INDEX

chapter Content page

no. no.
1. Executive Summary 4

2. Problem of research 5

3. Objective of Study 6

4. Literature review 7-14

5. Research methodology 15-16

6. Logistics Management 17-20

7. Importance 22

8. Logistic Functions 23-24

9. Advantages of logistic 25-27

10. Logistics activities 28-30

11. The Evolution of logistics and supply chain 31-34

management

12. Logistics Management Process 35

13. Logistics: inbound and outbound 36-38

14. Global trend of E-commerce 39-40

15. Global market share of E-commerce 41

16. Broad difference between traditional and E- 42-45

tailing
17. Indian trend 46-51

18. Indian market size and Growth 52-54

19. Advantages & Disadvantages of E-commerce 53-60

20. Essential Strategy by E-commerce 61-66

21. Customer relationship strategy by all E- 67

commerce

22. Effective strategy by E-tailing company 68-71

23. Industry challenges in E-commerce 72-76

24. History of flipkart 77-79

25. Industry challenges for flipkart 80-81

26. Distribution network of Flipkart 82

27. SWOT Analysis of Flipkart 83

28. History of Amazon 84

29. Over view of How Amazon operates 86-89

30. Marketing strategy by Amazon 90

31. SWOT Analysis of Amazon 91

32. Observation & Conclusion 92-102

33. Recommendation 103

34. Bibliography 104

35. Limitation 105

36. Annexure 106

 PROJECT REPORT ON

A DETAILED STUDY

ON ROLE OF LOGISTIC IN ONLINE

SHOPPING WITH RESPECT TO
FLIPKART AND AMAZON IN
INDIA
 EXECUTIVE SUMMARY

Due to increasing competition, high cost of acquisition and distribution of

products including raw material, increased service levels demanded by
the customers and shrinking profits- have faced the management to
realize the need and importance of efficient management of physical flow
of raw materials, components/ parts, spares, work-in-progress and
finished goods from suppliers through the customers.

Every organization, whether manufacturing or service sector, required a

system for integrating and coordinating functional activities for ensuring
smoothen flow at lowest total cost. Logistic management has been
evolved to achieve such as integration. Logistic management is also
known by various other names such as total physical distribution,
complete flow management and supply management, as well as known as
integrated logistics management.

A logistics manager has to manage the complete flow of materials, which

include movement of raw material from suppliers, in process within the
firm and 16 movements of finished goods to the customers. As well as
information flow covering reports and documentation relating to goods
movement.

The project report also suggests the way to achieve logistical mission,
coordination of specific jobs, which must be perform within the areas of
physical distribution, manufacturing support and procurement. To
achieve logistics competency by coordinating five elements (network
design, information, material handling, warehousing and packaging).
 PROBLEM OF RESEARCH
Research Analysis Demand for online shopping;

As it is growing rapidly with the online shoppers increasing company

started to trade through internet.

The researcher analysis the increase in growth ratio with transparency and
online transaction security. Trust inculcate by online shoppers on internet
and company.

The researcher would make the research company on two leading online
sites i.e. Flipkart and Amazon for research.

Thus, the research would help further company to inside online shopping
for academic & research worker.
 OBJECTIVE OF STUDY

1. To understand the exact nature of transaction security concerns of

Indian consumers.

2. To search for possible solutions for the transaction security concerns.

3. To explore other reasons that prevents online shopping in India.

4. To find the future potential of online shopping in India.

5. Online retailers should have their own warehouses & fulfil most of the
orders from their inventory only.

6. Amazon should adapt just-in-time techniques for prompt delivery

7. To study the competition between Flipkart and Amazon (national &
international company)
8. Online retailer has to kept safety stock.
9. What steps an e-retailing format companies should take to increase the
profitability.
10. To analyse whether delivery days for both cash on delivery and prior
payment are same or not?
 LITERATURE REVIEW

There are a number of research works have been done by researchers but
only a few has been given, related to the paper. The costs of a retail
format refer to consumers costs. Consumers incur non-monetary costs -
time, effort and psychological costs - as well as monetary costs. Savings
in non-monetary costs are especially emphasized by non-store formats.
Their appeal to consumers has been the ease and convenience of
shopping, freed from location and other constraints.

A) Supply Chain Management: Concepts and Cases

Author: Rahul Altekar

In response to the increasing significance attached to supply chain

management in both academic and professional areas, this text intends to
build a bridge and highlight the relationship between various disciplines
of SCM like demand planning, manufacturing planning, logistics
planning, analytical IT management, global e-biz modelling, performance
benchmarking etc.

Primarily intended to address the typical and general syllabus

requirements of postgraduate management programmes, and
undergraduate and postgraduate engineering programmes, this book also
caters to the needs of the industry professionals in the supply chain
domain.
B) Supply Chain Management

Author: John T Mentzer, Sage Publications

This book provides structure and clarity for a much talked about, but
poorly understand, functional requirement of business which directly
relates to profitability for all members of the supply chain.

This book is one of the most comprehensive collections of supply chain

analytics ever compiled comparing numerous multi-dimensions models in
a number of matrix environment.

C) Supply chain management

Author: JayashreeDubey, M.L. Sai Kumar

Competitive environment of modern times is forcing the firm to shift

focused from inside the corporate walls to collaboration with outside
trading patterns. Enhanced communication technology has redefined how
business work together, race customers expectations and placed new
demands on supply chain performance. Internet has allowed companies to
come up with highly innovative solution that accelerate the widespread
adoption of core principles of supply chain management. Companies that
make use of ebusiness to redefine supply chain integration achieve
significant increase in their efficiency and competitive edge over their
competitors. The next few years will see an explosion of e-enable new
paradigms of e-business for the future.
D) Exploring the supply chain theory and practice. By
Upendra Kachru,
First edition: New Delhi, 2009

Supply chain management is a revolutionary way of looking at the

processes involved in buying. The book elaborates the basic concepts of
supply chain management involved in buying & provides a
comprehensive coverage of the methodology & key strategic drivers in
the different processes involved in operating & designing a supply chain.

E) Supply Chain Management, Strategy Planning &

Operation
Author: Sunil chopra& Peter Meindl
Edition: III
The main objective of this well-established text is to enable the
students to understand the strategic importance of good supply chain
design, planning & operation for every firm. It explains in detail how
good supply chain management adds to a firms competitive advantage
while weakness in the supply chain adversely affects the performance of
the firm.

This third addition is expanded to include the cross functional supply

chain drivers of sourcing & pricing. A new chapter on supply chain
metrics is added to enable the readers to understand what ought to be
measured and why it is important to do so. There is also a significant
enhancement in the text with the added IT focused sections within
individual chapters to show the IT permeates through virtually all supply
chain functions.
F) The Icfai university journal of supply chain management

The paper published in this issue offer theoretical as well as practical

insights that hold immense vale to the practice & research of supply chain
management. The bullwhip effect is well known phenomenon & it affects
the supply chain management process. This phenomenon results in order
distortion and increasing amount of upstream variability in the orders
placed at various levels in supply chain.

G) Supply Chain Management

Author: Rene de Kster
Edition 2005

The popularity of supply chain management in theory and practice

is still increasing. This book provides a unique overview of current
research trends and practice in the field from European scholars.

Departing at selected theoretical inquires on prominent concepts and

methodologies in the supply chain field (e.g. theoretical foundations, 4PL
concept, configurationally approaches), the contributions in this volume
cover highly relevant topics along a generic supply chain upstream
activates relation to modular ratio, the development of logistical
capabilities, but also order picking optimization in warehouses,
distribution network design heuristics and issues of urban freight
transportation operations are among the topics treated.
H) Supply chain management: a structured literature review
and implications for future research, Kevin Burgess,
Prakash J. Singh, RanaKoroglu

Journal: International Journal of Operations &Production Management

The field of supply chain management (SCM) has historically been

informed by knowledge from narrow functional areas. While some effort
towards producing a broader organizational perspective has been made,
nonetheless, SCM continues to be largely eclectic with little consensus on
its conceptualization and research methodological bases. This paper seeks
to clarify aspects of this emerging perspective.

I) Business Logistics/ Supply Chain Management

Author: Ronald H. ballou
Edition: fifth

This book is about the vital subject of business logistics/ supply chain
an areas of management that has been observed to absorb as much a s60
to 80 % of a firms sales dollar & that can be essential to a firms
competitive strategy * revenue generation. This management area has
been described by many names, including physical distribution, material
management, transportation management, and logistics & now supplies
chain management.
J) Retail Management
Author: Swapna Pradhan
Indian Retail Industry is very old, but when being compared to
World/ Global Retail it still has a long way to go. Though there are many
problems faced in India with respect to its infrastructure, it still has a high
potential for becoming a future Hotspot. India is standing on the verge of
having the pleasure to hold 2010 Olympic Games. Its retail business
meter shows only about 7% organized retail in India. It means that a
whopping 93% market is yet to be captured by entrepreneurs.

K)Logistics And Supply Chain Management

Author: Raghuram

This book is a compilation of cases and notes documenting various

problem contexts and their resolution approaches. It is primarily intended
as a study text for case-based modules, courses on logistics and supply
chain management as part of training and educational programmes in
management.

According to Rao (1999)

E-commerce offers increased market activity for retailers in the form of

growing market access and information and decreased operating and
procurement costs. The consumers can gain better prices due to the
competition and also can enrich their knowledge on goods and services.
Zhang and von Dran (2000)

Have found that certain aesthetic elements of a web-site are considered

as purchase motivators, while other aesthetic elements serve as hygienic
factors (i.e., necessities) in purchase decisions from e-retailers. The
colour and background images of webpage are also found to affect
consumer choice.Tractinsky and Rao (2001) have argued that computer
users, particularly those who seek online substitutes to the physical
shopping experience, would value aesthetic designs just like consumers
of other commodities.

Ratchford et al. (2001)

Have told that through Internet, consumers can gather information about
merchandise and they compare a product across suppliers at a low cost.
They also can effectively analyse the offerings and easily locate a low
price for a specified product.

Eroglu et al. (2001) have advocated that the most important thing in the
traditional retailing is physical store setting. According to them, it is
largely determined by the cost of real estate and the various physical
objects required creating different sounds, aromas, colours and lighting.

Online constraints tend to be related to the screen resolution and the

hardware that exists at the consumer end of the channel. The hedonic
factors in designing the web-site interface can be enhanced with
symbolic, nonverbal elements, which can be created by images, colours,
fonts and videos and music.
Zeithaml (2002) has defined that;

The success of e-tailing depends on the efficient web site design,

effective shopping and prompt delivery. The other e-store services are
delivery on real time, return and replacement process, period of filling out
online orders form, speed of response time to e-customers queries. Kim
and Lee (2002) have suggested that the design of e-store influences
consumers access to e-store. In the e-store, website design, design of
product and service comparison and information, time to complete online
order form, easy of searching product and service, screen layout, screen
complexity, page composition, information retrieval methods,
information display, use of colour and background, assistance to the user
and speed of accessing the e-store are notable factors attracting e-
customers.
 RESEARCH METHOLODGY

The first step in the research process was to determine the issues that need
to be addressed for the purpose of the study. Initial talks & discussion
were held with manager of the Company in consultation with the guide.

Review of various data & literature available regarding all issues

connected with the research was extensively undertaken. Books from
various libraries were perused & the relevant ones were studied in detail.
Various journals, magazines & research papers were referred too.

Several web sites were browsed and relevant data was accumulated. The
descriptive survey helped in preparing the ground work for the next step
i.e.

The field survey.

Historical survey: The geographical area chosen for the survey was
Mumbai & Navi Mumbai city for the purpose of convenience. An
extensive survey of various distributors in Mumbai was undertaken &
people from the industry were consulted.

