Emerging E-commerce Businesses and Supply Chains

R Jayaraman

Author: R Jayaraman

Date: Mon, 2016-10-24 11:41

E-commerce is e-tailing its way into the retail business at great speed. The impact of e-commerce on the retail revolution can be seen in different ways. In short e-commerce is likely to become the e-way for retail soon, if not already so in many places.

For one, if the e-commerce is attached only to the retail business then the effect is that of providing a platform for aggregating demand from multiple customers, from multiple geographies, in one place. This aggregation is the main driver of the low prices which Walmart and others of their ilk promise.  Just imagine, the local kirana store can stock some five dozen toothpaste tubes, as he caters to a demand of 50 per day in the locality. Hence his ability to offer low prices is limited. If this same seller goes the e-commerce way, his demand for the toothpaste could go up to 500 or 1,000 per day. Then he can really look at discounted prices. Now you are talking.

The second benefit is the speed with which the sale can be closed. The culture of e-commerce fits in well with the overall “quick” culture of the times. We need quick responses, so we use WhatsApp, never mind that much of WhatsApp is Multiple Forwards and the authenticity is up for questioning. It is like a lie, if repeated several times, becomes truth-like. In an e-commerce transaction, the customer has implicitly accepted that the goods that he will view will be the ones that he will get – something like WYSIWYG of yore. This predilection of the customer to get what he wants in double quick time, works well for e-commerce. Abracadabra.

The third benefit is that sales resources need not be deployed to close out a sale. In a big retail store, the other day I saw at non peak times, it is difficult to make out who is the customer and who is the sales person waiting to attend to them. Such confusion can be avoided with e-commerce with the concomitant benefit in transaction costs. This may sound harsh in a country where population is considered as an asset, but such is the lure of e-commerce.

The fourth is the savings in the non-manpower resources to be used for the sale. For example, for every customer who buys from an e-commerce platform and who doesn’t step into the store, the fuel for the car is saved, the parking lot is available to others, the roads are less subjected to wear and tear, the lights and air-conditioning required to service the store footfalls can be avoided.

The fifth benefit is in the overall lessening of the Supply Chain resources, especially the transport. Consider if the customers were to come to the store to buy, then the goods have to be transported to the warehouse, thence to the store, from where the customer will cart it to the home. In the e-commerce scheme of things, the goods are either in the warehouse or in the kirana stores who partner with the big chains as the fronting delivery teams. In either case one trip is avoided. This is a huge benefit.

Another benefit is that e-commerce companies which tend to aggregate demand and sell in large volumes also place large orders with suppliers, who are typically manufacturers. In view of these large orders, goods are sold by the manufacturer at lower prices. Barring seasonal goods, others are sold through the year and hence this large demand will lead to regular supplies, resulting in stable production runs and the consequent cost and quality benefits. The pull system can be pushed by both buyer and supplier. Warehouses will stock goods in large quantities which then will be handled in bulk, thus speeding up and streamlining unloading and stacking operations. Thus the overall cost situation is likely to be held in leash and could be one of the reasons why many countries like the USA where such e-commerce and retails stores are selling in bulk, inflation remains low.

So it appears that e-commerce is the many splendoured thing – like love. Let’s enjoy it.  

 

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The Disruption, we are seeing in e-retail, at present definitely hints that E-commerce, is the way forward for sure. i also believe that, E-commerce in India, is giving tremendous opportunity, not just, to the consumer in terms of the variety, ease of purchase and payment, attractive offers, etc. but at the same time, it has proved to be a blessing, for the small time retailers and artisans who are operating in remote and not so developed areas of our country. There are some slum dewellers in Dharavi, Mumbai, who till, two years back, were earning around Rs. 15000 per month, by selling leather products. Today the same craftsmen, are earning approx. 15 lacs per month, as they listed their products on Amazon, through which they got connected with some international buyers and got bulk orders. Similarly, various artisans from the interiors of UP, Rajathan, Kolkatta, Gujarat, North East, etc. have been able to reach and sell their hand crafted products, to a larger consumer base. Something, which they wouldn't have been able to do, otherwise, at such a reasonable cost. Moreover, increased internet and Mobile penetration, acceptance of online payment have provided the much needed support to E-commerce Industry to flourish. Hence it definitely, is, the most addictive thing at present.

