E Commerce Merged

LEVEL ANALYSIS
1. PRE-STRUCTURAL LEVEL
WORLD’S LARGEST ONLINE STORE
2. UNISTRUCTURAL LEVEL
WIDE GEOGRAPHICAL EXPERIENCE-5
INTERNATIONAL STORES-’WHOLE WORLD
IS MARKET PLACE’
3. MULTISTRUCTURAL LEVEL
BUYER SALE APPROACH,MULTI-LEVEL E-
COMMERCE,MULTIPLE PRODUCTS AND
CUSTOMER TRAFFICKING
4. RELATIONAL LEVEL
MULTI-TIER INVENTORY MODEL-VERY LOW
FIXED COSTS
5. OUT OF BOX
LEVERAGED ON THE STRENGTHS OF BRAND
VALUE AND BUSINESS MODEL
QUESTIONS
AND
ANSWERS
1. Why is Amazon building more warehouses as it grows? How many
warehouses should it have and where should they be located?
Answer: As it grew, the company added warehouses, allowing it to react

more quickly to consumer orders,
It is clear that when the no of warehouses increase the response time
decrease, and when the no of warehouses decrease the response time
increase. So by increasing the no of warehouses and locate them near the
customer will improve response time .
Amazon has about 50 warehouses, 20 in U.S and rest 30 in Canada,

France ,Germany , Italy , United Kingdom , China , and Japan.
2. What advantages does selling books via the internet provide over a
traditional bookstore? Are there any disadvantages to selling via
internet?
Answer:
Now a days world has become global village that’s why there is a need to
start business via e-commerce as we know e- business affects customer
service elements such as product variety, availability, customer experience,
time to market, visibility, and return- ability.
Amazon offers a much larger selection of books than a typical bookstore.
Offering the same selection at a retail store would require a huge location
with correspondingly large amount of inventory.
Disadvantages:
Response time
Transportation cost
3. Should Amazon stock every product it sells?
Answer: No …. It should stock those products which are in higher demand.

4. What advantages can bricks-and-mortar players derive from setting
up an online channel? How should they use the two channels to gain
maximum advantage?
Answer: The performance of traditional bookstore supply chain can be
improved significantly by combining the strength of the retail and online
channels. It is important to realize that the benefits of aggregation are most
significant for low- demand books whose demand is hard to forecast.
The book supply chains should be structured so that retail outlets carry
many copies of best sellers for customer purchase and one copy of low
demand books to encourage customers to browse and make impulse
purchase. Terminals or internet kiosks should be provided so that
customers wanting to order low demand books that the bookstore can
offer.
This approach allows the supply chain to reduce inventories by
aggregating low demand books sold online while keeping transportation
costs low for best sellers sold at retail store.
5. What advantages/ disadvantages does the online channel enjoy in sale
of shoes/ diapers relative to a retail store?
Answer:
Advantages:
1. Time to market
2. Flexible pricing, portfolio, promotions
3. low facility cost
Disadvantages:
1. Transportation cost
2. Response time
3. IT cost
6. For what products does the online channel offer the greater advantage
relative to retail stores? What characterizes these products?
Answer:
Online channel offer the greater advantage for those products having large
product varieties.
For example; Netflix offers a much large selection of movies than any video
rental store, offering the same selection at a store would require a huge
location with correspondingly large amount of inventory.
AMAZON BASIC SUPPLY
CHAIN
Supply chain drivers
Facilities:
warehousing and order-fulfillment for third-party
sellers
49 fulfillment centers across globe
United States – 14 spread across 14 states
Canada – 2
France – 3
Germany – 7
Italy – 1
United Kingdom – 8
China – 8
Japan – 6
TRANSPORTATION
Transportation
rely primarily on national parcel couriers
UPS, FedX
Own logistics network
INVENTORY
BOOK SHELF OF AMAZON
Inventory
SOURCING
PRICING
Pricing
Amazon does make millions of price changes
daily
HIGH- LOW PRICING
HIGH PRICE FLUCTUATIONS
Information
Amazon web service: allow partner retailers, the
individual sellers and developers to advertise
their products through Amazon.com by building
their web based applications in a reliable,
scalable, and low cost way.
Simple storage service: designed to make web-
scale computing easier for the business partners
and developers by web service interface to keep
and receive any data, any time, from anywhere.
Smart analytic search: allow detecting and
decreasing the examples of fraud in Amazon web
site by analyzing the behavioral patterns of
fraudsters and designing the predictive scores.
INFORMATION:AMAZON
SERVERS
INFORMATION :AMAZON CLOUD
STORAGE
STRATEGIC FIT
AMAZON STRTEGY ANALYSIS
Strategic fit
Competitive strategy
Respond to wide range of demand
Fulfill orders in short lead time
Meet high service level
Supply chain strategy
Both cost effective and responsive
Facility: more towards centralization
Inventory: high
Transportation: Faster
Information: high investment
Cyclic view
Introduction
July 5, 1994 • Amazon Incorporated as “Cadabra”, By Jeff Bezos.
1995 • Website went Online as Amazon.com; Online Book Store
1998 • Acquired Junglee.com
2012 • Entered Indian E-commerce space as Junglee.com
2013 • Amazon.in launched
@Data Source: Amazon Corporate Website

India: The Big Opportunity for Amazon
Total E-Commerce Size ($ Billion)

Online Shoppers of Total
Internet Users (as a %)
Average Spending per Online Shopper in India
Investment Over $5 Billion
@Data Source: “e-Commerce in India: A Game Changer for the Economy”, CII, April 2016
Amazon Invades India
o B2C e-Commerce Market place; 2nd largest Online Retailer in India.
o 55 million products across hundreds of categories.
o 1.3 Million Products in Fulfillment Center (26 FC in 10 States).
Customers Sellers
• Massive Selection • World Class e-commerce platform

• Low Prices • Large Base of Customers
• Fast & Reliable Delivery • Fast & Stress free shipping
• Trusted & Convenient Experience • No Fixed Cost
• Convenient Payment (Cash, • Secure & Timely Payment
Electronic) • Professional Services
Amazon India: Products, Services and Value Chain
Products
Kindle e-Readers & eBooks Value Chain

Computers & Accessories
Sports, Fitness & Outdoors
Handbags & Luggage Services
Amazon Apps
Sell on Amazon
Cameras, Audio & Video
Beauty, Health & Gourmet Fulfilment by Amazon
Books Pay with Amazon (Easy Ship)

Shoes
Sponsored Product
Clothing & Accessories
Movies, Music & Video Games Amazon Global Selling
Home, Kitchen & Pets
Jewellery, Watches & Eyewear
Car, Motorbike & Industrial
Mobiles & Tablets
@Data Source: Amazon India Corporate Website, Store Directory
Toys & Baby Products
Unveiling Supply Chain of Amazon India
With respect to their different services
Selling on Amazon (Sell Smart. Sell on Amazon.)
Set up Store on Receive orders Amazon delivers

Amazon from Customers Orders
Amazon Easy Ship
Fulfillment By
Amazon
Receive payment Help to Grow

from Amazon Business Expand Globally
@Data Source: Amazon India Corporate Website

How Amazon help to grow Sellers’ business?
Advantages
Set up your store Crores of customers across the world
Sit back and relax Fast and Stress free Shipping
Hassle-free Payments No fixed costs. Pay when you sell.
Sell Globally Secure and Timely Payments
Professional services
Fulfillment By Amazon (FBA)
1. Sellers send products
to an Amazon 2. Amazon stores
fulfillment center or Sellers’ products –
schedule a pickup from a single unit to
your entire inventory
3. Customers order
Sellers’ products from
Amazon, often with
fast, free delivery
4. Amazon packs and 5. Amazon’s customer

ships Seller’s products service and delivery
from fulfillment center to creates loyal, happy
the customer customers

Fulfillment By Amazon (FBA)
Seller
INFORMATION PRODUCT
FC
INFORMATION PRODUCT
Customer
Advantages of FBA- “You sell it, we ship it.”
Customers keep
Focus on your coming back for
business more
Build Trust Cash on delivery

payments
Pay as you go Amazon Prime

Amazon Easy Ship
1. Customer orders 2. Sellers schedule the 3. Amazon Easy Ship 4. Amazon Easy Ship
from Sellers using Pay pickup and keep the delivery associate delivers the package to
with Amazon. Sellers product packaged and picks up the package the customer and picks
get a notification of the ready. from Sellers’ doorstep. up Cash on Delivery
order via email, Seller (COD) payments.
Central.

Amazon Easy Ship
Seller
INFORMATION PRODUCT
INFORMATION PRODUCT
Customer
Amazon Global Selling
Selling on Amazon & Fulfillment by Amazon

 Customers order Seller’s products on Amazon.com
Expand business to
the US and other
International Market
 Sellers can either choose to fulfil those orders on their
own or use Fulfilment by Amazon (FBA).
Showcase products to  Fulfil orders on their own: sellers will fulfil orders
millions of customers from India when a customer buys sellers’ products on
Amazon.com
Increase sales by tapping into  FBA: sellers store their products in Amazon's
the US & International holiday fulfilment centres, and Amazon will pick, pack, ship,
season and provide customer service for these products.

Amazon Seller Flex
Warehouse Supplier
PRODUCT
INFORMATION
INFORMATION PRODUCT
Customer
Strategic Partners of Amazon
Amazon will use P&G’s warehouses for faster and economical product
distribution.
Amazon will use Future Group’s strong product knowledge, extensive

brand portfolio and sourcing base.
Amazon will use SBI’s smooth & trusted payment solutions for small
businesses and end customers
Fulfillment Centers of Amazon
Fulfillment Center: 21
New Fulfillment Center: 5
Delivery Station: 4
86% Sellers of FBA

1.3 Million Products are available for
Immediate Shipping
Largest FC in Sonipat, Haryana

Space: 200000 Sq. Ft.
Capacity: 800000 Cu. Ft.
Year end 2016: Combined Storage Capacity 7.5

Million Cu. Ft.
@Data Source: MWPVL International
FC, New FC and Delivery Station of Amazon
@Data Source: MWPVL International

Evaluation of Amazon India’s Supply Chain
Hybrid Logistics Model
• Delivers some of the products itself, while delivering some products sold by suppliers
on its marketplace using other logistics firms.
Amazon SCOT (Supply Chain Optimization Technology)
• “Innovating to get customers what they want, when they want it.”
• Using machine learning, data analytics, and complex simulations.
Managed Marketplace Model
• Seller is free to choose self-fulfilment or marketplace-fulfilment.

• Infused inventory-led in a marketplace by having operational control over seller
entities like Cloudtail (Amazon).
The Game Plan of Amazon India: Wining India
• 65 % Orders (2015) are from Tier II & III
cities
• Engaged in Pilot Project of Rural Delivery

Network in Tier III & IV cities with Connect
India E-Commerce Pvt. Ltd. (of Basix
Group)
Amazon India: Wining India
Amazon Chai Cart

• Three-wheeled mobile carts to navigate in a city’s business districts, serve tea, water,
and lemon juice to small business owners and teach them about selling online.
• Team travelled 15,280 km across 31 cities, served 37,200 cups of tea, engaged with
over 10,000 sellers (in 4 Months)
Amazon Tatkal
• A studio-on-wheels offering a suite of launch services.
• Enables small businesses to get online in less than 60 minutes.
Easy Ship
• Deliver products in over 19,000 pin codes using Amazon Transportation Services,
Blue Dart, and India Post.
• Most penetrated e-commerce platform in the country.
Our Suggestion
Multiple Hub & Spoke Model
• Customer Consideration, Vendor Consideration, Geo-Political Consideration,

Logistics Consideration.
A fully grown in-house logistic arm
• Better control, Business Diversification.

• Improved Delivery, Cost and Services.
More Investment in Supply Chain to penetrate Rural India
• Tie up with Home-Grown Logistics Firm & Start-Ups.