Research instruments: In consultation with the guide it was decided to

adapt an in-dept. structure interview (open-ended) as a method of data
collection to obtain qualitative data. As pointers for the research an
interview schedule was prepared for the purpose of conducting structured
in depth interviews of the distributors.
Data collection: both primary & secondary data were collected for the
research. The secondary data had already been collected in the previous
stage. Some of the primary data was collected during the interview of
production manager of the company, distributors & customers.
Appointments of the manager of the plant were taken over the phone.
Most of the primary data was collected by conducting in-depth interviews
of distributors. The researcher met the respondent face- to- face earlier.
The interview was conducted as per the interview schedule in English
language as well as in the local language. The gist of the discussion is
appended as annexure. Prior permission was taken of the interviewee to
append the gist of the discussion; typed copies are appended at the end.

Data analysis stage: data collected through primary & secondary sources
was tabulated and summarized so as to draw logical conclusions

Presentation of findings conclusions & recommendations: the finding,

conclusion & recommendations have been discussed later in this paper.
 LOGISTICS MANAGEMENT

Logistics and Supply Chain Management have always been an integral

part of any business, although they have mainly remained in the
background. But today, both Logistics and Supply Chain Management
are beginning to gain momentum. Indian businesses are fast getting
competitive and the only way one can stay ahead is to be quick, efficient,
and flexible. The best way to achieve this is to have an efficient logistics
system in place. This holds more importance as every industry is realising
that not only can substantial savings be gained from this area, but also a
good logistics system can push the business to the top slot. Definition: -
Very simply put, Logistics Management is a bridge between Demand and
Supply. That is it conveys the demand to the Supply point and reaches the
supply to the Demand point.

Logistics can be defined as:

'Logistics is the process of strategically managing the procurement,
movement and storage of materials, parts and finished inventory (and
related information flows) through the organization and its marketing
channels in such a way that current and future profitability are maximized
through the cost effective fulfilment of orders.'

Logistics Management provides a major source of competitive

advantage - in other words a position of enduring superiority over
competitors in terms of customer preference may be achieved through
Logistics.
 Logistics:

The science of planning and carrying out the movement and maintenance
of forces. In its most comprehensive sense, the aspects of military
operations which deal with:

a) Design and development, acquisition, storage, transport, distribution,

maintenance, evacuation and disposition of materiel

b) Transport of personnel;
c) Acquisition or construction, maintenance, operation and disposition of
facilities;

d) Acquisition or furnishing of services; and

e) Medical and health service support.

"Logistics is...

Strategically managing the procurement and movement of goods and

storage of inventory in all forms."

The process of strategically managing the procurement, movement and

storage of materials, parts and finished inventory (and the related
information flows) through the organization and its marketing channels in
such a way that current and future profitability are maximized through the
cost-effective fulfilment of orders".
 These definitions give the idea of the wide range of functions that
logistics covers. A simple definition is: "Logistics is the delivery of the
required goods, at required place, at required time, in required state and to
the required person efficiently." Logistics is "the process of planning
implementing and controlling the efficient, effective flow and storage of
raw materials, in-process inventory, finished goods, services and related
information right from the point of origin to the point of consumption
(including inbound, out bound, internal and external movements) in order
to satisfy customer's requirements.

LOGISTICS is also defined as time related positioning of resources. The

whole concept of Logistics is based on 7 R's which are:-

Right place
Right time
Right quantity
Right quality
Right price
Right condition
Right customer

Logistics is about moving materials, information and funds from one

business to another or from a business to the consumer. It is a vital part of
the business economic system and is a major global economic activity. In
fact 10-15 per cent of product costs are logistics related. Worldwide,
logistics constitutes about $2 trillion a year. For any country, the logistics
cost is estimated between 9 and 20 per cent of its GDP.
If one considers that logistics comprises both the building up of stocks
and capabilities and the containment of weapons and forces, then it is
clear that a distinction can be made between two important aspects of
logistics: the first one dealing with production and the second one with
consumption.

The following definitions of these aspects enjoy widespread acceptance: -

Production Logistics (also known as: acquisition logistics that part of

logistics concerning research, design, development, manufacture and
acceptance of materiel. In consequence, production logistics includes:
standardization and interoperability, contracting, quality assurance,
procurement of spares, reliability and defence analysis, safety standards
for equipment, specifications and production processes, trials and testing
(including provision of necessary facilities), codification, equipment
documentation, configuration control and modifications.

Consumer Logistics (also known as: operational logistics) that part of

logistics concerning reception of the initial product, storage, transport,
maintenance (including repair and serviceability), operation and disposal
of materiel. In consequence, consumer logistics includes stock control,
provision or construction of facilities (excluding any material element
and those facilities needed to support production logistic facilities),
movement control, reliability and defect reporting, safety standards for
storage, transport and handling and related training.
 What Can Logistics do for A Company?

Logistics includes all the processes required to go from raw materials to

end customer delivery, including purchasing, inventory management,
warehousing, shipping and even customer returns. All product-oriented
businesses have logistics as a cost of doing business. Some may think it
only applies to large businesses, but companies of any size can benefit
from logistics improvements.

Purchasing and Procurement: Purchasing is a key function in

optimizing overall Logistics and Supply Chain Management operations;
here we provide a listing of relevant resources in the purchasing field.

Inventory management: A significant cost to most organizations is

the inventory it carries to support customers and sales. Effectively
managing and minimizing this inventory investment can provide
competitive advantage to your firm in the marketplace. Review these
inventory management links to learn more.

Warehouse Management: A warehouse Management system is a

Critical component of an effective overall supply chain management
systems solution. Warehouse management is now, or will soon be, a
must-have for your logistics operations to remain competitive. We offer
warehouse management resources, information and a listing of
organizations that support warehouse management professionals. The
good news is that any improvement in logistics you make results in
savings in your cost of doing business. Best of all, these savings drop
right to your bottom line as profits.
 IMPORTANCE
Logistics is the one important function in business today. No marketing,
manufacturing or project execution can succeed without logistics support.
For companies, 10 per cent to 35 per cent of gross sales are logistics cost,
depending on business, geography and weight/value ratio.

Logistics is comparatively a new term, but not the operation. Logistics

has existed since the beginning of civilization. Raw material and finished
products had always to be moved, though on a small scale. Things began
changing with the advance in transportation. Population began moving
from rural to urban areas and to business centers. No longer did people
live near production centers, nor did production take place near residence
centers. The geographical distance between the production point and
consumption point increased and logistics gained importance.

Another factor has come into play recently. Since the early 1990's, the
business scene has changed. The globalization, the free market and the
competition has required that the customer gets the right material, at the
right time, at the right point and in the right condition...... at the lowest
cost.
 LOGISTIC FUNCTION

It is important to recognize that the various logistic functions come

together to form the totality of logistics support. For example, logistic
planning originates in national or MNC policy guidance and has to be
coordinated with all the staff branches concerned, whether they are
operational, administrative or logistic, military or civil. A brief
examination of the main functions of logistics shows this clearly.

1. Materiel Function of Logistics

Production or acquisition logistics covers materiel, from the first phase

of the life cycle to its final disposal from the inventory. The first part of
the cycle, from specification, design and production is clearly a function
of production logistics. Reception of the equipment into service, its
distribution and storage, repair, maintenance and disposal are clearly a
consumer logistic task. However, the initial design of the equipment
which is part of production logistics has to take account of the consumer
aspects of repair and maintenance, and therefore involves both
disciplines.

2. Supply Function of Logistics

Supply covers all materiel and items used in the equipment, support and
maintenance of military forces. The supply function includes the
determination of stock levels, provisioning, distribution and
replenishment.
3. Service Function of Logistics
The provision of manpower and skills in support of combat troops or
logistic activities includes a wide range of services such as combat
resupply, map distribution, labour resources, postal and courier services,
canteen, laundry and bathing facilities, burials, etc. These services may be
provided either to one's own national forces or to those of another nation
and their effectiveness depends on close cooperation between operational,
logistic and civil planning staffs.

4. Engineering Function of Logistics

The area of logistic engineering, while not exclusively a logistic function
will require close coordination with logistics as the mission is very
closely aligned with logistics in terms of facilitating the logistic mission
of opening lines of communication and constructing support facilities.
The engineering mission bridges the gap from logistics to operations and
is closely related to the ultimate success of both.

5. Medical Function of Logistics

This function entails the provision of an efficient medical support system
to treat and evacuate sick, injured and wounded personnel, minimize man
days lost due to injury and illness, and return casualties to duty. An
effective medical support system is thus considered a potential force
multiplier. Though medical support is normally a national responsibility,
planning must be flexible and consider coordinated multinational
approaches to medical support.
 ADVANTAGES

Competitive Advantage
The source of competitive advantage is found firstly in the ability of the
organization to differentiate itself in the eyes of the customer, from its
competition and secondly at a lower cost and hence at a greater profit.
That is successful companies either have a productivity advantage or a
value advantage or a combination of the two.

Productivity Advantage
Productivity Advantage gives a lower cost profile. Traditionally it has
been suggested that the main route to cost reduction was by gaining
greater sales volume and there can be no doubt about the close linkage
between relative market share and relative costs. However it must also be
recognized that Logistics Managers can provide multitude of ways to
increase efficiency and productivity and hence contribute significantly to
reduced unit costs.

Value Advantage
It has been an axiom in Marketing that 'Customers don't buy products
they buy benefits'. Put another way, the product is purchased not for itself
but for the promise of what it will deliver. Unless the product or the
service that we offer is distinguished from its competitor in some way,
there is a strong likelihood that the market will view it as a 'commodity'
and so the sale will tend to go to the cheapest supplier. Hence the
importance of adding value to our offerings to mark it out from the
competition. An extremely powerful means of adding value is service.
Increasingly we are finding that markets are becoming more service
sensitive.
This simply means that it is becoming progressively difficult to compete
purely on the basis of brand or corporate image. A number of companies
have responded to this by focusing on service as a means of gaining a
competitive edge. Service in this context relates to the process of
developing relations with customers through the provision of an
augmented offer. This augmentation can take many forms including
delivery service, after sales service, financial packages, technical support
and so forth.

Fig.1 Logistics and Competitive Advantage

In practice what we find is that the successful companies will often seek
to achieve a position based upon both a productivity advantage and a
value advantage; a useful way of examining the available options is to
present them as a simple matrix
Let us consider these options in turn: - For companies who find
themselves in the bottom left hand corner of our matrix the world is an
uncomfortable place. Their products are indistinguishable from their
competitors' offerings and they have no cost advantage. These are typical
commodity market situations and ultimately the only strategy is either to
move to the right on the matrix i.e. to cost leadership, or upwards into a
'niche'. Often the cost leadership route is simply not available. This
particularly will be the case in a mature market where substantial market
share gains are difficult to achieve.

Cost Leadership, if it is to form a basis of a viable long term marketing

strategy, should essentially be gained early in the market life cycle. This
is why market share is considered to be so important in many industries.
The other way out of the 'commodity' quadrant of our matrix is seek a
'niche' or segment where it is possible to meet the needs of the customers
through offering additional values. This value addition is mostly through
service. There is unfortunately no middle ground between cost leadership
and niche marketing. Being caught in between is quite a bad news.
Finally, perhaps the most defensible position in the matrix is the top right
hand corner. Companies who occupy that position have products that are
distinctive in the values they offer and are also cost competitive.

For example, for years marketing and manufacturing have been seen as
largely separate activities within the organization. At best they have
coexisted at worst there has been open warfare. Manufacturing priorities
and objectives have typically been focused on operating efficiency,
achieved through long production runs, minimized setups and change
over and product standardization. On the other hand marketing has sought
to achieve competitive advantage through high service levels and frequent
product changes.
 LOGISTICS ACTIVITIES

In our definition, logistics is comprised of five interdependent activities:

customer response, inventory planning and management, supply,
transportation, and warehousing.

a) Customer Response
Customer response links logistics externally to the customer base and
internally to sales and marketing. Customer response is optimized when
the customer service policy (CSP) yielding the lowest cost of lost sales,
inventory carrying, and distribution is identified and executed.

b) Inventory Planning and Management

The objective of inventory planning and management (IP&M) is to
determine and maintain the lowest inventory levels possible that will
meet the customer service policy requirements stipulated in the customer
service policy.