The Vision and Mission of all profit making Organisations boil down to getting their products into the hands of every consumer who can afford it. As splendidly put up by Prof. R. Jayaraman, E - Commerce companies now have created a unique channel for the manufacturers to not just satisfy their thirst for growth, but also increase their efficiency by streamlining their internal decision-making processes in the supply chain for low operation and production costs. And so, these manufacturers reduce their product cost adding more potential consumers who can afford their products satisfying their endless desire for growth. Before adding my views, I would first want the readers to understand the two major business models currently in the E-Commerce industry. The first model involves the E-Commerce company removing the different links controlled by various entities in a supply chain like Warehousing, freight, last mile delivery etc. and offering all the services under one Umbrella Organization (ex: Amazon). The second model involves the E-Commerce company merely behaving as an aggregate for manufacturers, suppliers, in fact, anyone with a product and looking for consumers to buy them. The company doesn't own any of the links in the supply chain. The drawbacks of this system include pirated product listings, poor customer responsiveness etc., but the system encourages free market and competition leading to growth across entities involved in the supply chain and manufacturers.(ex:Ebay) Two different principles of operation. Commenting on their operation will do no justice if we don't understand another important aspect which makes this whole business so efficient. Four letters - DATA, the immense data that flows through this system is where the magic happens. Information flow is the key to greater profitability. In a conventional supply chain, the data is hardly captured and most of the functions of a business are based on assumptions and vague information obtained from the market. The data obtained through this channel, if put to right use can not just help the organisations in streamlining their manufacturing overheads but will also help in Marketing. To put things into perspective, let's assume an average family who does shopping through e-commerce for their daily essentials. The buying patterns and personal data (necessary to register with the e-commerce platform) are more than enough to understand who wants what and when. They know when your toothpaste will run out and they know when to barrage you with ads of toothpaste. Speaking strictly from a pro-consumerism point of view, this is the best thing that could ever happen. Products can now be successfully marketed to the consumers using Push and Pull type marketing with all these insights. Amazing isn't it. If the end objective is just GROWTH, why do we need to limit all this data in the hands of few individuals who control the supply chain? E-Commerce is the future. Agreed. But how it goes about changing the future is the real question.

Being able to match key customer expectations and requirements to your firm’s operating competency level and customer commitment, is the essential ingredient for success of E commerce and it achieves this by optimizing supply chains. For a business such as E- Commerce, one of the most important ways to optimize supply chain is by optimizing the value of logistics. The logistics value proposition stems from a company’s ability to know exactly how to balance logistics cost against the appropriate level of customer service. In majority of situations, the cost benefit impact of a logistical failure is directly related to importance of the service to the customer. When a logistical failure will have a significant impact on a customer’s business, error free logistics service should receive high priority. To leverage the customer experience, E commerce companies started with the concept of Third Party Logistics (3PL) and Fourth Party Logistics (4PL), which is nothing but outsourcing of some or all logistics operation. There has been a trend since 1980’s to outsource services such as warehousing, shipping and other logistics responsibilities and more so by larger firms such as 3M, Amazon and other giants from the (last decade) such as Flipkart, Snapdeal although one might expect such corporate giants to be most capable of handling their own logistics. The most compelling reason I could think of from we have learnt in our Strategy subject is realizing: what one should do and what one should not do. It’s primarily a company’s decision to focus on core competencies. Some benefits of 3PL and 4PL which I feel can help E commerce and Supply Chains emerge can be 1) It helps in improving business focus 2) Can rope in more current logistics technology 3) Provides better and greater business flexibility (in terms of adapting its core business in line with new market strategies or new products). There are ample things which logistics +supply chain + analytics can achieve in the future to come. Let’s wait and watch..!! 

