ANALYSIS OF THE CASE:

ShopClues.com: Turning Logistics into a

Competitive Advantage
Submitted to
Prof. (Dr.) Manoj Das

Submitted by
Group 5

Group Representatives:
Prabhat Sharma (19A1HP066)
Navin Kumar (19A2HP476)
Amitrojit Dan(19A1HP033)
Plabit Pattnaik (19A1HP126)
Summary:
In March 2016, the senior director of the logistics and fulfilment department at ShopClues.com,
the variety one online marketplace based in Gurgaon, India, reflected on the positive change
within the company's logistics strategy. Until 2014, the company had relied on air
transportation for delivery of shipments, limiting it to Tier 1, Tier 2, and some Tier 3 cities. It
used to be dependent entirely on the few national courier services available. These services
had high logistics costs and could not reach customers in some Tier 3 and 4 cities, preventing
these customers from ordering and causing dissatisfaction. ShopClues.com switched to surface
transportation and a network of third-party logistics service providers to meet their
requirements cost-effectively. With changing client desires for web-based retailing and wild
rivalry inside the web-based business advertise, could ShopClues.com become the main
productive internet business organization with outsider coordination’s associations as the key
empowering influence?"

Q1. How were Shop clues logistics requirements different from those of traditional offline
retailers?
The strategy of ShopClues.com as an upcoming name in the Indian Retail place market
contrasted with those of the known players. Their approach of targeting especially the price-
conscious Tier 2 and Tier 3 and Tier 4 customers spread across the country with specifically
value-oriented products was a revolutionary move for the E-Commerce Market. However,
given the large consumers and the geographical constraints, it is implied that the Logistic
Strategy of ShopClues.com would be quite special.
Traditional Offline Retailers cater to a specific range of customers normally situated around
the stores. However, the motto of ShopClues.com was to expand beyond the region of major
Tier 1 markets and enter small Cities and Rural areas. Therefore, given the size of sellers
(650000) and the number of Customers (Covering up to 30,000 Pin codes), ShopClues.com
required a compatible, efficient, and knowledgeable logistics system that would ensure the
successful penetration and safe delivery of goods.
Therefore it is not feasible for ShopClues.com to deliver or Handle the returned products to
and from the customers alone, as the price, geographical constraints, lack of technological
availability in deeply rooted regions of the country would put a huge burden in terms of
operational cost. Thus, a primary Logistical requirement for a company like ShopClues.com is
to outsource its Logistics process. This could be achieved by partnering with national as well
as with strong local Logistical Partners, as this would ensure maximum geographical reach.
Moreover, the business of offline retailers and ShopClues.com differs on the grounds of
physical contact. In one channel there is a chance to visit the store and buy the products on
your own, while the other delivers the products at your doorstep. Thus, in online Retail, there
is a doubt regarding everything in the mind of the customer. Moreover, here ShopClues.com is
also dealing with the small cities and rural regions, so Shoclues.com requires a logistics system
which would provide the correct information, deliver, and collect the returned goods on time,
and have excellent local connectivity. Therefore, this format of Logistical Strategy has proved
effective for ShopClues.com as it has reduced the overall cost of operation and risk associated
with its business.
Q2. What is Shop clues logistics strategy? Highlight its benefits?

The Logistic Strategy of ShopClues can be described as:

MARKETPLACE MODEL:
The market model is the online platform that has provided an online e-commerce facilitator to
be the bridge between the seller and the customer. Marketplace is a platform that allows a great
fragmented base of buyers and sellers to discover price and transact with each other in an
efficient, transparent, and trustworthy environment.
The main feature of the market mode is that the e-commerce such as ShopClues will provide a
platform for customers to interact with a selected number of sellers.

INVENTORY LED MODEL:

It is when the company sources directly from the brands and vendors and store it. There are no
multiple sellers selling a product, unlike markets where buyers can choose from various
merchants.

LOGISTICS HAS A COMPETITIVE ADVANTAGE:

• Third-party logistics providers frequently excel in coordinated operation, storage , and
transportation services which can be adjusted and adapted to customer needs according to
current market conditions, and as demand for your products and materials and as delivery
service requirements.

Q3. What are the steps in Shop clues order fulfilment cycle? How does a third-party
logistics fit in this Cycle?

ORDER FULFILLMENT CYCLE

ShopClues was operating with a marketplace model; the sellers processed 97% of the orders.
And only 3 % of the orders processed by company-owned fulfillment centers. The logistics
operations were forward ordered fulfillment were as follows.

• Order Processing
First, the customer placed an order on the portal; the inbuilt software checked the taxes,
prices, and terms of payment and assigned an order number. Then order assigned for
shipment to a 3PL partner with the help of a back-end decision support system (DSS).
 • Inventory Management

Delivery commitments to customers were the most important to remain competitive in

the e-commerce industry. So, the information captured online order integrated with the
inventory and fulfilment system. ShopClues’s online interface allowed sellers to view
order status and delivery details. The APIs and system integration helped ascertain
shipment status and reasons for any delays.

• Shipping
Order-status information selected by the DSS sent to the 3PL partner. This allowed the
3PL partner to schedule the pickup of packages that had been previously processed at
the seller’s site. After packages were shipped, the order status was updated as
“dispatched” through the connection API. The shipment details were sent to the
customer via e-mail and SMS.

• Tracking

Customers could track the status of their in-transit order at the ShopClues portal using
the order number. Regular updates on the status of orders were also automatically sent
to customers through e-mail and SMS. SLAs were classified based on the destination—
within a city, within a zone, within a metropolitan area. The SLA for within-city order
delivery was three to five days. Although 95% of orders were delivered as per the SLA,
in case of delays, non-delivery reason (NDR) updates were sent.

• Order Delivery

The 3PL partner has to make at least three order delivery attempts before initiating an
RTO. An RTO means order delivery was unsuccessful, and the product was sent back
to the seller. If an RTO was initiated for a paid order, the full amount was refunded to
the customer. For COD orders, the product was sent back to the seller.

• Reverse Material Flow

To protect customers, ShopClues had a well-structured replacement and return policy

for products that were unsatisfactory, damaged, and the wrong product. The company
had a network of reverse 3PL partners, such as Pikndel and Nuvoex, for handling
reverse across 14,000 PIN codes. Within ten days of order delivery, a customer can file
a return request on the portal, and a pickup would be arranged within two business days.

Third-party logistics fit in this Cycle by providing services like

• From procurement and storage to packaging and delivery.
• Expand their reach to Tier 2 and 3 cities, where cash on delivery (COD) was more
preferred.
• With the help of 3PL partners, online retailers could offer specialized value-added
services, such as, card swipe on delivery, time-bound deliveries and parcel lockers.