Conclusion
“Be afraid of Our Customers, because those are the folks who have the money. Our Competitors
are never going to send us money” …… Jeff Bezos
Supply Chain of Amazon India
Ready with
EVERYTHING
EVERYWHERE
EVERYTIME
Thank You
Encyclopedia of
Information Science
and Technology, Fourth
Edition
Mehdi Khosrow-Pour
Information Resources Management Association, USA
Published in the United States of America by
IGI Global
Information Science Reference (an imprint of IGI Global)
701 E. Chocolate Avenue
Hershey PA, USA 17033
Tel: 717-533-8845
Fax: 717-533-8661
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Web site: http://www.igi-global.com
Copyright © 2018 by IGI Global. All rights reserved. No part of this publication may be reproduced, stored or distributed in
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Product or company names used in this set are for identification purposes only. Inclusion of the names of the products or
companies does not indicate a claim of ownership by IGI Global of the trademark or registered trademark.
Library of Congress Cataloging-in-Publication Data
Names: Khosrow-Pour, Mehdi, 1951- editor.
Title: Encyclopedia of information science and technology / Mehdi
Khosrow-Pour, editor.
Description: Fourth edition. | Hershey, PA : Information Science Reference,
[2018] | Includes bibliographical references and index.
Identifiers: LCCN 2017000834| ISBN 9781522522553 (set : hardcover) | ISBN
9781522522560 (ebook)
Subjects: LCSH: Information science--Encyclopedias. | Information
technology--Encyclopedias.
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For electronic access to this publication, please contact: eresources@igi-global.com.

Category: Logistics and Supply Chain Management 5367
E-Commerce in Logistics and L

Supply Chain Management
Yasanur Kayikci
Turkish-German University, Turkey
INTRODUCTION tools such as portals, e-marketplaces, e-auctions

or virtual inventory. Logistics and supply chain
The rapid development of computing services operations have been affected irrevocably by
and information and communication technologies e-commerce solutions. But the possible major
(ICT) in the 1990s has dramatically transformed changes could take a lot longer to happen. For
the way how organizations use logistics and sup- companies, the overall goal of e-commerce in-
ply chain operations for achieving competitive cludes (Yang, 2012): to help companies develop
advantage. This has led to the emergence of the global sales network and logistics infrastructure
e-commerce context (Turban, et al., 2007; Harris which support efficient online order fulfillment;
et al., 2015). Gaining a competitive advantage to provide enterprises with information and data
in e-commerce means finding a balance of the of various business activities (i.e. online order
right item price, customer service and delivery documentation), production and sales informa-
time, therefore e-commerce includes innovative tion to solve the difficult problem of collection;
and highly scalable e-commerce platforms (Chen to reduce market entry link that help companies
et al., 2012). The impact of e-commerce covers open up the market to minimize the circulation
both business-to-business (B2B) and business- of goods; to reduce business cost of sales and
to-consumer (B2C) transactions. Simply to point minimize the transaction costs of goods; both for
out, e-commerce is conducted through the Internet trading and online commodity trading to facilitate
computer network products, trading, payment and negotiations; supports online purchasing includ-
services and other economic activities, and also ing secure online payment system; to provide the
it integrates all inter-company and intra-company most reliable quality assurance; to provide cus-
functions, meaning that the three flows namely, tomers the most convenient means for retrieval.
physical flow, financial flow and information flow Supply Chain Management (SCM) is based on
of the supply chain are affected by e-commerce. customer demand, providing a common focus
The digital revolution has driven the develop- on the related products or services, enterprise
ment of e-commerce. Early applications can be information resources, software products based on
traced back to the 1960s, but e-commerce only Internet technology as a tool to manage, the entire
became popular in the 1990s due to the widespread channel which all relevant processes to maximize
use of the Internet. E-commerce uses communica- net value added, and improve the efficiency and
tions such as EDI, POS, electronic ordering system, effectiveness of a platform. In this chapter, the
electronic mail, file transfer, video conferencing, evolution of logistics and supply chain and trends
workflow or interaction with a remote computer to of e-commerce in logistics and supply chains are
improve efficiency of logistics and supply chain described. Then the discussion on the integrated
activities, and to enhance the entire supply chain e-commerce and e-commerce logistics are given
management decision capacity. E-commerce and finally, it ends with future research directions
has also become associated with solutions and and conclusion.
DOI: 10.4018/978-1-5225-2255-3.ch466
Copyright © 2018, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
E-Commerce in Logistics and Supply Chain Management
BACKGROUND every kind of shopping experience, service and

product. Presently, it remains the case that as the
The rapid growth of e-commerce is being related gross revenue earned from e-commerce is increas-
to economic development and often been cited ing year on year from nascence to critical mass,
as a driver of economic growth. E-commerce is most transport service providers (TSP) or retailers,
also touted as a powerful medium through which particularly multi- and omni-channel retailers,
developing economies can exploit the potential of are only starting to realize what this will bring
global markets. Today, e-commerce in developed to their retail logistics and physical distribution
economies represents the latest leader of chance in network infrastructures and what role they can
physical distribution network and SCM, whereas have within. So much as, today e-commerce has
in developing economies, e-commerce market is become a complementary retail touch point for
still in its infancy but it is expanding and becom- the traditional brick-and-mortar retail.
ing integral part of commercial life. This field The new e-commerce technologies have
evolved substantially over the past four decades the potential to offer greater efficiencies and
and continues to grow today. In the early days, transparency and have led to significant changes
low prices and convenience were the driving within supply chains, with alternative ways of
forces for e-commerce, but today, e-commerce doing business, improved visibility and changes
retailers (also known as e-tailers) are catering to to distribution channels, including new interme-
Figure 1. The evolution of logistics and supply chain
5368
Category: Logistics and Supply Chain Management
diaries. From a distribution property perspective, according to geographical location, often by

the evolution of logistics and supply chain has post or zip code, so they can be delivered to the L
passed through various phases and very broadly relevant parcel delivery center for final delivery
in the timeline as follows (JLL, 2013) (see Figure to the customer’s home or designated collection
1): most retail stores were replenished by direct point. Parcel delivery center handles the last mile
deliveries from wholesalers and suppliers in the delivery to the customer. Seamlessly integrated
1970s. The distribution centers (DC) emerged technology is where shopping carts connect via
and retailers started to centralize store deliveries WEBXML, API or some other connection to a
through new DCs that they controlled in the 1980s. TMS, so customers get the exact price quote of
Global sourcing took off in the 1990s, with many shipping of larger items. Quotes are often more
retailers developing import centers to receive suited for less than truckload, as these technol-
and process mostly containerized imports. From ogy products for logistics, such as a TMS, must
around 2000, e-commerce began to rapidly expand accomplish along with the shopping cart for bet-
with Internet-only (pure-play) retailers leading ter management. These technology products for
the way in establishing giant e-fulfillment distri- logistics feature: the ability to organize and track
bution networks. In 2000, the business concepts shipment according to transport modes; online
like information sharing driving the extensive and order documentation and status; online dispatch
intensive cooperation, collaborative warehousing, invoice and documentation such as freight bills of
collaborative urban (city) as well as non-urban dis- lading and invoices; auto reminder for payments;
tribution are merged and implemented in logistics seamless interface with existing ERP or SCM
and supply chain operations (Capgemini, 2008). system; online alerts for critical information via
According to a study in developed economies mobile or text, information systems reports on
the growth of online retail has been stronger in delivery history, past data analysis, etc. Types
sectors such as fashion, electrical and ICT goods of e-commerce logistics systems based on these
(Robinson, 2014). In the past times and models, considerations ensure the following benefits to
there weren’t many carrier options and purchased transport users (e.g., shippers, receivers) and
items were often distributed via a parcel, postal or TSPs (e.g., carriers): improved communication,
freight network. However, e-commerce logistics transparency into the supply chain, improved
models have created new demands. customer satisfaction, distribution and logistics
There are four distinct types of logistics optimization, cost reduction, improvement in
functions being setup (Robinson, 2014): An e- efficiency and on-time delivery.
fulfillment center is a warehouse at which goods As online retail grows further, delivering order
are stocked and chosen at item level. Today, to customers quicker will become an increasing
there are numerous e-fulfillment centers, which competitive advantage. As a result, the logistic
are operated either by a retailer or a TSP such facilities will encourage some retailers to set up
as eKart for Flipkart, JaVAS for Jabong and their own networks of local depots - either to
ATS for Amazon etc., often operating 24/7. Key cross-dock items shipped from larger e-fulfillment
facility configuration includes size (also called centers or to ship certain fast moving products
as big-box space which ranges from 50.000 to direct to customers. In this emerging model, e-
more than 100.000 m2) as well as features that fulfillment blends with urban logistics, as these
contribute to more efficient picking, order fulfill- facilities will be mainly based around the major
ment and throughput, such as accessibility for population centers where online sales densities
delivery vans, access to a strong employee base are highest. For example, in the U.S., Amazon
and cross-dock configuration. A parcel hub/ opened smaller scale distribution facilities to offer
consolidation center is where orders are sorted same-day delivery services.
5369
TRENDS OF E-COMMERCE IN data prices, customers access mobile appli-

LOGISTICS AND SUPPLY CHAINS cations conveniently to shop from any lo-
cation like at airports, traffic signals, cafes
The e-commerce context is changing at a steady or waiting in the line. This ease of ordering
rate in both B2B and B2C, although it only rep- through mobile has further fueled impulse
resents 10% of all new leasing around the world, purchases. Companies are investing more
this percentage has doubled during the past three resources for optimization of their mobile
years, therefore companies have to anticipate sites to enable customers to have seamless
strategies to manage these changes in their favor. shopping experience across platforms.
Recognizing online presence as one of the biggest • Personalization for Customer Engagement:
opportunity to expand and grow, many physical Personalizing customer experience is a key
retailers have started to establish and increase their customer engagement tool and is expected
online presence. An e-commerce platform not to drive e-commerce growth. With increase
only facilitates a transaction over the web, but it trend towards online shopping, brands are
supports the creation and continuing development becoming more sophisticated in their abil-
of an online relationship. The emerging trends of ity to collect information about customers
enabling e-commerce systems have been subject and using this data to deliver personal-
of discussion in recent years. ize recommendations, tailored offers and
delivering differentiated experiences each
• Cloud Computing: There are four basic time.
service configurations which are Software- • Big Data: The Big Data has arguably been
as-a-Service (SaaS), Platform-as-a-Service generated primarily from web and e-com-
(PaaS), Infrastructure-as-a-Service (IaaS) merce communities. Significant market
and Supply Chain-as-a-Service (SCaaS). transformations have been accomplished
In SaaS, the cloud user is able to access a by leading e-commerce vendors such as
software application hosted by an external Amazon and Ebay through innovative and
provider over the Internet. Such as Google highly scalable e-commerce platforms and
Apps, Salesforce. PaaS model describes product recommender systems. Major in-
a virtual platform which involves the use ternet companies such as Google, Amazon
of an externally provided infrastructure to and Facebook continue to lead the devel-
host the application like Apprenda, Google opment of web analytics, cloud computing
App Engine. IaaS provides virtualized and social media platforms.
computing resources over the Internet such • Social Networks: Social media has shown
as Amazon Web Services, Cisco Metapod, to be an effective platform for customers to
Google Compute Engine. SCaaS describes discuss and voice opinions about products
a framework for service oriented SCM and brands, as well as for business to com-
such as OpenPMF SCaaS, HCL SCaS. municate with customers (DHL, 2015).
• Mobile Applications: Customer shopping Social media plays an important role.
habits have changed driven in part by in- There are four different segments where
creased use of mobile devices. Continued marketing channels fit along the customer
growth in tablets, smartphones, handheld path to purchase: awareness, consider-
devices use boosts the amount of time cus- ation, intent, and decision. Despite not
tomers spend online – and they’re more being a direct sales channel, social media
likely to shop there. With the proliferation can support e-commerce logistics and sup-
of the Internet into daily life and the falling ply chains in the ways (O’Leary, 2012):
5370
Figure 2. Paradigm change in e-commerce

