Friday, September 21, 2012

E-Commerce - Product Strategy - 2

In India, travel bookings was the first segment that has triggered the e-commerce interest. They started with reservations in trains and slowly expanded into other areas like flight and bus ticket bookings. Being one of the biggest railway networks in the world, "the need for easy availability of tickets" was a growth driver for this e-commerce site. If there is such a pull in the market, the e-commerce venture around that domain would not need extensive marketing budgets.

Sometimes the need for a category of items would not be very obvious in the market. In such cases a marketing survey needs to be conducted to understand the demand for that category in the market.

Once the domain is identified, the next step would be to identify the categories (electronics, books, apparel etc.) and corresponding items (cameras, home appliances, regional language books, T-shirts etc.).

It might not be a good idea to start with a bang and make available lot of items. It would be prudent to start with the items which have 'market pull' than 'market push'. The best example would be flipkart, which started with only books and expanded into many other categories slowly.

The other factors which can help decide on the categories and items:
  1. Where can the items be procured from? Who are the major suppliers and what kind of 'credit-support' can they provide?
  2. What is the roadmap for categories and items? Do we diversify (books, electronics, home appliances, apparel etc.) or operate in a niche area (socks, shoes etc.)?
  3. Can the items be procured 'just-in-time', which can help with 'drop-shipping'?
  4. What is the demand level for each item? This should help identify 'which items' and 'what quantity' needs to be stocked in warehouses.
  5. What is the durability of the items? Are we talking about perishable food items or long lasting books?
  1. What is the validity or expiry date of the items? We could be talking about outdated fashion items or pharmacy drugs here.
  1. In which all regions and locations is there a demand for the items? Some items might be of more interest for people in rural areas. In this case, the order fulfillment needs to be though-through for last-mile dispatch of the items.
  2. What is the price at which the items would be sold? There are certain items which can provide good returns on volume sales, while there are also luxury items which can be sold at premium. For cost-sensitive markets like India, determining items with correct pricing becomes even more important.
  3. What does it take to deliver the items to the customers? Are the items big in size and needs special vehicles to carry the goods to the end-customer?
  4. Does it need a 'call center' facility? If so, what should be the size of such facility in terms of number of people and where should it be located?

As can be noticed, the entire life-cycle of the products from 'procurement' through 'order' and 'cash' has to be thought-through before deciding on the product categories and items.

Needless to say, e-commerce play involves as much of defining good business strategy as the supporting technology. Though the end customer interacts through Internet medium and sees the e-commerce website as the face of the company, the back-end operations are quite important too.

E-Commerce is a long term play and needs deep-pockets in most of the cases.

Tuesday, August 21, 2012

E-Commerce - Product Strategy - 1

The first and foremost aspect in e-commerce is to decide on the products to be offered online. If one is already into a specific domain (for example retail apparel) and wants to extend into online space, then the next move becomes easier. If one is interested to get into e-commerce domain directly in the first place and has to decide on the products to be sold, exhaustive research needs to be done.

There are many goods and services that can be offered online. Typically, they can be classified into following broad categories:
  1. Physical products (like books, electronics, apparel, lifestyle and deals)
  1. Services online (like online marketplace, travel bookings, tax filing, video-on-demand and group-buying)
  1. Digital Downloads (like ring-tones, mp3 music, wall-papers and images for websites)
  1. Classifieds (like matrimony, jobs and property)

Each category of the products has its own unique characteristics that needs to be considered while making them available online.

Some of the physical products are big in size and quite expensive. The packaging and delivery needs must be considered carefully for such products especially from cost perspective.

One might think that providing services online should not be that challenging. While it is true that fulfillment and delivery are not quite difficult, providing the functionality itself is not that easy. Keeping the customer hooked on to the site to avail more services or repeat service is the key in this case. Earning the trust of the customer in some of the cases is also equally challenging.

The typical challenge with digital downloads category is the digital rights management. The digital content has to be procured from authentic source while paying due attention to copyrights. The complexity involved in delivery of the digital goods through various channels (like Web and SMS) cannot be undermined.

Classifieds is an area, which has been traditionally available in print medium. When it was moved online, it was the exact replica of mixed classifieds (sulekha, freeads etc) available on the Web too. Later, the specialized areas - like only job sites or only matrimony sites - have picked-up and delivered good results in India. There needs to be a good enough incentive for two or more parties to come together on a classifieds site to avail the service.