The logistics of inventory planning and management includes

Forecasting
Order quantity engineering
Service level optimization
Replenishment planning
Inventory deployment
 c) Supply
Supply is the process of building inventory (through manufacturing
and/or procurement) to the targets established in inventory planning. The
objective of supply management is to minimize the total acquisition cost
(TAC) while meeting the availability, response time, and quality
requirements stipulated in the customer service policy and the inventory
master plan.

The logistics of supply include

Developing and maintaining a Supplier Service Policy (SSP)
Sourcing
Supplier integration
Purchase order processing
Buying and payment

d) Transportation
Transportation physically links the sources of supply chosen in sourcing
with the customers we have decided to serve chosen as a part of the
customer service policy. We reserve transportation for the fourth spot in
the logistics activity list because the deliver-to points and response time
requirements determined in the customer service policy and the pick-up
points determined in the supply plan must be in place before a
transportation scheme can be developed. The objective of transportation
is to link all pickup and deliver-to points within the response time
requirements of the customer service policy and the limitations of the
transportation infrastructure at the lowest possible cost.
 The logistics of transportation includes
Network design and optimization
Shipment management
Fleet and container management
Carrier management
Freight management

E) Warehousing
Warehousing as the last of the five logistics activities because good
planning in the other four activities may eliminate the need for
warehousing or may suggest the warehousing activity be outsourced. In
addition, a good warehouse plan incorporates the needs of all the other
logistics activities. Good or bad, the warehouse ultimately portrays the
efficiency or inefficiency of the entire supply chain.

The objective of warehousing is to minimize the cost of labor, space, and

equipment in the warehouse while meeting the cycle time and shipping
accuracy requirements of the customer service policy and the storage
capacity requirements of the inventory play. The logistics of
warehousing includes

Receiving
Put away
Storage
Order picking
Shipping
 THE EVOLUTION OF LOGISTICS AND
SUPPLY CHAIN MANAGEMENT

Paralleling advances in management theory and information systems,

logistics has evolved in scope and influence in the private sector since the
mid to late 1940s. In the 1950s and 60s, the military was the only
organization using the term logistics. There was no true concept of
logistics in private industry at that time. Instead, departmental silos
including material handling, warehousing, machining, accounting,
marketing, and so on, were the norm. The five phases of logistics
developmentworkplace logistics, facility logistics, corporate logistics,
supply chain logistics, and global logistics

Fig2. The evolution of logistics.

Workplace Logistics

Workplace logistics is the flow of material at a single workstation. The

objective of workplace logistics is to streamline the movements of an
individual working at a machine or along an assembly line. The principles
and theory of workplace logistics were developed by the founders of
industrial engineering working in WWII and post-WWII factory
operations. A popular name today for workplace logistics is ergonomics.

Facility Logistics

Facility logistics is the flow of material between workstations within the

four walls of a facility (that is, interwork station and intrafacility).The
facility could be a factory, terminal, warehouse, or distribution center.
Facility logistics has been more commonly referred to as material
handling. The roots of facility logistics and material handling are in the
mass production and assembly lines that distinguished the 1950s and
1960s. In those times and even into the late 1970s, many organizations
maintained material-handling departments. Today, the term material
handling has fallen out of favour because of its association with no value
added activities.
Corporate Logistics

As management structures advanced and information systems

accordingly, our ability to assimilate and synthesize departments
(material handling, warehousing, and so on) into functions (physical
distribution and business logistics) in the 1970s permitted the first
application of true logistics within a corporation. Corporate logistics
became a process with the common objective to develop and maintain a
profitable customer service policy while maintaining and reducing total
logistics costs.

Supply Chain Logistics

Supply chain logistics is the flow of material, information, and money

between corporations (interwork station, interfacility, intercorporate, and
intrachain). There is a lot of confusion surrounding the terms logistics and
supply chain management. I distinguish the two by explaining that the
supply chain is the network of facilities (warehouses, factories, terminals,
ports, stores, and homes), vehicles (trucks, trains, planes, and ocean
vessels), and logistics information systems (LIS) connected by an
enterprises suppliers suppliers and its customers customers. Logistics is
what happens in the supply chain. Logistics activities (customer response,
inventory management, supply, transportation, and warehousing) connect
and activate the objects in the supply chain. To borrow a sports analogy,
logistics is the game played in the supply chain arena.
Global Logistics

Global logistics is the flow of material, information, and money between

countries. Global logistics connects our suppliers suppliers with our
customers customers internationally. Global logistics flows have
increased dramatically during the last several years due to globalization in
the world economy, expanding use of trading blocs, and global access to
Web sites for buying and selling merchandise. Global logistics is much
more complex than domestic logistics, due to the multiplicity of handoffs,
players, LAN-gauges, documents, currencies, time zones, and cultures
that are inherent to international business.

Next-Generation Logistics

There are many theories as to the next phase of logistics development.

Many logisticians believe that collaborative logistics, logistics models
built with continuous and real-time optimization and communication
between all supply chain partners will be the next phase of evolution.
Other camps in the logistics community believe the next phase of
evolution will be virtual logistics or fourth-party logistics, where all
logistics activities and management will be outsourced to third-party
logistics providers who are in turn managed by a master or fourth-party
logistics providers acting kind of like a general contractor. I used to joke
that interplanetary logistics would be the next phase of evolution until the
director of logistics for NASA and the international space station program
showed up in our Logistics Management Series and began asking my
advice on how to get parts to Mars to support their next mission.
 LOGISTICS MANAGEMENT PROCESS

Fig3. Logistics Management Process

Logistics Management Process.

The above figure illustrates the total systems concept. Logistics

Management, from this total systems view point, is the means whereby
the needs of the customer are satisfied through the coordination of
materials and information flow that extend from the market place,
through the firm and its operation and beyond that to the suppliers. To
achieve this company wide integration clearly
 LOGISTICS: INBOUND AND OUTBOUND

This is the most intricate part of the system of SCM. If goods dont reach
in time and they are of inferior quality you as an entrepreneur earn a bad
name too. So why give the consumer a chance? Plan it in a way that you
ensure both quality and quantity in a reasonable time frame. Take for
example 7 days truckers strike in 2004. It was bad for economy of the
country and above all worse for those manufacturers who couldnt deliver
goods on time. A strike or a bandh as we call it in India is a happy
situation for the fleet owners but a bad time for the drivers, mill owners,
small timers, laborer, suppliers, manufacturers and the consumers. That
is the reason contingency planning plays a predominant role in shaping
our SCM system. How, let us see.

Suppliers to Manufacturers
The most complicated, yet, the most important phase in any
production are the movement of raw materials from the supply point by
the suppliers to the manufacturing unit. Identification of the right type of
suppliers is therefore the key to effective SCM system. Can you envisage
the various agencies and steps that are involved in this total system? Let
us see them one by one.

What is the raw material that has to be moved?

What is the cheapest and the best available with the suppliers?
Where is it available?
What are the credentials of the supplier?
What is the mode of transport being utilized for the move?
Is it cost effective?
 What is the time factor involved in the movement?
Does weather and climate play a predominant role in moving the raw
material?

What are the terrain conditions in the areas from where it has to be
moved?

What is the distance involved?

Is it of acceptable quality?

All these have to be addressed before one plan for movement of

these raw materials, that too in great detail. That is whatis an effective
SCM system to be followed by every firm.

Manufacturers to Consumers

Let us now visualize the various stages involved in moving the finished
products from the manufacturing units to the consumers. They are:

Packaging of goods.
Stocking them in warehouses/containerization.
Loading into carriers/transportation.
Delivery to the nearest wholesalers.
Wholesalers to retailers.
Retailers to market places/stores.
To consumers.
 These 7 steps are like any of those 7 days. Its difficult to skip one to save
on another. Yes, there are direct marketing that the companies are
following these days, but they are numbered. But the basic stages of these
companies too move through pre-designated franchises and not directly.
Hence, the time taken or cost per se generally remains the same.

Problems envisaged in movement of products from manufacturing units

to consumers are many and can be listed as under:

Perishable products.
Losses in transit.
Accidents and calamities.
Unavoidable delays in terms of strikes and bandh.
Labour unrest.
Rats and rodents.
Breakages during handling.
General costing since at times even double handling is involved.
 GLOBAL TRENDS

In 2010, the United Kingdom had the biggest e-commerce market in the
world when measured by the amount spent per capita. The Czech
Republic is the European country where ecommerce delivers the biggest
contribution to the enterprises total revenue. Almost a quarter (24%) of
the countrys total turnover is generated via the online channel.

Among emerging economies, China's e-commerce presence continues to

expand. With 384 million internet users, China's online shopping sales
rose to $36.6 billion in 2009 and one of the reasons behind the huge
growth has been the improved trust level for shoppers. The Chinese
retailers have been able to help consumers feel more comfortable
shopping online.China's cross-border e-commerce is also growing
rapidly. E-commerce transactions between China and other countries
increased 32% to 2.3 trillion yuan ($375.8 billion) in 2012 and accounted
for 9.6% of China's total international trade.

Other BRIC countries are witnessing the accelerated growth of

ecommerce as well. In Russia, the total ecommerce market is projected to
total somewhere between 690 billion rubles ($23 billion) and 900 billion
rubles ($30 billion) in 2015, at 2010 values. This will equal 5% of total
retail volume in Russia. Longer-term, the market size of Russian e-
commerce could reach $50 billion by 2020. Ecommerce players need to
understand unique insights about trust factor, online payments and
language peculiarities to penetrate the Russian market. Brazil's
ecommerce is growing quickly with retail ecommerce sales expected to
grow at a healthy double-digit pace through 2014. By 2016, E-Marketer
expects retail ecommerce sales in Brazil to reach $17.3 billion.
India's ecommerce growth, on the other hand, has been slower although
the country's potential remains solid considering its surging economy, the
rapid growth of internet penetration, English language proficiency and a
vast market of 1.2 billion consumers (although perhaps only 50 million
access the internet through PCs and some estimate the most active group
of e-commerce customers numbers only 2-3 million). E-commerce traffic
grew about 50% from 2011 to 2012, from 26.1 million to 37.5 million,
according to a report released by Com Score. Still much of the estimated
14 billion dollars in 2012 ecommerce was generated from travel sites.

E-commerce is also expanding across the Middle East. Having recorded

the world's fastest growth in internet usage between 2000 and 2009, the
region is now home to more than 60 million internet users. Retail, travel
and gaming are the region's top ecommerce segments, in spite of
difficulties such as the lack of region-wide legal frameworks and
logistical problems in cross-border transportation. E-Commerce has
become an important tool for small and large businesses worldwide, not
only to sell to customers, but also to engage them. In 2012, ecommerce
sales topped $1 trillion for the first time in history.
 GLOBA MARKET SHARE OF

E-COMMERCE

E-commerce B2C product sales total $142.5 billion, representing about

8% of retail product sales in the United States. The $26 billion worth of
clothes sold online represented about 13% of the domestic market, and
with 72% of women looking online for apparel, it has become one of the
most popular cross-shopping categories. Forrester Research estimates that
the United States online retail industry will be worth $279 billion in
2015. There were 242 million people shopping on-line in China in 2012.

For developing countries and low-income households in developed

countries, adoption of e-commerce in place of or in addition to
conventional methods is limited by a lack of affordable Internet access.
 BROAD DIFFERENCES BETWEEN
TRADITIONAL RETAILING AND
E-TAILING

In India, at present, most retailing occurs through physical stores, with

existing operators. The importance of location has been stressed in
traditional retailing. The physical location of a store is seen as a source of
competitive advantage as it attracts the customer attraction. Similarly, the
new version of web based retailing is growing all over the world. They
provide virtual shopping space to the customers. With the help of the
power of information technology through large and accurate data
warehouses, both traditional retailers and e-tailers have been able to
reduce and manage inventory and respond accurately to customer
demand.