L
Demand information: using the percent- in B2B and B2C commerce must be flexible and
age of likes and dislikes from social media as omni-present as possible in order to remain
exchanges as a measure of interest of cus- competitive in this shop-anytime-anywhere world.
tomers in a product, thus providing some As seen today, this trend is starting to displace
potential insight into customer demand. the traditional role of parcel operators. Now the
Supplier choice: Data mining of media e-commerce challenge has shifting to finding a way
such as Linked-In can provide important of synchronizing and standardizing the business
data to help infer information about wheth- processes to achieve real time access and insight
er a company will continue in business. of the inventory movement. As predicted, retail-
Logistics: Information gathered over time ers in developed markets are experiencing to shift
about particular highways can help devel- from multi-channel retail to omni-channel retail.
op a better understanding of likely highway Paradigm change in e-commerce is depicted in
conditions. Effectively, intuition can be Figure 2. Omni-channel retailers are managing
generated about routes and the likelihood their channels in an integrated way that offers
of problems being encountered when mov- customers a seamless experience, however they
ing goods over those routes choose to shop. With omni-channel, a retailer
may fulfill orders from local stores rather than
warehouses, ultimately blurring the distinction
INTEGRATED E-COMMERCE between the two e-fulfillment centers.
With extensive number of sales channels,
The evolution of multiple shipping options al- multiple warehouses, and dozens of suppliers,
lows retailers today more control over their e- the risk of misplaced orders is much higher than
commerce logistics and supply chains. Today’s ever before. In order to respond to this chal-
customers have the ability to purchase whatever, lenge, order fulfillment technologies have also
whenever, however, wherever and at the price they helped integrate the front-end and back-end of
want, putting them in total control of the market. online retail. Automated software and real-time
With social media, mobile and e-commerce on fulfillment data transform the back-end process
the rise, omni-channel fulfillment is becoming now in a collaborative effort. The alignment of
increasingly important for retailers. Companies important touch-points in the supply chain has
5371
reduced inefficiencies and has helped identify channel it comes from, whether custom-
redundant processes. There are even robots that ers are shopping online from a desktop or
pick inventory and move it around the warehouse mobile device, by telephone or offline in a
(Robinson, 2014). brick and mortar store. Basically, the goal
of omni-channel is to give retailers an end-
• Multi-Channel: Customers interacts with to-end view based on aggregated informa-
retailers across the independently man- tion from suppliers to customers, orders,
aged channels (e.g. social media, web and and inventory.
emails). Retailers with this approach are
adopting two or more channels to engage In the past, retailers built two types of DCs, one
their customers, however, they are not nec- to manage store fulfillment, whereas another to
essarily focused on delivering a seamless/ manage purely e-commerce. Omni-channel DCs
consistent message across multiple touch- seamlessly combine both e-commerce and tradi-
point. Furthermore, these programs do not tional store distribution channels, omni-channel
necessarily factor in optimizing customer fulfillment strategies must be done right and
experience based on different devices (e.g. quickly. Omni-channel improves the customer ser-
smartphones, tablets and laptops). vice through real-time integration with POS, web
• Omni-Channel: This business is dili- storefront and call center solutions, furthermore
gent to ensure that customers receive the it increases flexibility and reduced costs through
same experience and message through common carrier, small package and private/dedi-
different channels and devices involved cated fleet delivery planning and optimization.
within their interactions with the retailer It improves delivery control through transport
(Kourimsky & van den Berk, 2014). Thus, execution capabilities including tendering, multi-
omni-channel has seamless integration carrier parcel manifesting, fleet dispatching,
with company software systems like ERP, routing, proof of delivery and freight auditing,
WMS, warehouse control system, distrib- additionally transport operations are streamlined
uted order management (Hobkirk, 2016). through carrier connectivity and global logistics
Typically, omni-channel customers require network. To meet the challenges, retailers must
their orders to be delivered within either completely redesign their distribution processes
same day or next day to their location of and add automation equipment to their DCs. In
choice, whether the order is distributed to order to support the fulfillment promise, shippers
their home or can be picked up in a store must have technology and infrastructure in place
or another location, moreover this type of to ensure sufficient response time between when
customers expect to be informed of every customer places an order and when fulfillment
step and any delays which may occur along center dispatches it. Additionally, significant
the delivery process. Similarly, retail- capital investment is required in material handling,
ers have a holistic view into inventory in conveyor sortation and controls, optimized racking
omni-channel environment, allowing them systems and lift equipment, inventory management
to fulfill orders from any location or ship software, and picking/packing technology.
inventory to other locations where invento-
ry is needed or sells better. Omni-channel
DCs share a common inventory pool and E-COMMERCE LOGISTICS
seamlessly combine both e-commerce and
traditional store distribution channels in In the context of logistics, e-commerce platforms
order to meet demand regardless of which can be termed e-commerce logistics platforms.
5372
Figure 3. Overview of e-commerce logistics platform with consortia partners

L
E- commerce logistics is the use of web-based platform developers build web-based (e.g., www.
technologies to support the material acquisition, timocom.com) as well as mobile-based (e.g.,
warehousing, and transportation processes. It TimoCom transportbarometer) applications, as
enables distribution to couple routing optimiza- communication tool in supply chain that run on
tion with inventory-tracking information. This Internet and on mobile, that are completely inde-
platform is an inter-organizational system (IOS) pendent of the user’s actual computer operating
that links transport users and TSPs together for system. E-commerce platforms offer powerful
the purpose of collaboration or trading. It en- online solutions for transport collaboration, where
ables online interactive transport exchanges in TSPs easily search online for freight or post any
terms of transport supply and transport demand spare capacity in order to increase load factor for
in order to match freight capacity with available return trip. Similarly, transport users offer freight
shipments (Christiaanse, 2005; Kale et al., 2007; for transportation or search for suitable vehicles.
Wang et al., 2007). For example, internet-based Today companies (e.g. Shipwire) access end-
freight acquisitions enable spot buying of truck- to-end orchestration and fulfillment capabilities
ing capacity. TSPs offer virtual logistics services on web-based enterprise fulfillment platforms
by integrating and optimizing distribution re- (DHL, 2015). These make it easy to access specific
sources. A company may even consider collabo- services and grow into new markets. Customers
ration with its competitors to improve its supply can choose their preferred transport option and
chain. Utilizing the web has largely reduced the this is factored into the total cost of the product
complexity and cost of implementation and the (e.g. FreightOS). E-commerce logistics platforms
integration of IOSs. Incorporating the concept of offer three different types of business activities
cloud computing services, e-commerce platforms (Kaplan & Sawhney, 2000):
are emerging quickly as a viable alternative to
large-scale client-server solutions (Kayikci & • Aggregators create a business community
Zsifkovits, 2013; Wang et al., 2007), especially where TSPs offer freight capacities with
where they are hosted by the technology provider. predefined prices (e-catalog) for trans-
Traditionally, transport software programs (e.g., port users on a website (e.g., Freefreight
TimoCom, TransMATCH) are developed for search).
specific platforms, such as Windows, Linux, or • Auctions create market and reduce empty
Mac OS, where parties are advertising freights trip and promote the load factor, where
(cargoes) and looking for empty trucks. Today, transport users can bid simultaneously
5373
for the TSP’s freight capacity accord- an independent platform usually tries to be of
ing to multiple real-time auction systems direct use for shippers, receivers and carriers.
(e.g., FReight Exchange for International Neutral community, where the aforementioned
Transport-ONlinE). three communities collaborate each other and
• Exchanges create stable online market, their communications are supported by a neutral
where selected transport users and TSPs technology provider which is called as control
trade freight according to a fixed set of unit (CU). This community is characterized by
rules and at constantly changing prices a high level of transport collaboration. It is web-
(e.g., Transplace); this Expedia-like plat- based and hosted platform and enables high level
form for freight providing instant, online information sharing and joint activities.
real-time quoting for all legs of shipment.
Shippers can generate and book instant, • Platform Strategy: E-commerce plat-
door-to-door quotes directly online, using forms are divided into two types: open
their own internal negotiated rates or rates and closed platforms. Open platform al-
shared online by carriers or forwarders. lows transport parties to use their services
with no barriers to entry whereas closed
Characteristics of an E-Commerce platform tends to be geared towards the
Logistics Platform needs of particular shippers, receiver and
carriers (Wang et. al, 2007). Closed plat-
• Platform Community: The network for form denotes private community in other
transport exchanges allows transport users and words, semi-private or private networks
TSPs to create communities to better manage where the all participants know each other
their transport needs and resources (Kayikci & and they share information on shipping
Zsifkovits, 2013). Figure 3 depicts an overview requirements. Most of the transport users
of e-commerce logistics platform with various prefer to collaborate in a private network
consortia partners. If a transport coalition is rather than in an open network, however
composed of pre-selected members on vertical close platforms are less structured and of-
plane, it is called then private community; most ten contain the opinion of large companies
of the time this community is closed and specific (Chen et al. 2012), whereas open platforms
requirements should be fulfilled to enter into this acquire bigger negotiation capability and
community. If a transport coalition is composed offer more freight matching opportunities
of only receivers, then it is called receivers’ com- than closed platforms. However, the open
munity where the platform primarily serves interest platforms are not suitable in high level of
of receivers; likewise, if it is composed of only transport collaboration (Cruijssen et al.,
shippers, which is called shippers’ community 2007; Wang et. al, 2007). Especially stra-
and the platform serves the interest of shippers; tegic partnering level requires closed plat-
if only carriers are collaborate, then it is carriers’ form strategy.
community where the platform primarily serves • Platform Sourcing: The platforms also
interest of carriers. If shippers, receivers and car- differ in how total freight load capacity is
riers integrate together on the lateral plane, it is bought. Generally, transport users either
denoted as a neutral community which has gener- engage in systematic sourcing or in spot
ally heterarchical structure and serves interest of sourcing (Kaplan & Sawhney, 2000). First,
all participants and is often managed by a group transport users can acquire freight capac-
of consortium. That means, there is no dominant ity in a truck through fixed-commitment
community which rules the coalition, therefore contracts and negotiated market prices
5374
with TSPs. Especially major shippers and platforms can also include personalization/
forwarders use systematic sourcing for ac- preference profiling, multichannel selling, L
quiring available freight capacity (Kayikci site/product search, search engine optimi-
et al., 2014). The closed private platforms zation, customer community management
exemplify this approach. Second, in spot or participation, integration with social
sourcing, transport user’s goal is to ful- media, and mobile stores.
fill an immediate need at the lowest pos-
sible cost, whereas TSP’s goal is to utilize
truck space at the highest possible profit- FUTURE RESEARCH DIRECTIONS
ability. The open source auction platforms
elucidate this approach. Spot transactions Customer buying behavior is evolving faster than
are being accompanied by development logistics and supply chains can adapt. The rapidly
of a short-term, loose relationship among changing delivery expectations of e-commerce
transport users and TSPs. customers, driven by trends towards click & col-
• Platform Capability: Development of an lect and next day delivery, mean that operating an
online platform includes creation and man- effective e-commerce supply chain and fulfilment
agement of an online storefront, shopping operation presents a whole new set of challenges.
cart management, PCI compliance, per- To meet these new expectations, e-tailers need to
sonalization transaction management, set- find new solutions at every stage, from demand
tlement and product visualization – enable forecasting, through to inventory management,
organizations to build basic B2B or B2C warehousing, technology integration and dis-
online stores. Some specific capabilities in tribution. A strong mobile presence, in-stock
electronic communications are determined merchandise, and fast delivery are important keys
(Hajdul, 2014) that are essential for e-com- to e-commerce success, and a strong argument
merce platforms with the collaboration of for top-notch logistics solutions. Today, supply
transport users and TSPs: web-interfaces, chains are segmented by channels, which results in
event management / alerting functional- duplication of inventory and infrastructure. Only
ity based on (re-)calculated routes/plans, few companies (such as Vargo) are beginning to
reporting, transport/purchase order man- offer omni-channel DCs, so that separate channel
agement at company level, monitoring of spaces within the same warehouse and different
the performed task, digital map, route op- automation solutions are used in order to easily
timization, invoicing, fleet management, respond the changing supply chain demands of
freight exchange, real-time monitoring of B2B and B2C channels. Unfortunately, there is still
the performed tasks, transport/purchase or- limited research associated with how e-commerce
der management at group of independent in terms of new trends has been and can be used in
companies level, verification of business the logistics and supply chains. From this perspec-
partners, coordination of transport orders tive, many opportunities for future research might
and resources of independent companies, be opening for researchers. These new research
optimization of truck loading process, areas might be big data analytics in logistics and
share of savings among group of cooper- SCM, adapting industry 4.0 in logistics and sup-
ating companies, load tracking, deliveries, ply chain, setting the strategies for omni-channel
support of existing communication stan- logistics, omni-channel integration as well as
dards, settlement and reports. E-commerce designing omni-channel DCs.
5375
CONCLUSION Hajdul, M. (2014). Virtual co-opetition in trans-