Identification of a domain is the first crucial step in starting an e-commerce venture.

Friday, June 22, 2012

E-Commerce India - Customer Relationship Management (CRM)

Customer is the King or Queen. That is even more so in this Internet Age where customer experience can get shared easily using social media. The establishment of relationship with the customer starts the moment he includes a few items in his shopping cart of the e-commerce store.

Once the customer selects items and make payment, the order is supposed to have been captured. The order details along with items purchased, quantity, delivery address and any special instructions like gift wrapping or pre-defined time of delivery are to be provided to the fulfillment team. Based on the type of payment - cash on delivery or pre-paid - the process differs for delivery of items purchased.

The moment order is placed, the customer would be keen to receive them as per the delivery dates promised by the vendor. There must be a provision for the customer to track his orders on the e-commerce site where he purchased the items. Sites like Flipkart, owing to their own delivery services, provides that mechanism on their site itself. In cases like Indiatimes Shopping, the delivery status can be verified by using the tracking number associated with the 3rd party courier service (like Bluedart or Dhelivery) mentioned in the Order. For a customer, it does not matter how the delivery happens as long as it happens in time. For e-commerce companies, the operations to support delivery forms the backbone.

Whether the customer experience has been good or bad, it must be captured in a system for critical analysis later. The issues could be about payments, shipping or the item itself. Any immediate problems must be addressed with a sense of urgency. Customers in India (not sure about global space) are sensitive about payment issues, even if the amount involved is small. So issues like double charge for the same Order, refund of money in case of credit-card payments for Order cancellations or issues related to discount must be addressed immediately. Otherwise, the risk of losing that customer and hence his entire network of online buying family and friends looms large at the e-commerce vendor. My bad experience in shopping with Indiatimes was effectively addressed by the company.

Once the customer is happy with his overall experience on an e-commerce store, he is going to come back again. The entire e-commerce business hinges on acquiring large numbers of such customers, who provide repeat business. Hence, it is very important to keep track of such customers and provide benefits to them for their loyalty.  I have not seen any e-commerce store in India offering any substantial loyalty services. Or maybe I have not come across one so far.

But, information about new products, special discounts, pre-launch offers and clearance sales needs to be dispatched to all the customers on regular basis to keep the touch-point with them alive.

Needless to say, e-commerce companies must rely on information technology for all the above CRM needs. Customer, order, shipping, payment and feedback information gets stored in appropriate database. Huge amounts of this data can be moved to data warehouses and analyzed for business insights.

E-mail, Chat and Voice Support are the primary channels through which customer communicates with the e-commerce company. One key aspect in providing support to the end-customers is to integrate all these channels at the back-end. Irrespective of the channels I use - this could be many for an issue with the same order - to complain about an Order, it must be resolved.

If you are an end-customer - did you get that wonderful experience from that e-commerce store?

If you are an e-commerce company - could you acquire and retain customer and improve the loyalty base over a period of time through CRM?

Friday, June 15, 2012

E-commerce India - Inventory Management, Warehousing and Order Fulfillment

T S Eliot quote about beginning and end
While e-commerce store front (website) provides customer interface on the Internet, good back-end operations lead to customer satisfaction. One of the important back-end operations of e-commerce is inventory management. When the customer browses the site, selects an item and makes payment, the item MUST be shipped to the customer in time. For that the item must be either produced by the e-commerce company itself or procured from a 3rd party.

If the procurement has to happen from a 3rd party, it can be arranged in different ways:
  1. Drop-shipping
Items can be bought from the 3rd party just in time and shipped to the end-customer. In this case there must be direct connection for the e-commerce company with the appropriate vendors, dealers or publishers. In cases like Sweets and Snacks this will be the modus operandi, unless the vendor himself manages the e-commerce store.
  1. Warehouse-based shipping
Certain quantity of items can be procured up-front, stored in a warehouse and shipped to the customer based on the order.

In the second case, the quantity of inventory that needs to be maintained in the warehouse has to be controlled appropriately. If there is less quantity of inventory then there would be inherent delay in procurement and shipping. If there is more than required quantity, the unnecessary occupancy of the warehouse would lead to financial disadvantage.

