OPERATIONS

MANAGEMENT
Group Assignment No. 1

E-COMMERCE INDUSTRY

Submitted by:Group No. 3

Section: B

1. Abhinav Prakash
(141205)
2. Chandramouli S.
(141214)
3. Himanshu Ghiya
(141223)

Institute of Management, Nirma

University
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Date of Submission:13/03/2015

Contents
Introduction to E-commerce Industry....................................................................2
Top E-commerce players of India...........................................................................3
Competitive Advantage of Supply Chain Management..........................................5
Trends in the e-commerce industry.......................................................................7
Current Practices................................................................................................. 12
Challenges........................................................................................................... 16

Introduction to E-commerce Industry

E-commerce is Electronic commerce where trading of products and services take place over
the electronic network mainly Internet. E-commerce covers all the sectors such as B2B
(Business to Business), B2C (Business to Consumer), C2C (consumer to consumer).
Sometimes this is also called as E-business, and also called as E-tail for transaction process
for retail. E-commerce can be conducted via websites, emails, shopping carts
Most of the E-commerce companies have a certain pre-requisites such government rules and
regulations, suppliers, website and customers. E-commerce also needs logistics, online
transactions and more importantly security. The main transaction is the product flow from the
seller to the customer, information flow the order information going from the customer to the
seller, and most importantly the monetary flow as the money flows from customers pocket
into that of sellers.
In India e-commerce was started in 1996 initially B2B purpose slowly over the years it is
spreading to all the sectors and has a pan India reach. Till mid 2000 e-commerce industry was
slow due to lack of Internet penetration, poor logistics services and resistance to e-commerce
due to lack of trust. The changeover started from the travelling industry entering then it
moved on to retail sector as well. Now the Indian e-commerce market stands at a staggering
$13 billion at the end of 2014 and this is expected to grow exponentially in the coming years.

Top E-commerce players of India

1

Top Flipkart

EBay India

Snapdeal

Amazon India

Myntra

Shopclues

Dominos

Freecharge

Jabong

10 Tradus

Competitive Advantage of Supply Chain Management

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The competitive advantage of an industry can be analysed by Porter five forces analysis.
According to this analysis, the competition situation is determined by the Five forces. The
analysis is simple and determines the level of competition and attraction of the industry.
Bargaining power of suppliers:
The power of suppliers can get higher when e-tailers have less option of suppliers in the
market. but this is generally not the case as e-tailers have many alternatives. Not only esupply Chain Management (ESCM) gives the access of different suppliers but also provide
equal access for all suppliers to the e-tailers. This reduces the dependency on distribution
channels available for distribution and reduces bargaining power of suppliers.
Threat of substitute products:
As there are large number of alternative suppliers, threat of alternative product and service is
high. This large number increases the trends to switch between suppliers. This creates new
threats of alternative suppliers. This boosts the power of e-tailers in the industry but also
decreases power of electronic suppliers.
Risk of new entrants:
The entry of new entrants is very easy and reduces the entry barriers. So , because of the
convenience of increasing number of e-tailer suppliers the competition increases at any time.
E-SCM lowers the difference among competitors. Therefore, threat of new e-suppliers entry
and new e-tailers is high at all the times.
Bargaining power of e-tailers:
ESCM transfers the bargaining power to the hands of e-tailers copared to traditional
suppliers. This is solely because e-tailers have more choices of suppliers.
Competitions Intentsity:
ESCM makes the industry more efficient. There is a high competition in the industry because
of the lack of any obstacle to the market entry. There are many electronic stores of the same
size and less product differentiation and all have a large number of suppliers for them.
In short, E-SCM makes market wider geographically, the attractiveness of E-Tailing industry
increases, the size of the E-Tailing industry expands, and the number of suppliers and E6

tailers (electronic retailers) increases. As a result, there are many competitors in the ETailing
industry, and, of course, the market is highly competitive, because all suppliers must fight to
achieve etailers (electronic retailers), and all e-tailers (electronic retailers) must fight to
achieve joint customers.

Trends in the e-commerce industry

1

PREMIUM DELIVERY SERVICE

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The tussle in the e-commerce industry has been very tight .Companies know that customers would
switch if the goods are delivered sooner by the competitors .Hence to overcome it almost all of the
companies have introduced single day delivery service by charging just a few extra rupees and hence
such a facility needs operational as well as supply chain efficiency.