port: T-Scale platform case study. Procedia:
Expanding ICT has broken down barriers to make Social and Behavioral Sciences, 111, 761–769.
it easier to start and grow a business online in doi:10.1016/j.sbspro.2014.01.110
every industry and logistics and SCM continue to
Harris, I., Wang, Y., & Wang, H. (2015). ICT in
be pushed in new direction by e-commerce. The
multimodal transport and technological trends
new trends in e-commerce like cloud computing,
Unleashing potential for the future. International
mobile applications, big data, social networks
Journal of Production Economics, 159, 88–103.
can offer great opportunities for companies in
doi:10.1016/j.ijpe.2014.09.005
order to redefine their corporate strategies and to
redesign their business models. The percentage Hobkirk, I. (2016). Key distribution strategies of
of e-commerce sales is growing continuously and top omni-channel retailers. Logistics Manage-
the increased volumes are putting unprecedented ment, 1, 48–53.
demands on the supply chains of e-commerce and
JLL. (2013). E-commerce booms triggers trans-
omni-channel retailers. In this chapter, a broad
formation in retail logistics. White Paper, Jones
overview of current e-commerce applications in
Lang Lasalle.
logistics and SCM is given. It gives researchers
and practitioners better understanding the role of Kale, R., Evers, R. T., & Dresner, M. E. (2007).
e-commerce in logistics and SCM in order to ex- Analyzing private communities on Internet-based
pand business and provide competitive advantages. collaborative transportation networks. Trans-
portation Research Part E, Logistics and Trans-
portation Review, 43(1), 21–38. doi:10.1016/j.
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evolution of logistics and supply chains from direct ing business communication and transactions
to store models to e-commerce. Retrieved August over networks and through computer technology
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commerce-logistics/ known as e-business), and transferring funds
Turban, E., Leidner, D., McLean, E., & Weth- through digital communications.
erbe, J. (2007). Information technology for man- E-Tailer: An e-tailer is a retailer that primarily
agement: transforming business in the digital uses the Internet as a medium for customers to
economy. New York: John Wiley & Sons. shop for goods and/or services provided.
Omni-Channel: Omni-channel involves pro-
Wang, Y., Potter, A., & Naim, M. (2007). Electron- viding a seamless, consistent and complementary
ic marketplaces for tailored logistics. Industrial customer shopping experience across all interac-
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doi:10.1108/02635570710822804 mobile devices.
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Amazon.com
2000-2013:
Expanded
2001: into Canada,
Japan, China,
Registered India
first ever profit
of $5mn • Currently more than 34 product
1999:
categories
Diversified into
consumer • Active Amazon customers
electronics, ◦ 2007: 66mn+
1995: furniture,
music, ◦ 2013: 200mn+
Jeff Bezos software, etc • Active Amazon sellers
launched
Amazon as ◦ 2007: 1mn+
online ◦ 2013: 2mn+
bookstore
• Much of its success is due to
 Order fulfillment capabilities
 DC management
 Local Customization
Business Model of Amazon.com
• Customer browse products on website and
place orders
• Order is fulfilled either by internal DC or
drop-shipper
As Seller
• Customer relationship is with Amazon
• Third parties list their products on

Amazon.com
• Marketplace and Merchants program
• Sales made by 3rd parties add to Amazon’s
As Margin as incremental cost of each sale is
Intermediary close to zero
• Offers technology platform and web

storefront experience to other companies
• Customer relationship and decision power
As E- stays with the company
commerce • Amazon provides order fulfillment services
Service
Provider
3 – Tier Amazon Inventory Network
Information Flow
Tier-1
Vendor/ Tier-2 Amazon

Supplier Website
and IT
System
Tier-3
Wholesaler
-DC
Publisher
/MFG
Amazon-
DC
Partner-DC
Indepen Customer
dent-
Supplier
Physical Flow
China Japan
 Launched in 2004  Launched in 2000
through Joyo.com  Same-day delivery: a key
 Delivers goods on its own selling point
 Purchases on average  Existence of Saihan system
within 2.5 days prevents price competition
 Cash on Delivery in case of books retailing.
prominent (70%)  “Look inside" option to allow
 Chinese are more customers to read excerpts
concerned about time of & passages from books
arrival than lead time in before they purchase them.
delivery. So Amazon.cn,  Offered large selection of
states what time of day products than its
the items will arrive at competitors.
your doorstep
Amazon in Asian countries

Amazon India
 Entered Indian E-commerce space in 2012 as

Junglee.com
Junglee.co
 Customers can compare product prices but not
m purchase
 Customer redirected to existing seller website or
physical store location for purchase
 Amazon.in launched in June 2013

 Marketplace model only unlike Amazon.com
Amazon.in  Product Categories: Books, Kindle, Movies & TV and
Consumer Electronics (Mobile, Camera and Media
players)
 Services offered: Third-Party Selling, Fulfillment
services, Product listing & promotion on website
 Free Shipping for orders above Rs 499 fulfilled by
Amazon
 CoD services only for orders fulfilled by Amazon
Challenges for Amazon India
 Understanding of Market  Intense competition
Place model among Indian  Inadequate infrastructure

Sellers facilities
 Presence in tier-II and tier-  Changing government

III Cities: 60% revenue policies
from tier-1, 40% from tier 2
 Creditors collection periods
& 3 cities.
 Marketing efforts
 Credit card EMI payment
not available to tier 2 & 3
cities
WALMART
• Wal-Mart is the largest brick-and-mortar format retailer in
the world
• First store opened in 1962 in Kansas by founder Sam
Walton
• Principle was to be focussed on keeping costs low
• Always a volume player, emphasized on using cost
advantage to increase sales
• Every day low prices promised to customers in order to
manage demand fluctuations
• Also operates a retail website, hence not a pure brick-and-
mortar retail player
Supply chain network components : Where is the focus in the
retailing industry?
1 2 3 4 5
Fulfilment
Sourcing Planning
and
and Production and Logistics
Customer
Procurement Distribution
Service
Plant Location Warehouse, Transportation Call centres

Capacity, Lead Inventory networks, Retailing
Time location Inventory Pricing
Flexibility management, Product delivery
Storage,
Loss/damage
Traditional retail supply chain structure
Information
Information
Information Flow
Retailer
Retail
Vendor Distribution Customer
Outlets
Carrier Centre Carrier
Physical Flow
Source: An Analysis of Current Supply Chain Best Practices in the Retail Industry with Case Studies of Wal-Mart and Amazon.com,Chiles and Dau, Georgia Tech
Internet retail supply chain structure
Information Flow
Vendor/Supplie
r
Website & IT
systems
Wholesale
DC
Publisher/Mfg Internet
Retailer DC
Customer
Partner DC
Independent
supplier/3rd
party
Physical Flow
Source: An Analysis of Current Supply Chain Best Practices in the Retail Industry with Case Studies of Wal-Mart and Amazon.com,Chiles and Dau, Georgia Tech
Sourcing and Procurement
• EDLP makes it essential for sourcing costs to be • For customer service, responsiveness and
low in order to make profits choice as the goal, supply chain strategy is
• Variety and assortment helps to maintain low completely different from that of EDLP
priced market basket • Procurement of products for resale from
• Supply chain innovations used to lower costs manufacturers
• Policy of purchasing no more than 25% of the • Procurement also for manufactured products
producer’s overall business like Kindle devices
• The price of the product is negotiated before the • Focus on reducing variable costs such as
start of the growing season transaction, processing and packaging costs
• Focus on sourcing from local suppliers, large • Seek to increase direct sourcing, discount from
and long term contracts with suppliers selected suppliers, process efficiencies and lean culture
• Consolidated its global procurement functions • High inventory turnover because of the
and reduce the use of intermediaries in its global business model
sourcing processes leading to savings • High supplier risk: No long term contract
• Receives consideration from suppliers for agreements and guarantee of availability
primarily volume incentives, warehouse • Difficulty in procurement and fulfilment in case
allowances and markdowns etc. of unforeseen disasters
Production
• Most of the stock in the Wal-Mart • Amazon produces devices like

stores are procured from different Kindle; production is outsourced
suppliers for resale • Kindle being an electronic gadget
• The private label products are also is prone to the varying demand
not manufactured by Wal-Mart phase as seen with other
• The manufacturers package and electronic equipment
label these products and provide it • With new releases and versions,
to the store older versions reach maturity and
• Lead time is due to placing orders decline phase
and replenishment of stock from • Lead time is due to the time taken
the suppliers and vendors to complete and fulfil orders either
by the company or by the drop-
shippers
Planning and Distribution
• 114 distribution centres only in the US • 90 distribution centres in 4 parts of

• Centralise distribution system using the world
Hub-and-spoke model, led to significant • In 2011 and 2012, addition of 9
cost savings massive distribution centres
• Heavy investment in IT and • Initially densely populated states
communication systems were devoid of distribution centres
• Satellite communication system – allow due to state tax implications
stores to manage own stock, reduce • Now, Amazon has moved to “Same
pack sizes Day Shipping Strategy” leading to
• Bar-code, use of computers and RFID heavy investments
made management economical • Real time supply chain
• Inventory Turnover at distribution communication which has
centres is high minimised human intervention
4. Logistics
Transportation Networks Transportation Networks

• Owns a fleet of 6500 trucks and • Doesn’t have a scale per order which
50,000 trailers makes truckload and less than truckload
• Fast and responsive in nature owing carriers economical as compared to
to products parcel carriers
• Efficient routes followed to burn less • Transportation hubs called ‘injection
fuel and minimize empty miles driven points’ located in areas with high
• It has 158 distribution centres which demand
support 90-100 retail stores each • Truckload and LTL carry inventory from
within a 200 mile area DC to injection points
• Trucks need to travel less and reduces • Last mile delivery made by UPS or
lead time FedEx
• Lowers transportation cost as well as • Drop shipping: Listed products but
the safety stock required at retail shipped and transported by partners
outlets • Reduces the inventory and shipping
Material Handling costs for Amazon
• Hydrogen powered fork lifters used for • Fulfilment service: products are offered
handling perishable material by third party seller but are packed and
Logistics (contd.)
Inventory Management Inventory Management
• IT expertise + satellite communication system • Owns no retail outlets -doesn’t incur
• Keeps check on unproductive inventory by reducing cost to build new outlets to attract
SKUs and timely markdowns. consumers
• Order management & store replenishment carried • Consolidate the inventory at DCs –
out through Point-of-Sales (POS) system. hence carry a much wider variety of
• Quick Replenishment- use IT to locate & products than the retail stores.
replenish goods. • DCs operated in automatic mode-
• Voice-based Order Filling (VOF)- guide the person efficient inventory tracking, inventory
responsible for order picking by voice to item location monitoring,etc
locations. • Drop shipment model solves
• Radio-Frequency Identification (RFID) problem of stock outs & allows
Technology -Employees don’t have to physically Amazon to offer products which are
scan the bar codes -saving of labor cost, reduces not lying in its DC inventory.
stock outs. • Direct sourcing from some
• Retail Link System- Retail suppliers can monitor publishers, manufacturers and third-
the sales of their products and can replenish party sellers- enable offering wide
inventories. variety, reduces dependence on
• Collaborative Planning, Forecasting and distributors and increases the markup.
Replenishment with key suppliers-share forecasts • 3-ecehlon inventory management

Fulfilment and Customer Service
Fulfilment Fulfilment
• Big Data to optimize fulfilment networks, • Fulfilment centres can handle any number
to create powerful pricing tools and to of orders with no minimum requirement
build the right product assortment • Defects eliminated by Kaizen and
• Customer trends analysed via social streamlining
media to optimise the fulfilment centre's • If not adequately predict customer demand
inventory –lead to excess or insufficient inventory or
Customer Service fulfilment capacity
• Walmart has a 90-day return policy for • Failure to optimize inventory will increase
most of the goods sold with few the net shipping cost by requiring long-
exceptions zone or partial shipments
• Customer centric policies designed to Customer Service
be a market leader in Canada • Customer service centres operated globally
• Tracking orders, placing return requests • Customers can track orders, shipment
made easy by One-touch facility at details and also make changes to open
stores and also reduced costs orders
• Free super saver shipping and prime
shipping
E-RETAILING & FLIPKART
• Large internet usage

Demographic • High mobile penetration
• Young population
• More secure online monetary

transaction
Technological
• Broadband connection
• Advancements in logistics
Macro-economic • Rise in disposable income