The inflow (from the suppliers) and outflow (to the end customers) of goods must be tightly controlled in the warehouse to restrict any damages and pilferage. The orders taken for delivery in a day must be reconciled at the end of the day to match shipments and pending orders.

If the e-commerce company has its own warehouses, the location and number of these should be carefully selected. Any shortages or excesses and wrong locations would drain all financial resources of the company in no time.

One can also outsource the warehouse and order fulfillment operations to a 3rd party. From experience (as mentioned in the book by Tony Hsieh), one can understand that it is risky from different perspective to outsource such operations. Needless to say, one needs to be wary about outsourcing such operations.

The last part of order fulfillment involves delivery to the end customer at his premises. This is done by:
  1. e-commerce company's own courier service (like in case of Flipkart)
  1. Private delivery service center (the likes of DHL, Bluedart…)
  1. Government courier service from Post Office
  2. Hybrid of all the above modes (typical case)

With Cash-On-Delivery (CoD) becoming an important payment mechanism the delivery person not only has to ship the items, but also collect money from the end customer. There are companies like Gharpay, which specialized in cash collection.

Also, there are local companies which specialize in delivery of certain items and one such company is Delyver in Bangalore.

There is ample scope for companies operating in this domain to expand and increase the scope of their activities. There is also talk about Amazon and Walmart setting up their own courier operations in India and becoming successful Giants in the Indian e-commerce space. Let's wait and watch !

Saturday, June 2, 2012

My bad experience with Indiatimes Shopping, an E-Commerce site in India

I know this post is very lengthy. But please do read for your own benefit !
I looked at so many e-commerce websites in India and done shopping on a few of them. I always used to think that all the sites look alike (is it not as easy as search, select and pay) and its very different to differentiate the services in the e-commerce domain. I felt that to be the reason for not much of competition in each of the domains (books, gadgets, apparel etc) and hence a few players.

I read " - Delivering Happiness" book and wondered how Tony Hsieh could create so much impact through the customer service while focusing on selling only shoes online !

I was wondering how big guns like Futurebazaar can compete in a market growing with new entrants.

I knew that e-commerce is a long term game and it took eight solid years for Amazon to break-even. My initial impression was 'what was he doing for so many years apart from expanding the coverage and product base?'

Apart from Internet penetration the other major enablers for e-commerce adoption are credit-cards usage and trust. I was thinking earlier about 'trust' in the form of payments and delivery.

The thread that runs through all the above thinking is about 'customer experience'. I had a first-hand experience to understand about what could go wrong with customer experience in an e-commerce company.

Being an avid reader, I was greedy on my part to be tempted on a '30% more discount only for 3 days' offer by Indiatimes Shopping site. I went to the site on third day and browsed through the catalog.

I found multiple versions of a book and thought of them as different editions or paperback / hard-cover or indian / foreign editions. I wanted to check them all individually, but the site was inaccessible on every other request.

I selected the three books I wanted and went to 'check-out' option to review and confirm my order. To my surprise I found no option to navigate back to the main site and leave the check-out process in the middle. I personally feel this is restricting the user to not abandon the shopping cart. But I guess no one would like this option, given a choice.

I provided the payment details and got the 'Verified by Visa' page from payment gateway. I provided the code, which was verified and the redirection to the site was happening. As the Indiatimes Shopping was down (or probably not able to sustain high loads) at that time, it showed me an error page. This is a classic case of 'hung payment' when the user would not know whether his payment was through or not !

I checked the status of my order status through 'My Order' tab. It showed that my order is captured. The status column said 'Created'. I had to wonder what that really means ! Surprisingly, the 3 books I selected to buy earlier are still present in the shopping cart !

I haven't got a transaction SMS from the credit card provider. Usually these SMS messages come even before the re-direction to the site happens. I was puzzled that there was no message yet on that occasion.

I called up the voice support number that was provided on the website in each of the header pages. I got an 'invalid number' message !!

I was happy to find a chat option on the website and initiated chat. I got a welcome message and after a few seconds, I got an automated message saying that all the customer executives are busy. I was advised to leave a message, which I promptly did including my contact details. I never got a response from their support team through any channel - phone or e-mail.

I waited for an hour and checked my order status and it has not changed at all. I did not receive any SMS messages, phone calls or e-mails on the issue.