The most prominent difference between traditional retailing and e-tailing

is the replacement of human-to-human interaction with human-to-
machine interaction. While store layout is one of the decisive factors in
traditional retailing , screen depth, browse and search functions, indices,
image maps and e-store design quality are an integral part of e-tailing.
Moreover, many buying functions seem personal and have no
correspondence in the e-store, which should drive us to conclude that e-
customer satisfaction is one of the major concepts in e-tailing industry in
this Internet Age.

In traditional retail environment, retailers can use the aesthetic design to

create a desired possible design aspect that would help generate a
favourable store atmosphere. On the case of e-tailing, the e-tailers use the
visual aesthetics.
To get these things, they use and designs better websites. The websites
are considered most important because lack of aesthetics sense in the
websites consumers may switch to another store. Secondly, manipulating
websites is relatively easier, cheaper and can be done more flexibly.

In the traditional retailing system both the retailer and manufacturer

control over the presentation of the product. The manufacturer controls
the packaging, but the retailer executes the visual merchandising and
signage that provide the context for the package. On the e-tailing system,
the e-tailer controls the product representation as the product is not
physically present in front of the customer. Instead, the e-tailer decides
how to represent the presence of the product as part of the information
mix for the site: images, text and hyperlinks among other elements. The
e-tailer totally depends by the distribution of screen and window size and
screen resolution in the target.

The table 1 depicts the differences between the traditional retailing and
online retail.
 TABLE 1: DIFFERENCES BETWEEN TRADITIONAL RETAIL
AND E-TAIL

Traditional retailing E-tail

Location and Physical branded goods Location is the web address,

easily identified and available globally through internet
Presence connection.
found. Most traditional
and oldest location for Can establish a presence through
retail. cross promotions (links between sites)

Commands attention In
the retail landscape.

Merchandisi Use of store space and Web page layout

ng proper assortment.
Relationship between product and
Signage other product text
information tools.
Signage and other product
information tools
Category search and sorting
mechanism
Interactive product locations

Promotional Pricing strategies and Pricing strategies and campaigns

Activity campaigns can be can be implemented instantaneously
implemented on a daily depending on internal organizational
basis constraints

Inventory Product must be Multiple inventory ownership

available at multiple store options, with most prominent being
Management
locations to maximize traditional, just-in-time and a
purchasing opportunities hybrid of two.
Overall, the trend for online shopping is very positive. The reasons for
this optimism, according to dot-com players, are an increased availability
in online payment options, a wider range of merchandise, online tracking
of shipments, 24-hour, seven-day-a-week customer care, and a larger
Internet reach at cheaper costs. Today, the customer has a choice of
payment modes: credit cards, cash on delivery, Internet banking accounts,
demand drafts and cash on order. Table 2 provides the comparative
analyses of traditional retailing and e-tailing.

TABLE 2: TRADITIONAL RETAILING VS. E-TAILING

Strength Weaknesses

Traditional Established brand value/image Lack of execution speed

retailers Lack of technology
Established quality and its competence
Merchandising skills High advertising costs
Consumer acceptance of current
proposition
Can touch and feel products

E-trailers Low overhead Concerns over

security Lack of trust
IT infrastructure and dependency among
Execution speed the users

Low advertising costs Users are less due to

high technology
 INDIAN TRENDS

E-TAILING IN INDIA: ITS ISSUES, OPPORTUNITIES

AND EFFECTIVESTRATEGIES FOR GROWTH AND
DEVELOPMENT

ABSTRACT:

The Indian Online Retail is a rich segment waiting to be exploited.

Internet is a potent medium that can serve as a unique platform for the
growth of retail brands in India. The medium holds many virtues
favourable for the retail industry including a higher customer penetration,
increased visibility, and convenient operations. The current web-based
models for e-tailing are part of an embryonic phase preceding an era of
rapid transformation, challenge, and opportunity in Indian retail market.
The Indian retail market is witnessing a revolution. The growth of
internet has enabled the new retail format of the virtual retailer to emerge
and forced the existing retailers to consider e-tailing model of retailing as
well. Online retailing or e-tailing is described as transactions that are
conducted through interactive online computer systems, which link
consumers with sellers electronically, where the buyer and merchant are
not at the same physical location. In a short space of time, internet
retailing or e-tailing has firmly established itself as a viable alternative to
store based shopping. This paper attempts to provide a clear picture about
the e-tailing in India and its various issues, opportunities. It also attempts
to draw an effective e-tailing strategy in India based on the detailed
survey of e-tailing companies.
INTRODUCTION:
With rapid growth of the Internet and globalization of market, the retail
sector has become an increasingly competitive and dynamic business
environment. Business and marketing activities are affected by the invent
of Internet technologies and the Internet is revolutionizing commerce,
marketing, retailing, shopping and advertising activities of products and
services.

There are several attractive attributes of Internet to not only e-customers

but also companies on time and money saving, communicate,
convenience, easy accessibility, selection from a wide range of
alternatives, and the availability of information for making decisions and
all marketing activities can be performed via the Internet efficiently. In
the era of globalization, companies are using the Internet technologies to
reach out to valued customers and to provide a point of contact 24 hours a
day, 7 days a week. E-commerce and e-marketing are the two important
terms in the new Internet-based business domain. E-commerce can be
defined as a way of conducting business by companies and customers
performing electronic transactions through the Internet. E-marketing,

(Also known as Internet Marketing, Web Marketing, and Online

Marketing etc.) Can be defined as the promotion of products or services
through the Internet whereas; e-tailing can be defined as selling products
and services by using the Internet. Wang (2002) has provided a broad
definition of e-tailing by defining it as the selling of goods and services to
the consumer market via the internet. According to Turban et al. e-tailing
is defined as retailing conducted online, over the internet.
In general, the activities of e-tailing encompass three main activities.
They are: (i) a product search facility (often referred as a product
evaluation or information gathering facility), (ii) an on-line purchase
function and (iii) a product delivery capability.

Like general marketing activities of an organization, e-tailers have also

stick to the same 4Ps of marketing activities. They are: Product, Price,
Promotion and Place. With regard to the right products, e-stores can offer
a larger spectrum of product offering like traditional retailers in
categories ranging from electronics to shoes. E-store is the Internet
version of stores that set up electronic storefronts on the Internet. It
provides all kinds of products and renders service to the e-customer at the
click of a mouse button and makes money by selling products directly to
e-customers. When it comes to the right price, e-stores can be operated
with low profit margin because of the lower cost and higher sales volume.

As for the right promotion, e-stores have unlimited direct marketing,

advertising and selling opportunities. Finally, with regard to the right
place; the location of e-stores is not important in the Internet and e-
customer can connect and purchase products and services from the
Internet at any time and place, e-store is defined as a commercial web site
on which e-customers can shop and make purchases.

E-commerce offers increased market activity for retailers in the form of

growing market access and information and decreased operating and
procurement costs. The consumers can gain better prices due to the
competition and also can enrich their knowledge on goods and services.
According to a survey conducted by Internet and Mobile Association of
India (IAMAI) and Indian Market Research Bureau (IMRB), the e-
commerce market in India has garnered Rs. 9210 crore in 2007-08,
whereas e-tailing market was only about Rs. 1150 crore).
In general, e-tailing industry, from a business perspective offers an
opportunity to cater to consumers across geographies, no operational
timings, unlimited shelf space and all this with miniscule quantity of
infrastructure. For a country like India, the growth in the e-tailing market
is driven by the need to save time by urban India.

Besides with over 2.5 billion internet users, access to internet has also
played an important role in growing the markets. Consumers decision-
making process has considerably changed with the introduction of the
Internet as an alternative channel for shopping. The new wave of
consumerism coupled with increasing urbanization and burgeoning
middle class with paradigm shifts in their demographic and
psychographic dynamics have driven consumers frequently to use retail
websites to search for product information and/or make a purchase of
products. In India, the shift from physical stores to e-store takes place due
to the in-adequacy of time of consumers and the relatively high
disposable incomes as well as due to a high need for labour saving goods
and The electronic retail growth of Indian market as estimated by Euro-
monitor report has already touched Rs. 2700 crores in the year 2010 from
Rs. 400 crores in 2005.

Again on the recent report of Internet and Mobile Association of India

(IAMAI), the Indian e-commerce market will gallop at an impressive
growth rate of 47 per cent to over Rs 46,000 crore in the year 2011.
Comprising about 81 per cent of the total e-commerce in the country, the
online travel market, which includes booking rail and air tickets, hotel
accommodations and tour packages, is estimated to grow by 50 per cent
and touch Rs 37,890 crore by December, 2011. E-tailing sector in India is
expected to grow by 34 per cent and touch Rs 2,650 crore in the year
2011.
Bullish on the growth prospects of the online market, the Indian retail
market has observed that online spending has been skewed toward certain
products in e-tailing. E-tailing, which includes purchases of durable
products such as electronic items, home and kitchen appliances, as well
as personal items like apparels and jewellery, constitutes 8 per cent of the
overall e-commerce market in India. The top E-tailers in India are
indiatimes.com, fabmart.com, rediffshopping.com. They have managed to
retain their lead due to innovative business strategies, supply chain model
and changing urban lifestyles.

India has an internet user base of about 137 million as of June

2012.The penetration of e-commerce is low compared to markets like the
United States and the United Kingdom but is growingat a much faster
rate with a large number of new entrants. The industry consensus is that
growth is at an inflection point.

Unique to India (and potentially to other developing countries), cash on

delivery is a preferred payment method. India has a vibrant cash economy
as a result of which 80% of Indian e-commerce tends to be Cash on
Delivery. Similarly, direct imports constitute a large component of online
sales. Demand for international consumer products (including long-
tail items) is growing much faster than in-country supply from authorised
distributors and e-commerce offerings.
 MARKET SIZE AND GROWTH

India's e-commerce market was worth about $2.5 billion in 2009, it went
up to $6.3 billion in 2011 and to $14 billion in 2012. About 75% of this is
travel related (airline tickets, railway tickets, hotel bookings, online
mobile recharge etc.). Online Retailing comprises about 12.5% ($300
Million as of 2009). India has close to 10 million online shoppers and is
growing at an estimated 30% CAGR vis--vis a global growth rate of 8
10%. Electronics and Apparel are the biggest categories in terms of sales.

Key drivers in Indian e-commerce are:

Increasing broadband Internet (growing at 20%)

and 3G penetration.
Rising standards of living and a burgeoning, upwardly mobile
middle class with high disposable incomes.
Availability of much wider product range (including long
tail and Direct Imports) compared to what is available at brick and mortar
retailers.
Busy lifestyles, urban traffic congestion and lack of time for offline
shopping.
Lower prices compared to brick and mortar retail driven
by disintermediation and reduced inventory and real estate costs.
Increased usage of online classified sites, with more consumer
buying and selling second-hand goods.
Evolution of the online marketplace model with sites like eBay,
Flipkart, Snapdeal, Infibeam, qnetindia.in and Tradus. The evolution of
ecommerce has come a full circle with marketplace models taking centre
stage again.
India's retail market is estimated at $470 billion in 2011 and is expected
to grow to $675 Bn by 2016 and $850 Bn by 2020, estimated CAGR of
7%. According to Forrester, the e-commerce market in India is set to
grow the fastest within the Asia-Pacific Region at a CAGR of over 57%
between 201216.

As per "India Goes Digital", a report by Avendus Capital, a leading

Indian Investment Bank specializing in digital media and technology
sector, the Indian e-commerce market is estimated at Rs 28,500 Crore
($6.3 billion) for the year 2011. Online travel constitutes a sizable portion
(87%) of this market today. Online travel market in India is expected to
grow at a rate of 22% over the next 4 years and reach Rs 54,800 Crore
($12.2 billion) in size by 2015. Indian e-tailing industry is estimated at Rs
3,600 crore (US$800 mn) in 2011 and estimated to grow to Rs 53,000
Crore ($11.8 billion) in 2015.

