IIMK CC Ecommerce
- 1. Career Conversations" on Supply Chain and Operations An IIMB NSRCEL & Goldman Sachs Supported Firm
- 2. • E-Commerce Business Models • eSCM • Salt n Soap Case Study © Bluebeaks SolutionsFriday, June 17, 2016 2 What we intend to cover
- 3. • A new sales channel? • A home delivery service? • A seller-buyer information portal? • A technology platform? © Bluebeaks SolutionsFriday, June 17, 2016 3 What is E-Commerce?
- 4. What is “E-Commerce”? © Bluebeaks SolutionsFriday, June 17, 2016 4
- 5. Out of 5 only 1.5 Senses can be transmitted electronically! If all other considerations were same, we all will buy everything after examining a product with our 5 senses (i.e. buy offline). E-Commerce would have been a non-starter. © Bluebeaks Solutions LLPFriday, June 17, 2016
- 6. Customer Engagement Cycle: Discover to Experience (D2E) Discover Research Order Pay Possess Experience © Bluebeaks Solutions LLPFriday, June 17, 2016
- 7. D2E Process: Brick and Mortar Retail Domain Discover Research Order Pay Possess Experience © Bluebeaks Solutions LLPFriday, June 17, 2016
- 8. Revenue Model: Brick and Mortar Retail Discover Research Order Pay Possess Experience “Revenue – Cost = Profit” : Traditional “Trader Model” © Bluebeaks Solutions LLPFriday, June 17, 2016
- 9. Channels Facilitating D2E Cycle Discover Research Order Pay Possess Experience Physical Channel © Bluebeaks Solutions LLPFriday, June 17, 2016
- 10. Digital Disruption in D2E Cycle Discover Research Order Pay Possess Experience Physical Channel Digital Channel © Bluebeaks Solutions LLPFriday, June 17, 2016
- 11. How Customers Today Traverse the D2E Path Discover Research Order Pay Possess Experience Physical Channel Digital Channel © Bluebeaks Solutions LLPFriday, June 17, 2016
- 12. Retail in Digital Age Discover Research Order Pay Possess Experience Physical Channel Digital Channel © Bluebeaks Solutions LLPFriday, June 17, 2016
- 13. Retail Industry in Digital Age: E-Commerce Business Model Discover Research Order Pay Possess Experience Physical Channel Digital Channel © Bluebeaks Solutions LLPFriday, June 17, 2016 Potential Earnings leveraging “Digital Asset” Revenue (Present + Potential) – Cost (Mostly Present) = Potential Profit The “Valuation Game”
- 14. Leveraging Digital Assets Digital Asset Monetise “Digital Entry Barrier” Higher Customer Life Cycle Value Cost Take-out through greater negotiationpower Monetise Data Monetise home- grown technology © Bluebeaks SolutionsFriday, June 17, 2016 14
- 15. So... What can the Customer get from E-Commerce Transformation? Cost ConvenienceChoice © Bluebeaks SolutionsFriday, June 17, 2016 15
- 16. Can E-Commerce Provide a Sustainable Low Cost Option? Challenges Opportunities Cross-subsidising product sale with earnings from digital assets Leveraging digital entry barrier to obtaingreater bargaining power with suppliers Replacing physicalassets with digital assets Last mile deliverycost Customer acquisitioncost Technologycost © Bluebeaks SolutionsFriday, June 17, 2016 16
- 17. Can E-Commerce Provide Convenience with Dependability? Challenges Opportunities “aving customers’ time, fuel, hassles, etc. Empowering customers with digital discovery, research and experience facilitating smarter buying decision Inability to provide“all 5 sense” shopping experience Inability toprovide “neighbourhood acquaintance” confidence © Bluebeaks SolutionsFriday, June 17, 2016 17
- 18. Can E-Commerce Provide Choice with Timeliness? Challenges Opportunities Fulfilment predictability and time Servicing the “long tail” demand © Bluebeaks SolutionsFriday, June 17, 2016 18
- 19. e-SCM © Bluebeaks SolutionsFriday, June 17, 2016 19
- 20. eSCM Models in E-Commerce eSCM Models in E-Commerce Inventory Led Drop Ship Marketplace VMI Hyper-local © Bluebeaks SolutionsFriday, June 17, 2016 20
