OPERATIONS MANAGEMENT

Group Assignment No. 1

‘E-COMMERCE INDUSTRY’

Submitted by:-

Group No. 3

Section: B

1. Abhinav Prakash (141205)

2. Chandramouli S. (141214)

3. Himanshu Ghiya (141223)

Institute of Management, Nirma University

Date of Submission:13/03/2015

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Contents

Introduction to E-commerce Industry...................................................................................................2

Top E-commerce players of India..........................................................................................................3

Competitive Advantage of Supply Chain Management.........................................................................5

Trends in the e-commerce industry.......................................................................................................7

Current Practices.................................................................................................................................12

Challenges...........................................................................................................................................16

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Introduction to E-commerce Industry

E-commerce is Electronic commerce where trading of products and services take place over

the electronic network mainly Internet. E-commerce covers all the sectors such as B2B

(Business to Business), B2C (Business to Consumer), C2C (consumer to consumer).

Sometimes this is also called as E-business, and also called as E-tail for transaction process

for retail. E-commerce can be conducted via websites, emails, shopping carts

Most of the E-commerce companies have a certain pre-requisites such government rules and

regulations, suppliers, website and customers. E-commerce also needs logistics, online

transactions and more importantly security. The main transaction is the product flow from the

seller to the customer, information flow the order information going from the customer to the

seller, and most importantly the monetary flow as the money flows from customers pocket

into that of sellers’.

In India e-commerce was started in 1996 initially B2B purpose slowly over the years it is

spreading to all the sectors and has a pan India reach. Till mid 2000 e-commerce industry was

slow due to lack of Internet penetration, poor logistics services and resistance to e-commerce

due to lack of trust. The changeover started from the travelling industry entering then it

moved on to retail sector as well. Now the Indian e-commerce market stands at a staggering

$13 billion at the end of 2014 and this is expected to grow exponentially in the coming years.

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Top E-commerce players of India

1. Top Flipkart

2. EBay India

3. Snapdeal

4. Amazon India

5. Myntra

6. Shopclues

7. Dominos

8. Freecharge

9. Jabong

10. Tradus

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Competitive Advantage of Supply Chain Management

The competitive advantage of an industry can be analysed by Porter five forces analysis.

According to this analysis, the competition situation is determined by the Five forces. The

analysis is simple and determines the level of competition and attraction of the industry.

Bargaining power of suppliers:

The power of suppliers can get higher when e-tailers have less option of suppliers in the

market. but this is generally not the case as e-tailers have many alternatives. Not only e-

supply Chain Management (ESCM) gives the access of different suppliers but also provide

equal access for all suppliers to the e-tailers. This reduces the dependency on distribution

channels available for distribution and reduces bargaining power of suppliers.

Threat of substitute products:

As there are large number of alternative suppliers, threat of alternative product and service is

high. This large number increases the trends to switch between suppliers. This creates new

threats of alternative suppliers. This boosts the power of e-tailers in the industry but also

decreases power of electronic suppliers.

Risk of new entrants:

The entry of new entrants is very easy and reduces the entry barriers. So , because of the

convenience of increasing number of e-tailer suppliers the competition increases at any time.

E-SCM lowers the difference among competitors. Therefore, threat of new e-suppliers’ entry

and new e-tailers is high at all the times.

Bargaining power of e-tailers:

ESCM transfers the bargaining power to the hands of e-tailers copared to traditional

suppliers. This is solely because e-tailers have more choices of suppliers.

Competition’s Intentsity:

ESCM makes the industry more efficient. There is a high competition in the industry because

of the lack of any obstacle to the market entry. There are many electronic stores of the same

size and less product differentiation and all have a large number of suppliers for them.

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In short, E-SCM makes market wider geographically, the attractiveness of E-Tailing industry

increases, the size of the E-Tailing industry expands, and the number of suppliers and E-

tailers (electronic retailers) increases. As a result, there are many competitors in the ETailing

industry, and, of course, the market is highly competitive, because all suppliers must fight to

achieve etailers (electronic retailers), and all e-tailers (electronic retailers) must fight to

achieve joint customers.

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Trends in the e-commerce industry

1. PREMIUM DELIVERY SERVICE

The tussle in the e-commerce industry has been very tight .Companies know that customers would

switch if the goods are delivered sooner by the competitors .Hence to overcome it almost all of the

companies have introduced single day delivery service by charging just a few extra rupees and hence

such a facility needs operational as well as supply chain efficiency.

2. RISING FASHION CATEGORY

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The fashion segment in the e-commerce industry has grown up considerably in the recent years. And

these purchases are quite frequent. Being it a highly competitive business companies differentiate

highly on their services and pricing. Here also supply chain management plays a very important role

in making the products available at the correct time.