RISING FASHION CATEGORY

The fashion segment in the e-commerce industry has grown up considerably in the recent years. And
these purchases are quite frequent. Being it a highly competitive business companies differentiate

highly on their services and pricing. Here also supply chain management plays a very important role
in making the products available at the correct time.
3

EXCLUSIVE LAUNCHES

Recent trends of exclusive launches on e-commerce platforms like Moto G on Flipkart etc have even
given a completely new dimension to the business world. Being e-commerce the sole platform for
making the products available the supply chain management has to cater the demands for all over
India , there have been issues where products have been sold out in a day and also people facing
problems for delivery of their orders. Hence such tie ups needs greater care and hence even better
supply chain management.
4

IN HOUSE BRANDS

Many e-commerce platforms have even come up with privet labels ie products under their own brand
name example Zovi,Bewakoof,YEPME etc.These products are to be pushed in the market because
they are the most profitable to the company. So the backend of this is to make the products quickly
available across the nation. Hence efficient supply chain management is a prime need.

NICHE STORES

Certain niche stores like Lenskart,makemydrink etc. are provding products for a certain category and
have a very high volume in demands.These products might need care and attention while procurement
as there may be fasionable products whose life cycle is less . Hence supply chain management should
take care of all these factors.
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MOBILE ACCESS

The increasing tele-density and also in that the increasing use of internet services on mobile have
made it a very lucrative platform for businesses. E-commerce companies like Flipkart,
Amazon,Myntra, Snapdeal etc. have also entered the m-commerce market by launching applications
for mobile phones. The companies also come up with special offers for mobile app users. Hence such

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a increasing reach has led to increase in business for such online business and hence made the supply
chain even more efficient due to competition.

NO MORE FREE SOCIAL MEDIA TRAFFIC

ECOMMERCE IS YOUNG

It is observed that e-commerce platform users are more of te young generation .Hence the choices
made by them include apperals,electronics etc. Even the frequency with which they buy products is

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also quite high which increases business for the e-commerce business .Hence leads to companies
focusing more on the operation efficiency of the businesses namely the supply chain.
9

WOMEN ARE INCREASINGLY SHOPPING ONLINE

There has been a considerable rise in the number of women users of online businesses .Hence this
leads to greater demand for apparels, jewellery,accessories etc .Also tis provides a great platform for
business houses to directly target the market and hence this increase leads to increase in the efficiency
of business ie supply chain management.
10 MOST POPULAR BRANDS ONLINE

The e-commerce platform provides a plethora of brands in one place.Increase in the number of
brands hence leads to wide range of products in display. Hence this leads to companies planning for
their supply chain for procuring different products and hence making it available to the customers.

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Current Practices
Logistics
E-commerce companies tie up with courier companies like Blue Dart, First Flight etc which
helps it to deliver products. In addition to this, they use Indian post for areas where couriers
do not reach. Flipkart even use their in house logistics known as eKart (EKL). This helps
them to reduce the commission by 2% and offers services such as delivery logistics, reverse
logistics and pay on delivery. Flipkart has also started to deliver for its competitors through
eKart Logistics.

Procurement
E-commerce companies dont have their own inventory, rather buyers deal with the sellers
directly and delivery is done by the companies. Orders are served by inventory (used for fast
moving items) or by just-in-time (used for low volume, expensive items) methods. Central
Procurement team monitors the stock level of all the suppliers in the country, focussing on
bigger suppliers with country-wide range.

Warehouse Management System

Inward Processing:
Here physical delivery of goods from warehouse is done and then they undergo quality check
and sent for initial packing.
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Storage management
After entry of all the products in the IT system, list of shelves is generated where the product
can be kept. If there is any order pending for the product, it is directly sent Final packaging
area else the product is kept on the shelves and list is closed.

Outward Processing
A pick-list is generated for the products to be delivered in the day. Products are gathered
according to the pick-list and sent for final packaging area. Here they are packaged according
to the category of the product. Then they are placed in a bag dedicated for destination area
delivery hub.

Order Processing
Companies are using their own ERP system to process the order.

Order fulfilment
Order once placed is fulfilled either by inventory or JIT procurement. First inventory check is
done at warehouse. If the item is found it is sent to the nearest warehouse and packaged to be
delivered. If item is not found, it is forwarded for JIT procurement from legal vendors. After
procurement is done, the product is packaged and delivered to the customer.

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Inventory Management:
Inventory stocks are replenished whenever it goes below the Reorder point. Companies
employ the FIFO method (oldest inventory shipped first).

Supplier Management:
For a new product category, they start by sourcing from local suppliers and once the demand
is generated they approach large wholesalers or manufacturers. This helps them to get the
better deals from bigger suppliers and help in avoiding the channel conflict dilemma.

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Challenges

The companies are facing problems in maintain trade-off between reducing just-intime procurement and Consumer Delight. To maximise the consumer delight,
company would have so serve all consumer orders for which it requires just-in-time
procurement since many products have limited demand.
Due to package litter, there is a chance of difficulty in mobility within warehouse.
Some orders are cancelled while delivery is in processed. Such orders are not recalled
but delivered to the address and then cancelled.
All scans for inward processing are being done manually.

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