- 21. Inventory Led Model Warehouse/ Brick and Mortar Retail Store 1 (Owned by Portal) Warehouse/ Brick and Mortar Retail Store 2 (Owned by Portal) E-Commerce Portal 1. Product range , stock and price updated in Portal consolidated or for specific warehouse/ store 2. Customer places order on Portal . Customer is usually shown products available in the nearest warehouse based on customer’s location. 3. Order is processed in the nearest warehouse/ store) 4. Products delivered, In- house logistics, Salebooked by E-Commerce entity © Bluebeaks SolutionsFriday, June 17, 2016 21
- 22. Drop-Ship Model Retailer 1 Retailer 2 E-Commerce Portal 1. Product , stock and price updated in Portal by Retailer 2. Customer places order on Portal on a specific Retailer 3. Order is processedby the Retailer 4. Products delivered by the Retailer, Sale booked by the Retailer, E-Commerce entity earns through “listing money” and/or sales commission © Bluebeaks SolutionsFriday, June 17, 2016 22
- 23. Marketplace Model E-Commerce Portal 1. Product , stock and price updated in Portal by Retailer 2. Customer places order on Portal on a specific Retailer 3. Store to Door delivery managed by a multi-tier hub and spoke logistics network , owned or outsourced Sale booked by Retailer, E-Commerce entity earns through Registration fee and/or Sales Commission Milk-run delivery Milk-run collection Aggregation Disaggregation © Bluebeaks SolutionsFriday, June 17, 2016 23
- 24. VMI Model E-Commerce Portal 3. Customer places order on Portal on a specific Retailer 4. Store to Door delivery managed by a multi-tier hub and spoke logistics network , owned or outsourced Sale booked by Retailer, E-Commerce entity earns through Registration fee and/or Sales Commission 2. Product , stock and price updated in Portal by Retailer 1. Retailer stock kept in E- Commerce owned/ outsourced warehouse, stock owned by Retailer till sale is executed © Bluebeaks SolutionsFriday, June 17, 2016 24
- 25. Hyper-local Delivery Model E-Commerce App 1. Product range , stock and price updated in Portal consolidated or for specific warehouse/ store 2. Customer places order, usually on an App. Customer is shown products available from local retailers based on geo-location information available from the App 3. Order processed at local station, delivery bikes despatched to pick up product from Retailer and deliver to customer Sale booked by Retailer, E-Commerce entity earns through Registration fee and/or Sales Commission © Bluebeaks SolutionsFriday, June 17, 2016 25
- 26. Model Comparison © Bluebeaks SolutionsFriday, June 17, 2016 26 Parameters Inventory Led Drop Ship Marketplace VMI Hyper- local Physical Asset Heavy Light Light Medium Light Geographical Expandability Low High High Low High Control on Quality, Availability and Accuracy of Product and Information High Low Low Medium Low Delivery Time Short Depends on Retailer Long Long Very Short Range of Product Choice Low High High Low Low Ease of Retailer On- boarding Nil Average Easy Very Difficult Easy Ability to Leverage Digital Assets Low High High Low High
- 27. Online Grocery Its Different! © Bluebeaks SolutionsFriday, June 17, 2016 27
- 28. Difference # 1 Many Items in a Cart: The “Original “hopping Cart” © Bluebeaks SolutionsFriday, June 17, 2016 28
- 29. Difference # 2 A Large Number of SKUs, Changing Frequently © Bluebeaks SolutionsFriday, June 17, 2016 29
- 30. Difference # 3 Perishable/ Short Shelf Life Products © Bluebeaks SolutionsFriday, June 17, 2016 30
- 31. Difference # 4 Price and Stock Positions Change Frequently © Bluebeaks SolutionsFriday, June 17, 2016 31
- 32. Difference # 5 Many “Qualitative” Parameters in Product “election © Bluebeaks SolutionsFriday, June 17, 2016 32
- 33. Difference # 6 Need of “Fast Delivery” © Bluebeaks SolutionsFriday, June 17, 2016 33
- 34. Difference # 7 “Order Fill Rate” Units of Items Delivered Order Fill Rate = Units of Items Ordered © Bluebeaks SolutionsFriday, June 17, 2016 34