Overall e-commerce market is expected to reach Rs 1, 07,800 crores

(US$ 24 billion) by the year 2015 with both online travel and e-tailing
contributing equally. Another big segment in e-commerce is mobile/DTH
recharge with nearly 1 million transactions daily by operator websites
Infrastructure

Many open source ecommerce software and platforms are growing in

prominence including Magento. There are many hosting companies
working in India but most] of them are not suitable for E-Commerce
hosting purpose, because they are providing much less secure and threat
protected shared hosting. E-Commerce demand highly secure, stable and
protected hosting. Trends are changing with some of ecommerce
companies starting to offer SaaS for hosing web stores with minimal
onetime costs.

There could be various methods of ecommerce marketing such as blog,

forums, search engines and some online advertising sites like Google
adwords and Adroll.

India got its own version of the so-called Cyber Monday known as Great
Online Shopping Festival in December 2012, when Google
India partnered with e-commerce companies
including Flipkart,HomeShop18, Snapdeal, Indiatimes
shopping and Makemytrip. "Cyber Monday" is a term coined in the USA
for the Monday coming after Black Friday, which is the Friday
after Thanksgiving Day.

In early June 2013, Amazon.com launched their Amazon India

marketplace without any marketing campaigns.
 ADVANTAGES OF E-COMMERCE

Convenience
Online stores are usually available 24 hours a day, and many consumers
have Internet access both at work and at home. Other establishments such
as internet cafes and schools provide internet access as well. In contrast,
visiting a conventional retail store requires travel and must take place
during business hours.

In the event of a problem with the item (e.g., the product was not what
the consumer ordered, the product was not satisfactory), consumers are
concerned with the ease of returning an item in exchange for either the
correct product or a refund. Consumers may need to contact the retailer,
visit the post office and pay return shipping, and then wait for a
replacement or refund. Some online companies have more generous
return policies to compensate for the traditional advantage of physical
stores. For example, the online shoe retailer Zappos.com includes labels
for free return shipping, and does not charge a restocking fee, even for
returns which are not the result of merchant error. (Note: In the United
Kingdom, online shops are prohibited from charging a restocking fee if
the consumer cancels their order in accordance with the Consumer
Protection (Distance Selling) Act 2000.
Information and reviews

Online stores must describe products for sale with text, photos, and
multimedia files, whereas in a physical retail store, the actual product and
the manufacturer's packaging will be available for direct inspection
(which might involve a test drive, fitting, or other experimentation).

Some online stores provide or link to supplemental product information,

such as instructions, safety procedures, demonstrations, or manufacturer
specifications. Some provide background information, advice, or how-to
guides designed to help consumers decide which product to buy.

Some stores even allow customers to comment or rate their items. There
are also dedicated review sites that host user reviews for different
products. Reviews and even some blogs give customers the option of
shopping for cheaper purchases from all over the world without having to
depend on local retailers.

In a conventional retail store, clerks are generally available to answer

questions. Some online stores have real-time chat features, but most rely
on e-mails or phone calls to handle customer questions.

Price and selection

One advantage of shopping online is being able to quickly seek out deals
for items or services provided by many different vendors (though
some local search engines do exist to help consumers locate products for
sale in nearby stores). Search engines, online price comparison
services and discovery shopping engines can be used to look up sellers of
a particular product or service.
 DISADVANTAGES OF E-COMMERCE
Fraud and security concerns

Given the lack of ability to inspect merchandise before purchase,

consumers are at higher risk of fraud than face-to-face transactions.
Merchants also risk fraudulent purchases using stolen credit cards or
fraudulent repudiation of the online purchase. However, merchants face
less risk from physical theft by using a warehouse instead of a retail
storefront.

Secure Sockets Layer (SSL) encryption has generally solved the problem
of credit card numbers being intercepted in transit between the consumer
and the merchant. However, one must still trust the merchant (and
employees) not to use the credit card information subsequently for their
own purchases, and not to pass the information to others. Also, hackers
might break into a merchant's web site and steal names, addresses and
credit card numbers, although the Payment Card Industry Data Security
Standard is intended to minimize the impact of such breaches. Identity is
still a concern for consumers. A number of high-profile break-ins in the
2000s have prompted some U.S. states to require disclosure to consumers
when this happens. Computer security has thus become a major concern
for merchants and e-commerce service providers, who deploy
countermeasures such as firewalls and anti-virus software to protect their
networks.

Phishing is another danger, where consumers are fooled into thinking

they are dealing with a reputable retailer, when they have actually been
manipulated into feeding private information to a system operated by a
malicious party. Denial of service attacks are a minor risk for merchants,
as are server and network outages.
Quality seals can be placed on the Shop web page if it has undergone an
independent assessment and meets all requirements of the company
issuing the seal. The purpose of these seals is to increase the confidence
of online shoppers. However, the existence of many different seals, or
seals unfamiliar to consumers, may foil this effort to a certain extent. A
number of resources offer advice on how consumers can protect
themselves when using online retailer services. These include:

Sticking with known stores, or attempting to find independent consumer

reviews of their experiences; also ensuring that there is comprehensive
contact information on the website before using the service, and noting if
the retailer has enrolled in industry oversight programs such as a trust
mark or a trust seal.

Before buying from a new company, evaluate the website by considering

issues such as: the professionalism and user-friendliness of the site;
whether or not the company lists a telephone number and/or street
address along with e-contact information; whether a fair and reasonable
refund and return policy is clearly stated; and whether there are hidden
price inflators, such as excessive shipping and handling charges.

Ensuring that the retailer has an acceptable privacy policy posted. For
example note if the retailer does not explicitly state that it will not share
private information with others without consent.

Ensuring that the vendor address is protected with SSL (see above) when
entering credit card information. If it does the address on the credit card
information entry screen will start with "HTTPS".
Although the benefits of online shopping are considerable, when the
process goes poorly it can create a thorny situation. A few problems that
shoppers potentially face include identity theft, faulty products, and the
accumulation of spyware. Whenever users purchase a product, they are
required to put in their credit card information and billing/shipping
address. If the website is not secure, customer information can be
accessible to anyone who knows how to obtain it. Most large online
corporations are inventing new ways to make fraud more difficult.
However, criminals are constantly responding to these developments with
new ways to manipulate the system. Even though online retailers are
making efforts to protect consumer information, it is a constant fight to
maintain the lead. It is advisable to be aware of the most current
technology and scams protect consumer identity and finances.

Product delivery is also a main concern of online shopping. Most

companies offer shipping insurance in case the product is lost or
damaged. Some shipping companies will offer refunds or compensation
for the damage, but this is up to their discretion.

Lack of full cost disclosure

The lack of full cost disclosure may also be problematic. While it may be
easy to compare the base price of an item online, it may not be easy to
see the total cost up front. Additional fees such as shipping are often not
be visible until the final step in the checkout process. The problem is
especially evident with cross-border purchases, where the cost indicated
at the final checkout screen may not include additional fees that must be
paid upon delivery such as duties and brokerage. Some services such as
the Canadian based Wishabi attempts to include estimates of this
additional cost, but nevertheless, the lack of general full cost disclosure
remains a concern.
Privacy

Privacy of personal information is a significant issue for some consumers.

Many consumers wish to avoid spam and telemarketing which could
result from supplying contact information to an online merchant. In
response, many merchants promise to not use consumer information for
these purposes,

Many websites keep track of consumer shopping habits in order to

suggest items and other websites to view. Brick-and-mortar stores also
collect consumer information. Some ask for a shopper's address and
phone number at checkout, though consumers may refuse to provide it.
Many larger stores use the address information encoded on consumers'
credit cards (often without their knowledge) to add them to a catalogue
mailing list. This information is obviously not accessible to the merchant
when paying in cash.

Product suitability

Many successful purely virtual companies deal with digital products,

(including information storage, retrieval, and modification), music,
movies, office supplies, education, communication, software,
photography, and financial transactions. Other successful marketers use
drop shipping or affiliate marketing techniques to facilitate transactions
of tangible goods without maintaining real inventory.

Products such as spare parts, both for consumer items like washing
machines and for industrial equipment like centrifugal pumps, also seem
good candidates for selling online.
ESSENTIAL STRATEGY KEEP IN MIND BY
E-COMMERCE
Big Data isnt the Future, its now:

Amazon is the most successful e-commerce site on the web. Thats not
because of charm, personality, or charisma. Its because of tools and data.
Amazon has been playing the big data game for a very long time, and
the result has been massive profits. With personalized results and
recommended items, people use Amazon just as much for the usefulness
of its tools as for the variety of its products.

E-commerce start-ups may not have the sheer number of products that
Amazon has, and they may not have the resources to implement
recommendation systems powered by dozens of servers and machine
learning algorithms, but weve already arrived at a point in time where
some semblance of big data is available to nearly any start-up.

Take Googles Prediction API, for example. For $10 a month, an E-

commerce start-up can make up to 10,000 predictions per month, training
a machine learning algorithm on a dataset for $0.002 per megabyte. That
amounts to $5 for the maximum-sized dataset: 2.5 gigabytes. True,
youre certainly not going to build user-by-user recommendations with
those limitations (at least not in a way thats scalable), but its certainly
enough to build some optimized recommendations for a heavily
segmented audience.

Meanwhile, tools like KISS metrics cost a maximum of $500 per month
($150 at the bargain end), and allow you to track behavioural data for
individual consumers over extended periods of time, giving you insights
about their purchasing habits that can be further crunched.

Personalization has already proven itself to be a powerful way to boost

ROI, and studies are already starting to show us that consumers prefer
personalization, despite the privacy concerns that naturally come with it.

Meanwhile, free machine learning courses like Courseras are already

enough to transform novice programmers with little statistical knowledge
into people who can win data science contests.

Its not my intention to start a big debate here about the problem of
unstructured data, which is still a huge one, or to argue over the
semantics of big data. Instead, Im here to argue that if you want to
compete in the marketplace as it stands, your marketing strategy will
need to be as personalized as possible with the resources available to you.
Online is Moving Offline:

When you combine the mobile revolution with things like Amazons
plans to build same-day delivery systems (with or without drones), the
fact that 70 percent of shoppers research online before shopping in the
store, and Shopifys point-of-sale system for their e-commerce platform,
you start to get the feeling that online isnt strictly separate from the
physical world anymore.

In fact, as Warby Parker discovered, a primarily online business can

dramatically improve their customer retention and overall sales simply by
adding a small proportion of offline sales, even if they only make up 10
percent of the total figure.

With 30 percent of online shoppers turning straight to Amazon, and only

13 percent to Google, its easy to see how, in some cases, it might
actually be easier to make an impression offline than online.

E-commerce sites that hope to stand out and make a dent in the public
consciousness will do themselves a favor by experimenting offline: in
particular by doing some guerilla marketing and opening up a few
physical stores when the resources are available.

We went in-depth on the process of moving offline over at CrazyEgg.

Here are a few of the takeaways:

Experiment offline with minimum viable stores such as kiosks (or, like
Warby Parker, your dining room) before you move into a full-blown
store.
Understand How Social Networks Drive Sales:

There are essentially only two ways that social networks can make you
money:

They refer somebody to your site, where a sale is ultimately made

They influence brand and product perception, which influence sales

That first point is relatively easy to track and measure. While you cant
split test your posts (unless you make it a promoted post or use some very
convoluted targeting options), you can keep a record of your posts and
referrals, analyse them, and arrive at insights about how best to refer
visitors to your site.

That second one is much more complicated. Its difficult enough to

measure that some marketers question whether such an effect even exists.