I found another number on their site and called-up that number. My order was verified and I was told to wait for an hour or so to see any change in status. I had no better option but to wait. Apparently, this is no toll-free number. I call up to raise a complaint about their system and pay for it too !

I provided my feedback on the site with all the details. I got an automated e-mail that the feedback is received. I haven't heard from their feedback team yet.

I waited till evening and checked the status of the order. Nothing changed. I thought I shall try to place the order again. As the items were still hanging in the 'Cart', I went to 'Check-out' process and tried to provide the gift coupon code. Surprise - no discount was allowed on the code !

I raised a case against my order. Yes, they have an option to report a case against an order. Not sure, if there is anyone looking into the cases at all - there is no response yet !

I called them again at about 6 PM in the evening and here is the conversation I had with the customer executive (CE):

Thanks for calling Indiatimes Shopping. How can I help you?
Hi. I placed an order with Indiatimes Shopping. My order seems to be captured but the items are still hanging in the shopping cart. I have not received any confirmation of my order. Can you please confirm the order?
Give me your order number please.
Here it is…
[ does something for a few secs ] Sorry sir. All our systems are down currently
So, what happens to my order?
Sorry sir. All our systems are down currently
Let me know how you can help me. Can I speak to one of your seniors? I have no complaints about YOU, but I just want to give my feedback about the system.
Sorry sir. All of them are busy right now.
So, what do I do now?
You can call us after half an hour sir. Or much better, you can call us tomorrow.
But the offer closes tonight.
Sorry sir. All our systems are down currently.
Ok then.
Is there anything ELSE I can help you with sir?
Yeah, Sure ! Can you get me a scoop of Coconut Ice-cream with Cone from Natural's? [ Click … ]

Except for the last statement the rest of the conversation is verbatim that happened with the customer executive. It's an understatement if I say 'It's heights of worst customer experience' !

I later got a couple of transaction alert notices from my credit card providers. I guess it happened through transaction reconciliations at later point in time. I don't know why it's duplicated. Now my money is taken, but there is no response or order-change status from Indiatimes. Apparently, I noticed this delayed response and delivery from this vendor from others' experiences shared on Internet.

I tweeted to them on twitter and got a cold and canned reply 'We regret your inconvenience…'.

As you could see, no unit of the customer service department functioned effectively and the lack of integration among all these units - online chat, feedback on website, order complaints, call center, twitter - was quite obvious. If the entire system had unexpected load, they could have at least devised a pro-active plan to deal with customers without losing their image.

Two lessons from this experience:

  1. For all those entrepreneurs venturing into E-Commerce domain, remember that 'customer service' is the key. With all the experience I had at this shopping site now, I would not dare shop at their site in the near future - even if they give me 90% discount. Integrated functioning of the entire customer service department (and also with other departments) is quite important. Having no physical retail outlet, the website and the people over the phone becomes the 'face' of the company.
  1. For all those online shoppers, beware of all the typical problems while shopping online. Share your experiences with others so that they would benefit while shopping on e-commerce sites; also, this would help the trustworthy companies to surface to the top.

If anyone has any other good or bad experiences, I would be happy to listen. Please do share  your experiences with one and all for their benefit.

If anything happens to my order, I will let you all know :-)

Thursday, May 31, 2012

E-Commerce India - Sweets & Snacks

Quote on Pizza and Police
Everyone likes to munch a few snacks in the evening along with tea. Home made snacks still have preference, though the trend is slowly changing. When it comes to occasions, sweets are a must. I guess no other country consumes sweets like India and no wonder we are one of largest consumers of sugar. Apparently, we are also a nation of large diabetes population. Could it be anything other than direct correlation?

We love Rotis and everyone likes to make them fresh at home. Eating them out once in a while is becoming a norm, at least in cities. Not sure when the 'Italian Rotis' (Pizzas) have come into existence in India, they certainly have become popular. First there were dining outlets, then came only delivery outlets and now they can be ordered online. Isn't this evolution very natural for pizza companies? But I wonder what makes the Indian Rotis not consumable like the Italian ones - just like snacks? Or perhaps, we made the Italian Roti a snack :-)

Dominos (Jubiliant Foods) and Pizza Hut are dominant players in India from size and coverage perspective. They do have online presence and one can order their favorite pizzas from their website over Internet. With half the population in India being youth and smartphones becoming omnipresent, it is but logical to extend the service to hand-held devices.

