Industry Analysis and Competitive Strategy

Li & Fung is a global trading group sourcing and managing the supply chain for high volume, time sensitive consume goods. The group is associated with strong brands such as The Limited, Gymboree, American Eagle, Warner Brothers, Bed, Beth & Beyond, Levi-Strauss. With the rise of the internet, and the thrive of the B2B intermediaries, this memo will discuss the Li & Fung’s E-Commerce strategy and how to use internet to facilitate supply chain management.

Competitive advantages

Li & Fung’s product mix includes hard and soft goods. Soft goods refer to apparel. Hard goods include fashion accessories, festive or holiday products, furnishings, giftware, handicrafts, home products, fireworks, sporting goods, toys and travel goods. Hard goods provide higher margins than soft goods because they require higher value added services. Hard goods items such as watches, shoes, suitcases, kitchenware, or teddy bears require an inspector for quality control evaluation for even the smallest batch order, thereby greatly increasing what Li & Fung could charge. Margins for soft goods are roughly 6% to 8%, while margins on hard goods ranged anywhere from 10% to 30%. Li & Fung attempts to expand its sales of hard goods.

The group has extensive global network of over 48 offices covering about 32 countries and territories around the world. The group’s network extends outside Asia and into other markets like North America, Europe and South Africa. The group sources from around 10,000 internal supplies. Global network enables the group to source its goods from various