An in-depth study out of the University of Singapore demonstrates that

this kind of behaviour does influence sales, but not in the way most
marketers might expect. After combining an Asian retailers customer
database of 14,000 customers with data from the Facebook API and
Facebook Data Science Team, and using text analysis tools on the posts
that their customers saw on Facebook, they reached the following
conclusions:

Posts by the marketer did not influence sales, but their comments and
other direct interactions with consumers did. (Again, this is ignoring
referrals.)

Interactions with other consumers had a more dramatic impact on sales.

Information rich comments had a positive influence on sales, whether the
comments were positive or negative surprisingly,
positive indirect communications with other consumers had the strongest
impact on sales.

At the same time, direct interactions with other consumers had the
strongest impact on the price elasticity of demand. Direct interactions
with other consumers essentially transformed the product into an inelastic
commodity.

While theres no doubt that your own Facebook posts can be optimized
for referrals, where further persuasion can occur, it looks like the
Facebook post itself isnt a good place to do any persuading. Instead, if
you hope to use Facebook as a platform to drive sales directly, you need
to get your audience talking to itself. Your number of Likes or followers
is irrelevant.

So, how do you get your audience talking?

That starts with an understanding of what social networks are actually

for. They arent a place for topically driven discussions the way that a
blog comment section or a forum is. They are a place for people to
entertain themselves and see what their friends and family are up to.

For an idea of what works on social networks, you can look at Facebook
Pages like Interesting Things, JustGirlyThings, and Deal Dash, all
Pages that are doing the unthinkable: getting even more people talking
about this than Liking their Page.

While Im not remotely suggesting that you should copy everything these
Pages are doing, I am suggesting that if you fail to understand why these
Pages are working, you will fail to make the most of social networks.
The crucial thing to understand is that social networks are not blogs or
forums. They are not niche communities. They are a mass market
platform, and they are used almost exclusively for entertainment. While
relevance is certainly important if you hope to drive traffic that converts,
its actually more important to stick to bite-size content that people will
talk about.

Your hard-core audience doesnt live on social media. It lives on forums,

blogs, and email.

E-commerce is an increasingly difficult arena for start-ups. Without

creative experimentation with offline, big data, and social media, the vast
majority of start-ups will fall behind. Dont let that happen to you.
 CUSTOMER RELATIONSHIP STRATEGY
BY ALL E-COMMERCE

The 9-Steps strategy outlined:

Relationship: Optimise the whole customer relationship

Reputation: Be true to the brand and its positioning

Relevance: Service each customer community appropriately

Value: Create enduring value first, tactical worth second

Touchpoints: Manage the relationship at all appropriate touchpoints

(CODAR)

Imagination: Bring imagination to the customer experience

Learning: Measure and learn

Technology: Use technology like an artist

Stakeholders: Make it good for everyone

Think in an integrated way, from strategy to practice, and back again,

paying attention to the details that build brand and customer equity.

Systematically develop business value through integrating customer

sales, service and communication effectively.

Use technology as a means to deliver CRM thinking, not as the objective.

 EFFECTIVE STRATEGIES ON E-TAILING
IN INDIA
Currently e-retailers in India are focusing on producing sustainable and
profitable business strategies for their Internet-based operations.
Established retailers in India are using physical channels as well as the
Internet to market their products. Online shoppers prefer shopping at web
sites operated by established high-street retailers. Levy and Weitz have
stated that generally retailers survive and prosper by satisfying customer
needs more effectively than their competitors, addressing customer needs
through effective. E-tailing in India has rapidly emerged, emulating non-
store-based operations and demonstrate how the Internet can potentially
completely redefine customer needs using the Internet and the web to
create a virtual retail environment with extensive global coverage.

For designing an effective e-tailing strategy in India, it is therefore

needed to understand the needs of individual customers. Successful e-
tailing are concerned with high velocity, flexible systems and procedures,
extremely high service levels, and full electronic connections to the
trading community. In order to develop the right e-tailing strategy, has
addressed five points. They are:

(i) Prompt delivery,

(ii) Supply chain,

(iii) Demand nature,

(iv) Reverse logistics, and

(v) Accuracy.
PROMPT DELIVERY

The first major challenge faced by e-retailers was high expectations for
prompt delivery of Web orders by customers. One of several delivery
options such as, express (next day), priority (three to four days) and
regular (five to ten days) may be selected and paid for by the customer
while ordering the product.

SUPPLY CHAIN

Ensuring supply of required amount of raw materials and products at the

right time for the right price as well as proper slotting and picking
methods are very much important for effective operating of e-tailing. E-
retailers must have reliable supply-chain partners with the support of a
back end supply-chain management systems. Proper slotting and picking
methods based on the size, weight and demand nature must be devised to
receive, slot, pick and pack properly. A warehouse management system
should be a part of the supply chain management system to oversee the
activities like order sorting, packing, and final bar coding for shipment.

DEMAND NATURE

Successful e-retailing companies will have to assess the supply and

demand condition so that they can meet unpredictable demand. A news-
worthy event can create a huge demand for a product within a short time.
Popular items and may need to be assessed on its future demand to avoid
processing delays. Proper use of seasonality factors in forecasting models
may contribute to better demand forecasting for highly unpredictable
items.
REVERSE LOGISTICS

In any retail business, some products are returned from the point of
consumption. Therefore, the challenge is setting up infrastructure and
procedures for reverse logistics. The process is not only inevitable but
also gaining importance as a viable, sustainable and profitable business
strategy. Procedures need to be established for returning orders. Drop-off
points must also be set up. A customer wanting to return merchandise
should be encouraged to have authorization to do so through the Web
site. The e-tailors need to have an understandable product return policy
on the Web. A copy of the same policy may also be included in the
shipped package. A customer must identify the reason for returning the
item. Based on the reason, one of several actions such as restocks,
recycle, remanufacture, and send back to the supplier may be taken. A
flexible sorting or packaging line in the warehouse may be used to handle
returned items when needed.

ACCURACY

To achieve high levels of accuracy in e-tailing business, the firm must

consider the right equipment to increase accuracy. This will augment the
nature of its operations, and the level of adjustment that managers are
willing to make to minimize human errors. But if companies gather and
analyse warehouse performance statistics regularly, invest in automated
data collection and verification systems and equipment to the extent
possible, create efficient picking procedures, and train all employees
thoroughly, then they can improve their accuracy level and streamline the
customer fulfilment process. In general the diagrammatic presentation of
e-tailing activities of India would be as follows in figure 1:
AN EFFECTIVE E-TAIL DIAGRAM

Customers Demand
B2 B Generator Web enabled
ERP/SCM
Mail Order
System
Customers /Telephone
B2 C

Purchasing

Vendor E-Fulfilment
Centres

In-House
Production
Transportation
Customers
 CHALLENGES AND OPPORTUNITIES ON
E-RETAILING IN INDIA
They are:

(i) Consumers can not touch and feel products,

(ii) Orders can take several days to be delivered,

(iii) Shipping costs are often excessive and

(iv) Customer service is often poor and

(v) Returns can be difficult.

A number of consumer characteristics as potential obstacles to Internet

growth, including consumer traditional shopping experiences, an aversion
or lack of access to the required technology and the perceived risks of
electronic shopping.

CONTROLLING CUSTOMER DATA

As the delivery services are becoming more modern in using information

technology, e-tailers may face some risks to properly handle on their
consumer data. The data related to the socioeconomic status of customers
to their buying patterns and preferences, helps intermediaries and
shippers reduce costs.
PROBLEMS WITH THE PAYMENT SYSTEM

People in India are not accustomed to the online shopping system and
moreover the online payment system through the credit card is also
totally alien to them. Most of them do not avail of the transaction
facilities offered by the credit cards. They are also dubious regarding the
online payment system through the credit cards. Companies should
protect their system from hackers as customers often worry about theft of
their personal information, such as a credit card number. Both
technological and legal tools should be used to enhance the security of e-
commerce.

LACK OF FULL COST DISCLOSURE

It is easy to compare the basic price of an item online, it may not be easy
to see the total cost up front as additional fees such as shipping are often
not be mentioned.

HANDLING RETURNS

The problem of returns is very much prominent in e-tailing businesses in

India. The customers can return defective or unwanted merchandise
which he receives. E-commerce retailers, with their emphasis on
convenience and customization, must match this standard of service. At
present, they do not.
DELIVERING THE GOODS COST-EFFECTIVELY

At present, every single transaction challenges e-tailors to deliver the

goods quickly, cheaply and conveniently. The existing mode for home
delivery works well for letters and flat packages but not for e-tailing as it
encompasses with high volumes and wide variety of package shapes and
sizes.

PROBLEMS WITH SHIPPING

The customers using the online shopping channel should be assured that
the products that they have ordered would reach them in due time.

OFFLINE PRESENCE

The customers of India should be assured that the online retailers are not
only available online but offline as well. This gives them psychological
comfort and trust. The concept of e- retailing or online retailing in India
has not gained prominence as Indians prefer to touch the products
physically before buying them. Studies have also revealed the preferences
of the customers towards the traditional shopping methods. Hence the
online retailer in India should first make it a point to spot the potential
customers and accordingly plan out the product.

LANGUAGE PROBLEM

Most internet retail shops use English as their mode of communication.

English may not be comprehensible to the majority of the Indian
population. To increase the customer base, content in the online retail
shops should be provided in local language. The opportunities of e-
tailing industry in India are as follows:
CONVENIENCE: Normally, online stores are usually available 24
hours a day, and many consumers have internet access both at work and
at home.

PRICE AND SELECTION: One of the biggest advantages of online

shopping is to find out quickly deals for items at services with many
different vendors. Search engines, on-line price comparison services and
discovering shopping items can be used to find out sellers for a particular
products or services. Some retailers also offer free shipping on
sufficiently large orders. Searching an online catalogue can be faster than
browsing the physical catalogue of a brick and mortar store.

MARKET RESEARCH: Retailers can use their online presence as a

tool to gain valuable customer information to forecast future customer
demand. Baker (2005) has pointed out that online market research has
some powerful advantages, such as monitoring real-time buying
decisions. In addition, online customers have the knowledge and
experience necessary to answer the questions, which produces more
accurate and reliable data.

ONLINE CUSTOMER SERVICE: In India, websites are becoming

new channels for conducting customer service; therefore their general
acceptance level will increase, due to the benefits provided to customers.
For example, a customer could ask for a product introduction or a
personalised product in the pre-purchase stage, and could also check the
delivery status online. All such services can be available uninterrupted
online, which is almost impossible in the physical world, due to the cost.
PROMOTIONAL TOOL: A website can be used as a medium to
conduct promotional experiments, due to the wide reach of the internet,
and the low cost (Rao 1999). Therefore, it will be a great opportunity for
Indian companies to promote their businesses.

MARKETING TOOL: As indicated by Peterson et al. (1997), a

website is also an effective channel to communicate with customers.
Organizations do not need to rely solely on one-way communication
media, such as TV and newspapers. The internet provides a two-way
communication channel. As a new communication channel, the internet
can provide benefits to retailers, such as low costs, interactivity,
personalization, and continuous communication. In this connection,
Wang et al. (2002) have suggested that by better understanding
consumers through customer relationship management, marketers can
employ relationship marketing techniques in the retail market to provide
personalized services.
 HISTORY OF FLIPKART
Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal, both
alumni of the Indian Institute of Technology Delhi. They had been
working for Amazon.com previously. The business was formally
incorporated as a company in October 2008 as Flipkart Online Services
Pvt. Ltd. During its initial years, Flipkart focused only on books, and
soon as it expanded, it started offering other products like electronic
goods, Air Conditioners, Air coolers, stationery supplies and life style
products and e-books. The first product sold by them was the book,
Leaving Microsoft to Change the World, bought by VVK.Chandra from
Andhra Pradesh. Flipkart now employs more than 4,500 people, and is
ranked among the top 10 Indian websites. Flipkart's offering of products
on Cash on Delivery is considered to be one of the main reasons behind
its success. Flipkart also allows other payment methods-
Credit or Debit card transactions, net banking, e-gift voucher and Card
Swipe on Delivery.

