. Perhaps Target made the acquisition because it wanted to analyze the benefit of carrying more specialized kitchen products while continuing to refine their pricing strategy. However, it’s evident that Target didn’t absorb Chef’s higher-priced items into their assortment when they closed down the shop. Target’s average price hovered around $50 from September 2015 to February 2016.

Market Position over Time (SKU Count & Average SKU Price)

It’s speculation, but Target’s motivation for closing down Chef’s Catalog was probably a combination of the fact that the companies were just too different, and the benefits of Chef’s higher price point and niche (but partially overlapping) market didn’t outweigh the cost of maintaining separate logistical operations.

Understanding market positioning is an extremely powerful tool. Our multi-layered data not only allows you to understand where you are positioned overall in the marketplace but also where and what inventory and pricing strategies are influencing factors.

Contributing Writer: Sierra Sterler

Min-Jee Hwang

Min-Jee is the former Director of Marketing at Wiser. She has extensive experience working with SaaS companies and holds a BA from Carnegie Mellon University and an MBA from NYU Stern.

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