Buying sweets on the street corner is not unusual in any part of India. Unlike in advanced countries, sweets are not just chocolates in India - there are mysore-pak, jhangri, kaju roll and hundreds of varieties more. Vendors got established and created brands from their products. They also expanded to multiple locations across the country and made more people happy during occasions. Employing a cook and getting the sweets prepared at home for occasions is slowly dwindling. 'Outsourcing' is happening at all the households as well.

I know folks who ordered birthday and anniversary cakes online for their family members, when they were travelling. Sweet Chariot is one popular cake shop online for such occasions.

Some of the online sweet vendors in India I encountered while surfing are Anand Sweets, Almond House, Madhulika, Mitha4All and Oder Your Choice.

One interesting aspect to note is that the original sweet / snack vendors do not seem to sell their products directly online. There is a 3rd party who is selling for them online. This is the case for Sri Krishna Sweets, K C Das Ghantewala or Haldirams.

If you have sweet tooth or like to gift sweets to your loved ones, you might not need to visit a physical shop in the future.

I guess there is a lot of scope for innovation and development in this space. Fresheness, quality and quick delivery are the key ! Any takers?

Sunday, May 13, 2012

Internet is Fun : A Family Conversation

Steve Jobs says 'I am very excited about having the Internet in my den'
Internet has dawned into the lives of people and made a remarkable positive difference to one and all. With 2.2+ billion members on the Internet, many of the activities offline are available over the Internet from the ubiquitous mobile phone now. The generation which is born in the Internet world can hardly imagine how people used to get things done earlier, how they used to engage in social conversations, how they could wait for things to happen instead of making them happen, how they could buy products from global brands, how they could travel easily and many more. The previous generation are joining the younger brigade to enjoy the new-found ways of doing things over the Internet. Yes, Internet is Fun !

Here is a short conversation between Dad, Mom and Daughter of a Family. Obviously, Daughter is an ardent fan of Internet on the mobile. The characters are fictitious but all the Internet related aspects discussed through this conversation are very much true.