Dear Sir, I admire your eloquent writing style. The impact of E-commerce on retail industry has been exquisitely captured in the blog. I would like to augment the discussion with some of the examples from Indian E-tailing sector. Big basket has completely changed the way people shop for staples and grocery today. By maintain big warehouses in low rental areas, they save heavily on maintaining an outlet and sales employees. They also procure items in bulk thereby getting huge volumetric discounts from the manufacturers. All of this cost saving is shared with the consumers along with services like 90 minutes delivery. If you are a small shop owner, don’t worry, Grofers is there to help you sell and deliver your items to consumers. It is a marketplace model where Grofers acts as a service provider and connects consumers with merchants. Shop from your favorite neighborhood store online via Grofers platform and get the delivery in 90 minutes. The major E-commerce players like Flipkart, Snapdeal and Amazon are also working on Marketplace model. They provide logistics support to the suppliers and handle the SCM part to offload the manufacturers and speed up the process. This also enables small and medium enterprises (SME’s) to sell an exclusive range on products online. Economies of scale the E-retailers achieve unbeatable costs. Though the major players are recording losses in their P&L statements, it is majorly because of the rapid expansion and exorbitant marketing budgets. In the age of dual earning families, time is luxury. E-commerce in retail has simplified the life of many, saving time and money. The digital consumers wait for online sales such as “Big Billion Day”, “Unbox Diwali Sale” or “Great Indian Sale” to avail deep discounts and the firms gain from huge sales volume. Ultimately it is a win-win situation for consumers, service providers and the manufactures.

E-commerce as a way of business was certainly disruptive at the advent of it and all the benefits of e-commerce as described are indeed the bedrocks of e-commerce’s value proposition. Another benefit which e-commerce can offer is transparency. Though not much in discussion in the context of e-tailing but e-commerce in B2B (e.g. online auction/reverse auction services) is essentially driven by the proposition of transparency that it can bring in to the legacy systems. An impending danger that lurks is to do with the sustainability of the strategy that all these e-commerce companies or, to be more specific, e-tailers have taken. Cost Leadership and focus on gaining market share has essentially made them to burn investor money to gain market share and thus making the hard road ahead for the whole discount e-tailing a lot harder. In this context, in my view, the future of e-commerce in B2C business would be individual stores and a few marketplaces (like physical shopping centers today), which we all have grown up shopping from in the market, going online and becoming e-commerce companies. Not for the discount, but for the convenience will the customers buy online, thus maintaining and increasing demand for e-commerce in retail. Although the demand in future will increase, whatever may be the changed format, the trick will be in efficiency of and cost reduction through the supply chain. Technology will be available to all of us. It is the supply chain optimization that will create profits for the e-commerce companies and keep them up and growing.

E-commerce has revolutionized the methodology by which companies do business, implications of which have been beautifully penned down by Professor R Jayaraman. E-commerce helps to connect small and medium scale vendors to expand their customer reach across geographies and segments providing an opportunity for expansion. E-commerce typically follows a market place model which enables the industry to operate at a wide product catalog while maintaining extremely high inventory turnover and negative cash cycle. For instance, Amazon operates at an inventory turnover 14 while maintaining a negative cash cycle i.e. it generates revenue from customers before obligation to pay to suppliers for the inventory. E-commerce model facilitates superior tracking of customer demand due to availability of live data from online transactions. Though a booming industry E-commerce companies are still facing several challenges in Indian market. Internet penetration is still low in the country and since there are many first-time buyers there is high tendency of customers to return a huge chunk of purchase online. Logistics is still an issue in numerous towns and villages which limits the customer reach for the E-commerce companies. A huge number of people still believe in the look and feel model via a two-way communication. Indian consumers are also skeptic towards online payments and cash on delivery is still preferred as mode of payment which is not only laborious but also risky, expensive and burdensome. Additionally, digital illiteracy is one of the key issues hampering the E-commerce industry since a huge customer base lies in rural segment and is not in line with the growing digitization. Though there are numerous challenges in front of the companies, the industry showcase a huge expanding potential and will be the future of retail industry over next few decades.