The concept of e-commerce is downloading at a fairly rapid pace in the

psyche of the Indian consumer. In the metros, shortage of time is a big
driver for online shopping. On the other hand, accessibility to a variety of
products makes audiences from smaller towns and cities opt for the
online route. Major retailers face challenges in stocking their stores
adequately. Often, customers are unable to purchase items of their choice,
thus prompting them to resort to e-retailers.

The growing popularity of Flipkart in the non-metro regions as well. We

will close 2011-2012 with over $100 million in revenue. By 2015, we
want to clock in $1billion, but looking at present trends, we may be able
to do it sooner, states Binny, Flipkart's COO.
This statement doesn't seem far-fetched; a quick overview of India's
Internet penetration shows a user base of approximately 100 million. The
Government's National Broadband Plan, pegged at $4.5 billion, proposes
to connect nearly 160 million additional Internet users by 2014. The
spread, and subsequent adoption of e-commerce, thus, only seems
logical. With several reputed brick-and-mortar retailers also offering
online services, it seems natural the trend of shopping remotely will scale
up substantially. The value proposition in either formats of retailing,
physical and online, is different. It's the experience of touch-and-feel that
makes physical shopping exciting. In the online context, convenience and
comfort takes over. There's ample scope for both to grow, Sachin avers.

Finance

Initially, the founders had spent 4 lakh to set up the business. Flipkart
has later raised funding from venture capital funds Accel India (US$1
million in 2009) and Tiger Global (US$10 million in 2010 and US$20
million in June 2011). On 24 August 2012, Flipkart announced the
completion of its 4th round of $150 million funding from MIH (part
of Naspers Group) and ICONIQ Capital. The company announced, on 10
July 2013, that it has raised an additional $200 million from existing
investors including Tiger Global, Naspers, Accel Partners and Iconiq
Capital.

Flipkart's reported sales were 40 million in FY 20082009, 200 million

in FY 20092010 and 750 million for FY 20102011. In FY 20112012,
Flipkart is set to cross the 5 billion (US$100 million) mark as Internet
usage in the country increases and people get accustomed to making
purchases online.
On average, Flipkart sells nearly 20 products per minute and is aiming at
generating a revenue of 50 billion (US$.81 billion) by 2015.

In July 2013, Flipkart raised USD 160 million from private equity
investors, taking the total to USD 360 million in its recent fund raising
drive to build and strengthen technology and bolster its supply chain.

In October 2013, it was reported that Flipkart had raised an additional

$160 million from new investors Dragoneer Investment Group, Morgan
Stanley Investment Management, Sofina SA and Vulcan Capital with
participation from existing investor Tiger Global. With this, the company
has raised a total $360 million in its fifth round of funding, the largest
investment raised by an Internet company in India, emulating In Mobis
$200 million investment from Softbank in September 2011. The company
valued at approx. 9900 crore (US$1.6 billion) (Nov 2013), and plans to
use the capital raised to improve its technology and supply chain
capabilities, enhance its end user experience and for hiring.

BANGALORE, DEC 13:

E-commerce major Flipkart today announced the launch of PayZippys

customer-facing product for online consumers.

Flipkart Payment Gateway Services (FPGS) Pvt Ltd has launched the
customer-facing end of PayZippy (www.payzippy.com), the company
said in a release.

This service lets customers enjoy a faster, smoother and safer online
payment experience across a range of merchants, it added.
MUMBAI, JUNE 13:

Ecommerce player Flipkart, that downed shutters of its music service

Flyte earlier this month, has discontinued sales of consumer durables
such as television sets, refrigerators, air conditioners and washing
machines since the past one month.

The move has raised questions on the business model of the countrys
largest e-tailer, especially with Amazon entering the Indian e-commerce
space.

Bangalore-based Flipkart, which once had over 1,000 branded consumer

durables and white goods across international and regional brands such as
Samsung, Panasonic, Whirlpool and LG among others, has taken to
selling small electronic goods at present.

Confirming the move, a Flipkart spokesperson said, We keep various

factors in mind while arriving at our service matrix. This could be our
shipping partners in a state, our delivery capabilities or order volumes.
These are purely business decisions that arise from time to time in an
organisation that is scaling as rapidly as ours. These change from time to
time depending on circumstances and are not necessarily permanent.
INDUSTRY CHALLENGES FOR FLIPKART
Queried on the timing of the discontinuation, AnkurBisen, Vice-
President, Technopak Advisory services, was unwilling to comment on a
specific company. He said most e-trailers selling bulky white goods were
facing challenges, in terms of logistics and inventory.

There is a high cost of shipping involved in large cargo items. This cost
has to be borne by the company. Sometimes there are other issues such as
breakage during delivery. There are demand issues too, as the frequency
of buying goods such as TVs and washing machines is not that high.

According to a recent Google survey on Online shopping trends 2013,

apparels and accessories were pegged as the most rapidly expanding
categories and have overtaken electronic items, including white goods.

The report further adds that the share of electronic items decreased to 44
per cent in 2013 from 39 per cent in 2011.

Incidentally, Flipkart entered the apparel segment this year. Analysts

have termed the apparel business a high margin and high volume one.

Nimit Grover, Head-Marketing of online marketplace Tradus.com, that

also sells white goods, said that the share of white goods is less .than 10
per cent and does not feature in the top five categories of goods sold
online.
 DISTRIBUTION NETWORK OF FLIPKART
Grover added that while people tend to buy online for better deals and
easy availability, the issue with white goods is that most offline players
score given their strong distribution network.

The same holds true in small towns, where the deals could be more
lucrative, he said.

Apart from the logistic issues, we are facing difficulty in passing on the
margin benefits to customers, as the shipping charges of bulky items are
10 times higher compared to other categories, Grover said.
 SWOT ANALYSIS OF FLIPKART
This free SWOT analysis shows strengths, weaknesses, opportunities and
threats. We cover over 40,000 companies and industries. This SWOT
analysis for Flipkart.com can provide a competitive advantage.

Strengths Weaknesses

1. Less presence in emerging market.

1. Early market entrant with brand
equity
2. Integrated services like online ticket
tracking, online money transfers etc.
3. Vast customer base due to
international presence

4. Provides customized user shopping

experience by tracking users
5. Has over 33,000 employees in over
20 countries.

1.

Opportunities Threats

1. 1. The markets devoid of internet 1. 1. Can be subjected to frauds

2.Customers reluctant in shopping 2.Risk of Brand Dilution by selling a
online can be persuaded very wide range of products
3.Partnerships with corporate houses 3. Newly emerging competitive online
for bulk selling. shopping portals.
 HISTORY OF AMAZON
The company was founded in 1994, spurred by what Bezos called his
"regret minimization framework", which described his efforts to fend off
any regrets for not participating sooner in the Internet business boom
during that time. In 1994, Bezos left his employment as vice-president
of D. E. Shaw & Co., a Wall Street firm, and moved to Seattle. He began
to work on a business plan for what would eventually become
Amazon.com.

After reading a report about the future of the Internet which projected
annual Web commerce growth at 2,300%, Bezos created a list of 20
products which could be marketed online. He narrowed the list to what he
felt were the five most promising products which included: compact
discs, computer hardware, computer software, videos, and books. Bezos
finally decided that his new business would sell books online, due to the
large world-wide demand for literature, the low price points for books,
along with the huge number of titles available in print. Amazonwas
originally founded in Bezos' garage in Bellevue, Washington.

We are a very young promising group of people having vast experience

in managing large distribution house by the name of Kalpataru. We
have direct tie up with top FMCG companies like Hindustan Unilever,
Garnier, Loreal, Heinz, Reckitt Benkiser, Johnson & Johnson, Vodafone,
Reliance Capital, Lotus etc. We have more than 400 Staffs & about to
reach 200 Crore landmark Turnover very shortly. We are thankful to all
the parent companies that has helped us & guided us in expanding our
business fast. Our Success Story has been build up on Customer Relation
& Trustworthiness among all our internal & external members.
As we already have large distribution network in Kolkata we just made a
plan to go little more to reach out your door through e-Shop model &
facilitate the consumers to shop at their doorsteps & save smartly. For
that customers have to Call or Log for enjoying our Facilities & Benefits.

Our main motto is to

1) Bargain the best offer for customers,

2) facilitate shopping at home comfort,

3) Save smartly,

4) Follow up the customer complaint effectively &

5) Nurture loyal customers.

We hope this e-Shop endeavour will help us in developing Relationship

with the end customers & fulfilling our motto.
OVERVIEW OF HOW AMAZON OPERATES
Amazons interactive technology is smart. It's naturally focused on
servicing the high value customers; its services naturally favour the
regular shopper, while effective with the low value shopper. It can add up
the margin on individual customers and knows their interests.

When an existing customer comes online, Amazon practices the direct

marketing principle of recognising the customer by using a cookie
previously placed on their computer. As a result, Amazon personalises
what the customer sees. For example, each customer will get tailored
recommendations. These recommendations are generated using
sophisticated statistical software that profiles the kinds of interests of
each customer and also compares them with other customers, profiling
them into similar groups. Each of the books and other products that
Amazon carries also has category information about it, and of course
there is the buying history of which customers are buying it. As a result,
Amazon is more able to recommend books or other products that are
likely to be relevant to that particular individual.

The website is therefore designed as a sophisticated communication tool

that automates the process of creating value for the customer by
recognising his or her interests.

It is an interactive, direct marketing tool that facilitates a stream of

dialogue between the customer and the brand. As the customer buys or
does not buy products, knowledge about the customer increases, as does
the ability to serve their interests and needs.
The Amazon Internet system can also provide other related services that
complement this. For example, the customer is able to register their
interests, which is used in profiling, and can also register to receive
information in the form of newsletters. On the Amazon.com site services
provided include prompts and advice about birthday presents. This is an
example of permission marketing. To add to customer involvement, there
is even a facility to set up information about you for others to read.

Amazon makes use of one of the characteristics of the Web that is

regarded as its particular strength. This is the ability to allow people to
dialogue with each other. The way it does this is by allowing customers
to review books and other products. Direct marketing has always aimed
to involve the customer and this is a very powerful technique for doing
so. Customers trust each other, often more than then they trust what they
know to be advertising material. So one of the functions on the website is
a system to allow customers to record their reviews, which are then
scored according to how much they are appreciated by other customers.
Amazon, however, goes beyond merely providing this function; it adds
the classic direct marketing technique of recognising and rewarding its
best customers those who provide many valued reviews. Readers can
even review the reviewers and find out about their interests.

Amazon set about finding ways to increase the sense of customer

community and belonging, as well as providing interesting information
for customers. So you can access information such as the favourite books
of people living in Detroit, or how many people are actually online from
Minnesota. Each Internet firm needs to tailor its functionality according
to the kinds of services and information that its customers would find
valuable.
And of course the website is designed as a way of selling. Amazon
focused step-by-step on the whole process of selling to customers online,
streamlining the process to make it as fast as possible while adding in as
many hooks as it could to sell additional products in the process (for
example, by telling you what other customers who have bought the book
you have just bought have also found worth buying). From the moment
of clicking on the Amazon site in My Favourites, it takes 15 seconds or
less to complete the ordering of a book, including paying for it. Its
patented one click technology gives unique advantage in creating
customer convenience. Here is also a very practical use of knowledge of
the customer designed to service the customer.
 About FREE AmazonGlobal Saver Shipping

With FREE AmazonGlobal Saver Shipping, you receive free shipping to

India, New Zealand, and Singapore if your order includes at least $125 of
qualifying merchandise, excluding the Import Fees Deposit, gift-wrap
charges, duties, and taxes. Most products shipped using the
AmazonGlobal Program that is sold by Amazon.com is eligible for
AmazonGlobal Saver. Items 20 lb. or more, certain oversize items, e-
documents, software downloads, music downloads and gift cards don't
qualify.