- 35. Difference # 8 Frequent Repeat Purchase Categories © Bluebeaks SolutionsFriday, June 17, 2016 35
- 36. Difference # 9 Vs. Different Demographic and Psychographic Customer Segment Compared to Other Categories of E-Commerce © Bluebeaks SolutionsFriday, June 17, 2016 36
- 37. Difference # 10 Thin Margin © Bluebeaks SolutionsFriday, June 17, 2016 37
- 38. Online Grocery: Differences Create Challenges © Bluebeaks SolutionsFriday, June 17, 2016 38
- 39. Challenge # 1 Appropriate Web Store/ App Design and Features © Bluebeaks SolutionsFriday, June 17, 2016 39
- 40. Challenge # 2 Updating SKUs and their Information, Prices and Availability © Bluebeaks SolutionsFriday, June 17, 2016 40
- 41. Challenge # 3 Multiple Customer Touch Points © Bluebeaks SolutionsFriday, June 17, 2016 41
- 42. Challenge # 4 Geographical Expansion © Bluebeaks SolutionsFriday, June 17, 2016 42
- 43. Challenge # 5 Adoption of Marketplace Model for Grocery © Bluebeaks SolutionsFriday, June 17, 2016 43
- 44. Challenge # 6 Packaging © Bluebeaks SolutionsFriday, June 17, 2016 44
- 45. Challenge # 7 Home Delivery © Bluebeaks SolutionsFriday, June 17, 2016 45
- 46. Challenge # 8 Managing Returns © Bluebeaks SolutionsFriday, June 17, 2016 46
- 47. Challenge # 9 Managing Customer Expectation © Bluebeaks SolutionsFriday, June 17, 2016 47
- 48. Challenge # 10 Managing Employee Expectation © Bluebeaks SolutionsFriday, June 17, 2016 48
- 49. Salt n Soap ““hop n Drop” Model © Bluebeaks SolutionsFriday, June 17, 2016 49
- 50. © Bluebeaks SolutionsFriday, June 17, 2016 50 Strategic Considerations for Salt n Soap Supply Chain Model Parameters Strategic Desire Inventory Led Drop Ship Marketplace VMI Hyper- local Physical Asset Light Heavy Light Light Medium Light Geographical Expandability Medium Low High High Low High Control on Quality, Availability and Accuracy of Product and Information High High Low Low Medium Low Delivery Time Short Short Depends on Retailer Long Short Very Short Range of Product Choice Medium Low High High Low Low Ease of Supplier On- boarding Easy Easy Average Easy Difficult Easy Ability to deliver products in a long shopping cart concurrently with a high fill rate Very High Very High Low Low High Low Ability to Leverage Digital Assets High Low High High Low High
- 51. © Bluebeaks SolutionsFriday, June 17, 2016 51 Salt n Soap ““hop n Drop” Model 2. Customer of a zone views products available in thatzone and places order 3. Order processed and delivered from Salt n Soap Zonal Operations Sale booked by Salt n Soap Salt n Soap Salt n Soap Salt n Soap Portal1 + App1 Portal2 + App2 Portal3 + App3 1. Product range , stock and Composite price updated in Portal Portal + App programmatically Organised Organised Organised Wholesaler 1 Wholesaler 2 Wholesaler 3 SnS VMI @ SnS SnS VMI @ SnS SnS VMI @SnS Operation Zonal Operation Zonal Operation Zonal @ Office & @ Office & @ Office & Wholesaler Warehouse Wholesaler Warehouse Wholesaler Warehouse
- 52. © Bluebeaks SolutionsFriday, June 17, 2016 52 Strategic Considerations for Salt n Soap Supply Chain Model Parameters Strategic Desire Inventory Led Drop Ship Marketplace VMI Hyper- local Salt n Soap Shop n Drop Physical Asset Light Heavy Light Light Medium Light Light Geographical Expandability Medium Low High High Low High Medium Control on Quality, Availability and Accuracy of Product andInformation High High Low Low Medium Low High Delivery Time Short Short Dependson Retailer Long Long Very Short Short Range of Product Choice Medium Low High High Low Low Medium Ease of Supplier On- boarding Easy Easy Average Easy Difficult Easy Medium Ability to deliverproducts in a long shopping cart concurrently with a high fill rate Very High Very High Low Low High Low Very High Ability to Leverage Digital Assets High Low High High Low High High