The rise of e commerce in the Indian market has been enchanting. The e- commerce industry was at its infancy stage in India in 2009 but with increasing internet and mobile penetration it was seen to be growing. It grew by about 35% CAGR from USD 3.8 billion in 2009 to USD 21 billion in 2016 with an estimate of reaching USD 25 billion by 2018. Industry studies by IAMAI indicated that online travel dominated the industry with 70% market share. It has been estimated that by 2018 revenues from E-tailing would be 50% of the total revenues from the e-commerce industry. The growth in future years was predicted to come from consumer-led purchases in electronics, apparels, and accessories besides the traditional favourite - books. This hints to the fact that E commerce industry has long way to go. It has offered the platform with unprecedented opportunities to the consumer in terms of the variety, convenience of transactions & eye catching offers. It has also been crucial in encouraging the SMEs who could grab this opportunity with both hands. Shoppers prefer online shopping in a big way, mostly because of the lucrative discounts that were being offered by e-commerce companies. Online retailers try to lure customers through steep discounts as price is the most potent weapon in acquiring a customer. The festive season or special sell days bring attractive discounts to buyers which boost their sales. The digitization, increased internet and mobile banking & easy payment systems, acceptance of online payment has been pivotal to the success of E commerce. With big data coming in big way, we wait for further growth in the modern market called E commerce.

Yes, it is true that the e-commerce business in Indian market has emerged from worth of $3.9 billion in 2009 to $16.00 billion in 2016. According to study done by Indian institute of ecommerce, India's retail market is estimated at $470 billion in 2011 and is expected to grow to $675 billion by 2016 and $850 billion by 2020, – estimated CAGR of 10%. In last five years the online shopping has attracted more than 60% of the consumers to purchase products through online shopping. As you rightly said that if a family wants to go for festival shopping, than first thing they need to do is gathering together on the planned day, need to have bigger vehicle to travel in to market area, need the area for parking. And we use to found the shops were filled with crowd, due to all these factors we use to choose some other goods/ apparels which we had not thought of it. But today we can do the shopping by sitting at home with entire family and having wide range of varieties to choose. Even we can send some surprise gifts to our family members and dear once on the special occasions without any issue where ever we may be in the world. E-commerce has made these thing much easier in day to day life. Since these e-commerce industries purchase high volumes from the manufactures, they get heavy discounts on the same which is passed to the consumers with great deals on special occasions and season. E-commerce helps to connect small and medium scale vendors to expand their customer reach across geographies and segments providing an opportunity for expansion. E-commerce typically follows a market place model which enables the industry to operate at a wide product catalog while maintaining extremely high inventory turnover and negative cash cycle. Due to this fast growing e-commerce business, the small town artist, craftsmen and small scale industries are getting good opportunities of high volume business along with good cost. Increase in ecommerce business have made more impact on shopping malls and small retailers in the cities, were the peoples are avoid going for shopping, however due to this we can reduce the crowds at the malls and reduce the traffic issues.. In 2007 flipkart was launched in to Indian e-commerce business, Bangalore was their headquarters in India. Flipkart initially started with online selling of books, later it entered in to all segments of online retail stores. Flipkart made 40 million Indian rupees business in 2008-2009, which soon increased to 200 million in the next year.

There is no other thought than we can derive endless benefits in favour of E-commerce and the world is changing fast, trend is towards the E-commerce. We have listed down many advantages of this business and we have to simply accept it from the view point of customers. Our country is basically operating on trade channels through small kirana stores and India leaves in rural parts. Since last 10 to 15 years our urban areas are now converting into E-commerce business ( due to awareness of technology ) still rural India is far behind. In USA the giant called Wallmart is one of the world’s biggest retail chain and the names like Amezone is the leading online retail store………. What is the meaning and outcome for India? The gap between poor and rich is widening and many small business will loose their revenue, may not even sustain to continue their business against the big MNC E-commerce. It may create imbalance in the society and pople will go for fix income salaried job leaving the business. One E-commerce online / retail chain store may kill thousands of small businessmen and survival of their family will be a question mark. Due to the purchasing power of the big store the original producers / farmers may not get good price in some of the cases…. There is no one to one touch and relationship between customer and sellers…….. will be a pure commercial transactions. A theory of supporting each other in difficult time will not be effective in this scenario. For the country like India where large manpower is available having big populations long term balance is desirable in terms of earning of people. Our economy is largely consist of rural agriculture based family, small scale manufacturer from small towns, a traders, and labor class people. If they will not get their survival income than the imbalance will increase and it is not desirable in long term.