Your mom and self are going to Hyderabad next month. Can you go to the railway station and book tickets?
Tell me the date and train in which you want to travel. I will book the tickets right now.
25th June by Rajdhani.
Let me try with Paymate on my mobile. [ punches a few keys… ]
You can book tickets on mobile?
Yeah. Here you go ! Tickets are available for that date and train. You want me to confirm?
WoW ! Yes.
Done. I have given your mobile number. You will get a mobile ticket, which you can show in the train while boarding.
That's it ?
Yeah ! Now let me check out Kiran's marriage photos.
Kiran… the one who got married last night?
How can his photos come out so early. They need to be printed and processed.
Daah ! 30 of us friends attended his marriage. All of us had cameras in our phones. We snapped almost 200 pix and captured the moments. And they are all uploaded to Google+, Facebook and Flickr. Mom, you want to see the girl on my mobile?
Yes beta. Ah, she looks very pretty ! I wonder who brokered this marriage !
He posted his profile on e-matrimony sites like Shaadi and Bharat Matrimony. He showed some pix to me as well on his mobile a while ago.
How can they marry someone without seeing them?
Mom, they met through the matrimony sites, saw each others' photo, learnt about each others' family, spoke to each other on the phone, exchanged 50 e-mails and SMS on phone - Internet is Fun! I heard that when dad came to see you, 50 members came in one ambassador car and you could hardly see dad, forget about talking to him.
Yeah, there were no seats left to sit for our family in the hall and there were no sweets after they left the hall. BTW, the jewellery is looking awesome !
He bought it from CaratLane, a new online jewellery store.
OMG ! I thought he got only the bride on the Internet.
He bought his watch, footwear and t-shirts also on the Internet. BTW, he has got a special deal with 80% off on a spa treatment before marriage ! I guess he got most of them at Snapdeal. It's raining deals, deals and deals in India these days !
Oh ! I wonder if he buys at least inner wear in a physical shop !
Mom, if he could buy jewellery online, why would he buy innerwear from a physical shop?
Hmm… anyway, where are they going for honeymoon?
Maldives. Kiran booked a honeymoon package on MakeMyTrip - includes transport to airport, flight tickets, hotel accomodation, sight-seeing, blah blah...
Okay. How come your desk is so neat?? Where is your desktop computer?
Ha Ha. I sold it on OLX site yesterday, from my mobile. Internet is Fun !
how are you going to work on your assignments now? You were talking about Google being your best friend.
Now, everything is my mobile Dad. I can even search by using voice commands with my phone. Oh, again Mamata Banerjee is throwing tantrums and she's gone one step ahead and saying that there will be early Lok Sabha polls. Damn !
I am just watching that news on TV! How do you know that?
I've got Live TV on my mobile - Internet is Fun !
Your dad has been watching this stupid news for the whole day. I am missing my favorite TV serials every other day.
If you want, I can show you the latest TV serials from Youtube on my mobile.
See, my daughter is always there to help me.
Ask her to pay electricity bill first. Otherwise, she cannot charge her mobile and say 'Internet is Fun' from tomorrow.
Dad, I paid it from…
From your mobile phone. I know. [ he is beginning to get upset that the next generation is able to do so many things just using a mobile, without moving an inch ]
Ok. Your mom and self are going for a movie this evening. Where ever you go in the morning, come back early in the evening today.
Sure. If you want, I can book tickets for you using BookMyShow on my mobile - Internet is Fun !
I changed my mind. We shall go to a restaurant and have a romantic evening.
Great ! Shall I book a table for you through Bookurtable ? If you still insist on going to a restaurant, I can check out on Zomato about reviews of nearby restaurants.
[ Grr…… ] Nope. We shall go to Kohli uncle's house and spend our evening there.
I read a message from Kohli uncle on Facebook yesterday that he is going to watch IPL 5 match in Bangalore today ! BTW, it seems he booked the IPL tickets on the Internet. I don't want to go there all the way. I watch it live on my mobile over Internet. See, Internet is Fun !
[ temper is raising… ] Then, we shall go out to buy some groceries.
Dad, you can buy groceries on the Internet now. Check out bigbasket, mygrahak and other such stores.
[ the stakes are increasing… ] We shall go to temple, get the blessings of God and return with prasad.
If you want peace of mind, you can certainly visit the temple, but if you are keen on blessings and prasad, I can order that online.
[ give-up… ] Instead of doing all these fun things on the Internet, why don't you apply for a Job?
Dad, I am working on a couple of freelancer jobs, which I got through Internet. I am not interested in a full-time job; I want to become an Entrepreneur. I need your help for that Dad. I would need about 10 Lakh Rupees as initial capital to start my own company.
[ sarcastic… ] Why don’t you ask for funding on the Internet?
I did apply to a few Venture Capitalists by browsing their sites and sending e-mail. I did connect with a couple of them on LinkedIn, a professional networking site. In fact, I did all these things from my mobile. I am yet to hear from them. Oh, while we were talking I just placed an order for 100 shares of Financial Technologies through National Stock Exchange (NSE) - Internet is Fun !
Dearest, I don't feel like cooking today. Is it possible to order some food online?
Tell me what you want Mom. This Genie is at your service on Mother's Day. Do you want South Indian, North Indian, Chinese, European or Thai?
[ Still Laughing… ] Get me a Pizza baby !
Domino's - Done ! I got a good deal - buy one get one free ! Internet is Fun ! BTW, it is going to rain for the next three days. Weather application on my device has given a warning. If you want any fruits or vegetables, let's order on the Internet NOW !
Why do you keep saying 'Internet is Fun'? You guys are addicted to it and forget about the rest of the world.
Dad, I say that 'Internet is Fun' because It allows me to do all the things which I want - work, learn, read, listen, watch, buy, sell, chat and talk - without leaving my house. Those verbs pretty much describe my life in a nutshell. Moreover, I can fulfill our wishes and yet stay close to you all ! Internet is Fun?
Dad, Mom
[ pause and silence for 3 seconds... ] Yes. Internet is Fun ! [ They all get into a huddle and cherish the moment… ]
Super! Now, if you excuse me, I need to get back to my room and 'Hangout' with my friends on Google+.

This article fits well into the theme of my blog, but written more in the context of 'Internet is Fun' contest by Vodafone ( and Indiblogger.