Abstract:

The case deals essentially with the e-tailing model of Fabmart.com. Fabmart was launched as a
site for online shopping and later ventured into the opening of physical outlets. The case takes a
look at how Fabmart maintained a balance between its online portal along with its physical
stores. It discusses in detail the promotional schemes launched by the company and why it
chose Microsoft as its platform. It elaborates on the design of the site and the steps involved in
shopping online. It explains how different companies make use of the site to promote their
products. It also looks into Fabmart's fulfillment and payment mechanisms and gives a brief
note on its major competitors.

Issues:

» Understand the e-tailing strategy adopted by Fabmart and discuss the primary reasons for its
success.

Introduction

In 2000, PC Quest, a leading IT magazine, chose Fabmart for its Editors' Choice Award1 as the
'best-focused e-commerce shop', on the basis of a survey of 66 e-commerce sites. In the same
year, the readers of Chip magazine2 chose Fabmart as the 'Most popular online shopping site.'
Fabmart was one of the first online stores in India. Launched as a music store, it gradually
expanded to include a wide range of products. It gained a reputation for the huge number of
brands it showcased and for its unique promotional campaigns. When it began in 1999,
Fabmart tried to do everything right to develop its online shopping site. "It chose the right
categories, set up a foolproof fulfilment mechanism and kept its costs down," said V.Ravi,
Executive Director, India Research3.

All its initiatives paid off, with Fabmart's customer database increasing to 1, 60,000 shoppers
worldwide by early 2002. By early 2003, Fabmart widened its field of operations, concentrating
on three main areas. Its first area of focus was electronic retailing; the site had a variety of stores
in different categories. Secondly, it focused on web services by offering corporates services like
payment gateways4 and web-based Business Process Outsourcing (BPO) solutions. Thirdly, it
concentrated on its physical chain of grocery supermarkets in Bangalore and planned to expand
it to different cities with a mixture of physical retailing formats.

Fabmart's e-tailing model had its share of bottlenecks too. It took a long time to download items
from the site. The entire process of making an order seemed cumbersome and complicated.
There were also complaints that the site did not contain some famous books and CDs.
Occasionally customers complained that goods were not delivered on time and that there was no
feedback on the status of the order made. Nevertheless, Fabmart put up a tough fight to its
competitors like indiatimes.com, sifymall.com and rediff.com. It strove hard to remain loyal to its
customers and emerged as a strong and credible brand.

Balancing Brick and Mortar, and Click and Portal

In September 1999, a team of six experienced professionals from planetasia.com5 and Wipro
Computers and Systems Integration6, launched Fabmart.com.

According to K. Vaitheeswaran, VP (marketing), Fabmart.com, the vision of Fabmart was to

leverage the advantages of the internet as a medium for shopping and to offer shoppers an
experience which was as good as or better than what they got in physical shops.

He added, "We wanted a name with four characteristics: it should convey precisely what we
stand for, it should be very crisp and short with just one syllable, the company name and
URL7 should be the same, and there should be no possibility of a spelling error while typing in
the URL." On the basis of these conditions a few names were short listed and the name Fabmart
("Fab" as in "Fabulous")8 was found suitable.

A Step Ahead of the Rest

Fabmart's e-tailing model was different from that of other horizontal portals...

Shopping at Fabmart

Fabmart's site was designed on the 'find what you need fast' policy. If a shopper wanted to buy
a book from the bookstore, he had the option of selecting books according to title or first/last
name of the author.

There was also the facility of advanced search, which searched for books combining two or
three options.

If the customer did not have any specific book in mind, there was a browse feature on the site,
which helped him browse through all the available books either by subject or by author.

Fulfillment and Payment Mechanisms

Fabmart's fulfillment process was broadly classified into sourcing, order consolidation and
delivery...

A Means to Target Promotions

Fabmart maintained a database on what each of its customers was buying. This information was
used by other companies to promote new brands...

A Long Journey Ahead

Unlike other shopping sites which spent money without any limit, Fabmart kept a tight tab on its
spending. For instance, it cut down 50% of its communication cost by using instant messaging
service instead of telephone lines.

According to analysts Fabmart had three characteristics in its favor: it had depth of information
and contents on albums and artists; it was easy to navigate and order from, even compared to
international stores; and the status of any order could be found easily by logging on to "My
Account".