No doubt, e-commerce in India is being driven by greater customer choice & improved convenience with the help of internet. The vendor sells products or services directly to the customer from the portal using a shopping basket system or digital cart & allows payment trough debit card, credit card or electronic fund transfer payments. In the present scenario e-commerce market & its space is increasing in demand. E-commerce is already appearing in all areas of business, customer services, new product development & design. E-commerce business is growing in India because of wide range of product with minimum price wide range of suppliers & customers internet. In this modern era every business units want to join online business because of increasing ratio of internet users in India. With the advent of technology, online retailers are devising attractive delivery options such as same-day delivery or delivery within an hour, perks on buying from mobile apps, and try at home / at your door for consumers that are leading improved customer experience. Some of the key benefits which consumers are getting from e-commerce are as below: 1. Consumers have a much wider choice available on the cyber market[ 2. They bear lower costs for products due to increased online competition among sellers. 3. Because of wide-scale information dissemination, consumers can compare products, features, prices and even look up reviews before they select what they want. 4. They enjoy saving in shopping time and money. 5. Consumers also avail of fast services and delivery of products and services. Further there are also few benefits of e-commerce to the sellers / companies like, 1. Minimum Inventory Cost - E-commerce venture need not maintain huge inventories or expensive retail showrooms. It can minimize inventory costs by adopting JIT system enhancing the firm’s ability to forecast demand more accurately. 2. Improved Customers Service. 3. Wide range of customers (geographically) which is not available in normal business / retail shops. Backed by increased online user base & mobile phone penetration, Indian e-commerce has seen impressive growth in the last few years. Considering India’s demographic dividend & rising internet accessibility, the sector is slated to scale greater heights. While the growth in this sector excited entrepreneurs & financial investors alike, some serious challenges are beginning to weight down on the sector. E-commerce players in India need to address few key aspects of their business, both internal & external e.g., 1. Risk, fraud and cyber security 2. Tax and Regulatory structure 3. Compliance framework 4. Digitization and Cashless (recently have taken a pace with Govt. strategy and policies) 5. Products and Market Strategy 6. Not suitable for perishable commodities E-commerce is changing the way of buying & selling of product & services in India. E-commerce is future of shopping. Due to E-commerce the gap has been reduced between manufacturer & consumer. According to Indian population their vast scope for e-commerce because currently in India a few percentage of population is using internet for selling & buying goods & services so remaining percentage we can consider that we are having ample scope in Indian Market. As per IAMAI-IMRB Report, Urban India has 269 million internet users (out of 444 million) which is almost 60% of the population and Rural India has only 163 million internet users (out of 906 million) which is almost 18% of the population. Accordingly, total 432 million internet users out of total population of 1350 million in India. However, there is weak Cyber security Law in India that is why Indian People are facing challenges toward e-commerce. The future of e-commerce e in India would be bright in the upcoming years if all essential factors would be implemented, by establishing cyber & have their benefits as per people wish. The role of government is to provide a legal framework for e-commerce so that while domestic & international trade are allowed to expand their horizons, basic right such as privacy, intellectual property, prevention of fraud, consumer protection etc. are all taken care of. After evaluating the pros and cons of e-commerce, we can clearly state that the benefits of e-commerce are sufficient enough for overpowering the limitations. If apt strategies are followed and technical issues are addressed properly, you can easily build up the customers trust in your system. The present scenario of e-commerce can also be changed for good, so that it can easily adapt to the ever changing needs of the customers.

