E-commerce

27/05/22

Big basket Model

Multiple offerings

Multiple Demand pools

Multiple sourcing channels

Businesses

BB daily

Horeka sales

BB Mandi

KPIs

On Time Delivery

Fill Rate-50,000 SKU business

In stock

Customer complaints

Farmer outreach program

90% purchase directly from farmers

Benefits to farmers

Higher price-13% higher

Payment on day 2, direct credit to bank account

Bigbasket farm to form cycle

Harvesting at 6 am-reach customer by 8pm

Supply chain of BB

Buy products from-Branded products directly from companies, from farmers, distributors, private
label (own products),

DC-every country has their own warehouse, own P&L, own entity

Hubs/Dark Stores/Kirana Stores/Local Food Stores-Dark stores carry inventory, hubs don’t carry
inventory, regional distribution Stores-beauty products

Delivery

Milk is transported using Hubs

Read about bb now

Unit economics of full stack vs bb now-simialar-5-6% contribution margin

03/06/22

Consumer psychology in E-commerce

E-commerce have UX designed in such a way such that people buy more (bundling) and faster check
out

Amazon has reviews in small font size

Zomato has reviews in large font size

Grocery is a single step process

Food is a double step process

Important things for selling on e-commerce

2*2 Matrix (important)

Materiality of the product vs Time needed for fulfilment

Materiality’ are “those topics that have a direct or indirect impact on an organization’s ability to
create, preserve or erode economic, environmental and social value for itself, its stakeholders and
society at large

How many senses in the body, that product that we want to sell impacts?

Virtue Signalling

Past History

Essentials

Recipes

Commitment Bias

Sunk Cost Bias

Movement

Colour

Orientation

Look and feel

Selling beauty products with groceries problem?

Groceries are a highly repeated purchase

Packaging beauty products separately

04/06/22

Type of Logistics in E-commerce

1PL

2PL

3PL

4PL

https://dclcorp.com/blog/3pl/difference-between-1pl-2pl-3pl-4pl-5pl/

Logistic Partners for E-comm business

Courier-distribution based on geography, wait for all shipments to come for a particular area, no
time limits

Captive e-tailer-owned by the e comm company, they have started giving their own business as well
Independent -

Evolution of ECOM

Ecom has reduced the root to market distance, hence eliminating the bullwhip effect

Line Haul-Time taken for delivery to customer from suppliers warehouse

Load on bikes cannot be more than 10kg

Last Mile is sometimes outsourced to someone (LAAS-Logistics as a service)

Upstream supply chain

Midstream supply chain

Downstream supply chain

Material Flow, Information Flow, Capital Flow

Amazon Easy Ship/Fulfilled by Amazon/Amazon Seller Flex

Future Group’s sourcing base is amazing

High Inventory and Multi-tier inventory model

Push based supply chain and pull based supply chain

Push based-stock clearance (mark down approach/return down value of inventory)

Pull based-make the products, ship to the customers

2 cycles involved

1) Customer Order cycle

2) Replenishment cycle

https://www.youtube.com/watch?v=2qanMpnYsjk
Amazon’s Delivery in US

06/06/22

Last mile, effective transport management, and vantage point for last mile delivery makes the e-
commerce services make or break

Platform as a service (PAAS)

Direct Shipment

Trans-shipment

Put away shipment

Social influencing is the main factor that makes the brand accepted or rejected by the customer

Factors driving market place?

1) Build a sustainable supplier – Enrolment of the supplier

2) Have customer traffic but not a large supplier base
3) Technology
4)

Supplier can benchmark its products

Understanding the supplier alone is not important, need to identify the supplier’s sentiment

Marketplace itself brings economies of scale in pricing, volume, and value proposition

Creation of the marketplace should be sustainable

Supplier-market enabler

Customer-customer loyalty
FBA-80% of amazon business is completed by fulfilled by amazon

GMV based business and Revenue based business

GMV business’s value is based on – Consumer acquisition and supplier onboardings, and unique data
points

Different kinds of marketspaces

1) Open Marketspace-freezone, no control on pricing, role of supply chain is limited, using

platform as a service, seller enabler, buyer enabler, user enabler, no authentication
2) Managed Marketspace – two clients
3) Curated (e.g., Paytm mall)- interface is there, give chance to suppliers to correct their prices,
give guarantee and insurance, all risks are take care, more loyal customer,
4) Crafted-Not all curated can be crafted, all crafted can be curated. Minimum supply chain
interference. No liability or indemnity of the product. Marketplace for services, control the
pricing, complete ecosystem owned by them, simple customer experience

90% of impulse purchase is managed by the word of mouth

Monopolies of the supplier are breaking day by day

Hyperlocal logistics management system

Crafted-Urbanclap, practo

Curated-zepto, paytm mall

Open-Alibaba, quickr, olx

Mercado Libre- How to make profit in market place, see their business model
Lazada Philippines
Rakuten Japan