• Govt. committed to ease FDI norms
• Successful amazon model

Global • Rise in e-purchase
among customers
PRODUCT CATEGORIES
The matrix help in identification of product categories that are

more profitable based on industry & competitor analysis
PRODUCT CATEGORIES
Leather Goods and
travel accessories Camera and camera
accessories
Books & General

CCC Lifestyle
Merchandise
21 different categories, 4 million+ registered users , 45000 shipments

VENDOR SELECTION
A robust selection mechanism is put in place to ensure seamless backend supply chain
Vendor Management
Benefits Challenges
• Price pass-through • Channel conflict
• Demand • Distributor vs manufacturer
responsiveness
• Defect
Replacement
WAREHOUSE LOCATIONS
Hub & Spoke
Model
Delhi, Noida
Kolkata
Mumbai, Bhiwandi
Bangalore
Coimbatore
Flipkart operates 5 mother hubs that are geographically dispersed . It helps

in optimization of logistical expenses when demand arises from different
OVERALL SUPPLY CHAIN
Stock Liquidation
1. Negotiation with
supplier/bland/re-
seller
2. Internal liquidation
The flow-chart depicts the manner in which a customer order

is processed after the booking is made at the online portal
WAREHOUSE OPERATION
Receiving Dispatch
Team Team
QC
Team
Putter
Picker
Standard operating procedures have been designed to aid decision

making
during warehouse operation
JUST IN TIME MODEL
In previous model, Flipkart supplemented its own inventory from JIT vendors.
This helped in meeting unexpected customer demands during potential stock-
outs at WS retail
Inventory management
Parameters
Desired Service 98.9% 93.1% 99.5% 91.3%
Level
Average 2.16 29 61 597
sales/week
Average Loss of 1.37 1.7 6 80
sales (per week)
Average Margin 20%-25% 40%-45% 15%-20% 10%-15%
Actual service 92.2% 95% 92% 89%

level
Weeks of 1.17 1.6 1.55 1.39
inventory
Average Reorder 1 1.6 1.6 2
point
Cost of under Rs 2362/- Rs 349/- Rs 4675/- Rs 270/-
stocking
Flipkart has designed its reorder points based on the cost of under -
MARKETPLACE MODEL
Flipkart launched this platform on April 6th,2013
Salient Points
Product delivery and
shipping done by Flipkart
Flipkart now have large
assortment of products
Flipkart now act as a platform between buyers and sellers
Guiding Logic
After building a critical mass of
online shoppers, Flipkart
opened the platform for other
vendors to leverage its
customer base and brand
Marketplace model
Operational flow in Market Place model
Vendor Management
 Vendors apply for listing and Flipkart sends out invitation after verification
 All new sellers are categorized as Tier-2 sellers
 A Tier-2 Seller can become Tier-1 seller after completion of one month on Marketplace
and has a settlement defect rate of less than 5%
 Trusted Seller- Defect rate < 5%
 Preferred Seller- Considered best for particular product and is shown on the top of the
seller’s list
 Flipkart has its internal seller known as WS retail which supplies majority of the items
 Seller Support: Dedicated team at Flipkart Marketplace to support sellers
 Account Manager: Relationship manager for specific group of sellers
SELL OR RETURN
 New policy being offered by Flipkart

 Chance for new vendors to showcase their capability
 Inventory in Flipkart’s warehouse with the pre-condition of buyback
free of cost.
 Logistics and Inventory holding costs borne by Flipkart itself.
Comparative analysis
Parameters Market Place Sell-or-Return
Product Assortment High Moderate
Inventory Holding Cost Incurred by Vendor Incurred by Flipkart
Stock-out Fewer due to pool of Same as WS retail products

vendor available as Flipkart holds inventory
Delivery Time More because Flipkart Less as Flipkart ships from
depend on vendor shipping warehouse
from its own warehouse
Vendor Relationship Stringent vendor selection Lesser stringent compared to
MP
Inference
1. Market Place has an inherent advantage in meeting high uncertainties in
customer demand & competitive prices
2. Sell-or-Return mitigates the risk of Flipkart when introducing products with low
brand awareness
Web 1.0
 Static Web Pages
 Read Only
 One Way Communication
 Individual Participants
 Eg Encyclopedia Britannica
Web 2.0
 Dynamic Web Pages
 Read Write Execute
 Networked Communication
 Community
 Eg Wikipedia
SCOR Model
 Supply Chain Operations Reference Model
 Advocated by American Supply Chain Council
Plan
Source
Make
Deliver
Return
Plan
 Product Purchasing Plan
 Capacity Plan
Dynamic • ShopSavvy
Marketplace • Purchase at least price
Location and
• Delta Airlines
Context Based • Reverse auction to control overbooking
Services
Source
 Group Buying
 Consumer Rating
• Groupon
Social • Aggregation of orders to trigger
Networking purchase offers.
• Flipkart
User generated • Consumer opinion influence choice of
content supplier
Make
 Contract Research
 3D Printing
User generated • Google Sketchup

content • 3D Modelling blueprinting and sharing
User generated • InnoCentive

content • Crowdsourcing
Deliver
 GPS Tracking
 Content Delivery
Location and
• Cemex
context based • GPS to schedule and alter deliveries
services
• NowPublic
Social
• Local news uploaded at real time on
Networking Facebook profile
Return
 Airline Ticket Cancellation
 Opinion Mining
• Airline Industry
Smartphone • Apps used to cancel reservation at real
time
• Customer centric firms

User generated • Polling generates data on customer
content satisfaction
Supply Chain 2.0
 Supply Chain Reconfigured
Focal Firm
Supplier Customer
Enterprise 2.0
SCM 2.0 CRM 2.0
Thanks!
!!
E-Commerce Business Models
There are currently three main E-Commerce business models: the self-run model,
the E-platform/marketplace model and the hybrid model.
I. Self-run model
The self-run model is where E-Commerce vendors independently operate online sales. Vendors
often have a website of their own where they provide relevant information and a friendly interface
to display and sell goods. Vendors deliver goods to the final consumers through logistics operators
who complete the transaction.
Characteristics of the self-run model: vendors operate their own website which may be
self-built, self-owned and self-run. They provide consumers with information sharing, transaction,
order confirmation, communication, online bank payment or third-party payment and other services
via the Internet. Vendors may produce or purchase goods, sometimes also selling goods on a
commission basis. The goods are delivered to the final consumers through the vendors’ own
supply chains or logistics partners, often as chosen by the consumers. Logistics operations such
as import and export, warehousing and after-sales, the accuracy of website information, product
quality and problems arising during the transaction process are managed and controlled by the
vendors themselves.
The self-run model is mainly used by the official websites of brands, including online shopping
malls.
II. E-platform/marketplace model

The e-platform/marketplace model is where an e-platform/marketplace provides facilities and
services to vendors who sell goods on the e-platform/marketplace’s website.
The e-platform/marketplace integrates information flow, goods flow and capital flow for vendors.
The e-platform/marketplace takes commission and service fees after vendors and consumers have
completed their transactions, but it does not sell goods.
There are two main types of e-platform/marketplace model: the “market” and the “shopping guide”.
The “market” is where the e-platform/marketplace acts as an online market to attract vendors and
consumers: vendors are assigned a clickable access, and they receive orders from consumers by
displaying their goods and interacting with them on the platform/marketplace. Transactions
between vendors and consumers are settled by
the e-platform/marketplace, which provides intermediary services which often include online
payment, import and export, logistics, promotion, insurance and consumer protection.
The “shopping guide” is where the e-platform/marketplace serves consumers by matching their
needs with the goods, guiding them through the purchase process. The core element of this model
is the provision of information: a detailed goods description and price information from various
platforms/marketplaces are fully integrated to help consumers easily view and compare options
before making a decision.
Thanks to the intermediary services provided by e-platforms/marketplaces, both

platforms/marketplaces and vendors can focus more on their own roles. This makes it easy for
micro-, small and medium-sized enterprises and individual businesses to become vendors. As a
rule, e-platforms/marketplaces focus mainly on platform/marketplace services, and are concerned
more about optimization of the user interface and user experience so as to provide consumers with
easier access to the desired goods. Meanwhile, vendors are able to concentrate more on goods
quality and market promotion.
III. Hybrid model

The hybrid model is a combination of both the self-run and the e-platform/marketplace models.
1.
An operator of a hybrid model may have its own business which is similar to "self-run", i.e., self-
purchase and self-sales. At the same time, vendors are also incorporated in its
platform/marketplace in order to sell their own goods. Therefore, the operator of the integrated
model needs to manage both its own transactions and the platform/marketplace used by the
vendors.
Some integrated operators provide their own services for payment, import and export, logistics,
promotion, insurance and consumer protection. They may require their vendors to use these
services for their transactions.
* *
2.
16/06/2022, 13:56 E-Commerce - Business Models
E-Commerce - Business Models
E-commerce business models can generally be categorized into the following categories.
Business - to - Business (B2B)

Business - to - Consumer (B2C)
Consumer - to - Consumer (C2C)
Consumer - to - Business (C2B)
Business - to - Government (B2G)
Government - to - Business (G2B)
Government - to - Citizen (G2C)
Business - to - Business
A website following the B2B business model sells its products to an intermediate buyer
who then
sells the product to the final customer. As an example, a wholesaler places an order from a
company's website and after receiving the consignment, sells the endproduct to the final customer
who comes to buy the product at one of its retail outlets.
Business - to - Consumer
https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm 1/4
A website following the B2C business model sells its products directly to a customer. A
customer
can view the products shown on the website. The customer can choose a product and order the
same. The website will then send a notification to the business organization via email and the
organization will dispatch the product/goods to the customer.
Consumer - to - Consumer
A website following the C2C business model helps consumers to sell their assets like
residential
property, cars, motorcycles, etc., or rent a room by publishing their information on the website.
Website may or may not charge the consumer for its services. Another consumer may opt to buy the
product of the first customer by viewing the post/advertisement on the website.
Consumer - to - Business
In this model, a consumer approaches a website showing multiple business organizations
for a
particular service. The consumer places an estimate of amount he/she wants to spend for a
particular service. For example, the comparison of interest rates of personal loan/car loan provided
by various banks via websites. A business organization who fulfills the consumer's requirement
within the specified budget, approaches the customer and provides its services.
Business - to - Government
B2G model is a variant of B2B model. Such websites are used by governments to trade and
exchange information with various business organizations. Such websites are accredited by the
government and provide a medium to businesses to submit application forms to the government.
Government - to - Business
Governments use B2G model websites to approach business organizations. Such websites support
auctions, tenders, and application submission functionalities.
Government - to - Citizen
Governments use G2C model websites to approach citizen in general. Such websites support
auctions of vehicles, machinery, or any other material. Such website also provides services like
registration for birth, marriage or death certificates. The main objective of G2C websites is to reduce
the average time for fulfilling citizen’s requests for various government services.
Overview of Hyper-local Delivery Business Model
Today’s consumers value convenience and the comfort of ordering things online without
having to physically go to various shops thereby saving them precious time and energy. They
appreciate the virtually infinite choices offered by online catalogs and seek both specific
products (pre-decided) and/or discovered products (suggested by recommendation engines
based on personalization).
If it were free delivery, almost all consumers would want their products to be delivered
immediately (maybe within an hour or lesser). However, given the prevalent online delivery
fees & available choices, consumers bifurcate their need as immediate purchases vs. those that
they can wait for.
Business Model
Hyper-local Marketplace:
Hyper-local e-commerce business stands to fulfill consumer needs using supply points which
are in the immediate vicinity of the demand. Between offering “infinite choices” vs.
“immediate delivery”, Hyper-local e-commerce is over indexed on the latter and
hence, offers “limited” choices but within an assured Estimated Time of Arrival (ETA) of
usually a couple of hours.
Hyper-local businesses connect 3 participants to fulfill every order:
1. The Supply point(s) from where to pick-up the order
2. The Delivery Partner (DP)
3. The Consumer
Given the complexity of inventory management and the last mile nature of the business,
Hyper-local e-commerce businesses are usually pure play marketplaces where the company
does not own any inventory.
Non-hyper-local E-commerce:
Non-hyper-local e-commerce players offer almost “infinite choices” to the

consumer given the customer is willing to wait for the product to arrive. They usually have a
simpler product dispatch mechanism wherein all products arrive at a central warehouse from
where they are batched basis consumer pin-codes and are delivered within a usual ETA of 1–7
days.
Since most of these players run a warehouse, they end up owning a significant portion of the
inventory and can vary between 100% own inventory to a Hybrid to a 100% pure marketplace.
Competitive landscape
Given the high growth rate of the industry, the e-commerce segment has seen investments
being poured in by VCs across the globe. Just the hyper-local delivery market in India itself has
witnessed investments of over $3 billion between 2013 to 2020. As a result of the same,
multiple companies have contested and are contesting for their share of the market by offering
cash guzzling incentives such as Free Delivery, Platform funded discounts & Long-distance
ordering for the consumers, lower / attractive commissions for the stores and high perks for
the delivery partners.
The Hyper-local e-commerce industry witnessed multiple M&As such as UberEats, FoodPanda,
Holachef, etc. and shutdowns like PepperTap, RoadRunnr, LocalBanya, TaskBob, etc.
However, still there are well-funded companies operating in a much more consolidated market,
trying to solve the one problem which I would like to call the “ICDI Conundrum” or
Infinite Choices Delivered Instantly Conundrum.
Infinite Choices Delivered Instantly (ICDI) Conundrum
In the ICDI Conundrum, Delivery cost must be viewed as percentage of the value of purchase.
E.g. A delivery fees of Rs. 30 for a Rs. 1000 purchase is less significant vs. for a Rs. 150
purchase.
Similarly, Delivery time must be viewed in the context of the item purchased. E.g. A customer
maybe willing to wait for 3 days for their Smart TV to arrive but if his or her groceries take
more than a day to arrive, then it may be considered as too late.
Finally, Assortment Quality means both, the variety of choices (horizontal & vertical) and the
quality of those choices. This has a direct bearing on the Average Order Value of the platform
and the Customer Repeat frequency.
“Given a choice, all companies would want to migrate to the