E-Commerce has definitely been a prime reason in transforming consumer behaviour. The reluctance shown in the early days of adoption is now transformed into a preferred mode of consumption. This drastic change in the mindset has allowed consumers performing a wide variety of purchases through the click of a button. From buying a pack of pencils to buying a piece of real estate, e-commerce has come a long way and touched our lives in many ways unimaginable. The traditional market in India has always been a highly unorganized market and the existing supply chain system’s ineffectiveness has troubled both consumers, suppliers and the intermediaries. There have been instances in extremes wherein goods had to be sold at a rock bottom prices and sky touching pricing due to failure in the supply chain machinery. Both have been unfavourable conditions for the supplier wherein the revenues were unpredictable. E-commerce has helped transform this system in not only connecting the buyers with the remotest suppliers ,who were unheard of once upon a time ,but also created an effective supply chain which was easy to establish and the effectiveness of which can be measured digitally . Online portals and digital highways have provided unlimited opportunities for small and local suppliers allowing them to target the nationwide audience. Imagine a buyer sitting in a remote village of Bihar and ordering a handicraft from some of India’s finest artisans of Rajasthan who did not exist until the digital era took off. E-commerce has definitely brought them closer. With the Government’s constant focus on improving the nation’s infrastructure and building better roads and transport facilities, India’s logistics system is only going to improve bringing both the consumer and supplier closer than before. Small and medium scale business can only benefit from the recent rollout of GST and the Government’s determination of making India a favourable place for business. As Professor R Jayaraman rightly pointed out the non-tangible benefits such as reduction of traffic or saving travelling time, it is evident that e-commerce has long-term benefits and is here to stay and affect our lives for years to come. Rise in smartphone penetration, higher disposable income, better technology and infrastructure and change in the mindset of the consumers are only accelerators to this growing industry, propelling India to the next wave of economic growth and prosperity.

E-commerce is the retail, most updated and advanced outlet for shopping that world has seen now. It is trending, it has the most amazing features and also equipped with benefits of technology meeting convenience. E-commerce has given the world a new view point, a whole new dimension to shop and view the scope of environment with an entirely different approach. E-commerce has the capacity to enter into the market, with 100times the capacity of a local vendor or dealer with a confined shop area, increasing in number of footfalls into the E-commerce store, with the help of available and more number of goods, it can increase on its discounted goods. As it is equipped with the latest technology and increasing advancement, it becomes easier in faster and quicker deliverance, as the product capacity is fully utilized and the market can be served better with larger capacity, and lesser hindrances, due to multiple user interface. E-commerce has been able to bring in a lot of convenience into the domain of shopping and retail outlets, causing lesser traffic and commotion. Not much crowded Retail stores, with long hours of que lines and waiting to finally billing your order. Car parks and emptier slots available for the actually needed ones and very convenient door step delivery, the USP of E-commerce makes it a very hostile environment to operate, but at the same time, E-commerce with all its merits, also serves a few Demerits, such as, Poor quality, Unacceptable Size delivery, Non-trial rooms services, could bring in alternates and changes after the purchase of the product. Expected Product turning out to be something else due to non-reliable distribution networks, or even the worst-case scenario of very late delivery. The merits of E-commerce still stands far ahead than the demerits due to the amazing quantity of products that can be serves, providing the ease and access of product availability, no need to travel and wait for hours to purchase something instead get it door step delivered, and product that cannot be easily found , can be accessed easily on online stores, Domestic usage products such as Milk, now can also be found on E-commerce portals, Life thus has been made a lot easier with the help E-commerce business, and we should comprehend this beautiful advancement in our lives.

E-commerce, without a doubt, is one of the greatest inventions of mankind. A decade back people would not have even imagined of how e-commerce could help them perform the day to day chores of their life in an extremely simple and easy manner. Because e-commerce is a booming industry and is so much in demand, e-commerce companies receive huge funds from investors to carry forward their business. E-commerce firms are flushed with cash from multiple rounds of investor funding, as a result of which, e-commerce companies are capable of offering huge discounts to customers. This kills the demand for brick and mortar stores. While I understand why the author is all praises for e-commerce and the innumerable advantages of e-commerce business from a customer perspective, I would like to point out the flipside of this business i.e. how e-commerce paves the way for ruining the bread and butter of small stores. E-commerce may help a wholesaler’s business by opening up a greater market for him but the same is not the case for small stores seller (e.g. a retail shop which sells toothpaste). In practicality a small retail owner will hardly list his products on an online platform because such small sellers are not technologically savvy and also because the final settlement of money by e-commerce companies is delayed in light of prolonged refunds & return process. The third benefit of e-commerce business, as pointed out by the author, that sales resources need not be deployed to close out a sale can also be challenged. It diminishes employment opportunities for such sales force thereby killing employment opportunities for the skilled section of the society. Irrespective of how many attempts the regulators try to make to protect the interests of the native brick and mortar stores by restricting foreign invested e-commerce companies from holding inventory and by capping the percentage of sales coming from a single entity on these-commerce platforms, these cash rich companies leave no stones unturned in circumventing the law by creating bogus subsidiaries who are the only sellers on their platform (WS Retail Case).

