Threats and Opportunities

Going online presents unique threats and opportunities for the ME, careful analysis of these and
proper planning will not only diversify the risk but also give the ME a competitive edge over other
similar MEs.

Opportunities:

1) As we know that space is one of the biggest constraints for the ME, going online will aid to
overcome this constraint to a great deal.
2) Diversification of channel and reduction in location-based risk.
3) Creation of good-will and brand recognition, through home delivery service.
4) Alternate cash stream to strengthen the present operations.
5) Opportunity to scale-up the business and increasing the reach to an audience at the country
level.
6) Less inventory obsolescence due to less demand and ultimate discard. Thus, generating
more profits for the ME.
7) Same cyclical patterns and demand trends as the brick and motor retail. Thus, no additional
risk of demand variability.
8) The management can leverage their prior understanding of the domain knowledge and
customer tastes in the online retail.

Threats:

1) As human capital is also scarce resource for our ME, additional time consumed in sorting and
packing can lead to dissatisfaction or even potential loss of present clients due to
unattended customers.
2) Loss of focus on the core operations.
3) Less knowledge of online platforms may lead to create an obstacle to fully exploit them.
4) Additional working capital requirements may rise the cost of operations. As being the
supplier “Khazanay” may work to create a credit policy that may extend to 60 days.
Furthermore, if this additional working capital is financed through debt, then it will increase
the financing cost further.

Challenges:

1) Planning, forecasting, scheduling and channeling the goods would be a major challenge for
the ME, as the management is not conversant with the scientific methodologies and rely
heavily on judgement.
2) Capital arrangement and allocation might also be a challenge as the ME is over stretched
with financial constraints. This fact is interwound with the lower pace of the economic
growth and the current corona crisis which makes arrangement of capital even worse.
3) Additional working capital access remains a major issue for the ME. Even financing option
will be very cumbersome for the ME, as the banks are very cautious in money lending and
the requirements to extend such services are very lengthy, time consuming and difficult to
understand for the ME.
4) As, most MEs are not tax registered or do not fully disclose their taxable incomes dealing
with companies like “Khazana” will also pose specific challenge.
5) The ME has very limited experience dealing with claims and returns. Becoming conversant
with the terms of trade will also needs consideration.