Consumer Delight quadrant as that would mean fantastic
choices & faster delivery for the consumer and higher
customer loyalty, order value & delivery charge for the
company. In order to do this, companies would have to offer
Infinite Choices Instantly.”
Companies such as Amazon have invested heavily to build a huge assortment of quality
products on their platform. They also offer 1-day delivery for a vast majority of their offerings.
Amazon is now investing significantly to ensure 2-hour delivery for an assortment of goods.
Key Consumer Metrics
In this hyper competitive industry, customer experience can make or break the business.
Customers expect a variety of products to choose from, clear call-outs of ETAs, better or same
value & quality as offline purchase, no hidden charges, hassle free and convenient way of
ordering, real-time updates & tracking, timely delivery and swift redressal of any post-
delivery issues.
Other markers to measure consumer satisfaction include Retention of Consumers on the

platform, Repeat frequency of the buyers, Ratings and Reviews, Cancellation Rate, Return /
Refund rate, etc.
All the above parameters need to be closely monitored and any lapses in the same need to
continuously corrected. All Hyper-local business usually measure traffic and drop-out rates at
each part of the funnel.
Apart from the funnel, it’s imperative to measure operational parameters such as
serviceability of supply, Actual ETA to promised ETA and further breaking it into “Order
placed to DP Arrival time at store”, “DP Arrival to actual pickup time”, “Pickup time to Actual
Delivery time”, etc.
Financial overview
The last-mile margin on products could be lucrative or wafer thin but the same needs to be
divided among three parties involved — the Store Owner, the Delivery Executive and the
Company. This is coupled by the fact that the Indian consumers have not become habituated
online purchasers and are still not willing to pay delivery charges on most of their purchases.
This directly translates into low margins for the Company along with significant marketing
(both consumer awareness & discounting) and delivery investments at an operating level.
Cost per Delivery
The cost of delivery is highly dependent on Operational Excellence (ability to match demand
with supply while maintaining a lean yet sufficient delivery fleet), Average Order Value
(AoV) and the Distance to be covered / Time required to deliver the order.
Revenue Model
Usually, high Delivery & Surge charges are a huge deterrent for customers to order and
increasing the same may lead to drop in frequency of orders.
Reaching an optimum Average Order Value (AoV) is the key to success for the Hyper-local
business. Higher the AoV, higher the absolute commissions per order and lower the delivery
fee as a % of the order value. However, higher AoV would again translate into lower order
frequency thereby changing the supply demand dynamics.
All the above parameters need to be suitably adjusted to ensure that a critical mass of orders is
reached to make the business both sustainable and scalable.
Operational Complexity
Since hyper-local delivery is a 3-participant model, the dynamics of the number of available
Delivery Partners, the current queue and hence, the average pick-up time at each of the supply
points, the choices to be offered to the consumers and the likelihood of availability of all the
items at a single place keep changing by the minute (if not by the second). This leads to several
parameters which need to be managed algorithmically in the real time:
- Customer Traffic on the app

- Real-time choices to be displayed to the consumers
- Dynamic Delivery Radius
- Promised SLA (Service Level Agreement) of each of the available choices
- Order relay to store
- Order Acceptance and preparation by the store
- DP assignment
- Batching
- DP availability to be maintained in each hyper-local zone
- Time of the day affecting the surge on the platform & actual delivery time due to on-road
traffic, etc.
Robust and separate systems must be developed for all the 3 participants in order to ensure the
experience is smooth for all the parties involved.
Disclaimer
I have written the above article, including the ICDI Conundrum, as per my hands-on
experience of the industry and the know-how I could gather by interacting with some super
smart peers. Hence, I have not stated a lot of facts or numbers in the article and have
categorically kept it at a conceptual level.
I have also presented a very simplistic view of a complex problem and hence, may not have
done justice to a lot of the subjects covered. I will try to refine on some of the bigger topics or
allied issues in later posts.
Finally, I haven’t accounted for the impact of Covid-19 in the article, although the same has
completely re-shaped the e-commerce industry. The current crisis affects most, if not all facets
of the online delivery business. I wanted to keep the first article very broad and would like to
delve deeper on the impact of Covid-19 on the e-commerce business in the subsequent posts.
© 2022 Thoughtworks | Confidential 1
E-commerce
(Retail, E-commerce and Converged Commerce)
Industry Overview
&
Inside Out Perspective
June 2022
© 2022 Thoughtworks | Confidential

Introductions
Nupur Gupta Maunil Shah Umesh Mohanty

Retail & E-commerce SME Retail & E-commerce SME Product Principal
Merchandising, Fashion Digital & Converged Commerce, Order Product Management & Digital Public Goods
Management
Across 2 decades, Nupur has led For more than 15 years, Maunil A product enthusiast, Umesh
brand portfolios in retail (ABRL, has been a strategic and has experience working with
Raymond) and global CoC (IBM) technology transformation startups, technology service
in the areas of retail strategy, leader in the areas of providers, global captives and
process improvement, new E-commerce modernization & software consultancies globally.
technology adoption, digital Retail transformation helping His experience cuts across
transformation. organizations leverage multiple sectors like healthcare,
Fashion (GMT) + IIMA Alumni Technology as a strategic automotive, mobility and
advantage to win customer experience.

Industry Overview
Emerging Themes
Agenda
Inside-out Domain Perspectives

• E-commerce
• noun
“ commercial transactions conducted electronically on the Internet. ”
Transaction on the Physical Retail

internet Fulfilment E-Commerce

Let’s See
Can you name some of the most unique
E-commerce businesses that you have
seen till date?
Unique business Model / Category /

Product or Service?
https://www.menti.com/tpirqervn9
Or
Go to
www.menti.com and
use code 6444 4717

Answers
word cloud…

Click to add subtitle This is also E-commerce!!
Click to add body copy text

Source: Blume Ventures Annual Report
• E-commerce
• noun
“ commercial transactions conducted electronically on the Internet. ”
Transaction on the Physical or Retail

internet ( Full / Partial ) Digital Converged
Fulfilment E-Commerce

Industry & Market
Overview

While everyone is building
for India1 Alpha & 1
Their eyes are on India 2 &

3 as that is where the
volumes will be

India’s decade of Retail
& E-commerce
Impact drivers by 2030
1. 2. 3. 4.
India's retail Digital Online ONDC, Social
market to grow Economy shoppers to Commerce
to ~2 Tn & 25 ~800 Bn, increase to Q-commerce,
900 Mn Internet
Mn new Jobs E-comm 350 500 Mn from
Users
Bn ~150 Mn now 13
Source: IBEF
Emerging Themes

Customer expectations for
end to end connected
experiences are significantly
higher than a few years ago,
59% of consumers say 54% are likely to look
they’re likely to look at a at a product in-store
product online and buy and buy online
in-store
Source: Forrester
….. And the future belongs to

those who understand that
customers will continue to
evolve over time.
Key shifts in India’s Retail & Commerce ecosystem
01. The race towards creating private ecosystems
02. One-third of India’s 92 unicorns are in the retail & commerce space
● 32 unicorns account for ~37% of the unicorn universe valuation
● 62 became unicorns during the pandemic
● 4 startups became unicorns per month on an avg in 2021
● Fintech and ecommerce will continue to be among investors’ favourites in 2022
Next big Digital Public Good Disruption. Provides alternatives to proprietary e-commerce sites, aimed at
curbing ‘digital monopolies’
Where are we now?
The evolution of technology and business and “Technology in Business”
TECH BUSINESS
TECH TECH
TECH
TECH
TECH TECH
BUSINESS BUSINESS BUSINESS TECH
TECH
TECH
Formal walls
and moats
TECH-LED
SUPPORTING ROLE COLLABORATION DIFFERENTIATION TECH@CORE
Tech creates digital assets Collaborative execution Tech/business boundaries blur Tech enables digital business

The digital disruptors
They set the standard for what it means to be a modern digital business (MDBs)
and the rest of the world is feeling pressured to catch up.
But to truly succeed, you must understand the authentic digital YOU.
© 2022 Thoughtworks 18
Indian customers want convergence of
Emerging Themes to shopping offline and convenience of
Online
be successful in
E-commerce
Large Conglomerates are building
Ecommerce ecosystems ( Reliance, Tata,
Aditya birla) - Tata Neu
While there are multiple moving parts; speed
and agility of moving towards evolving
models will only help to succeed in
E-commerce Technology at Core is enabler for this
next wave; If not entire problem, solve a
Recent Innovations: piece of the puzzle
1. Q- Commerce
2. Social Commerce
3. Thrasio Model (House of brands)
Platform Approach to E-commerce
4. Metaverse Shops / NFT’s (Industry agnostic expansion)
Domain
Understanding

Different types of
● B2C - Apple.com
Business models in
E-commerce ● B2B - Udaan
There are multiple types of plays in the ● B2B2C > Marketplace -

○ Amazon
E-commerce ecosystem and they are ○ Swiggy
primarily decided by the following ○ Urban Company
○ Practo
criteria’s
● Ecosystem / Super Apps - Tata
Neu ( Managed Marketplace)
1. Who owns the Inventory?
2. Who owns the Customer relationship? ● C2C- OLX, Meesho?
3. Who owns the Pricing Power?
4. Who owns the Platform? ● D2C - FabIndia

Few examples of Marketplaces
Trade-off between assortment width, Supply chain control, customer experience,
margins and capital outflow - Who owns the Inventory?
Pure Inventory-led Hybrid Managed marketplace Pure Marketplace
Sell only owned Inventory Sell owned Inventory No owned Inventory No owned Inventory
Platform for connecting buyers & sellers
No 3rd party products Sell 3rd party products Sell only 3rd party products Sell only 3rd party products
Fixed prices Fixed prices Fixed prices Price is discovered
Control inventory storage

Control fulfilment & returns Control fulfilment & returns No control over fulfilment & returns
packaging, fulfilment & returns

Functional “LEGO”blocks of a modern commerce ecosystem,
focused on the customer facing side of the E-commerce Platform
Customer
Interaction Acquisition Engagement Conversion Retention
across
channels
Search Engine Optimization (SEO) Browse and Search Cart and Checkout
Customer Service
Search Engine Marketing (SEM) Personalization Delivery Opportunities
Loyalty Program
Social Programs Catalogue and Categories Payments
Subscription
Digital Marketing Campaigns Account Management Promotions, Offers and Discounts
NPS
Affiliate and Advertising Product Information
UGC/ Reviews and Rating
Digital Content
Wishlist/ Registry
Digital MARKETING -
CONTENT MANAGEMENT SYSTEM PRODUCT INFORMATION MANAGEMENT
Commerce SEGMENTS/
Enterprise ORDER MANAGEMENT SYSTEM CAMPAIGN
Ecosystem
CUSTOMER SUPPORT CENTRE
ANALYTICS & OPERATIONS
Dimensions INDUSTRY CHANNEL BUSINESS OPERATING MODEL

