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Please analyze Wix Value Added Chain
Hello and thank you for your question about Wix's Value Added Chain. The short answer is that Wix adds a majority of its direct value through operations and technological development. Below we'll dive into an analysis of the Wix company through Porter's Value Chain.
METHDOLOGY
According to Michael Porter's Value Chain, a company's primary activities include: Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, and Services. Secondary activities include: Procurement, Human Resource management, Technological Development and Infrastructure. We'll measure each of these categories, identifying either direct, indirect, or quality assurance activities of the company.
PRIMARY ACTIVITIES
INBOUND LOGISTICS
Wix is a digital service and platform for developing websites. They do not delve into any raw or manufactured parts. They do however operate server sites which store and backup their client websites. Wix server space is located throughout the UK and USA according to their website. It uses CDN service which is multiple interconnected servers in various locations. It is unclear however if they rent or own their server systems which would impact the margin of profit. However this case study with Amazon Web Services, a well known cloud hosting company, would lead us to assume that they are renting at least a portion of their server space. This inevitably costs the company money. Direct numbers on the number of servers is not available. Software production and management create a direct value here, as Wix's team continuously updates and maintains their featured offerings.
OPERATIONS
Wix allows customers to quickly create websites using a drag and drop system. It allows users to design without writing code, and instead relies on a user friendly interface. This is where the real value of Wix is, through their website and app features. Basic design features are offered for free, with additional tools or elements of website to be added on a paid basis. These plans range from $4.50-24.50 USD per month with a variety of mix and matched features. Wix stated in the 3rd quarter of 2016 they had an estimated "174,000 net premium subscriptions" added in the time frame, reaching a total of 2.3 million premium subscribers. Their most popular feature is their "Unlimited Entrepreneurs & Freelancers" plan for $12.50 a month. If we use this plan value to calculate margin gains for the sake of a quick estimation, Wix made approximately $2.175 million in new subscriptions alone for Q3 of 2016, and a total of $28.7 m overall. Maintaining and operating their product creates an indirect synergy with Marketing & Sales, as well as Outbound Logistics for providing services.
OUTBOUND LOGISTICS
Wix does not sell a physical product. Outbound logistics generally include ways in which products are delivered. Again, server space and connectivity are what allow the company to provide websites which is all done through the internet portal. Unlike commerce vendors, there is nothing to physically ship or deliver meaning no value is added in this category.
MARKETING & SALES
The company spent $ 116m USD in marketing and sales for Q3 2016. The company has seen a lot of success in prior years with its weighty ambition, buying up a $4.5 million dollar ad spot with Superbowl and the three months coming up before it." Wix reported a 54% increase in revenue to $44.5 million in the three months to March 31." Successful marketing campaigns and increased global exposure means continued year after year earnings. These are mainly direct activities that produce revenue. Free offerings allows Wix to start its client base, then builds with paid features to produce a happy and returning client base meaning clients can immediately test and see the value when they use the free version.
SERVICE
Wix is a monthly subscription. This means any services rendered comes in the form of support alongside continued purchase. The service and support provided to its subscribers and users create the base of their quality assurance subactivity using Porter's model.
SECONDARY ACTIVITIES
PROCUREMENT
This includes the purchase or server space, as well as appropriate technology to maintain their services. Again, there is documentation that Wix is working with AWS to provide this. They have offices in "Tel Aviv, New York, San Francisco and Dnipro" with tons of telecommuting staff around the globe. These are simply indirect activities that allow for the continued function and work of the product.
HR MANAGEMENT
Wix has over 1,000 employees across the globe. Their score on third party Glassdoor shows a high satisfaction rate. This would imply a low turnover. The company also moved to a new headquarters in San Fransisco just a few years ago that exudes positive, company culture. The value added here is indirect, in that higher retention and satisfaction would mean less turnover, loss of knowledge, and deeper gains of the platform in existing customer and service relations.
TECHNOLOGICAL DEVELOPMENT
The company is known for continuously updating its interface as well as adding new templates, features, and add-ons that allow for the flexibility and use of their websites. As the company continues to offer more business-like features like email management and marketing tools for small business platforms and freelancers, they can add a direct value to the subscription model. New subscribers will continue to discover viable operations in scaling a website with Wix, while old subscribers renew their contracts and payments to keep their website running with added efficiency.
INFRASTRUCTURE
The rental of property, and necessary teams like accounting, graphics, and legal are composed here. These all allow for the continued operation of the business on an indirect level. They do not in and of themselves add value, but rather support the functioning and goals of other elements of the business.
CORE OF THE COMPANY
The core operations of the company is through its easy to use website development. It adds layers of value through its continual publication of new features, as well as offering scalable website solutions to a variety of clients.
OUTSOURCING
That which is already outsourced is the rental of server space through AWS, and HR management through the Dapulse platform. Certain features and products that Wix envisions in its future could certainly be outsourced for short term products and development. Sales rep and support service is also a viable part of operations that could, and possibly are outsourced at the moment. However, key customer service would be important to maintain high quality on given the stifling and cut throat competition of website development tools and platforms. Their use of DreamWorks to create a successful ad campaign is part of what contributes to their growth.
CONCLUSION
Wix company is benefiting from direct activities like technology development, and marketing and sales. They are supported for scalable activities and catering through a variety of clients with their great HR services, and expanding operations.
Thank you for using Wonder! Let us know if you have any other questions for us.. This would imply a low turnover. The company also moved to a new headquarters in San Francisco just a few years ago that exudes positive, company culture. The value added here is indirect, in that higher retention and satisfaction would mean less turnover, loss of knowledge, and deeper gains of the platform in existing customer and service relations.