I really enjoyed reading your article and it is a very relevant topic in today’s business environment. With the retail business growing at a large rate, coupled with the Increasing internet usage by an average Indian consumer, the “Digital India” and cashless economy being promoted by Government, E retail is becoming an important part of economy. It is changing the way business is done in India and it is expected to stay for long. Your article describes the various benefits to customers and sellers eloquently. With low prices, convenience of delivery at door step the and multitude of products available on the virtual shelf, a customer is the King more than ever. However, I have certain concerns in this regard. When a consumer goes for online shopping, he or she wants best product at cheapest price. The question comes is his wish being fulfilled truly? Is the product delivered same as what was displayed? Is there a gap between customer interpretation and the product actual features? These questions strike my mind when I wear the hat of a customer. Answers to these can provide a differentiating strategy to the e commerce chains and determine the long-term success of e-retail chains. Being a regular online shopper and having interacted with many shopaholics, I gained certain insights into online buying experiences of a number of customers. An Indian customer orders a product after looking through many options, waits for average five six days and if finally gets an undesirable product, it is a nasty experience. Add to it the efforts of returning the product and waiting for the get back one’ money. This signifies the issue of either inability of e retail chains in communicating real information about the product features or the poor product of seller. In this case traditional way of offline buying proves to be an advantage where the customer gets more assurance of what it is paying for. So, it is not only quick delivery but better quality of service that the buyers are looking for. Although there are existing mechanisms in e retail chains to measure a seller’s performance, repeated incidents of dissatisfaction make e retailer chain equally accountable. From the perspective of a seller, if the customer segment available through e retail chain is large, there are also many competitors and hence little pricing power. Leave aside local manufacturers, even big manufacturing firms are finding it challenging to do business with e retailers for the little pricing power they are able to get. If they decide not to go for online sales, they sacrifice their loyal customers in the online space. Selling through organised retail chains has become a necessary evil for them. When manufacturers feel pressure on their costs, they are forced to improve their efficiency. While it is good for the firms to be productive in an economy but beyond a limit, manufacturers can compromise on the quality to survive in price war. The question comes which zone are the sellers of e retail operating at? I am not sure about this. This is something to look for in the near future how sellers and e retail chains collaborate to create real value for the customer.

The battle of supremacy between e-commerce and brick and mortar stores is at its zenith. Five years back, ecommerce was still a distant dream for most Indians. However, today the scenario has drastically changed. According to an ASSOCHAM- Forrester study, ecommerce is growing at the rate of 51% in India. That is remarkable! Ecommerce market is expected to reach $120 billion by 2020. Professor Jayaraman, in this well-penned article, extols the virtues of ecommerce. He has sound, logical reasons for envisioning the future of retail to be one of e-retail. While I am not in complete agreement with all his points, I do see a foreseeable increase in the business of ecommerce companies in the near future. As explained here, ecommerce leads to discounted prices. That is what the consumers want, right? Yes, indeed. No refuting that. Today’s generation swears their lives on smart phones and hence, speed is an important concern in most transactions. But is speed actually guaranteed by e-commerce? My packages have been delayed innumerable number of times. Even the WYSIWYG (What you see is what you get) syndrome isn’t exemplified by many online products. Open any ecommerce website and you will find countless reviews of the product not being exactly like the picture displayed. So, in this case, I believe brick and mortar stores have an edge. You get what you see. The third benefit Professor Jayaraman talks of is the marginal use of resources, especially manpower that ecommerce makes use of. However, is that really a benefit? By taking away the jobs of millions, we are indeed reducing costs of goods but at an irreparable human cost. This is a sensitive issue and needs to be examined in greater depth before jumping to conclusions. Despite the above critique, I love e-shopping. Primarily, because I don’t have to waste time going to the store. I don’t have to stand in long queues. I can order anything from the comfort of my bedroom. This is the fourth benefit talked of here. Again, a powerful reason. The only way brick and mortar stores can counter this argument is by placing themselves on strategic locations so that consumers do not have to travel an extra mile to get to them. That’s why most kirana stores are just round the corner. Often long queues arise due to the inefficiency of the systems or the concerned personnel. They must make sure that technical glitches are minimal and properly train the employed personnel. In ecommerce, goods move directly from warehouses to customers. This again reduces costs and helps improve the efficiency of supply chain networks. However, in all this buzz around ecommerce, let’s not forget the human connect that brick and mortar stores have. When I go to kinara store right across my home, Sharma Uncle, the grocer, enquires of my father’s health, my education. He fondly recalls his childhood when I buy a Paperboat aampanna. It’s because of this warmth, I can safely say, ecommerce can never fully replace brick and mortar stores.