Cancelling items, combining orders, or changing your shipping address,

speed or preference might affect your order's AmazonGlobal Saver
Shippingeligibility.

If your order doesn't qualify for AmazonGlobal Saver Shipping:

The order may contain ineligible items.

A special product, order, or handling fee may still apply.

An eligible item that was cancelled brought the total below $125.
 MARKETING STRATEGY BY AMAZON
Amazon India announced the availability of a guaranteed 'one-day
delivery' service for items fulfilled by Amazon in select pin codes across
several Indian cities including Bangalore, Mumbai, New Delhi,
Ahmedabad, Hyderabad and Pune.

Customers in eligible pin codes can now choose 'One-Day Delivery' at

the time of checkout and can enjoy guaranteed next-day delivery service
by placing the orders before the cut-off time. Customers in Mumbai and
Pune can place orders as late as midnight to receive items next day. For
other pin codes the cut-off time to place orders under this offer is
currently 3.00 pm.

'One Day Delivery' guarantees service is available at a charge of Rs 99

per order, and requires no minimum order value. Orders placed with
'One-Day Delivery' service are guaranteed to be delivered the next
business day excluding Sundays and public holidays. Amazon.in will
automatically refund shipping charges if orders are not received by the
promised day.
 INTEGRATED MARKETING OF AMAZON
Research across a range of industries and companies by the Centre for
Integrated Marketing has identified a number of high impact diagnostic
factors that indicate successful Integrated Marketing in organisations and
brands. Amazons customer focused implementation of technology
registers a high score on many of these, including on the following
essential factors:

Customers feel that all their brand experiences come from one identity.

Customers trust the brands promises.

The brand treats different kinds of customers in ways appropriate to

them.

Whenever appropriate, the brand recognises individual customers

wherever they interact or do business.

Customers are happy with the brand experience.

There is a service-oriented ideal that encourages aligned commitment

across the organisation.

Everyone nurtures what the brand means to committed customers.

The brand organisation is excellent at realising high value propositions.

Objectives are coherent with the brand/companys competence.

There are no silos.

Practices ensure shared learning across the organisation.

The organisation works in effective partnership with the members of its

value stream.
 Amazon SWOT analysis
Strengths Weaknesses

2. Cost leadership strategy 2. Only online presence

3. Superior quality services and products 3. Selling at zero margins

4. Strategic acquisitions 4. Negative publicity

5. Efficient distribution chain and logistics

6. Economies of scope

Opportunities Threats

2. Online payment system 2. Online security

3. Release more its own brand products and

3. Lawsuits
services
4. Strategic alliances
4. Increase services and product portfolio
through acquisitions 5. Legislation against tax avoidance

6. Regional low cost online retailers

5. Open more online stores in other
countries

6. Physical presence
1. Have you ever experience of online shopping?

EXPERIENCE FREQUENCY PERCENTAGE

Yes 8 40

No 12 60

Column1
70

60

50

40

30

20

10

0
YES NO

As the above question answer is describe graphically its say that 40% of
the people have been visited to the online sites as per the survey graph
result and 60% people still has not been visited to the online sites. So, the
conclusion for this question as per the survey is that still less number of
people have an experience of online shopping.
2. How often do you visit online website for shopping?

VISIT FREQUENCY PERCENTAGE

Daily 2 5

Weekly 8 35

Monthly 8 55

Yearly 2 5

Column1

60

40

20

0
DAILY
WEEKLY
MONTHLY
YEARLY

As the above question answer is describe graphically its says in India

only 5% of people visit online shopping daily and early and 35% of
people visit the online sites weekly and 55% of people visited online sites
monthly. So, the conclusion for this question as per the survey is that,
Indian users has been visited the sites monthly for their shopping.
3. Do you feel that online transaction is secured?

SECURITY FREQUENCY PERCENTAGE

Yes 14 70

No 6 30

Column1

80
60
40
20
0
YES NO

As the above question answer is describe graphically its say that 70% of
people are secured in online transaction as per the survey graph result and
30% people have low trust on online transaction. So, the conclusion for
this question as per the survey is that there is a high level of degree of
secured transaction.
4. What would be your best payment method if you buy online?

PAYMENT METHOD FREQUENCY PERCENTAGE

Debit/credit card 8 40

Cash on delivery 12 60

Column1

60

40

20

DEBIT/CREDIT CARD

CASH ON DELIVERY

As the above question answer is describe graphically its say that 40%
people used to prefer debit or credit card system for their online
transaction as per compared to the cash on delivery by 60%. So, the
conclusion for this question as per the survey is that, Maximum number
of people prefer cash on delivery facility for payment because they give
the payment after seeing the product.
5. Which online site can meet your requirements?

ONLINE SITES FREQUENCY PERCENTAGE

Amazon 5 25

Flipkart 9 45

Others 6 30

Column1
50
45
40
35
30
25
20
15
10
5
0
AMAZON FLIPKART OTHERS

As the above question answer is describe graphically its say that 25% of
the requirement are meet to consumer demand whereas 45% consumer
can get their requirement on Flipkart and the remaining 30% demand gets
fulfilled by other online sites. As per the survey graph result Flipkart has
variety of product on their sites to meet consumer demand.
6. Which of the sites offer more discount on product?

DISCOUNT FREQUENCY PERCENTAGE

AMAZON 8 40

FLIPKART 6 30

OTHERS 6 30

Column2

40

30

20

10

Amazon
Flipkart
Others

As the above question answer is describe graphically its say that the
consumers getting more offers and discount from Amazon i.e 40%
whereas consumers gets less discount offers from flipkart i.e 30% as well
as others online shoppers also give stiff competition to the flipkart and
amazon by giving more discount.
7. Which of the following features you observe before obtaining
from online websites?

FEATURES FREQUENCY PERCENTAGE

DISCOUNT 12 60

DELIVERY 4 20

PACKAGING 2 10

EASY TO 2 10
REPLACEMENT

60
50
40
30
20
10
0

Column1

According to the research, 60% of consumers are looking for a Discount

before order a product from online sites. Whereas 20% consumer think
that delivery time is more important for obtaining a product. In online
shopping packaging is must and therefore 10% consumer look beyond the
packaging of the product. The remaining 10% consumer prefer to obtain
product from those sites which has better replacement facility.
8. Which online site takes less time in dispatch and delivery?

ONLINE SITES FREQUENCY PERCENTAGE

AMAZON 6 30

FLIPKART 10 50

OTHERS 4 20

Column2

50

40

30

20

10
0

Amazon
Flipkart
Others

As the above question answer is describe graphically its says that 30% of
consumers believes that Amazon takes minimum time for the dispatching
and delivery of product whereas 50% believes that flipkart takes very less
time in dispatching and delivery because of their own logistic system.
The remaining 20% consumers getting a quick delivery from others
online sites. So, the conclusion for this question as per research is flipkart
has quick deliver facility.
9. Which online company has best marketing strategy and brand?

ONLINE SITES FREQUENCY PERCENTAGE

AMAZON 8 40

FLIPKART 8 40

OTHERS 4 20

Column1
40
30
20
10
0
Amazon
Flipkart
Others

According to the research on the above question 40% & 40% of

consumer believes that Amazon and flipkart stand on a same position
respectively that is Amazon worldwide online sites has stand in a number
1 brand in online shopping whereas Flipkart use the innovative marketing
strategy for the product. The remaining 20% consumers says others
online sites has good marketing strategy. So, the conclusion of the
research is Amazon and Flipkart has cut throat competition in the market.
10. Which online site has better replacement facility?

PROBLEMS FREQUENCY PERCENTAGE

AMAZON 7 35

FLIPKART 7 35

OTHERS 6 30

Column1

36
34
32
30
28
26

Amazon
Flipkart
Others

As the above question answer is describe graphically its say that again
Amazon and Flipkart has a stiff competition in replacement facility also
i.e. 35% respectively. The remaining 30% consumers believes that others
online shopping sites also gives better replacement facility if they face
some damage to the product.
 OBSERVATION & CONCLUSION

While free and discounted shipping is a big story, there is more to online
shopping and the customer experience. In fact, many shoppers are willing
to pay a nominal fee to receive the product faster if given the option.
Shipping and delivery timing is important during check-out its all
about communication!

To reduce shopping cart abandonment, retailers should show the shipping

costs, present how much more should be purchased to get free shipping,
and give consumers the option of shipping time frames. Customers are
willing to wait for their packages, but need to know what is happening
they want estimated delivery time clearly stated and they want e-mail or
text alerts about their delivery.

Also important to the customer is the feeling of control. Options such as

special delivery instructions, the ability to schedule a late delivery, or
having a delivery window give the consumers the control they need to
better their shipping experience.

According to the research study on role of logistic in online shopping in

flipkart and Amazon, both the company has a better logistic system in
Indian market by keeping a strict watch on just in time strategy.
Both the company focussing on better customer service to the consumer
who are engage in online shopping. As there is a stiff competition
between amazon and flipkart, therefor they are offering product at a les
price to achieve the market strength.
 RECOMMENDATION
My recommendation to this project I done is as follows:

1. Online shopping sites have to keep transparency in transaction to satisfy

consumer of secured.

2. Flipkart and Amazon both has to adapt logistic techniques for quickly
delivery of product to an end users.

3. Amazon need to do a more and innovative advertising for enhancing

demand in Indian market.

4. Online company must have accurate customer care service facility to the
consumer if any disturbance occurred.

5. In my experience of internet business and what I have studied from gurus

who share online business guides, I realized it is advisable to create a
blog for your business. The advantage that a blog has over a website is
that on a blog you will be able to interact with your target audience.
While on a website communication is one way.

6. Online should assist your customers by responding to their feed-back and

any problems they are encountering as regard to the product or service.
As you communicate you will create customer confidence thus generate
business sales leads.
 BIBLIOGRAPHY & WEBLIOGRAPHY
Reference Books

a) Supply Chain Management: Concepts And Cases

Author: Rahul Altekar
Edition: V

b) Supply Chain Management

Author: John T Mentzer, Sage Publications

c) Supply chain management

Author: Jayashree Dubey, M.L. Sai Kumar

d) Exploring the supply chain theory and practice. By Upendra

Kachru ,

WEBSITES

www.google.com
Article the TOI
Article the business line
The economic times
www.ibm.com/e-business
 LIMITATION
1. There was a time limit because not able to reach every consumer who
obtain product from online sites.
2. In India there are less number of illiterate people in India therefore it
was difficult to gain perception of every consumer about online shopping.
3. There were only 100 respondent for the research.
 ANNEXTURE
PROJECT REPORT ON
A DETAILED STUDY ON ROLE OF LOGISTIC IN ONLINE SHOPPING
WITH RESPECT TO FLIPKART & AMAZON IN INDIA

PADMASHREE DR. D. Y. PATIL UNIVERSITY

DEPARTMENT OF BUSINESS MANAGEMENT

C.B.D BELAPUR

1. Have you ever experience of online shopping?

o Yes

o No

2. How often do you visit online website for shopping?

o Daily
o Weekly

o Monthly

o Annually

3. Do you feel that online transaction is secured?

o Yes

o No
4. What would be your best payment method if you buy online?

o Debit / Credit Card

o Cash on delivery

5. Which online site can meet your requirements?

o Amazon.com

o Flipkart.com

o Others

6. Which of the sites offer more discount on product?

o Amazon.com

o Flipkart.com

o Others

7. Which of the following features you observe before obtaining

from online websites?

o Discount
o Delivery time
o Packaging
o Easy to replace
8. Which online site takes less time in dispatch and delivery?

o Amazon.com

o Flipkart.com

o Others

9. Which online company has best marketing strategy and brand?

o Amazon.com

o Flipkart.com

o Others

10. Which online site has better replacement facility?

o Amazon.com

o Flipkart.com

o Others