Analyzing customer user journey from Industry lens..
MarTech Upper Funnel / CSE Lower Funnel SPF CSF
Home PLP, Order Order Order Post-Purchase

Pre-Login Login Cart Check-out Payment
Page PDP Fulfillment Updates Delivery Support
Category / Supply Chain Leader Customer Service Rep/

Brand Manager Category / P&L Heads Mgr
Merchandizing Manager
Functional Sourcing & Buying Digital Operations Manager Warehouse Store Operations
Digital Marketing Experts Loyalty & Engagement
Roles Manager Manager
Product catalogue
Social Media Mgr creation is complicated Payment / Reco / Finance Heads Omni Channel Fulfillment Inventory updates
and time consuming sync - Latency
Customer Data Customer Buying Seamless Checkout Experience /

Platforms / CDP Operations Command Center Loyalty & Engagement
Experience Payment Innovation
Product
Marketing Engines Search / Browse / Mini Cart / 1 Click Cart/ Payment Automated
Navigation Exp Converged Commerce Experience Self-Service
Mktng Analytics Product Information/ Order Fulfilment &

Catalog Management AI / ML - Cart Improvement Management Warehouse Predictive Analytics
Tech & Data Systems Systems
Mktng
AR / VR / Metaverse CS Portals / Chat Bots
Automation Integrations / API Gateway Operations Command Center

Domain “LEGO”blocks of a modern E-commerce backbone
focused on the enabling side of the E-commerce Platform
PLAN BUY MOVE SELL SUPPORT

Demand Forecasting Assortment Planning Fulfilment Store processes Digital Marketing, SEO
Budgeting Pricing & Promotions Replenishment Checkout & Connected store Loyalty
Merchandise Financial Digital Merchandising Order Management Payments & Wallets Customer 360
Planning
Product Information Warehousing OmniChannel Personalisation
Space Planning management
VALUE Logistics Store Innovation
CHAIN Supplier Management
Inventory Management
PLM
Workforce management
Advent of
Technology
CROSS CUTTING
PLATFORM Digitalisation Data & Analytics Innovation AI Automation Design
Home
Health & beauty Fashion & Apparel Cash & Carry Pharma Marketplace Speciality Retail
Improvement
SEGMENTS Grocery
General
CPG
Luxury Sports Travel
Merchandise
25
Sample view
of
complexity
of
E-commerce
business
https://www.brightvessel.com/wp-content/upl
oads/2018/01/BV_CustomerJourneyLayers_
CREA95.pdf
High Resolution Image

Some Key Players in the E-commerce enablement space
Customer Facing Platforms Backend Platforms
And then there are companies like who help bring

deep domain knowledge to help companies built platforms In-house
27
Thank you for letting us share our
E-commerce Insights
Maunil Shah
maunil.shah@thoughtworks.com
https://www.linkedin.com/in/shahmaunil/

Some Insights, Videos and reading material
https://www.youtube.com/watch?v=ad-GuV6YIMI Reading Material:
Future of Shopping
https://www.thoughtworks.com/en-in/clients/retail-e
https://www.youtube.com/watch?v=axhjLLi0wLg commerce
https://www.ibef.org/industry/ecommerce
Funny Adobe - Old
https://www.ey.com/en_in/e-commerce/six-e-comm
erce-trends-to-watch-out-for-in-2021
https://www.youtube.com/watch?v=MIomlDXDEdQ
Blume Ventures- Annual Report- State of India
Better shop Online - Mr bean
https://www.youtube.com/watch?v=TnSN42BgT94
DHL - keep up with clicks

eCommerce & ONDC
Industry perspectives and
opportunities
June 2022
@2022 Thoughtworks Technologies India Pvt. Ltd | Commercial in Confidence - do not distribute
1
Table of contents
1. eCommerce in India 05
2. Understanding ONDC 10
3. Open networks 17
4. ONDC building blocks 21
5. Product taxonomy for ONDC 23
6. Further reading 27

Key shifts in India’s Retail & Commerce ecosystem
01. The race towards creating private ecosystems
02. One-third of India’s 92 unicorns are in the retail & commerce space
● 32 unicorns account for ~37% of the unicorn universe valuation
● 62 became unicorns during the pandemic
● 4 startups became unicorns per month on an avg in 2021
● Fintech and ecommerce will continue to be among investors’ favourites in 2022
Next big Digital Public Good Disruption. Provides alternatives to proprietary e-commerce sites, aimed at
curbing ‘digital monopolies’
eCommerce in India

India is one of top 3 high growth digital commerce
markets in the world
Digital native
young population
Affordable
smartphone
Cheap internet
Source:
www.ibef.org
www.statista.com

but there are several systemic challenges…
Limited reach in
Majority of retail sector e-retail penetration is
semi-urban and rural
is not digitally enabled only 4.3% in India
areas
0.125%
China 25%
12.8M 15K South Korea 26%
The UK 23%
Total Kirana stores Digitised kirana stores
Source:
www.ibef.org
www.statista.com

and Small retailers can’t go online - high
1 entry barrier
operational
challenges… Buyers and Sellers can’t discover each
2 other unless they are in the same
closed group (platform)
Sellers have to surrender to the T&C

3 of the platform players
Smaller ecommerce players can’t

4 operate a profitable business -
© 2022 Thoughtworks | Confidential economies of scale 8
It's a decentralised network that enables multiple
platforms to be interoperable

Understanding ONDC

ONDC foundation pillars

ONDC is a network of platforms
PLATFORM NETWORK
Centralised Decentralised
Limited
Interoperable
interoperability
Proprietary Open
Store of Value Flow of Value
Source:
www.ondc.org

“Store of Value” vs. “Flow of Value”
Source:
www.ondc.org

How is ONDC intended to work?
Buyers Sellers
Local Kirana
Sellers Registry
Buyer G
A
T
E
W
A Logistics
Y
(S)
All brands shown here are for illustrative purposes

14
ONDC is an alternative - good or bad?
Source:
www.ondc.org
15
Top challenges for ONDC
1. 2. 3. 4.
Customer Predictive Balancing Leveraging the
experience investments to policy and tech commons to
(CX) parity support to enable benefit the
fulfillment market forces network
Open Networks

Open networks always existed, its ubiquitous
Open Protocols
PROVIDERS CONSUMERS

What are protocols?
Protocol, in computer science, a set of rules or

procedures for transmitting data between
electronic devices, such as computers. In order
for computers to exchange information, there
must be a preexisting agreement as to how the
information will be structured and how each side
will send and receive it.
Source:
www.britannica.com

BECKN protocols are powering ONDC
Source:
https://becknprotocol.io

ONDC building blocks

Building blocks of ONDC
Buyer Buyer Buyer Buyer Buyer
ONDC Network Services
ONDC Network
Retail, Logistics, Hospitality Registry

Buyer-side Buyer side
Open Credit App(s) Super App(s)
Enablement Network Policies
Network
(OCEN)
Gateway(s) Reputation Ledger
Privacy
Protected Travel,
Retail
Exchange of Hospitality, OpenData Ledger
Data Mobility
Seller-side Other
Seller-side
App
App Seller-side Inter-network
Other Networks (Aggregator) App(s) Logistics Interoperability
Payment Processor
(possible in future)
Logistic Other Service
Supermarket(s) Kirana Store(s) Retailer
Provider(s) Provider(s)
Source:
www.ondc.org

Product Taxonomy for ONDC

Why product taxonomy? What problem is it solving in an
open network?
How customers perceive products vary significantly across categories & geographies.
Lack of shared e.g. Brand - Maggi or noodles; Language - Doodh, Dudh, Milk or pal. Harmonize (not
understanding Size - 6.8” or S/M/L; Material - Leather jacket / sofa. standardize)
Packaging - Tetra / Zip / Carton; UoM - kg / liter / Nos /
Which seller is selling which products? E.g. Kirana with eggs, footwear selling
Ineffective Optimize search,
accessories (belts, bags)
discoverability How do you route searches when inventory is distributed? interoperability
Seller autonomy -
Buyer-seller Every seller (online or offline) categorises its products differently. Large ones have
categorize,
matchmaking public (customer) and private (operations) categorizations. . e.g. Garments, electronics
identify…
Product Categorisation of products is a continuously changing construct and changes are

Flexibility of
categorization driven by multiple factors not limited to product evolution, customer preferences,
regulations, size of the business. categorization
changes frequently
Design Principles for ONDC product taxonomy
The ONDC product taxonomy is designed to evolve and mature based on feedback from the
network participants
1.0 2.0 3.0 4.0

Buyer & Seller centric Drive flow through the Decentralized Evolutionary -
Network ownership led by extensible & flexible
domain groups
Aliases / Localisation / Add / update products

Experts manage domain
Language Keywords / Tags Change product hierarchy
repositories, ONDC verify
Search inputs Attributes levels
before release 25
Feedback loop Interoperability Activate / inactive attributes
Openly available to public
No deletion at any point
ONDC Product Taxonomy combines hierarchy and relationships
centered around the customer’s view of the product
Attributes:
● Brand ROOT
● Price
Attributes:
L1 Electronics Fashion Grocery ● Organic
● Packaging
L2 Bakery Oil & Ghee Diary
Attributes:
Vegetable Oil Curd Milk ● Fat (Toned)
L3 ● Size
Sunflower Ricebran Toned Milk Nandini Milk Toned 1L

L4 Mapped to - Milk (GR/890)
Brand: Nandini
Price: ₹ 50
Organic: N
Size: 1L 26
© 2022 Thoughtworks
Further reading
1. ONDC FAQs
2. ONDC strategy paper
3. Interoperability as a tool for competition regulation - Ian Brown
4. Protocols, not platforms - Mike Masnick
Thank you for letting us share our ONDC
Insights
Umesh Mohanty
Umesh.mohanty@thoughtworks.com
https://www.linkedin.com/in/youmohanty/
© 2022 Thoughtworks 28
© 2021 Thoughtworks
Retail & Merchandising
Overview. Omniview

Session coverage
A quick background on what key elements of Retail are. Understanding of segments, channels, formats,
value chain & key KPIs. An insight into Merchandising process (PLAN & BUY) , case studies on who’s
doing it right. Explore what different roles in the industry look like.
Retail Essentials 03
Merchandising overview 12
Supply chain snapshot 20
Omni Retail experiences & case studies 23
Organization Structures and Roles 29

Retail
Essentials

Retail is many experiences
Retail 3.0
Rise of
E-Commerce
● It is multitude of experiences you have as a customer when you go to a shop or buy online
● When you have a person or a machine serve you 4
● When you are presented with products you want, need or like or community recommends
● RETAILER is the last link and final business between manufacturer and consumer.

