ptak prizeindia2014 scnext_romulans_iimshillong
TRANSCRIPT
E-Commerce & LogisticsSubmission By:
Indian Institute of Management, Shillong
Romulans
Chaitanya Beera
Nishesh Bhasin
Rakind Gupta
Shreyas Pai
Executive Summary
3
1. Amazon beginsoffering USAmazon Prime(two-day delivery
2. Amazonstarts Freshpilot in Seattle
3. Launch ofsame-dayservice Shutlin the UK
4. Amazonintroducesbrandedparcel boxes
5. AmazonlaunchesAmazonSupply
6. Amazon rolls out Fresh
7. Google pilots Shopping Express
8. Alibaba launches China Smart Logistics Network(CSN)
9. eBay acquires Shutl
10. Amazon begins Sunday delivery in the US
11. Amazon begins Sunday delivery in UK
12. Alibaba signslogistics/deliverycooperative dealwith China Post
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
1 2 3 4 5 6,7,8,9,10 11,12
Rapidly Evolving E-Logistics Scenario – No longer a support function
Other Characteristics
Last Mile Delivery
Home Delivery
Parcel Lockers
Post Office
Re-routing
Drop at neighbour
Cross Border
Offline vs. Online
Amazon recently opened a brick & mortar store in USA
Most top retailers have e-commerce presence
Omni-Channel Retail
e-Commerce Strategy
Streamline logistics and end-to-end visibility
Interactive consumer feedback system
Recyclable packaging to reduce costs in returns
GST ready logistics vendors and supply chain
Streamline COD – courier to deposit in bank account
Multi-channel visibility -apps, social media
Characteristics of e-Commerce that put spotlight on Logistics
4
The Business Model Logistics is the only physical link between the e-retailer and the consumer
Consumer
Virtual Connection
Physical Connection
44%
44% of shoppers abandoned carts due to unsatisfactory
estimated delivery times – A study conducted by UPS and
ComScore in 2014
• Logistics is the critical link between consumer and an e-retailer.
• It has the power of either delighting the consumer or forcing him to change the consumer altogether
Logistics – The Critical Bottleneck in e-Commerce
5
Lack of logistics infrastructure and the systems, processes and
technology required to grow the burgeoning e-retail business
Cash on delivery (COD) mode of payment is regarded as a
drawback
High rate of return is another big problem in this regard
High competition leading to price war is also a hurdle.
Rather than the traditional end-to-end distribution model, a new ecommerce-led “line-haul +
regional distribution centre + last mile delivery” model is booming
As e-commerce continues to grow, most shippers, particularly multi-
channel shippers, are still only just beginning to work out what this will entail for their distribution
network infrastructures
Logistics – The Critical Bottleneck in e-Commerce
E-commerce logistics models have led to a wave of new demand for four distinct
types of logistics
Mega e-fulfilment centres where the merchandise is stocked and picked at item
level
Parcel hubs/sortation centres which sort orders by zip or
post code
Parcel delivery centres which handle the ‘last mile’ delivery
to the customer
Seamlessly integrated technology where shopping carts connect via API, web
xml or some other connection to a
transportation management system
6
Challenges related to delivery timelines, cash management and returns management
The central area, relying on rivers, lakes and railways, does not have many advantages for export-oriented economic conditions, and has a low level of technology, equipment and logistics standardization, affecting the logistics efficiency
Last Mile Delivery
7
Significance Last mile delivery accounts fro 30% of all e-logistics cost – The biggest chunk of cost
The Problem A constant tussle between service levels and uncertainty
Factors affecting last mile delivery
Service Levels Profitability
Quick Delivery Time
Visibility such as Tracking
Free Delivery
Customisations such as re-routing
Free Returns
Expansion in Tier II cities
Unavailability of the recipient
Merchandising till the last stage
Last Mile Delivery is a nightmare for planners due to the fact that it is very difficult to strike a perfect balance between the service levels and the profitability of the entire supply chain
E-Commerce – Porter’s 5 Forces Analysis
8
Industry Rivalry
Bargaining Power of Suppliers
Threat of Substitutes
Bargaining Power of Buyers
Threat of New Entrants
High:- Brick & Mortar moving to Click
& Mortar- No requirement of a - Less complex/absent legal
framework- Higher outreach
Moderate:- Brick & Mortar don’t have the
same outreach- Higher cost of substitutes- Touch-and-feel vs. Free Return
Policy- Convenience – at the store
vs.at the door
High:- Demand driven model- Giving best deals to garner
higher customer turnover- Multiple options to choose from
Low:- Serves as a platform for
suppliers- Helps the supplier reach
more customers, thuslowers bargaining power
High:- Intense competition - Discount offers- Speed and convenience
of delivery, try-n-buy, return policy
Will We Start Our Own E-Commerce Business?
A space that is fast becoming cluttered – existence of ventures that address the masses as well as those that look at the niches
Capital Intensive – No investment in showrooms, but high warehousing, transportation, and logistics cost
Low Profits – Very small margins, high competition, high expense
IT Competence – E-Commerce is more than just a website
Vendor Selection and Management – sourcing material in time, from the correct vendor is a hassle
Dependence on others to deliver on your promise
9
NO!
Our E-Commerce Strategy
• Customer Feedback is crucial – walk the extra mile
• Tightening logistics and enhancing terms with logistical partners, while developing our own independent capabilities
• Improving quality control measures in sourcing and packaging, to deliver on customer expectation, while developing reverse-logistics
• Direct deposition of COD collections into bank account by courier service, thus reducing the cash collection cycle, and adhering better to the Government and VAT guidelines
• Planning cheaper transportation means keeping in mind the much-awaited application of GST in India
• Streamlined and consistent multi-channel visibility – presence on multiple channels, communicating the same message – social media, apps, duty free areas, multiple countries
10
Online Players Going Offline vs Offline Players Going Online
11
Why?
Online Players Going Offline Offline Players Going Online
• The key reasons for online players to open physical stores are multisensory consumer experiences, better logistics and consumer service offerings and strong, lasting brand relationships
• Even if consumers prefer buying online, nothing beats the experience of feeling a product, holding it and seeing it
• These stores also serve as logistics centres for home delivery – Overall reducing cost in the supply chain
• Prominent examples – Amazon in NYC, Birchbox, Frank & Oak
• The key reasons for a physical store to open e-commerce websites are –Changing consumer behaviour, opportunity to engage with larger segment of the target market
• Showrooming – The phenomenon which describes the tendency of a consumer to browse for products in physical stores but buy online due to the price differential. Physical stores do not want to loose out on the business
Who will win in the long
run?
In the long run both the physical and online retailers will have Omni channel strategy. We believe that online retailers will have an edge over Brick-and-Mortar retailers, because of –high consumer penetration, attractive marketing strategies, and brand agnostic consumers
Hope You Found This Interesting
Thank You For Your Attention
13