Approx. cost is 120% to the 130% of revenue for a marketplace. Add multiple revenue
streams to the platform.
 10/06/22

Pre Covid-Landscape in India

General Trade-FMCG warehouse, distributor, wholesale, retailer, shopper (70-75%)

Modern Trade – 4 retail chains (d mart, big bazaar, reliance, more) and pharmacy players
(20-25%)

E-commerce- 5% business

Covid has changed few things

1) Omni-channel impact
2) Digital Adoption
3) Innovation & digitization
4) Scaling up of b2b/eb2b
5) Alternatives of shopping
6) Rapid Urbanization

150mn ecom shoppers in India out of 700mn internet users

Changes in existing ecosystem general trade

FMCG-new age distributors (elastic run, lynk)/b2b/distributors-retailers (taking wholesalers

out of business)

Change in ecosystem in modern trade

Consolidation/regionalization- e.g., DMart consolidating in west, reliance consolidating in north

New Store formats – smart stores, smart points, many deliveries points

Cash & carry revolution-e.g., Udaan

M&A

Omnichannel Retail

Quick Commerce

Trends in Indian Online Ecosystem

1) New formats for growth

2) Emerging cities driving new online growth
3) D2C/Digital first brands
4) Move towards super-apps
 Affiliate Marketing

CAC-cost of acquisition

Regulatory Disruptions in e-market place

1) Stricter rules to restrict market operations

2) Amazon/Flipkart change sellers
3) Consolidated seller business broken up as per new rules
4) Transition over 2021

Loss of scaled seller & investigations creating volatility in the market

Industry + category knowledge-need to build back over time

Unknown managed sellers’ higher financial risk in brands

Tharasio Model

How to Play in e-commerce?

Winning in online sales-5Ps, Magic Formula

5Ps

Presence

POS

Placement

Price

Promotion

Magic Formula

Sales on E-commerce as a multiplication of 4 factors – Unique visitors*Conversion rate*Per

consumer transaction*Retention Rate

Sales in Modern Stores-Footfalls*conversion rate*average price of the product*repeat rate

In digital place there are 10 ways to get to a product, hence, conversion changes
E-commerce strategies on these four levers

B2C/B2B Business models

Amazon Flywheel/Business Model

Walmart-Business model-focus on customer experience

Faster delivery

More products

Lower prices

Companies like DMart will have limited SKUs, cost structure by controlling inventories, cater to
certain segment
Reliance is looking at selection, can’t lower prices

Amazon model is win lose

While many retailers focus only on win-win model

Now retailers are blurring the boundaries

Amazon, Reliance are playing on many formats

Traditional Model

Retail- cost+ Trade Funds = Retail Profit

E-commerce Retail

Profit=Retail Price – Cost + trade Funds- fulfilment cost (usually -ve profit)

E-commerce & retail models work differently in terms of P&L

Aggregators converting their own internal products to services

AWS was started as a way to manage their own platforms

Amazon has launched prime as a service

E-commerce has different and new sources of revenue

Revenue from 3rd party sellers

Websites are ad platforms

Logistics as a service

Webhosting/IT service

Payment processing

Data is the central resource and how to leverage it against multiple sources

What role your e-commerce brand plays in the e-commerce system

Brand traditional spending in china 70% traditional 30% digital

Now in china 80% digital and 20% traditional

B2B Ecommerce do the unit economics work?

Trade-offs are different in b2b market, price sensitivity is higher in b2b

11/06/22

In e-commerce business, logistics cost is the highest of the total delivery cost

Hyperlocal has to connect these three:-

My supply point

Consumer

Delivery point/delivery partner

They can’t be expected to have inventories

Hyperlocal vs not hyperlocal is differentiated by cost vs time conundrum

Infinite choices is not hyperlocal

Delivered instantly is hyperlocal

Not hyperlocal have warehouses

Hyperlocal is a cost driven model

Cost delivery is decided by

Logistics cost utilization

Average order volume optimization

Try to increase the average order value

Revenue Model
Critical mass of the model-don’t talk about sustainability

Closed loop supply chain

Open loop supply chain

12/06/22

Read rest from study material shared

Order Fulfilment

Three broad things in fulfilment

A system chooses the partner which courier service will deliver the goods. Can be inhouse and
outsourced

Courier service is selected by the below parameters: -

Capacity, service availability, service ability, compare service level across partners

The shipping address is the consignee

Read about elastic run’s business model
Fulfilment can be done by: having own inventory, extended place of business (amazon)

Vs fulfilled by sellers

Regulatory, cost, volumes, are criteria for fulfilment centre

Own network causes capacity constraints

Picking from 1000 sellers is very difficult

Make distribution pick up points-hence first mile connectivity is different

What vehicle to chose in middle mile-volume, large shipment,small shipment etc

First mile and middle mile are about economies of scale

Last mile is much more effort

55% of transport cost is last mile

If higher volumes are there, there will be separate people for pickups
19/06/22