Thanks sir for giving detailed explanation on the benefits of e-commerce in layman terms. I was wondering what makes e-commerce so powerful and how to embrace this change particularly in retail markets. The major criteria while buying from consumer point of view would be the trust. Hence customers are ready to pay that extra money to make sure the quality of products is good without uncertainty. I was sceptical about discounts offered by the e-commerce companies on branded products. I got the reason from your blog on how the e-commerce companies are able to reduce costs by effectively using the supply chain resources. Also e-commerce is an effective way to shop in countries with huge population like India. The way you discussed the reduction of time and costs from customer point of view appealed to me in a special way. It reduces lot of other costs like consumer travelling by car and stepping into the stores. This dimension of all products being available to customer at a single online place is a revolutionary thought. Your blog revolves around benefits to customers, suppliers and the e-commerce firm through the culture of e-commerce. This is a win-win situation for all the stakeholders involved. Coming to Indian context, this e-commerce revolution has substantially increased the base of suppliers and many new products are made available to consumers easily. This increased the product diversity thereby increasing the options to consumers. Many small and medium suppliers are able to sell their products more easily without depending on distributors and other costs. This increased the standard of living of the entire ecosystem. Hence now I feel more convinced that the future ahead is e-commerce. Optimizing the operations involves the amalgamation of hardware and software technologies. E-commerce companies being the technology firms would be the first ones who utilize the emerging technologies to its fullest. This aspect excites me as a person who is passionate about technology and its impact on business. Also one of the main takeaways from your blog is the importance of stability and predictability and its effect on the costs. The e-commerce companies were able to analyse them most effectively using the data analysis techniques. The e-commerce has converted the technology from just an enabler to business to main driver of business. It has created a new market place. Every insight through analysis of the transactional data results in tangible business growth. It has the power to increase the sales and at the same time improve the efficiency of system. This aspect of certainty makes it helpful for the entire society. One more insight would be the ecosystem adjusting itself to the combination of e-commerce companies and kirana stores. E-commerce companies can even improve the business of their competitors by aggregating them in the online space. This improves the demand of kirana stores as well. The overall stability that the e-commerce brings to retail sector shall improve the country’s macro- economic indicators as well.

E-commerce has been emerging rapidly between business all over the world, and it has affected the business at all sizes in many aspects. 7 out of 10 people are preferring market town, which means that you know the price and information. You can buy it on the spot. Based on the booming e-commerce, logistics and supply chain management has been greatly influenced when we are now already overwhelmed by its success in both developed and emerging economics. Over the next ten years , online retail will gain even more importance than expected so far not just in developed countries, but also in emerging markets. The reality today is consumers are ordering online across the globe and skyrocketing demand for products has put enormous strain on transport, storage, and distribution networks in these emerging markets. These challenges often traslate to complications for e-commerce companies looking to do business in emerging countries but it also means that the supply chain side of the e-commerce has large potential for growth. The modern logistics have become the most important means to improve the efficiency of material flow, reduce distribution costs in various industries, at the same time, the recent development of e-commerce also contributed to the expansion of logistics market, promote the development of technologies related to logistics. Moreover e -commerce markets in Asia are experiencing exponential growth and is driving tremendous expansion and need for comprehensive logistics capabilities and networks.

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