3. EXCLUSIVE LAUNCHES

Recent trends of exclusive launches on e-commerce platforms like Moto G on Flipkart etc have even

given a completely new dimension to the business world. Being e-commerce the sole platform for

making the products available the supply chain management has to cater the demands for all over

India , there have been issues where products have been sold out in a day and also people facing

problems for delivery of their orders. Hence such tie –ups needs greater care and hence even better

supply chain management.

4. IN HOUSE BRANDS

Many e-commerce platforms have even come up with privet labels ie products under their own brand

name example Zovi,Bewakoof,YEPME etc.These products are to be pushed in the market because

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they are the most profitable to the company. So the backend of this is to make the products quickly

available across the nation. Hence efficient supply chain management is a prime need.

5. NICHE STORES

Certain niche stores like Lenskart,makemydrink etc. are provding products for a certain category and

have a very high volume in demands.These products might need care and attention while procurement

as there may be fasionable products whose life cycle is less . Hence supply chain management should

take care of all these factors.

6. MOBILE ACCESS

The increasing tele-density and also in that the increasing use of internet services on mobile have

made it a very lucrative platform for businesses. E-commerce companies like Flipkart,

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Amazon,Myntra, Snapdeal etc. have also entered the m-commerce market by launching applications

for mobile phones. The companies also come up with special offers for mobile app users. Hence such

a increasing reach has led to increase in business for such online business and hence made the supply

chain even more efficient due to competition.

7. NO MORE FREE SOCIAL MEDIA TRAFFIC

8. ECOMMERCE IS YOUNG

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It is observed that e-commerce platform users are more of te young generation .Hence the choices

made by them include apperals,electronics etc. Even the frequency with which they buy products is

also quite high which increases business for the e-commerce business .Hence leads to companies

focusing more on the operation efficiency of the businesses namely the supply chain.

9. WOMEN ARE INCREASINGLY SHOPPING ONLINE

There has been a considerable rise in the number of women users of online businesses .Hence this

leads to greater demand for apparels, jewellery,accessories etc .Also tis provides a great platform for

business houses to directly target the market and hence this increase leads to increase in the efficiency

of business ie supply chain management.

10. MOST POPULAR BRANDS ONLINE

The e-commerce platform provides a plethora of brands in one place.Increase in the number of

brands hence leads to wide range of products in display. Hence this leads to companies planning for

their supply chain for procuring different products and hence making it available to the customers.

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Current Practices

Logistics

E-commerce companies tie up with courier companies like Blue Dart, First Flight etc which helps it to deliver products. In addition to this, they use Indian post for areas where couriers do not reach. Flipkart even use their in house logistics known as eKart (EKL). This helps them to reduce the commission by 2% and offers services such as delivery logistics, reverse logistics and pay on delivery. Flipkart has also started to deliver for its competitors through eKart Logistics.

Procurement

E-commerce companies don’t have their own inventory, rather buyers deal with the sellers directly and delivery is done by the companies. Orders are served by inventory (used for fast moving items) or by just-in-time (used for low volume, expensive items) methods. Central Procurement team monitors the stock level of all the suppliers in the country, focussing on bigger suppliers with country-wide range.

Warehouse Management System

Inward Processing:

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Here physical delivery of goods from warehouse is done and then they undergo quality check and sent for initial packing.

Storage management

After entry of all the products in the IT system, list of shelves is generated where the product can be kept. If there is any order pending for the product, it is directly sent Final packaging area else the product is kept on the shelves and list is closed.

Outward Processing

A pick-list is generated for the products to be delivered in the day. Products are gathered according to the pick-list and sent for final packaging area. Here they are packaged according to the category of the product. Then they are placed in a bag dedicated for destination area delivery hub.

Order Processing

Companies are using their own ERP system to process the order.

Order fulfilment

Order once placed is fulfilled either by inventory or JIT procurement. First inventory check is done at warehouse. If the item is found it is sent to the nearest warehouse and packaged to be delivered. If item is not found, it is forwarded for JIT procurement from legal vendors. After procurement is done, the product is packaged and delivered to the customer.

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Inventory Management:

Inventory stocks are replenished whenever it goes below the Reorder point. Companies employ the FIFO method (oldest inventory shipped first).

Supplier Management:

For a new product category, they start by sourcing from local suppliers and once the demand is generated they approach large wholesalers or manufacturers. This helps them to get the better deals from bigger suppliers and help in avoiding the channel conflict dilemma.

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Challenges The companies are facing problems in maintain trade-off between reducing just-in-

time procurement and Consumer Delight. To maximise the consumer delight, company would have so serve all consumer orders for which it requires just-in-time procurement since many products have limited demand.

Due to package litter, there is a chance of difficulty in mobility within warehouse. Some orders are cancelled while delivery is in processed. Such orders are not recalled

but delivered to the address and then cancelled. All scans for inward processing are being done manually.

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