E-commerce Fundamentals

3 Sales Types
1. B2C 2. P2P
Quickr
▪ E-commerce Marketplace: eBay and Shopclues OLX

▪ E-commerce Inventory: BigBasket, Jabong 3. B2B

IndiaMart
▪ E-commerceAggregator Amazon for Business[AFB]
✓ Online cab aggregators - Uber, Ola
✓ Online health aggregators -Healthkart
✓ Online Laundry – LaundryWala 4 Products
✓ Online Entertainment – Netflix ▪ Customer App
✓ Online Truck Booking - TruckSuvidha, TruckMandi, The ▪ Customer Website
Karrier ▪ Seller app
▪ Seller Website
 3 Pillars of E-commerce
Price Selection Convenience

Customer Customer Customer

▪ Better prices than ▪ Vast varietyof ▪ Country-wide delivery
offline products ▪ COD & Returns
▪ Low deliverycharges Seller ▪ Warranties &fraud
Seller ▪ Carry both prevention
▪ Low subscription fees fast-moving and Seller
▪ Low deliverycharges slow-moving ▪ Pick, pack &ship
products ▪ Payment terms
▪ CRM data
Business Models
Inventory-Led Marketplace Hybrid

▪ Control on prices ▪ Market-driven ▪ Best of both worlds

▪ Limited selection prices (US scenario)
due to inventory ▪ Unlimited selection, ▪ Unlimited selection
carrying costs no shelf space ▪ Customized
▪ Quick delivery, required convenience –
control on inventory ▪ Least convenient, depends on WTP
▪ Ex: Jabong, Yepme no control on ▪ Ex: Amazon &
inventory Flipkart
▪ Ex: eBay and
Shopclues
 Evolution of the marketplace
Dropship (Amazon – MFN) Oneship Warehouse
▪ Merchant doesn’t stock or ▪ 3P shipment company ▪ Fulfilled by
own inventory (Vulcan, Gati, Primo, Amazon (FBA)
▪ Purchases the item from TCI, Express) picks up ▪ Pick, pack,
the wholesaler or orders from sellers ship, and
manufacturer ▪ Processes in its own provide
▪ Has it shipped directly to warehouse customer
the consumer ▪ Assigned courier service
▪ Pros: Less capital, wide companies pick up
assortment orders from these
▪ Cons: Low margins, oneship centers
shipping complexities, ▪ Pros: Reduces hassles
supplier errors of multiple suppliers
Aided Business
▪ Aggregator of E-Commerce: Unicommerce , Orderhive
▪ 3rd-party Logistics :Bluedart ,DTDC
▪ Services Business: Photography , content writers
▪ Last mile delivery:Warehouse to consumer (Logistics)
▪ Coupon business: Coupondunia , coupon raja
Terminologies
GMV –Gross Merchandise Value
￭ Importantmetric for valuations especially during the early stages of growth
￭ The majorityof B2C e-Commerce companies, globally, despite being operational
for 5-20 years, report low profitability
￭ The GMV for B2C segment in Indiawas approximately USD 16 Billion [2015]

NPS –Net promoterScore

0-6: Detractors
7-8: Neutral
9-10: Promoters
NPS =(Promoters - Detractors)/Number of respondents

CPS –Calls per subscriber [Think how can you decrease this?]

AOV –Average Order Value [Thinkhow can you increase this?]

Terminologies
CAR – Cart Abandonment Rate

LTV –Lifetime Value

Upsell vs Cross-sell – Higher valued item vs selling allied categories

Show-rooming –the practice of visiting a shop in order to examine the

product before buying itonline
E-commerce: The Supply
Chain (Strategy) Perspective
Fundamentals
What is the difference between E-Commerce and E-Business?

E-Commerce E-Business
E-commerce covers outward-facing E-business includes e-commerce but
processes that touch customers, also covers internal processes such as
suppliers and external partners, production, inventory management,
including sales, marketing, order product development, risk
taking, delivery, customer service, management, finance, knowledge
purchasing of raw materials and management and humanresources
supplies for production and
procurement of indirect
operating-expense items, suchas
office supplies
Popular E-Business
Models
Pure-Play:The business which is having an electronic
existence only or exclusive businessonly Ex: Flipkart,
Facebook
Brick and Click: The business model, in which the
business exists both in online i.e. electronic and offline
ie., physical mode Ex: Shopper stop, Dominoes, Pizza
Hut
Why does it make sense
to have a good thriving
E-Commerce Business?
◇ Inventory aggregation
◇ Tackling Bull whip Effect
◇ Removal of InformationAssymetry
BASIS for
Competition
Competition among
E-Commerce Firms is two
pronged
Prices (Market Share) Lead Time (Supply Chain
Competitive prices with Efficiency)
the aim to inspire Having robust supply
customer loyalty in chain (distribution
order to expand infrastructure and/or
customer base; then logistics tie-ups) to reduce
gradually achieving order to delivery cycle
price stability (PayTM)
Interview
Questions
What is the typical Process
Flow Diagram of an
E-Commerce Transaction?
What does a typical
E-Commerce Supply
Chain Look like?
Too Complicated?
Lets Simplify
 TYPICAL E-COMMERCE SUPPLY CHAIN
E-COMMERCE MARKETPLACE

Purchase orders Order Relay Online orders

based on
demand Products
Products
Forecasts
E-COMMERCE COMPANY WAREHOUSE

Last mile
Products Delivery
VENDORS/SUPPLIERS CUSTOMERS

REGIONAL SEGREGATION HUBS

Direct Seller to customer in case of pure marketplace

How is a FMCG Supply
Chain Different?
 TYPICAL FMCG SUPPLY CHAIN

CORP HEAD
OFFICE

RAW MATERIAL SUPPLIERS

Supplier POs
Demand Forecasts
Raw Materials
CENTRAL MANUFACTURING FACILITY
CUSTOMER

Products
Supplier POs
RAW MATERIAL SUPPLIERS Products
DISTRIBUTION CENTER
Products
Products

WHOLESELLERS RETAILERS

Products
 What are the Issues plaguing
E-Commerce Companies in India?
Returns
Return to Vendor [RTV]: When an unopened courier is returned, it goes straight to
the vendor

Return to Origin [RTO}: When a customer has unpacked the delivered order, quality
assurance is done at the company’s end before it returns to the vendor

Why are returns difficult to manage?

▪ Reverse logistics do not enjoy economies of scale like forward logistics

▪ Monetary losses for sellers & the company

▪ Loss of customer
 What are the Issues plaguing
E-Commerce Companies in India?
Cash On Delivery

▪ Longer cash conversion cycle

▪ More players in the process – added costs

Last mile connectivity

▪ Private couriers have limitedreach

▪ India post delivery experience isquestionable

▪ Logistics cost is high for air cargo and same day delivery options
 Role of SMAC*
◇ Social mediahas becomea platform for active engagement between the
buyer and the seller. It will continue to be one of the biggest influencer to
connect to the enduser

◇ Mobility –One in four Indians carry a smart phone. That data itself proves
how large the mobilitywave is and the scale of transactions it can execute

◇ Analytics –Predictive analytics will help e-Commerce players to optimize

their marketing strategy for targeted advertising that will influenceconsumers
to buy. For B2B companies the analytics will develop more reliable sales
buying

◇ Cloud computing– Reducing costs and increasing speed of business,

especially on big traffic days, is one of the majoradvantages of Cloud
computing