Evolution of Retail
2 decades, 4 big shifts
Retail 4.0 Retail 5.0

Omni-channel 1:1 retail, deep
Big format retail, Rise of Retail personalization
Malls E-Commerce

Channels in Retail

Big format retail, Rise of
Stores Online or Mobile Customer can shop Customer can shop
Malls E-Commerce either in Stores, seamlessly across
Online or Mobile channels. (Browse on Insta,
Rise of big brands and try at store, buy online)
organized retail (India) 6

Retail CXO Business Priorities
Offline is still core & Online key to differentiate
• Retail e-com in 2021 had a 19% penetration

much below the 2020 meteoric rise of 31%
it’s still expected to climb at 14% YoY
• Online marketplaces accounted for nearly

two-thirds (62.5%) of global e-commerce in
2020 (43% of which is amazon. NA 25%)
• IT spending according to Gartner, grew by

5.9% in 2021 and is projected to grow at 7%
to $257 billion by 2025.
• Increased demand of e-commerce is one of

the main 3 driving IT spending reason in the
retail industry. (other 2 are advanced analytics
and increasing visibility)

Retail value chain is constantly evolving
Brand/ Wholesaler/
Manufacturer Distributor
Social
Raw material Retail Consumer Communities
Supplier
● Traditional roles have changed

● New entrants are increasing competitive intensity

Segments in Retail ● Retail processes have a common basic
functionality like purpose of marketing
& supply chain across segments
● However,different segments have

specific & unique functions.
Retail 2.0 I.e. in fashion (Dresses, Jackets) you
Retail 3.0 do not have predictability of sales like
Big format retail, with Grocery essentials (Milk, Bread)
Rise of
Malls E-Commerce
● You may need frequent promotions for
Rise of big brands and $5 pvt. brand cereal, not $1000 TV
organized retail (India)
● Fashion needs seasonal planning & 9
markdowns, furniture does not

● Luxury customer deliveries needs
different capabilities than grocery
fulfillment

Formats in Retail ● Department stores ; Brand physical
stores (Own or franchisee)
● Hypermarkets ; Big box stores,

Supermarkets; convenience stores
● Discount stores
Retail 3.0
● Brand E-com store ; Social stores
Rise of
● Marketplace / Malls
E-Commerce
● Auction sites
● Live Commerce 10
● Pop-ups

Key business KPIs across segments
GROCERY DIY/FURN FASHION BEAUTY LUXURY
Avg. Gross Margins in segment 21% 38% 50% 65% 75%
Avg. Days of Inventory 35 65 85 100 200
Profit Margins ~ 2% 10% ~5% 21% 30%
Sales Target
Stock Availability
Returns
Vendor scorecard (OTIF)
Sales per Sq. foot Loyalty (value, frequency)

Traffic/Conversion rate CSAT
Average Basket Size/Value Hits
Shrinkage CTR

Merchandising
Core & Digital

Retail product lifecycle
PLAN BUY MOVE MARKET - SELL
Customer Item Management Landed cost Marketing Calendar Stores – Own/Franchise

Brand USP Placement
Orders Inventory In Acquisition Plan
Budget Digital – E-Com/Mobile/
Pricing Inventory Out CRM/touch-points
Marketplace
Assortment Plan Allocation Order Fulfillment Service
Sourcing Plan (Transport/Delivery) Promote,
Feedback Markdowns/Replace

Feedback
Evolved role of Merchandising
Sales Support
Merchandising Supply Chain Marketing
Operations Functions
The department that

plans, develops and
presents the retail Core Merchandising Digital Merchandising
products to a target
market
The PLAN &
t
en
ns
BUY phase
sh
nn &
em
tio
g
la ts
ni
tia
in
ag
n
t P ge
le
tio
go
an
ep
Brand USP
en ud
VM
a
Ne
M
r
R
rtm y B
cu
&
e
t&
&
ic
nt
so or
ns g Pre/In/End Season
ng
Pr
en
o
As ateg
al e
tio
nt rs
ci
em
at
&
ff e
ca
Co
ur
m
C
ac C GTM
So
lo
Ite
O
Al
Pl
1 2 1 2 3
3 4 5 AI
The 4 Ps of Merchandising
A constantly evolving framework to deliver a

better customer experience
Product: Which products are my customers buying &
why – and which are they not buying? How can I plan
and create a better assortment?
Price: What is my customer’s price / value
perception?
Promotion: How do I drive traffic and improve
conversion?
Placement: How do my customers shop to find the
product they want? How should I change the display
P P
or shelf placement to drive interest & conversion?
Product Placement

(Assortments) 15
Feedback
How are Merchants measured
Trends
Demand Forecast KPIs
Buyers
Width ● Sales target
A.Plan, Source
Sourcing & ● Gross & Net Margin
Margins Buying ● Sell through/ FP Sell
CM Sell through through
NPI
Pricing & ● Inventory turns
M/Planners Item
Differentiated Promotions
Depth Management ● In stock / OOS %
MFP. Allocations products ● Increased ASP
Freshness Planogram ● Conversion rate
Analysts Curation ● Returns rate
Pricing
Availability ● Sales / Sq. ft
Repl., Reporting
Allocations
Rebalance
+ Central MD Conversion
+ Manufacturing Replenishments
+ VM (Stores/Mktg) Experience
Digital Merch Curate Catalog

Promotion Content
Content
Offers/ Promotions
AI for merchants and customers
Bestseller India Myntra
Merchandise attribute understanding Complete the look ; AR/VR trials
To reduce Inventory pile up to under 15% AI auto-correction for brand vendors

The most profitable days for Retailers?
Black Friday sales - $8.9 Billion
India - Billion day sales

Together Amazon & Flipkart sold –
55 million deliveries, approx. $3 Billion in sales
Singles day sales - 84.5 Billion
18
Merchandising current landscape
Trends
Demand Forecast
NPI
Pricing &
Item
Promotions
Management
Planogram
Curation
Allocations
Rebalance
Replenishments
*McK
Clearances
Navigating through Supply chain challenges Use advanced analytics and automation
Accelerate Digital adoption Improving customers store experiences
Talent crunch Product personalization
Supply chain

Snapshot of supply chain functions
Sales Support
Merchandising Supply Chain Marketing Operations Functions
Stores/Digital F&A, HR, IT
The department that

plans distribution,
logistics and moves the
product efficiently
between locations i ng
a nn t
Pl en
The MOVE Phase ply em
g
up g na
/ S in ng a 3PLs
st ur i M
ca ct us ry t
re fa o o en Returns
u eh nt lm
Fo an a r e ﬁl
M W Inv l
1 Fu AUTOMATION
2 3 4
5

Feedback
Supply chain done well
● Supply chain innovation (stockout alerts, Asset

management IoT, blockchain)
https://youtu.be/HCMURKWrHbI

Digital experiences
done well

Omni channel - addressing a niche
Pepperfry
Simplified furniture shopping
AR digital visualization
Experience stores
JIT
10000 sellers, Own
trucks, assembly
carpenters

Omni experience O2O connected
Sephora
Experience Driven
Customers get tailored

product
recommendations on line
and as soon as they
walk-in!
- Profile
- History
- Affinity match
- Trials
Associate empowerment
Geo-data limited time

offers
Brand Extensions & Network
Nykaa
Brand & category experience
Rated powered search
Shop by trends or
Concern
Cross Promotes
Educates
Exclusives (Kay)
Private Label
O2O sync

Let’s do this together
What is sustainability
for retail?
https://www.menti.com/tpirqervn9
Or
Go to
www.menti.com and
use code 6444 4717

What is sustainability for retail?
Doing what’s good for the planet
Open and transparent Sustainability Initiatives Ethical practices
1. Value collaborations 1. P&L reporting 1. Ethical sourcing

2. Blockchain product story 2. Materials 2. Unbiased data decisions
3. True labels 3. Circular economy 3. Protecting consumer privacy
4. Not just cheaper

Organization Structures &
Roles in the Industry

Retail Organization Structure
Typical Retail Org Structure 2000-2020 Emerging Org structures 2020 (Walmart, H&M)
CEO CEO
CM’O COO CFO CIO CMO CM’O CCO CTO
VP Omni SVP Technology,

Merchandising Strategy, Engg
SVP SVP E-commerce SVP Store Ops
Merchandising
VP VP
VP Tech
Home Head Product Digital
Home Garden Digital EX Director E-Com partners

Product DX
Stores & Online
Director Director
Buyer
Buyers Buyers Digital Marketing & Merch Supply Data
Analytics Omni-Merchant Director chain Dr Dr
Planners Planners Digital Merch &

Content
1. CTO oversees the development and dissemination of
1. CMO - Can be Chief Marketing as well as Chief Merchandising Officer technology for external customers, vendors, to help
2. Chief Merchants plan and launch new product assortments to sell to improve and increase business
customers and decide inventory, pricing and promotions. 2. CPO usually leads product design, User research in Digital30
transformations let by IT. they do not plan or create the
© 2022 Thoughtworks | Confidential product like Merchandising team (sellable products)
Retail functional tower, roles and key activities snapshot

Business - Category Manager
TG Customer Sourcing/Vendor Inventory Right Sales Trend Market opp

Category Strategy
Insights Negotiations Promotions Comp.
Re-projections Insights

Technology - Data Analyst/ Data Science
Data Analysis Predictive Modelling Emerging trends New Algorithm

Business Statistics
(external/Internal development
Data Migration)

Biz, Tech, Strategy - Supply Chain Transformation
Supply Chain Supply chain / Enterprise/WH/ Fulfillment Transformation Projects

Strategy Demand planning Supplier portal solutions (AI/Automation/
Network Analytics blockchain)
Trade Accounts
Strategy
Consultant
KAM
Sourcing Mgr
Project PM

Example of a delivery transformation team Model
Different roles across business and technology orchestrating in tandem
Client Program
Leadership
CXOs, HOB Client Business Product Owner
Client
Opportunity owners
Client Business Product Owner Tech/ Design Leads
Strategy Product owner/ Domain Specialist

consultant Domain Specialist Delivery Executives
Delivery/ Engineering Lead
Strategic SME/Domain Engineering Lead/ Industry Leaders/
Partner Specialist Architect Devs, QA Advisory
Lead Architect Devs, QA UX/ Service designer ETE Business Lead /

Change Manager
UX/ Service designer
Discovery Stream 1 Stream 2 Program

Governance
Cross functional product teams

35
Creating good customer experiences is retail
Grocery Fashion Beauty Luxury
Personalized
Assortment experience of Shop by skin/concern Best-in-class experiences,
Experiences
stores online, Convenience How-to guide technology & services
Trust & Loyalty

Thank you for letting us share Retail
Insights.
Nupur Gupta
nupur.gupta@thoughtworks.com
https://www.linkedin.com/in/nupurbgupta/

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LEVEL ANALYSIS

Answer: As it grew, the company added warehouses, allowing it to react

Amazon has about 50 warehouses, 20 in U.S and rest 30 in Canada,

Answer: No …. It should stock those products which are in higher demand.

July 5, 1994 • Amazon Incorporated as “Cadabra”, By Jeff Bezos.

1995 • Website went Online as Amazon.com; Online Book Store

1998 • Acquired Junglee.com

2012 • Entered Indian E-commerce space as Junglee.com

2013 • Amazon.in launched

@Data Source: Amazon Corporate Website

Total E-Commerce Size ($ Billion)

Average Spending per Online Shopper in India

Investment Over $5 Billion

• Massive Selection • World Class e-commerce platform

Kindle e-Readers & eBooks Value Chain

Books Pay with Amazon (Easy Ship)

Set up Store on Receive orders Amazon delivers

Receive payment Help to Grow

@Data Source: Amazon India Corporate Website

Set up your store Crores of customers across the world

Sit back and relax Fast and Stress free Shipping

Hassle-free Payments No fixed costs. Pay when you sell.

Sell Globally Secure and Timely Payments

4. Amazon packs and 5. Amazon’s customer

@Data Source: Amazon India Corporate Website

Build Trust Cash on delivery

Pay as you go Amazon Prime

@Data Source: Amazon India Corporate Website

Selling on Amazon & Fulfillment by Amazon

@Data Source: Amazon India Corporate Website

Amazon will use Future Group’s strong product knowledge, extensive

New Fulfillment Center: 5

86% Sellers of FBA

Largest FC in Sonipat, Haryana

Year end 2016: Combined Storage Capacity 7.5

@Data Source: MWPVL International

Hybrid Logistics Model

Amazon SCOT (Supply Chain Optimization Technology)

Managed Marketplace Model

• Seller is free to choose self-fulfilment or marketplace-fulfilment.

• Engaged in Pilot Project of Rural Delivery

Amazon Chai Cart

Multiple Hub & Spoke Model

• Customer Consideration, Vendor Consideration, Geo-Political Consideration,

A fully grown in-house logistic arm

• Better control, Business Diversification.

More Investment in Supply Chain to penetrate Rural India

• Tie up with Home-Grown Logistics Firm & Start-Ups.

Supply Chain of Amazon India

British Cataloguing in Publication Data

For electronic access to this publication, please contact: eresources@igi-global.com.

E-Commerce in Logistics and L

INTRODUCTION tools such as portals, e-marketplaces, e-auctions

BACKGROUND every kind of shopping experience, service and

Figure 1. The evolution of logistics and supply chain

diaries. From a distribution property perspective, according to geographical location, often by

TRENDS OF E-COMMERCE IN data prices, customers access mobile appli-

Figure 2. Paradigm change in e-commerce

Figure 3. Overview of e-commerce logistics platform with consortia partners

CONCLUSION Hajdul, M. (2014). Virtual co-opetition in trans-

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• Third parties list their products on

• Offers technology platform and web

Vendor/ Tier-2 Amazon

For electronic access to this publication, please contact: eresources@igi-global.com.